February 18, 2003, Introduced by Senators PATTERSON, KUIPERS, CROPSEY, GOSCHKA, BISHOP, JELINEK, BIRKHOLZ and OLSHOVE and referred to the Committee on Finance.
A bill to permit the establishment and maintenance of worker
financial security accounts; to provide for certain tax credits
and deductions; to prescribe the requirements of and restrictions
on worker financial security accounts; and to provide penalties
and remedies.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 1. This act shall be known and may be cited as the
2 "worker financial security account act".
3 Sec. 2. As used in this act:
4 (a) "Account administrator" means any of the following:
5 (i) A state or nationally chartered bank, savings and loan
6 association, credit union, or trust company authorized to act as
7 fiduciary and under the supervision of the office of financial
8 and insurance services; or a national banking association or
9 federal savings and loan association or credit union authorized
1 to act as fiduciary in this state.
2 (ii) A broker-dealer, commodity issuer, or investment advisor
3 registered pursuant to the uniform securities act, 1964 PA 265,
4 MCL 451.501 to 451.818, or a federal investment company
5 registered under the investment company act of 1940, title I of
6 chapter 686, 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-3 and 80a-4 to
7 80a-64.
8 (iii) A certified public accountant licensed to practice in
9 this state pursuant to article 7 of the occupational code, 1980
10 PA 299, MCL 339.720 to 339.736.
11 (iv) Life insurers.
12 (b) "Account holder" means the resident individual who is a
13 taxpayer and establishes a worker financial security account or
14 for whose benefit a worker financial security account is
15 established.
16 (c) "Domicile" means a place where an individual has his or
17 her true, fixed, and permanent home and principal establishment,
18 to which, whenever absent, he or she intends to return. Domicile
19 continues until another permanent home or principal establishment
20 is established.
21 (d) "Eligible expense" means 1 or both of the following:
22 (i) An expense paid by the taxpayer for reasonable living
23 expenses as determined by the department of treasury of a
24 qualified taxpayer for whose benefit an account under this act
25 has been established.
26 (ii) If the taxpayer is unemployed, an amount equal to the
27 difference between the taxpayer's average monthly gross income
1 for the 12-month period immediately preceding the first month in
2 which the employee received unemployment benefits and the average
3 monthly amount of unemployment benefits received by the taxpayer
4 during the tax year. Amounts under this subparagraph shall not
5 be withdrawn from an account more than once each month.
6 (iii) If the taxpayer is retired, an amount equal to the
7 difference between the taxpayer's average monthly gross income
8 for the 12-month period immediately preceding the date that the
9 taxpayer retired and the taxpayer's average monthly amount of
10 social security benefits received by the taxpayer during the tax
11 year. Amounts under this subparagraph shall not be withdrawn
12 from an account more than once each month.
13 (e) "Qualified taxpayer" means an individual with gross
14 salaries and wages as reported pursuant to section 61 of the
15 internal revenue code equal to or less than $75,000.00 who meets
16 1 of the following criteria:
17 (i) Received unemployment benefits during the tax year.
18 (ii) Received unemployment benefits during the tax year for a
19 period of time prior to the tax year in which withdrawals that
20 are deductible from the taxpayer's tax base under section 30 of
21 the income tax act of 1967, 1967 PA 281, MCL 206.30 are made, and
22 who has been continuously unemployed after receiving the maximum
23 amount of benefits available under the Michigan employment
24 security act, 1936 (Ex Sess) PA 1, MCL 421.1 to 421.75.
25 (iii) Is 65 years of age or older and is retired. As used in
26 this subparagraph, "retired" means that the individual is not
27 employed, or is employed or works for 10 hours or less each week
1 and receives salary, wages, or other compensation for that work
2 or employment that is subject to taxation under the income tax
3 act of 1967, 1967 PA 281, MCL 206.1 to 206.532.
4 (f) "Resident" means an individual domiciled in this state.
5 (g) "Unemployment benefits" means benefits allowed under the
6 Michigan employment security act, 1936 (Ex Sess) PA 1, MCL 421.1
7 to 421.75.
8 (h) "Worker financial security account" or "account" means an
9 account established in this state pursuant to this act to be used
10 to pay the eligible expenses of a qualified taxpayer.
11 Sec. 3. (1) For tax years that begin after December 31,
12 2001, a resident individual may establish a worker financial
13 security account with an account administrator for 1 or more of
14 the following:
15 (a) Himself or herself.
16 (b) His or her spouse.
17 (2) To establish an account, the qualified taxpayer shall
18 enter into an agreement with an account administrator.
19 (3) An account holder shall designate a beneficiary for the
20 account at the time he or she enters into an agreement under
21 subsection (2).
22 (4) Contributions to an account shall only be made in cash or
23 cash equivalent such as check, money order, or credit or debit
24 card, electronic fund transfer, or payroll deduction.
25 (5) Except as otherwise provided in this subsection, the
26 total amount in an account at any time shall not exceed
27 $75,000.00. Any contribution that would raise the amount in an
1 account to more than $75,000.00 shall be refused by the account
2 administrator or promptly withdrawn from the account and returned
3 to the account holder. An amount refused or withdrawn under this
4 subsection is not considered a withdrawal for purposes of section
5 5(1). Accrued interest shall be considered when determining if
6 the account holds more than $75,000.00 but that interest does not
7 need to be withdrawn to meet the maximum allowed in the account
8 under this section. Money may be contributed and withdrawn at
9 any time consistent with the provisions of this act as long as
10 the maximum amount allowed in the account, exclusive of interest
11 as provided in this subsection, is not exceeded at any point in
12 time.
13 Sec. 4. (1) An account administrator shall administer the
14 worker financial security account from which the payments are
15 made and has a fiduciary duty to the person for whose benefit the
16 account administrator administers an account.
17 (2) The account administrator shall utilize the funds held in
18 an account solely for the purpose of paying the eligible expenses
19 of the account holder or his or her spouse who is a qualified
20 taxpayer.
21 (3) The account administrator shall pay the eligible expenses
22 of the qualified taxpayer on whose behalf the account has been
23 established directly based on bills or other evidence of a debt
24 or account due or shall pay or reimburse the account holder from
25 the account holder's account for eligible expenses paid by the
26 account holder based on documentation submitted to the account
27 administrator.
1 Sec. 5. (1) Subject to subsection (2), if an account holder
2 withdraws money for any purpose other than a purpose described in
3 section 4(2), the administrator shall withhold from the amount of
4 the withdrawal and on behalf of the account holder shall pay a
5 penalty to the department of treasury equal to 10% of the amount
6 of the withdrawal.
7 (2) The amount of a disbursement of any assets of an account
8 pursuant to a filing for protection under title 11 of the United
9 States Code, 11 U.S.C. 101 to 1330, by an account holder or an
10 account holder's spouse is not considered a withdrawal for
11 purposes of this section.
12 (3) Upon the death of the account holder, the account
13 administrator shall distribute the principal and accumulated
14 interest of the account to the beneficiary of the account holder
15 as designated under section 4(3).