PRINTER'S NO. 1500
No. 1343 Session of 1981
INTRODUCED BY EVANS, J. D. WILLIAMS, BORSKI, WOGAN, EARLEY,
CORDISCO, MAIALE, DEAL, O'DONNELL, RAPPAPORT, SWAIM, WIGGINS,
DONATUCCI, RICHARDSON, BARBER, WHITE, BELOFF, H. WILLIAMS,
PENDLETON, COHEN, GREENFIELD AND WESTON, APRIL 28, 1981
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE, APRIL 28, 1981
AN ACT
1 Authorizing the establishment of individual housing accounts by
2 qualified institutions; providing a limited exclusion from
3 State taxation for deposits of principal and interest earned
4 on individual housing accounts and imposing additional duties
5 on the Department of Revenue.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the "Individual
10 Housing Account Act."
11 Section 2. Definitions.
12 The following words and phrases when used in this act shall
13 have, unless the context clearly indicates otherwise, the
14 meanings given to them in this section:
15 "Department." The Department of Revenue.
16 "Individual housing account." Any account established by a
17 qualified institution which meets the requirements of section 3.
18 "Qualified institution." Any bank, savings bank, savings and
1 loan association, building and loan association, credit union or
2 other similar financial institution organized and operated in
3 conformity with the laws of the United States of America or the
4 Commonwealth of Pennsylvania and insured by an instrumentality
5 of the United States or the Commonwealth of Pennsylvania.
6 "Taxable year." A calendar year or any portion thereof.
7 Section 3. Minimum requirements for individual housing
8 accounts.
9 (a) Every individual housing account which is offered by a
10 qualified institution shall conform to the following minimum
11 requirements:
12 (1) The account shall be for the exclusive benefit of
13 the individual deposition, or if married, for the benefit of
14 the individual and spouse jointly.
15 (2) The account shall be established for a minimum of
16 six months in any one calendar year.
17 (3) Total deposits in any one calendar year shall not
18 exceed $2,500.
19 (4) The account shall bear interest at a rate in excess
20 of the interest paid on demand deposit accounts.
21 (5) No account shall be carried for any period of time
22 in excess of ten years.
23 (6) Total deposits for the duration of the account shall
24 not exceed $20,000.
25 (7) In order to obtain the tax benefits of section 4,
26 the entire amount of the account shall be used solely for the
27 purchase of an individual's first owner-occupied residence
28 within the Commonwealth.
29 (b) Every qualified institution offering an individual
30 housing account may impose such additional requirements on such
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1 account as the institution deems necessary and proper.
2 Section 4. Exclusion from income tax.
3 (a) The amount of any deposit in any individual housing
4 account not in excess of $2,000 per calendar year and any
5 interest earned on the whole account shall be excluded from the
6 determination of income or interest for purposes of any tax
7 imposed pursuant to Article III of the act of March 4, 1971
8 (P.L.6, No.2), known as the "Tax Reform Code of 1971."
9 (b) Whenever the owner of an individual housing account
10 withdraws the funds from such account for purposes other than
11 the purchase of a first owner-occupied residence within the
12 Commonwealth or the ten-year limitation is exceeded, the entire
13 amount of the account shall be included in the determination of
14 income for such taxable year and in addition the owner of such
15 account shall pay an additional penalty of 20% of the tax
16 liability generated by such account. Any tax and penalty imposed
17 by this subsection shall be collected as provided in Article III
18 of the "Tax Reform Code of 1971."
19 Section 5. Withdrawal from account.
20 No funds shall be withdrawn from any individual housing
21 account until such time as the qualified institution obtains
22 from the owner of such account a sworn affidavit, in triplicate,
23 stating the following:
24 (1) The name, current address, current phone number,
25 occupation and social security number of the depositor.
26 (2) The exact amount of principal and interest in the
27 account.
28 (3) The date of withdrawal.
29 (4) The name and address of the qualified institution.
30 (5) The name and address of the lending institution
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1 which will hold the mortgage on the residence being
2 purchased.
3 (6) The purchase price of the residence.
4 (7) The location of the residence, stating at least the
5 county where located and such other location details as are
6 available.
7 Section 6. Disposition of sworn affidavit.
8 The three copies of the sworn affidavit shall be distributed
9 by the qualified institution as follows:
10 (1) One copy shall be forwarded to the Department of
11 Revenue.
12 (2) One copy shall be given to the depositor.
13 (3) One copy shall be retained by the qualified
14 institution.
15 Section 7. Powers and duties of the Department of Revenue.
16 The Department of Revenue shall have the power to:
17 (1) Establish and administer a system of reports which
18 will enable the department to keep an accurate record of all
19 individual housing accounts and to collect the appropriate
20 tax and penalty when necessary.
21 (2) Establish forms for affidavits, reports, exemptions
22 and notices relating to individual housing accounts.
23 (3) Require qualified institutions to withhold and
24 transmit to the department all or any portion of any tax or
25 penalty owed by a holder of an individual housing account.
26 (4) Establish procedures whereby the department and the
27 office of recorder of deeds of the various counties can
28 exchange information relating to the purchase of a first
29 owner-occupied home with funds from an individual housing
30 account.
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1 (5) Adopt all rules and regulations necessary to
2 administer the provisions of this act.
3 Section 8. Effective date.
4 This act shall take effect in 60 days.
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