2002 |
State of Wyoming |
02LSO-0126.W2 |
|
WORKING DRAFT |
|
HOUSE BILL NO.
Family college savings program.
Sponsored by: Select Committee on Capital Financing and Investments
A BILL
for
AN ACT relating to the Wyoming family college savings program; eliminating a penalty for nonqualified withdrawals; specifying legislative intent; providing for refund of certain penalties and appropriating funds needed for the refunds; and providing for an effective date.
Be It Enacted by the Legislature of the State of Wyoming:
Section 1. W.S. 21-16-815(h) and (k) is amended to read:
21-16-815. Program requirements.
(h) The
treasurer, by rule, shall increase the percentage
of the may establish a penalty
prescribed in subsection (g) of this section or
change the basis of this penalty for
nonqualified withdrawals, if the treasurer determines that the amount of the a penalty
must be increased to constitute a penalty that is
more than a de minimis penalty established
for purposes of qualifying the program as a qualified state tuition program under section 529 of the
Internal Revenue Code. Any penalties under this subsection shall be paid to the
treasurer for use in operating the program and for state student financial aid.
(k) If an account
owner makes a nonqualified withdrawal and no penalty amount is withheld
pursuant to subsection (g) (h) of this section or the amount withheld was
less than the amount required to be withheld under that subsection for
nonqualified withdrawals, the account owner shall pay the unpaid portion of the
penalty to the trust at the time the account owner files his federal income tax
return for the taxable year of the withdrawal. If the account owner does not
file a federal income tax return, the account owner shall pay the unpaid
portion of the penalty to the trust on the federal income tax due date. In no
case shall the unpaid portion of the penalty be paid after the date for filing
the federal income tax return taking into account any authorized extensions.
Section 2. W.S. 21-16-815(g) and (j) is repealed.
Section 3. The state treasurer shall amend the rules and regulations of the Wyoming family college savings program to conform with this act. No state penalty shall be imposed after January 1, 2002 for non-qualified withdrawals under rules in effect prior to the effective date of this act and the state treasurer shall refund any such penalties collected in that time period. Those funds needed to comply with the refund provisions of this section are hereby appropriated to the state treasurer from penalties collected and deposited with the treasurer pursuant to W.S. 21-16-815(g) prior to its repeal by this act.
Section 4. This act eliminates the mandatory state penalty imposed under the Wyoming family college savings program for nonqualified withdrawals. Section 529 of the Internal Revenue Code of 1986 was amended effective January 1, 2002, to eliminate the state penalty requirement and instead impose a penalty payable to the United States Treasury. It would impose a hardship on owners of accounts to be subject to both the federal and state penalties during the period from January 1, 2002 and the effective date of this act. It would also render the Wyoming program noncompetitive with other states' Section 529 programs, frustrating one of the goals of the Wyoming program. To avoid such hardship no state penalty shall be imposed for nonqualified withdrawals under the Wyoming program from and after January 1, 2002, unless pursuant to rules adopted by the state treasurer after the effective date of this act.
Section 5. This act is effective immediately upon completion of all acts necessary for a bill to become law as provided by Article 4, Section 8 of the Wyoming Constitution.
(END)