[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 464 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 464

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
                             for education.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 2, 1999

Ms. Granger (for herself, Mr. Weller, Mr. Pickering, Mr. Bereuter, Mr. 
Bonilla, Mr. Paul, Mr. Pitts, Mr. Cunningham, Mr. King, Mr. Pombo, Mr. 
  Sessions, Mr. Frost, Mr. Manzullo, Mr. Brady of Texas, Mr. Young of 
  Alaska, Ms. Dunn, Mrs. Morella, Mr. Sisisky, Ms. Ros-Lehtinen, Mr. 
   McIntosh, Mr. Watkins, Mr. LaTourette, Mrs. Myrick, Mr. Barton of 
Texas, Mr. McHugh, Mr. Schaffer, Mr. Shows, Mr. Armey, Mr. Thornberry, 
Mr. Rogan, Mr. Combest, Mr. Buyer, and Mr. Scarborough) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide tax incentives 
                             for education.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Higher Education Affordability and 
Availability Act''.

SEC. 2. EXCLUSION FROM GROSS INCOME OF EDUCATION DISTRIBUTIONS FROM 
              QUALIFIED TUITION PROGRAMS; COVERAGE OF PRIVATE PROGRAMS.

    (a) Exclusion.--
            (1) In general.--Subparagraph (B) of section 529(c)(3) of 
        the Internal Revenue Code of 1986 (relating to distributions) 
        is amended to read as follows:
                    ``(B) Distributions for qualified higher education 
                expenses.--If a distributee elects the application of 
                this subparagraph for any taxable year--
                            ``(i) no amount shall be includible in 
                        gross income by reason of a distribution which 
                        consists of providing a benefit to the 
                        distributee which, if paid for by the 
                        distributee, would constitute payment of a 
                        qualified higher education expense, and
                            ``(ii) the amount which (but for the 
                        election) would be includible in gross income 
                        by reason of any other distribution shall not 
                        be so includible in an amount which bears the 
                        same ratio to the amount which would be so 
                        includible as the amount of the qualified 
                        higher education expenses of the distributee 
                        bears to the amount of the distribution.''
            (2) Additional tax on amounts not used for higher education 
        expenses.--Section 529 of such Code is amended by adding at the 
        end the following new subsection:
    ``(f) Additional Tax for Distributions Not Used for Educational 
Expenses.--
            ``(1) In general.--The tax imposed by section 530(d)(4) 
        shall apply to payments and distributions from qualified 
        tuition programs in the same manner as such tax applies to 
        education individual retirement accounts.
            ``(2) Excess contributions returned before due date of 
        return.--Paragraph (1) shall not apply to the distribution to a 
        contributor of any contribution paid during a taxable year to a 
        qualified tuition program to the extent that such contribution 
        exceeds the limitation in section 4973(e) if such distribution 
        (and the net income with respect to such excess contribution) 
        meets requirements comparable to the requirements of clauses 
        (i) and (ii) of section 530(d)(4)(C).''
            (3) Coordination with education credits.--Section 25A(e)(2) 
        of such Code is amended by inserting ``529(c)(3)(B) or'' before 
        ``530(d)(2)''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to distributions after December 31, 1998, for 
        education furnished in academic periods beginning after such 
        date.
    (b) Eligible Educational Institutions Permitted To Maintain 
Qualified Tuition Programs.--
            (1) In general.--Paragraph (1) of section 529(b) of such 
        Code (defining qualified State tuition program) is amended by 
        inserting ``or by one or more eligible educational 
        institutions'' after ``maintained by a State or agency or 
        instrumentality thereof''.
            (2) Conforming amendments.--
                    (A) Paragraph (2) of section 26(b) of such Code is 
                amended by redesignating subparagraphs (E) through (Q) 
                as subparagraphs (F) through (R), respectively, and by 
                inserting after subparagraph (D) the following new 
                subparagraph:
                    ``(E) section 529(f) (relating to additional tax on 
                certain distributions from qualified tuition 
                programs),''.
                    (B) The text and headings of sections 529 and 530 
                of such Code are amended by striking ``qualified State 
                tuition program'' each place it appears and inserting 
                ``qualified tuition program''.
                    (C)(i) The section heading of section 529 of such 
                Code is amended to read as follows:

``SEC. 529. QUALIFIED TUITION PROGRAMS.''

                    (ii) The item relating to section 529 of such Code 
                in the table of sections for part VIII of subchapter F 
                of chapter 1 is amended by striking ``State''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1998.
    (c) Change of Qualified Tuition Program or of Designated 
Beneficiary.--
            (1) In general.--Clause (i) of section 529(c)(3)(C) of such 
        Code is amended by inserting ``to another qualified tuition 
        program for the benefit of the designated beneficiary or'' 
        after ``transferred''.
            (2) Inclusion of siblings as member of family.--Paragraph 
        (2) of section 529(e) of such Code is amended by striking 
        ``subparagraph (B).'' and inserting ``subparagraph (B),
        except that such term shall include any sibling (whether by the 
        whole or half blood) of the designated beneficiary.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1998.
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