109 HR 1756 IH: To amend the Internal Revenue Code of 1986 to make the Hope and Lifetime Learning Credits refundable, and to allow taxpayers to obtain short-term student loans by using the future refund of such credits as collateral for the loans. U.S. House of Representatives 2005-04-21 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 1st Session H. R. 1756 IN THE HOUSE OF REPRESENTATIVES April 21, 2005 Mr. Andrews 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 make the Hope and Lifetime Learning Credits refundable, and to allow taxpayers to obtain short-term student loans by using the future refund of such credits as collateral for the loans.

1.

Hope and Lifetime Learning Credits to be refundable

(a)

Credit to be refundable

Section 25A of the Internal Revenue Code of 1986 (relating to Hope and Lifetime Learning credits) is hereby moved to subpart C of part IV of subchapter A of chapter 1 of such Code (relating to refundable credits) and inserted after section 35. (b)

Technical amendments

(1)Section 36 of such Code is redesignated as section 37. (2)Section 25A of such Code (as moved by subsection (a)) is redesignated as section 36. (3)Paragraph (1) of section 36(a) of such Code (as redesignated by paragraph (2)) is amended by striking this chapter and inserting this subtitle. (4)Subparagraph (B) of section 72(t)(7) of such Code is amended by striking section 25A(g)(2) and inserting section 36(g)(2). (5)Subparagraph (A) of section 135(d)(2) of such Code is amended by striking section 25A and inserting section 36. (6)Section 221(e) of such Code is amended— (A)in paragraph (2)(B), by striking section 25A(g)(2) and inserting section 36(g)(2) and by striking section 25A(f)(2) and inserting section 36(f)(2), and (B)in paragraph (3), by striking section 25A(b)(3) and inserting section 36(b)(3). (7)Clause (i) of section 529(e)(3)(B) of such Code is amended by striking section 25A(b)(3) and inserting section 36(b)(3). (8)Subparagraph (A) of section 530(b)(2) of such Code is amended by striking section 25A(g)(2) and inserting section 36(g)(2). (9)Clause (iii) of section 530(d)(4)(B) of such Code is amended by striking section 25A(g)(2) and inserting section 36(g)(2). (10)Subsection (e) of section 6050S of such Code is amended by striking section 25A and inserting section 36. (11)Subparagraph (J) of section 6213(g)(2) of such Code is amended by striking section 25A(g)(1) and inserting section 36(g)(1). (12)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting or 36 after section 35. (13)The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by redesignating the item relating to section 36 as an item relating to section 37 and by inserting before such item the following new item: Sec. 36. Hope and Lifetime Learning credits. (14)The table of sections for subpart A of such part IV is amended by striking the item relating to section 25A. (c)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005.

2.

Use of refunds of Hope and Lifetime Learning Credits as collateral for short-term student loans

(a)

In general

Section 36 of the Internal Revenue Code of 1986 (as redesignated by section 1) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new section: (i)

Tuition tax credit assignment loans

(1)

In general

Any eligible educational institution may provide to a taxpayer described in paragraph (3) a tuition tax credit assignment loan. (2)

Tuition tax credit assignment loan

For purposes of this subsection, the term tuition tax credit assignment loan means a loan provided to the taxpayer by the eligible educational institution in return for which the taxpayer agrees to authorize the Internal Revenue Service to disburse the loan amount directly to the lender out of the next refund due to the taxpayer that is attributable to a credit under this section. (3)

Taxpayers eligible for loan

A taxpayer is eligible for a loan under this subsection if the taxpayer is either— (A)an eligible student for whom a Hope Scholarship Credit under subsection (a)(1) is allowed, or (B)a taxpayer for whom a Lifetime Learning Credit is allowed. (4)

Maximum amount of loan

The amount of a loan provided under this subsection may not exceed— (A)$1,000, or (B)in the case of a first-year or second-year student, $1,500. (5)

Loan origination fee may be charged

An eligible educational institution providing a tuition tax credit assignment loan may charge the taxpayer a loan origination fee of up to 5 percent of the loan amount, but may not charge interest on the loan amount. (6)

3-year time limit on use of credit refund as collateral

If a taxpayer who has obtained a tuition tax credit assignment loan has not received a refund attributable to a credit under this section within three years after receiving the loan, then the loan will become due and payable in accordance with the terms of the loan agreement.. (b)

Effective date

The amendment made by this section shall apply with respect to credits claimed in taxable years beginning after December 31, 2005.