As Introduced 1
123rd General Assembly 4
Regular Session S. B. No. 161 5
1999-2000 6
SENATOR GARDNER 8
_________________________________________________________________ 10
A B I L L
To amend sections 3334.01, 3334.02, 3334.08, 12
3334.10, 3334.12, 3334.15, and 5747.01 and to 13
enact sections 3334.18, 3334.19, 3334.20, 14
3334.21, and 5747.70 of the Revised Code to
authorize the Ohio tuition trust authority to 15
establish a variable college savings program. 16
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 18
Section 1. That sections 3334.01, 3334.02, 3334.08, 20
3334.10, 3334.12, 3334.15, and 5747.01 be amended and sections 21
3334.18, 3334.19, 3334.20, 3334.21, and 5747.70 of the Revised 22
Code be enacted to read as follows: 23
Sec. 3334.01. As used in this chapter: 32
(A) "Aggregate original principal amount" means the 34
aggregate of the initial offering prices to the public of college 35
savings bonds, exclusive of accrued interest, if any. "Aggregate 36
original principal amount" does not mean the aggregate accreted 37
amount payable at maturity or redemption of such bonds. 38
(B) "Beneficiary" means an: 40
(1) AN individual designated by the purchaser under a 42
tuition payment contract or through a scholarship program as the 44
individual on whose behalf tuition credits purchased under the 45
contract or awarded through the scholarship program will be
applied toward the payment of undergraduate, graduate, or 46
professional tuition; OR 47
(2) AN INDIVIDUAL DESIGNATED BY THE CONTRIBUTOR UNDER A 49
VARIABLE COLLEGE SAVINGS PROGRAM CONTRACT AS THE INDIVIDUAL WHOSE 50
2
TUITION AND OTHER HIGHER EDUCATION EXPENSES WILL BE PAID FROM A 51
VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT. 52
(C) "Capital appreciation bond" means a bond for which the 54
following is true:
(1) The principal amount is less than the amount payable 56
at maturity or early redemption; and 57
(2) No interest is payable on a current basis. 59
(D) "Tuition credit" means a credit of the Ohio tuition 61
trust authority purchased under section 3334.09 of the Revised 62
Code.
(E) "College savings bonds" means revenue and other 64
obligations issued on behalf of the state or any agency or 65
issuing authority thereof as a zero-coupon or capital 66
appreciation bond, and designated as college savings bonds as 67
provided in this chapter. "College savings bond issue" means any 68
issue of bonds of which any part has been designated as college 69
savings bonds. 70
(F) "Institution of higher education" means a state 72
institution of higher education, a private college, university, 74
or other postsecondary institution located in this state that
possesses a certificate of authorization issued by the Ohio board 75
of regents pursuant to Chapter 1713. of the Revised Code or a 76
certificate of registration issued by the state board of 77
proprietary school registration under Chapter 3332. of the 78
Revised Code, or an accredited college, university, or other 79
postsecondary institution located outside this state that is 80
accredited by an accrediting organization or professional 81
association recognized by the authority. To be considered an 82
institution of higher education, an institution shall meet the 83
definition of an eligible educational institution under section 84
529 of the Internal Revenue Code.
(G) "Issuing authority" means any authority, commission, 86
body, agency, or individual empowered by the Ohio Constitution or 88
the Revised Code to issue bonds or any other debt obligation of 89
3
the state or any agency or department thereof. "Issuer" means
the issuing authority or, if so designated under division (B) of 90
section 3334.04 of the Revised Code, the treasurer of state. 91
(H) "Tuition" means the charges imposed to attend an 93
institution of higher education as an undergraduate, graduate, or 94
professional student and all fees required as a condition of 95
enrollment, as determined by the Ohio tuition trust authority. 96
"Tuition" does not include fees charged to out-of-state residents 97
by state institutions of higher education, laboratory fees, room 98
and board, or other similar fees and charges. 99
(I) "Weighted average tuition" means the tuition cost 101
resulting from the following calculation: 102
(1) Add the products of the annual undergraduate tuition 104
at each four-year state university multiplied by that 105
institution's total number of undergraduate fiscal year equated 106
students; and 107
(2) Divide the gross total of the products from division 109
(J)(I)(1) of this section by the total number of undergraduate 110
fiscal year equated students attending four-year state 111
universities. 112
(J) "Zero-coupon bond" means a bond which has a stated 114
interest rate of zero per cent and on which no interest is 115
payable until the maturity or early redemption of the bond, and 116
is offered at a substantial discount from its original stated 117
principal amount. 118
(K) "State institution of higher education" includes the 120
state universities listed in section 3345.011 of the Revised 121
Code, community colleges created pursuant to Chapter 3354. of the 122
Revised Code, university branches created pursuant to Chapter 123
3355. of the Revised Code, technical colleges created pursuant to 124
Chapter 3357. of the Revised Code, state community colleges 125
created pursuant to Chapter 3358. of the Revised Code, the 126
medical college of Ohio at Toledo, and the northeastern Ohio 127
universities college of medicine.
4
(L) "Four-year state university" means those state 129
universities listed in section 3345.011 of the Revised Code. 130
(M) "Principal amount" refers to the initial offering 132
price to the public of an obligation, exclusive of the accrued 133
interest, if any. "Principal amount" does not refer to the 134
aggregate accreted amount payable at maturity or redemption of an 135
obligation. 136
(N) "Scholarship program" means a program registered with 138
the Ohio tuition trust authority pursuant to section 3334.18 139
3334.17 of the Revised Code. 140
(O) "Internal Revenue Code" means the "Internal Revenue 143
Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1 et seq., as amended. 144
(P) "Other higher education expenses" means room and board 147
and books, supplies, equipment, and nontuition-related fees 148
associated with the cost of attendance of a beneficiary at an 149
institution of higher education, but only to the extent that such 150
expenses meet the definition of "qualified higher education 151
expenses" under section 529 of the Internal Revenue Code. "Other 152
higher education expenses" does not include tuition as defined in 153
division (H) of this section. 154
(Q) "Purchaser" means the person signing the tuition 157
payment contract, who controls the account and acquires tuition 158
credits for an account under the terms and conditions of the 159
contract.
(R) "CONTRIBUTOR" MEANS A PERSON WHO SIGNS A VARIABLE 161
COLLEGE SAVINGS PROGRAM CONTRACT WITH THE OHIO TUITION TRUST 162
AUTHORITY AND CONTRIBUTES TO AND OWNS THE ACCOUNT CREATED UNDER 163
THE CONTRACT.
Sec. 3334.02. (A) In order to help make higher education 172
affordable and accessible to all citizens of Ohio, to maintain 173
state institutions of higher education by helping to provide a 174
stable financial base to these institutions, to provide the 175
citizens of Ohio with financing assistance for higher education 176
and protection against rising tuition costs, to encourage saving 177
5
to enhance the ability of citizens of Ohio to obtain financial 178
access to institutions of higher education, to encourage 179
elementary and secondary students in this state to achieve 180
academic excellence, and to promote a well-educated and 181
financially secure population to the ultimate benefit of all 182
citizens of the state of Ohio, there is hereby created the Ohio 183
college savings program. The program shall consist of the 184
issuance of college savings bonds and the sale of tuition credits 185
and, if offered, supplemental credits. 186
(B) The provisions of Chapter 1707. of the Revised Code 188
shall not apply to tuition credits or any agreement or 190
transaction related thereto.
(C) TO PROVIDE THE CITIZENS OF OHIO WITH A CHOICE OF 192
TAX-ADVANTAGED COLLEGE SAVINGS PROGRAMS AND THE OPPORTUNITY TO 193
PARTICIPATE IN MORE THAN ONE TYPE OF COLLEGE SAVINGS PROGRAM AT A 195
TIME, THE OHIO TUITION TRUST AUTHORITY MAY ESTABLISH AND 196
ADMINISTER A VARIABLE COLLEGE SAVINGS PROGRAM AS A QUALIFIED 197
STATE TUITION PROGRAM UNDER SECTION 529 OF THE INTERNAL REVENUE 198
CODE. THE PROGRAM, IF ESTABLISHED, SHALL ALLOW CONTRIBUTORS TO 200
MAKE CASH CONTRIBUTIONS TO VARIABLE COLLEGE SAVINGS PROGRAM 201
ACCOUNTS CREATED FOR THE PURPOSE OF PAYING FUTURE TUITION AND
OTHER HIGHER EDUCATION EXPENSES AND PROVIDING VARIABLE RATES OF 202
RETURN ON CONTRIBUTIONS. 203
(D) IF A VARIABLE COLLEGE SAVINGS PROGRAM IS ESTABLISHED, 205
A PERSON MAY PARTICIPATE SIMULTANEOUSLY IN BOTH THE OHIO COLLEGE 206
SAVINGS PROGRAM AND THE VARIABLE COLLEGE SAVINGS PROGRAM. 207
Sec. 3334.08. (A) In addition to any other powers 216
conferred by this chapter, the Ohio tuition trust authority may 217
do any of the following: 218
(1) Impose reasonable residency requirements for 220
beneficiaries of tuition credits; 221
(2) Impose reasonable limits on the number of tuition 223
credit participants; 224
(3) Impose and collect administrative fees and charges in 226
6
connection with any transaction under this chapter; 227
(4) Purchase insurance from insurers licensed to do 229
business in this state providing for coverage against any loss in 230
connection with the authority's property, assets, or activities 231
or to further ensure the value of tuition credits; 232
(5) Indemnify or purchase policies of insurance on behalf 234
of members, officers, and employees of the authority from 235
insurers licensed to do business in this state providing for 236
coverage for any liability incurred in connection with any civil 237
action, demand, or claim against a director, officer, or employee 238
by reason of an act or omission by the director, officer, or 239
employee that was not manifestly outside the scope of the 240
employment or official duties of the director, officer, or 241
employee or with malicious purpose, in bad faith, or in a wanton 243
or reckless manner;
(6) Make, execute, and deliver contracts, conveyances, and 245
other instruments necessary to the exercise and discharge of the 246
powers and duties of the authority; 247
(7) Promote, advertise, and publicize the college savings 249
program AND THE VARIABLE COLLEGE SAVINGS PROGRAM; 250
(8) Adopt rules under section 111.15 of the Revised Code 252
for the implementation of the college savings program AND THE 253
VARIABLE COLLEGE SAVINGS PROGRAM; 254
(9) Contract, for the provision of all or part of the 256
services necessary for the management and operation of the 257
college savings program AND THE VARIABLE COLLEGE SAVINGS PROGRAM, 258
with a bank, trust company, savings and loan association, 260
insurance company, or licensed dealer in securities if the bank, 261
company, association, or dealer is authorized to do business in 262
this state and information about the contract is filed with the 263
controlling board pursuant to division (D)(6) of section 127.16 264
of the Revised Code;
(10) Contract for other services, or for goods, needed by 266
the authority in the conduct of its business, including but not 267
7
limited to credit card services; 268
(11) Employ an executive director and other personnel as 270
necessary to carry out its responsibilities under this chapter, 271
and fix the compensation of these persons. All employees of the 272
authority shall be in the unclassified civil service and shall be 273
eligible for membership in the public employees retirement 274
system. 275
(12) Contract with financial consultants, actuaries, 277
auditors, and other consultants as necessary to carry out its 278
responsibilities under this chapter; 279
(13) Enter into agreements with any agency of the state or 281
its political subdivisions or with private employers under which 282
an employee may agree to have a designated amount deducted in 283
each payroll period from the wages or salary due the employee for 284
the purpose of purchasing tuition credits pursuant to a tuition 285
payment contract OR MAKING CONTRIBUTIONS PURSUANT TO A VARIABLE 286
COLLEGE SAVINGS PROGRAM CONTRACT; 287
(14) Enter into an agreement with the treasurer of state 289
under which the treasurer of state will receive, and credit to 290
the Ohio tuition trust fund OR VARIABLE COLLEGE SAVINGS PROGRAM 291
FUND, from any bank or savings and loan association authorized to 293
do business in this state, amounts that a depositor of the bank 294
or association authorizes the bank or association to withdraw 295
periodically from the depositor's account for the purpose of 297
purchasing tuition credits pursuant to a tuition payment contract 298
OR MAKING CONTRIBUTIONS PURSUANT TO A VARIABLE COLLEGE SAVINGS 299
PROGRAM CONTRACT;
(15) Solicit and accept gifts, grants, and loans from any 301
person or governmental agency and participate in any governmental 302
program; 303
(16) Impose limits on the number of credits which may be 306
purchased on behalf of or assigned or awarded to any beneficiary 307
AND ON THE TOTAL AMOUNT OF CONTRIBUTIONS THAT MAY BE MADE ON 308
BEHALF OF A BENEFICIARY;
8
(17) Impose restrictions on the substitution of another 310
individual for the original beneficiary; 311
(18) Impose a limit on the age of a beneficiary, above 313
which tuition credits may not be purchased OR CONTRIBUTIONS MADE 314
on behalf of that beneficiary; 316
(19) Enter into a cooperative agreement with the treasurer 318
of state to provide for the direct disbursement of payments under 319
tuition payment OR VARIABLE COLLEGE SAVINGS PROGRAM contracts; 320
(20) Determine the other higher education expenses for 322
which tuition credits OR CONTRIBUTIONS may be used; 323
(21) Terminate any prepaid tuition OR VARIABLE COLLEGE 325
SAVINGS PROGRAM contract if no purchases OR CONTRIBUTIONS are 327
made for a period of three years or more and there are fewer than 329
a total of five tuition units or tuition credits OR LESS THAN A 330
DOLLAR AMOUNT SET BY RULE on account, provided that notice of a 331
possible termination shall be provided in advance, explaining any 332
options to prevent termination, and a reasonable amount of time 333
shall be provided within which to act to prevent a termination; 334
(22) Perform all acts necessary and proper to carry out 336
the duties and responsibilities of the authority pursuant to this 337
chapter. 338
(B) Except as otherwise specified in this chapter, the 340
provisions of Chapters 123., 125., and 4117. of the Revised Code 341
shall not apply to the authority. The department of 342
administrative services shall, upon the request of the authority, 343
act as the authority's agent for the purchase of equipment, 344
supplies, insurance, or services, or the performance of 345
administrative services pursuant to Chapter 125. of the Revised 346
Code. 347
Sec. 3334.10. Divisions (A) and (B) of this section do not 356
apply to scholarship programs established under section 3334.17 357
of the Revised Code.
(A) Unless otherwise provided for in the contract, a 360
tuition payment OR VARIABLE COLLEGE SAVINGS PROGRAM contract may 361
9
be terminated by the purchaser OR CONTRIBUTOR under any of the 363
following circumstances upon the written request of the purchaser
OR CONTRIBUTOR to the authority: 364
(1) Upon the death or permanent disability of the 366
beneficiary;
(2) Upon notification to the Ohio tuition trust authority 368
in writing that the beneficiary is age eighteen or older, has 369
decided not to attend an institution of higher education, and 370
requests that the tuition payment contract be terminated; 371
(3) Upon the beneficiary's completion of the degree 373
requirements at an institution of higher education; 374
(4) Upon the rollover of all contributions to AMOUNTS IN a 377
tuition credit OR VARIABLE COLLEGE SAVINGS PROGRAM account to the 378
prepaid tuition plan of AN EQUIVALENT ACCOUNT IN another state; 380
(5) Upon the occurrence of other circumstances determined 382
by the authority to be grounds for termination. 383
(B) The authority shall determine the method and schedule 385
for payment of refunds upon termination of a tuition payment 386
contract. 387
(1) In cases described by division (A)(2) or (3) of this 389
section, the amount of the refund shall be equal to ninety-nine 390
one-hundredths of NOT LESS THAN one per cent of the weighted 391
average tuition in the academic year the contract REFUND is 393
terminated PAID, multiplied by the number of tuition credits 395
purchased and not used, minus any reasonable charges and fees
provided for by the authority, or such other lesser sum as shall 396
be determined by the authority but only to the extent that such a 397
lesser sum is necessary to meet the refund penalty requirements 398
for qualified state tuition programs under section 529 of the 399
Internal Revenue Code. 400
(2) In cases described by division (A)(1) of this section, 402
the amount of the refund shall be equal to the greater of the 403
following:
(a) One per cent of the weighted average tuition in the 406
10
academic year the contract is terminated, multiplied by the 407
number of tuition credits purchased and not used; 408
(b) The total purchase price of all tuition credits 410
purchased for the beneficiary and not used. 411
(3) In cases described by division (A)(5) of this section, 413
the amount of the refund shall be either of the following as 414
determined by the authority: 415
(a) The refund provided by division (B)(1) of this 417
section;
(b) The refund provided by division (B)(2) of this 419
section, or such other lesser sum as shall be determined by the 421
authority but only to the extent that such a lesser sum is 422
necessary to meet the refund penalty requirements for qualified 423
state tuition programs under section 529 of the Internal Revenue 424
Code.
(C) In the case of a scholarship program, a refund of 426
tuition credits in the program's account may be made only for 427
just cause with the approval of the authority. The refund shall 428
be paid to the entity that established the scholarship program 429
or, with that entity's approval, to the authority if this is 430
authorized by federal tax law. The amount of any refund shall be 431
determined by the authority and shall meet the requirements for 432
refunds made on account of scholarships under section 529 of the 433
Internal Revenue Code. 434
(D) If a beneficiary is awarded a scholarship other than 436
under a scholarship program, a waiver of tuition, or similar 437
subvention that the authority determines cannot be converted into 439
money by the beneficiary, the authority shall, during each 440
academic term that the beneficiary furnishes the authority such 441
information about the scholarship, waiver, or similar subvention 442
as the authority requires, refund to the person designated in the 443
contract, or, in the case of a beneficiary under a scholarship 444
program, to the beneficiary an amount equal to the value that the 445
tuition credits OR CONTRIBUTIONS that are not needed on account 446
11
of the scholarship, waiver, or similar subvention would otherwise 447
have to the beneficiary that term at the institution of higher 448
education where the beneficiary is enrolled. The authority may, 449
at its sole option, designate the institution of higher education 450
at which the beneficiary is enrolled as the agent of the 451
authority for purposes of refunds pursuant to this division. 452
(E) If, in any academic term for which tuition credits 454
have been used to pay all or part of a beneficiary's tuition, the 455
beneficiary withdraws from the institution of higher education at 456
which the beneficiary is enrolled prior to the end of the 457
academic term, a pro rata share of any refund of tuition as a 458
result of the withdrawal equal to that portion of the tuition 459
paid with tuition credits shall be made to the authority, unless 460
the authority designates a different procedure. The authority 461
shall credit any refund received, less any reasonable charges and 462
fees provided for by the authority, to the appropriate account 463
established under division (F)(1) or (2) of section 3334.11 of 465
the Revised Code.
(F)(1) A CONTRIBUTOR UNDER A VARIABLE COLLEGE SAVINGS 467
PROGRAM CONTRACT MAY RECEIVE A REFUND OF THE PRINCIPAL 468
CONTRIBUTED, PLUS ACTUAL INVESTMENT EARNINGS OR MINUS ACTUAL 470
INVESTMENT LOSSES, LESS ANY ADMINISTRATIVE FEES, AND LESS ANY 471
AMOUNTS USED TO PROVIDE BENEFITS TO THE BENEFICIARY, IF THE 472
CONTRACT IS TERMINATED FOR ANY OF THE REASONS SET FORTH IN
DIVISION (A)(1) OR (A)(3) OF THIS SECTION. 474
(2) IF A VARIABLE COLLEGE SAVINGS PROGRAM CONTRACT IS 476
TERMINATED FOR ANY REASON OTHER THAN THOSE SET FORTH IN DIVISION 477
(A)(1) OR (A)(3) OF THIS SECTION, THE CONTRIBUTOR MAY RECEIVE A 479
REFUND OF THE PRINCIPAL CONTRIBUTED, PLUS ACTUAL INVESTMENT 480
EARNINGS OR MINUS ACTUAL INVESTMENT LOSSES, LESS ANY 481
ADMINISTRATIVE FEES, LESS ANY AMOUNTS USED TO PROVIDE BENEFITS TO 483
THE BENEFICIARY FUNDS, AND LESS A PENALTY OF TEN PER CENT OF THE 484
EARNINGS OF THE ACCOUNT. EARNINGS SHALL BE CALCULATED AS THE 485
TOTAL VALUE OF THE CONTRACT LESS THE AGGREGATE CONTRIBUTIONS, OR 486
12
IN SUCH OTHER MANNER AS PRESCRIBED BY THE INTERNAL REVENUE CODE. 487
Sec. 3334.12. Notwithstanding anything to the contrary in 496
sections 3334.07 and 3334.09 of the Revised Code: 497
(A) Annually, the Ohio tuition trust authority shall have 499
the actuarial soundness of the Ohio tuition trust fund evaluated 500
by a nationally recognized actuary and shall determine whether 501
additional assets are necessary to defray the obligations of the 502
authority. If, after the authority sets the price for tuition 503
credits, circumstances arise that the executive director 505
determines necessitate an additional evaluation of the actuarial 506
soundness of the fund, the executive director shall have a 508
nationally recognized actuary conduct the necessary evaluation. 509
If the assets of the fund are insufficient to ensure the 510
actuarial soundness of the fund, the authority shall adjust the 511
price of subsequent purchases of tuition credits.
(B) Upon termination of the program or liquidation of the 513
Ohio tuition trust fund, the Ohio tuition trust reserve fund, and 514
the Ohio tuition trust operating fund, any remaining assets of 515
the funds after all obligations of the funds have been satisfied 516
pursuant to division (B) of section 3334.11 of the Revised Code 517
shall be transferred to the general revenue fund of the state. 518
(C) The authority shall prepare and cause to have audited 520
an annual financial report on all financial activity of the Ohio 521
tuition trust authority within ninety days of the end of the 522
fiscal year. The authority shall transmit a copy of the audited 523
financial report to the governor, the president of the senate, 524
the speaker of the house of representatives, and the minority 525
leaders of the senate and the house of representatives. Copies 526
of the audited financial report also shall be made available, 527
upon request, to the persons entering into contracts with the 528
authority and to prospective purchasers of tuition credits AND 529
PROSPECTIVE CONTRIBUTORS TO VARIABLE COLLEGE SAVINGS PROGRAM 530
ACCOUNTS.
Sec. 3334.15. The right of a person to a tuition credit or 539
13
a payment under section 3334.09 of the Revised Code pursuant to a 540
tuition credit contract or scholarship program, OR MONEY PAID 541
INTO OR OUT OF A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT THAT 542
HAS NOT BEEN TERMINATED, shall not be subject to execution, 543
garnishment, attachment, the operation of bankruptcy or the 544
insolvency laws, or other process of law. 545
Sec. 3334.18. (A) A VARIABLE COLLEGE SAVINGS PROGRAM 547
ESTABLISHED BY THE OHIO TUITION TRUST AUTHORITY SHALL INCLUDE 548
PROVISIONS FOR A CONTRACT TO BE ENTERED INTO BETWEEN A 549
CONTRIBUTOR AND THE AUTHORITY THAT WILL AUTHORIZE THE CONTRIBUTOR 550
TO OPEN ACCOUNTS FOR ONE OR MORE BENEFICIARIES AND MAY AUTHORIZE 551
THE CONTRIBUTOR TO SUBSTITUTE A NEW BENEFICIARY FOR ONE 552
ORIGINALLY NAMED IN THE CONTRACT. 553
(B) THE AUTHORITY SHALL ENSURE, AS FAR AS PRACTICABLE, 555
THAT TOTAL CONTRIBUTIONS MADE TO VARIABLE COLLEGE SAVINGS PROGRAM 556
ACCOUNTS ON BEHALF OF A BENEFICIARY DO NOT EXCEED THE AMOUNT 558
NECESSARY TO PROVIDE FOR THE TUITION AND OTHER HIGHER EDUCATION 559
EXPENSES OF THE BENEFICIARY. 560
(C) PARTICIPATION IN THE VARIABLE COLLEGE SAVINGS PROGRAM 562
DOES NOT GUARANTEE THAT CONTRIBUTIONS AND THE INVESTMENT RETURN 563
ON CONTRIBUTIONS, IF ANY, WILL BE ADEQUATE TO COVER FUTURE 565
TUITION AND OTHER HIGHER EDUCATION EXPENSES OR THAT A BENEFICIARY 566
WILL BE ADMITTED TO OR PERMITTED TO CONTINUE TO ATTEND AN 567
INSTITUTION OF HIGHER EDUCATION. THE STATE SHALL HAVE NO DEBT OR 568
OBLIGATION TO ANY CONTRIBUTOR, BENEFICIARY, OR ANY OTHER PERSON 569
AS A RESULT OF THE ESTABLISHMENT OF THE PROGRAM. 570
Sec. 3334.19. (A) IF THE OHIO TUITION TRUST AUTHORITY 572
ESTABLISHES A VARIABLE COLLEGE SAVINGS PROGRAM, IT SHALL ADOPT AN 573
INVESTMENT PLAN THAT SETS FORTH INVESTMENT POLICIES AND 574
GUIDELINES TO BE UTILIZED IN ADMINISTERING THE PROGRAM. THE 575
AUTHORITY MAY CONTRACT WITH ONE OR MORE INSURANCE COMPANIES, 576
BANKS, OR OTHER FINANCIAL INSTITUTIONS TO ACT AS ITS INVESTMENT 577
AGENTS AND TO PROVIDE SUCH SERVICES AS THE AUTHORITY CONSIDERS 578
APPROPRIATE TO THE INVESTMENT PLAN, INCLUDING: 579
14
(1) THE PURCHASE, CONTROL, AND SAFEKEEPING OF ASSETS; 581
(2) RECORD KEEPING AND ACCOUNTING FOR INDIVIDUAL ACCOUNTS 583
AND FOR THE PROGRAM AS A WHOLE; 584
(3) PREPARATION OF CONSOLIDATED BILLINGS AND STATEMENTS OF 586
ACCOUNT. 587
(B) THE AUTHORITY OR ITS INVESTMENT AGENTS SHALL MAINTAIN 589
A SEPARATE ACCOUNT FOR EACH BENEFICIARY OF A VARIABLE COLLEGE 590
SAVINGS PROGRAM ACCOUNT. IF A BENEFICIARY HAS MORE THAN ONE SUCH 591
ACCOUNT, THE AUTHORITY OR ITS AGENTS SHALL TRACK TOTAL 592
CONTRIBUTIONS AND EARNINGS AND PROVIDE A CONSOLIDATED SYSTEM OF 593
ACCOUNT DISTRIBUTIONS TO INSTITUTIONS OF HIGHER EDUCATION. 594
(C) THE AUTHORITY OR ITS AGENTS MAY PLACE ASSETS OF THE 596
PROGRAM IN SAVINGS ACCOUNTS AND MAY PURCHASE FIXED OR VARIABLE 597
LIFE INSURANCE OR ANNUITY CONTRACTS, SECURITIES, EVIDENCE OF 599
INDEBTEDNESS, OR OTHER INVESTMENT PRODUCTS PURSUANT TO THE 600
INVESTMENT PLAN.
(D) CONTRIBUTORS MAY NOT INVEST DIRECTLY UNDER THE 602
INVESTMENT PLAN. 603
(E) IF THE AUTHORITY DOES NOT CONTRACT WITH AN INVESTMENT 605
AGENT TO INVEST VARIABLE COLLEGE SAVINGS PROGRAM FUNDS, THE 606
AUTHORITY SHALL BE THE TRUSTEE OF THE PROGRAM. IN SUCH EVENT, 608
THE AUTHORITY SHALL RECEIVE AND HOLD ALL PAYMENTS, DEPOSITS, AND 609
CONTRIBUTIONS, AS WELL AS GIFTS, BEQUESTS, ENDOWMENTS, AND 610
FEDERAL, STATE, OR LOCAL GRANTS AND ANY FUNDS FROM ANY OTHER 611
SOURCE, PUBLIC OR PRIVATE, AND ALL EARNINGS, UNTIL DISBURSED TO 612
PAY TUITION OR OTHER HIGHER EDUCATION EXPENSES OR REFUNDS 613
PURSUANT TO COLLEGE SAVINGS PLANS CONTRACTS. THE AUTHORITY SHALL 614
KEEP SUCH FUNDS SEGREGATED FROM ALL OTHER ASSETS OF THE 615
AUTHORITY.
(F) THE AUTHORITY AND ANY INVESTMENT AGENTS WITH WHICH IT 617
CONTRACTS SHALL DISCHARGE THEIR DUTIES WITH RESPECT TO PROGRAM 618
FUNDS WITH THE CARE AND DILIGENCE THAT A PRUDENT PERSON FAMILIAR 620
WITH SUCH MATTERS AND WITH THE CHARACTER AND AIMS OF THE PROGRAM 621
WOULD USE.
15
(G) THE ASSETS OF THE PROGRAM SHALL BE PRESERVED, 623
INVESTED, AND EXPENDED SOLELY FOR THE PURPOSES OF THIS CHAPTER 624
AND SHALL NOT BE LOANED OR OTHERWISE TRANSFERRED OR USED BY THE 626
STATE FOR ANY OTHER PURPOSE. THIS SECTION SHALL NOT BE CONSTRUED
TO PROHIBIT THE AUTHORITY OR ITS INVESTMENT AGENTS FROM 628
INVESTING, BY PURCHASE OR OTHERWISE, IN BONDS, NOTES, OR OTHER 629
OBLIGATIONS OF THE STATE OR ANY AGENCY OR INSTRUMENTALITY OF THE 630
STATE. UNLESS OTHERWISE SPECIFIED BY THE AUTHORITY, ASSETS OF 631
THE PROGRAM SHALL BE EXPENDED IN THE FOLLOWING ORDER OF PRIORITY: 632
(1) TO MAKE PAYMENTS ON BEHALF OF BENEFICIARIES; 634
(2) TO MAKE REFUNDS UPON TERMINATION OF VARIABLE COLLEGE 636
SAVINGS PROGRAM CONTRACTS; 637
(3) TO PAY THE COSTS OF PROGRAM ADMINISTRATION AND 639
OPERATIONS.
(H) NO RECORDS OF THE AUTHORITY INDICATING THE IDENTITY OF 641
CONTRIBUTORS AND BENEFICIARIES UNDER THE PROGRAM OR AMOUNTS 642
CONTRIBUTED TO, EARNED BY, OR DISTRIBUTED FROM PROGRAM ACCOUNTS 643
ARE PUBLIC RECORDS WITHIN THE MEANING OF SECTION 149.43 OF THE 644
REVISED CODE.
Sec. 3334.20. (A) THIS SECTION APPLIES ONLY IF THE OHIO 646
TUITION TRUST AUTHORITY DOES NOT CONTRACT WITH AN INVESTMENT 648
AGENT FOR THE PURPOSES SET FORTH IN SECTION 3334.19 OF THE 649
REVISED CODE. 650
(B) THE ASSETS OF THE AUTHORITY RECEIVED UNDER THE 652
VARIABLE COLLEGE SAVINGS PROGRAM SHALL BE PLACED IN A FUND, WHICH 653
IS HEREBY CREATED AND SHALL BE KNOWN AS THE VARIABLE COLLEGE 655
SAVINGS PROGRAM FUND. THE FUND SHALL BE IN THE CUSTODY OF THE 656
TREASURER OF STATE, BUT SHALL NOT BE PART OF THE STATE TREASURY. 657
ALL SUCH ASSETS AND THE INTEREST AND INVESTMENT INCOME EARNED BY 658
THE FUND, AND ALL OTHER RECEIPTS OF THE AUTHORITY FROM ANY OTHER 659
SOURCE THAT THE AUTHORITY DETERMINES APPROPRIATE, SHALL BE 660
DEPOSITED IN THE FUND. NO CONTRIBUTOR OR BENEFICIARY UNDER THE 661
VARIABLE COLLEGE SAVINGS PROGRAM SHALL HAVE ANY CLAIM AGAINST THE 662
FUNDS OF ANY STATE INSTITUTION OF HIGHER EDUCATION. ALL 663
16
INVESTMENT FEES AND OTHER COSTS INCURRED IN CONNECTION WITH THE 664
EXERCISE OF THE INVESTMENT POWERS OF THE AUTHORITY PURSUANT TO
DIVISIONS (D) AND (E) OF THIS SECTION SHALL BE PAID FROM THE 665
ASSETS OF THE FUND. 666
(C)(1) EXCEPT AS MAY BE PROVIDED IN AN AGREEMENT UNDER 668
DIVISION (A)(19) OF SECTION 3334.08 OF THE REVISED CODE, ALL 669
DISBURSEMENTS FROM THE FUND SHALL BE MADE BY THE TREASURER OF 671
STATE ON ORDER OF A DESIGNEE OF THE AUTHORITY. 672
(2) THE TREASURER OF STATE SHALL DEPOSIT ANY PORTION OF 674
THE FUND NOT NEEDED FOR IMMEDIATE USE IN THE SAME MANNER AS STATE 675
FUNDS ARE DEPOSITED. 676
(D) THE AUTHORITY IS THE TRUSTEE OF THE FUND. THE 678
AUTHORITY SHALL HAVE FULL POWER TO INVEST THE ASSETS OF THE FUND 679
AND IN EXERCISING THIS POWER SHALL BE SUBJECT TO THE LIMITATIONS 680
AND REQUIREMENTS CONTAINED IN DIVISIONS (H) TO (J) OF THIS 682
SECTION AND SECTIONS 145.112 AND 145.113 OF THE REVISED CODE. 683
THE EVIDENCES OF TITLE TO ALL INVESTMENTS SHALL BE DELIVERED TO 684
THE TREASURER OF STATE OR TO A QUALIFIED TRUSTEE DESIGNATED BY
THE TREASURER OF STATE AS PROVIDED IN SECTION 135.18 OF THE 685
REVISED CODE. 686
(E) THE PUBLIC EMPLOYEES RETIREMENT BOARD SHALL, WITH THE 688
APPROVAL OF THE AUTHORITY, EXERCISE THE INVESTMENT POWERS OF THE 689
AUTHORITY AS SET FORTH IN DIVISION (D) OF THIS SECTION UNTIL THE 691
AUTHORITY DETERMINES THAT ASSUMPTION AND EXERCISE BY THE
AUTHORITY OF THE INVESTMENT POWERS IS FINANCIALLY AND 692
ADMINISTRATIVELY FEASIBLE. THE INVESTMENT POWERS SHALL BE 693
EXERCISED BY THE PUBLIC EMPLOYEES RETIREMENT BOARD IN A MANNER 694
AGREED UPON BY THE AUTHORITY THAT MAXIMIZES THE RETURN ON 695
INVESTMENT AND MINIMIZES THE ADMINISTRATIVE EXPENSES. 696
(F) IN JANUARY OF EACH YEAR THE AUTHORITY SHALL REPORT TO 699
EACH PERSON WHO RECEIVED ANY PAYMENTS OR REFUNDS FROM THE
AUTHORITY DURING THE PRECEDING YEAR INFORMATION RELATIVE TO THE 700
VALUE OF THE PAYMENTS OR REFUNDS TO ASSIST IN DETERMINING THAT 701
PERSON'S TAX LIABILITY.
17
(G) THE AUTHORITY SHALL REPORT TO THE TAX COMMISSIONER ANY 703
INFORMATION, AND AT THE TIMES, AS THE TAX COMMISSIONER REQUIRES 704
TO DETERMINE ANY TAX LIABILITY THAT A PERSON MAY HAVE INCURRED 705
DURING THE PRECEDING YEAR AS A RESULT OF HAVING RECEIVED ANY 707
PAYMENTS OR REFUNDS FROM THE AUTHORITY.
(H) TO FACILITATE INVESTMENT OF THE FUNDS, THE AUTHORITY 709
MAY ESTABLISH A PARTNERSHIP, TRUST, LIMITED LIABILITY COMPANY, 710
CORPORATION, INCLUDING A CORPORATION EXEMPT FROM TAXATION UNDER 712
THE INTERNAL REVENUE CODE, 100 STAT. 2085, 26 U.S.C. 1, AS 714
AMENDED, OR ANY OTHER LEGAL ENTITY AUTHORIZED TO TRANSACT 715
BUSINESS IN THIS STATE.
(I) IN EXERCISING ITS FIDUCIARY RESPONSIBILITY WITH 717
RESPECT TO THE INVESTMENT OF THE ASSETS OF THE FUND, IT SHALL BE 718
THE INTENT OF THE AUTHORITY TO GIVE CONSIDERATION TO INVESTMENTS 719
THAT ENHANCE THE GENERAL WELFARE OF THE STATE AND ITS CITIZENS 720
WHERE THE INVESTMENTS OFFER QUALITY, RETURN, AND SAFETY 721
COMPARABLE TO OTHER INVESTMENTS CURRENTLY AVAILABLE TO THE 722
AUTHORITY. IN FULFILLING THIS INTENT, EQUAL CONSIDERATION SHALL 723
ALSO BE GIVEN TO INVESTMENTS OTHERWISE QUALIFYING UNDER THIS 724
SECTION THAT INVOLVE MINORITY OWNED AND CONTROLLED FIRMS AND 725
FIRMS OWNED AND CONTROLLED BY WOMEN, EITHER ALONE OR IN JOINT 726
VENTURE WITH OTHER FIRMS.
THE AUTHORITY SHALL ADOPT, IN REGULAR MEETING, POLICIES, 728
OBJECTIVES, OR CRITERIA FOR THE OPERATION OF THE INVESTMENT PLAN 729
THAT INCLUDE ASSET ALLOCATION TARGETS AND RANGES, RISK FACTORS, 730
ASSET CLASS BENCHMARKS, TIME HORIZONS, TOTAL RETURN OBJECTIVES, 731
AND PERFORMANCE EVALUATION GUIDELINES. IN ADOPTING POLICIES AND 732
CRITERIA FOR THE SELECTION OF AGENTS WITH WHOM THE AUTHORITY MAY 733
CONTRACT FOR THE ADMINISTRATION OF THE ASSETS OF THE FUND, THE 734
AUTHORITY SHALL GIVE EQUAL CONSIDERATION TO MINORITY OWNED AND 735
CONTROLLED FIRMS, FIRMS OWNED AND CONTROLLED BY WOMEN, AND 736
VENTURES INVOLVING MINORITY OWNED AND CONTROLLED FIRMS AND FIRMS 737
OWNED AND CONTROLLED BY WOMEN THAT OTHERWISE MEET THE POLICIES 738
AND CRITERIA ESTABLISHED BY THE AUTHORITY. AMENDMENTS AND 739
18
ADDITIONS TO THE POLICIES AND CRITERIA SHALL BE ADOPTED IN 740
REGULAR MEETING. THE AUTHORITY SHALL PUBLISH ITS POLICIES, 741
OBJECTIVES, AND CRITERIA UNDER THIS PROVISION NO LESS OFTEN THAN 742
ANNUALLY AND SHALL MAKE COPIES AVAILABLE TO INTERESTED PARTIES. 743
WHEN REPORTING ON THE PERFORMANCE OF INVESTMENTS, THE 745
AUTHORITY SHALL COMPLY WITH THE PERFORMANCE PRESENTATION 746
STANDARDS ESTABLISHED BY THE ASSOCIATION FOR INVESTMENT 747
MANAGEMENT AND RESEARCH.
(J) ALL INVESTMENTS SHALL BE PURCHASED AT CURRENT MARKET 749
PRICES AND THE EVIDENCES OF TITLE TO THE INVESTMENTS SHALL BE 750
PLACED IN THE HANDS OF THE TREASURER OF STATE, WHO IS HEREBY 752
DESIGNATED AS CUSTODIAN THEREOF, OR IN THE HANDS OF THE TREASURER 753
OF STATE'S AUTHORIZED AGENT. THE TREASURER OF STATE OR THE AGENT 754
SHALL COLLECT THE PRINCIPAL, DIVIDENDS, DISTRIBUTIONS, AND 755
INTEREST THEREON AS THEY BECOME DUE AND PAYABLE AND PLACE THEM
WHEN SO COLLECTED INTO THE CUSTODIAL FUND. 756
THE TREASURER OF STATE SHALL PAY FOR INVESTMENTS PURCHASED 758
BY THE AUTHORITY ON RECEIPT OF WRITTEN OR ELECTRONIC INSTRUCTIONS 759
FROM THE AUTHORITY OR THE AUTHORITY'S DESIGNATED AGENT 760
AUTHORIZING THE PURCHASE AND PENDING RECEIPT OF THE EVIDENCE OF 761
TITLE OF THE INVESTMENT BY THE TREASURER OF STATE OR THE 762
TREASURER OF STATE'S AUTHORIZED AGENT. THE AUTHORITY MAY SELL 763
INVESTMENTS HELD BY THE AUTHORITY, AND THE TREASURER OF STATE OR 764
THE TREASURER OF STATE'S AUTHORIZED AGENT SHALL ACCEPT PAYMENT 765
FROM THE PURCHASER AND DELIVER EVIDENCE OF TITLE OF THE 766
INVESTMENT TO THE PURCHASER ON RECEIPT OF WRITTEN OR ELECTRONIC 767
INSTRUCTIONS FROM THE AUTHORITY OR THE AUTHORITY'S DESIGNATED 768
AGENT AUTHORIZING THE SALE, AND PENDING RECEIPT OF THE MONEYS FOR 769
THE INVESTMENTS. THE AMOUNT RECEIVED SHALL BE PLACED IN THE 770
CUSTODIAL FUND. THE AUTHORITY AND THE TREASURER OF STATE MAY 771
ENTER INTO AGREEMENTS TO ESTABLISH PROCEDURES FOR THE PURCHASE
AND SALE OF INVESTMENTS UNDER THIS DIVISION AND THE CUSTODY OF 772
THE INVESTMENTS. 773
NO PURCHASE OR SALE OF ANY INVESTMENT SHALL BE MADE UNDER 775
19
THIS SECTION EXCEPT AS AUTHORIZED BY THE AUTHORITY. 776
ANY STATEMENT OF FINANCIAL POSITION DISTRIBUTED BY THE 778
AUTHORITY SHALL INCLUDE FAIR VALUE, AS OF THE STATEMENT DATE, OF 779
ALL INVESTMENTS HELD BY THE AUTHORITY UNDER THIS SECTION. 780
Sec. 3334.21. THE VARIABLE COLLEGE SAVINGS PROGRAM MAY BE 782
TERMINATED BY STATUTE OR UPON THE DETERMINATION OF THE OHIO 783
TUITION TRUST AUTHORITY THAT THE PROGRAM IS NOT FINANCIALLY 784
FEASIBLE. UPON TERMINATION, ALL AMOUNTS HELD IN PROGRAM ACCOUNTS 785
SHALL BE RETURNED TO ACCOUNT OWNERS, TO THE EXTENT POSSIBLE, AND 786
ANY UNCLAIMED ASSETS IN THE PROGRAM SHALL BE TRANSFERRED TO THE 787
UNCLAIMED FUNDS TRUST FUND AND DISPOSED OF IN ACCORDANCE WITH 788
SECTION 169.05 OF THE REVISED CODE.
Sec. 5747.01. Except as otherwise expressly provided or 797
clearly appearing from the context, any term used in this chapter 798
has the same meaning as when used in a comparable context in the 799
Internal Revenue Code, and all other statutes of the United 800
States relating to federal income taxes. 801
As used in this chapter: 803
(A) "Adjusted gross income" or "Ohio adjusted gross 805
income" means adjusted gross income as defined and used in the 806
Internal Revenue Code, adjusted as provided in divisions (A)(1) 808
to (17) of this section:
(1) Add interest or dividends on obligations or securities 810
of any state or of any political subdivision or authority of any 811
state, other than this state and its subdivisions and 812
authorities.
(2) Add interest or dividends on obligations of any 814
authority, commission, instrumentality, territory, or possession 815
of the United States that are exempt from federal income taxes 816
but not from state income taxes. 817
(3) Deduct interest or dividends on obligations of the 819
United States and its territories and possessions or of any 820
authority, commission, or instrumentality of the United States to 821
the extent included in federal adjusted gross income but exempt 822
20
from state income taxes under the laws of the United States. 823
(4) Deduct disability and survivor's benefits to the 825
extent included in federal adjusted gross income. 826
(5) Deduct benefits under Title II of the Social Security 828
Act and tier 1 railroad retirement benefits to the extent 829
included in federal adjusted gross income under section 86 of the 830
Internal Revenue Code. 831
(6) Add, in the case of a taxpayer who is a beneficiary of 833
a trust that makes an accumulation distribution as defined in 834
section 665 of the Internal Revenue Code, the portion, if any, of 835
such distribution that does not exceed the undistributed net 836
income of the trust for the three taxable years preceding the 837
taxable year in which the distribution is made. "Undistributed 838
net income of a trust" means the taxable income of the trust 839
increased by (a)(i) the additions to adjusted gross income 840
required under division (A) of this section and (ii) the personal 841
exemptions allowed to the trust pursuant to section 642(b) of the 842
Internal Revenue Code, and decreased by (b)(i) the deductions to 843
adjusted gross income required under division (A) of this 844
section, (ii) the amount of federal income taxes attributable to 845
such income, and (iii) the amount of taxable income that has been 846
included in the adjusted gross income of a beneficiary by reason 847
of a prior accumulation distribution. Any undistributed net 848
income included in the adjusted gross income of a beneficiary 849
shall reduce the undistributed net income of the trust commencing 850
with the earliest years of the accumulation period. 851
(7) Deduct the amount of wages and salaries, if any, not 853
otherwise allowable as a deduction but that would have been 854
allowable as a deduction in computing federal adjusted gross 855
income for the taxable year, had the targeted jobs credit allowed 856
and determined under sections 38, 51, and 52 of the Internal 857
Revenue Code not been in effect. 858
(8) Deduct any interest or interest equivalent on public 860
obligations and purchase obligations to the extent included in 861
21
federal adjusted gross income. 862
(9) Add any loss or deduct any gain resulting from the 864
sale, exchange, or other disposition of public obligations to the 865
extent included in federal adjusted gross income. 866
(10) Regarding tuition credits purchased under Chapter 868
3334. of the Revised Code: 869
(a) Deduct the following: 871
(i) For credits that as of the end of the taxable year 874
have not been refunded pursuant to the termination of a tuition
payment contract under section 3334.10 of the Revised Code, the 876
amount of income related to the credits, to the extent included 877
in federal adjusted gross income;
(ii) For credits that during the taxable year have been 880
refunded pursuant to the termination of a tuition payment
contract under section 3334.10 of the Revised Code, the excess of 881
the total purchase price of the tuition credits refunded over the 882
amount of refund, to the extent the amount of the excess was not 883
deducted in determining federal adjusted gross income; 884
(b) Add the following: 886
(i) For credits that as of the end of the taxable year 889
have not been refunded pursuant to the termination of a tuition
payment contract under section 3334.10 of the Revised Code, the 890
amount of loss related to the credits, to the extent the amount 891
of the loss was deducted in determining federal adjusted gross 892
income;
(ii) For credits that during the taxable year have been 895
refunded pursuant to the termination of a tuition payment
contract under section 3334.10 of the Revised Code, the excess of 897
the amount of refund over the purchase price of each tuition 898
credit refunded, to the extent not included in federal adjusted 899
gross income.
(11) Deduct, in the case of a self-employed individual as 901
defined in section 401(c)(1) of the Internal Revenue Code and to 902
the extent not otherwise allowable as a deduction in computing 903
22
federal adjusted gross income for the taxable year, the amount 904
paid during the taxable year for insurance that constitutes 906
medical care for the taxpayer, the taxpayer's spouse, and
dependents. No deduction under division (A)(11) of this section 908
shall be allowed to any taxpayer who is eligible to participate 909
in any subsidized health plan maintained by any employer of the 910
taxpayer or of the spouse of the taxpayer. No deduction under 911
division (A)(11) of this section shall be allowed to the extent 912
that the sum of such deduction and any related deduction 913
allowable in computing federal adjusted gross income for the 914
taxable year exceeds the taxpayer's earned income, within the 915
meaning of section 401(c) of the Internal Revenue Code, derived 916
by the taxpayer from the trade or business with respect to which 917
the plan providing the medical coverage is established. 918
(12) Deduct any amount included in federal adjusted gross 920
income solely because the amount represents a reimbursement or 921
refund of expenses that in a previous year the taxpayer had 922
deducted as an itemized deduction pursuant to section 63 of the 923
Internal Revenue Code and applicable United States department of 925
the treasury regulations.
(13) Deduct any portion of the deduction described in 927
section 1341(a)(2) of the Internal Revenue Code, for repaying 928
previously reported income received under a claim of right, that 929
meets both of the following requirements: 930
(a) It is allowable for repayment of an item that was 932
included in the taxpayer's adjusted gross income for a prior 933
taxable year and did not qualify for a credit under division (A) 934
or (B) of section 5747.05 of the Revised Code for that year; 935
(b) It does not otherwise reduce the taxpayer's adjusted 937
gross income for the current or any other taxable year. 938
(14) Deduct an amount equal to the deposits made to, and 940
net investment earnings of, a medical savings account during the 941
taxable year, in accordance with section 3924.66 of the Revised 942
Code. The deduction allowed by division (A)(14) of this section 943
23
does not apply to medical savings account deposits and earnings 944
otherwise deducted or excluded for the current or any other 945
taxable year from the taxpayer's federal adjusted gross income. 946
(15)(a) Add an amount equal to the funds withdrawn from a 948
medical savings account during the taxable year, and the net 949
investment earnings on those funds, when the funds withdrawn were 950
used for any purpose other than to reimburse an account holder 951
for, or to pay, eligible medical expenses, in accordance with 952
section 3924.66 of the Revised Code;
(b) Add the amounts distributed from a medical savings 954
account under division (A)(2) of section 3924.68 of the Revised 955
Code during the taxable year. 956
(16) Add any amount claimed as a credit under section 958
5747.059 of the Revised Code to the extent that such amount 959
satisfies either of the following:
(a) The amount was deducted or excluded from the 961
computation of the taxpayer's federal adjusted gross income as 962
required to be reported for the taxpayer's taxable year under the 963
Internal Revenue Code;
(b) The amount resulted in a reduction of the taxpayer's 965
federal adjusted gross income as required to be reported for any 966
of the taxpayer's taxable years under the Internal Revenue Code. 967
(17) Deduct the amount contributed by the taxpayer to an 969
individual development account program established by a county 970
department of human services pursuant to sections 329.11 to 971
329.14 of the Revised Code for the purpose of matching funds 972
deposited by program participants. On request of the tax 973
commissioner, the taxpayer shall provide any information that, in
the tax commissioner's opinion, is necessary to establish the 974
amount deducted under division (A)(17) of this section. 975
(18) DEDUCT CONTRIBUTIONS TO VARIABLE COLLEGE SAVINGS 977
PROGRAM ACCOUNTS TO THE EXTENT PERMITTED UNDER DIVISION (B) OF 978
SECTION 5747.70 OF THE REVISED CODE, AND TO THE EXTENT INCLUDED 979
IN FEDERAL ADJUSTED GROSS INCOME. 980
24
(19) ADD AMOUNTS PREVIOUSLY EXEMPTED OR DEDUCTED UNDER 982
SECTION 5747.70 OF THE REVISED CODE TO THE EXTENT THAT SUCH 983
AMOUNTS CONSTITUTE DISTRIBUTIONS OR REFUNDS DURING THE TAXABLE 984
YEAR FROM VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNTS MADE FOR ANY 985
REASON OTHER THAN PAYMENT OF TUITION OR OTHER HIGHER EDUCATION
EXPENSES OR THE BENEFICIARY'S DEATH, DISABILITY, OR RECEIPT OF A 986
SCHOLARSHIP.
(B) "Business income" means income arising from 989
transactions, activities, and sources in the regular course of a 990
trade or business and includes income from tangible and 991
intangible property if the acquisition, rental, management, and 992
disposition of the property constitute integral parts of the 993
regular course of a trade or business operation. 994
(C) "Nonbusiness income" means all income other than 996
business income and may include, but is not limited to, 997
compensation, rents and royalties from real or tangible personal 998
property, capital gains, interest, dividends and distributions, 999
patent or copyright royalties, or lottery winnings, prizes, and 1,000
awards. 1,001
(D) "Compensation" means any form of remuneration paid to 1,003
an employee for personal services. 1,004
(E) "Fiduciary" means a guardian, trustee, executor, 1,006
administrator, receiver, conservator, or any other person acting 1,007
in any fiduciary capacity for any individual, trust, or estate. 1,008
(F) "Fiscal year" means an accounting period of twelve 1,010
months ending on the last day of any month other than December. 1,011
(G) "Individual" means any natural person. 1,013
(H) "Internal Revenue Code" means the "Internal Revenue 1,015
Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended. 1,016
(I) "Resident" means: 1,018
(1) An individual who is domiciled in this state, subject 1,020
to section 5747.24 of the Revised Code; 1,021
(2) The estate of a decedent who at the time of death was 1,024
domiciled in this state. The domicile tests of section 5747.24 1,025
25
of the Revised Code and any election under section 5747.25 of the 1,026
Revised Code are not controlling for purposes of division (I)(2) 1,027
of this section.
(J) "Nonresident" means an individual or estate that is 1,029
not a resident. An individual who is a resident for only part of 1,030
a taxable year is a nonresident for the remainder of that taxable 1,031
year. 1,032
(K) "Pass-through entity" has the same meaning as in 1,034
section 5733.04 of the Revised Code. 1,035
(L) "Return" means the notifications and reports required 1,037
to be filed pursuant to this chapter for the purpose of reporting 1,038
the tax due and includes declarations of estimated tax when so 1,039
required. 1,040
(M) "Taxable year" means the calendar year or the 1,042
taxpayer's fiscal year ending during the calendar year, or 1,043
fractional part thereof, upon which the adjusted gross income is 1,044
calculated pursuant to this chapter. 1,045
(N) "Taxpayer" means any person subject to the tax imposed 1,047
by section 5747.02 of the Revised Code or any pass-through entity 1,048
that makes the election under division (D) of section 5747.08 of 1,049
the Revised Code.
(O) "Dependents" means dependents as defined in the 1,051
Internal Revenue Code and as claimed in the taxpayer's federal 1,052
income tax return for the taxable year or which the taxpayer 1,053
would have been permitted to claim had the taxpayer filed a 1,054
federal income tax return. 1,056
(P) "Principal county of employment" means, in the case of 1,058
a nonresident, the county within the state in which a taxpayer 1,059
performs services for an employer or, if those services are 1,060
performed in more than one county, the county in which the major 1,061
portion of the services are performed. 1,062
(Q) As used in sections 5747.50 to 5747.55 of the Revised 1,064
Code:
(1) "Subdivision" means any county, municipal corporation, 1,066
26
park district, or township. 1,067
(2) "Essential local government purposes" includes all 1,069
functions that any subdivision is required by general law to 1,070
exercise, including like functions that are exercised under a 1,071
charter adopted pursuant to the Ohio Constitution. 1,072
(R) "Overpayment" means any amount already paid that 1,074
exceeds the figure determined to be the correct amount of the 1,075
tax. 1,076
(S) "Taxable income" applies to estates only and means 1,078
taxable income as defined and used in the Internal Revenue Code 1,079
adjusted as follows: 1,080
(1) Add interest or dividends on obligations or securities 1,082
of any state or of any political subdivision or authority of any 1,083
state, other than this state and its subdivisions and 1,084
authorities; 1,085
(2) Add interest or dividends on obligations of any 1,087
authority, commission, instrumentality, territory, or possession 1,088
of the United States that are exempt from federal income taxes 1,089
but not from state income taxes; 1,090
(3) Add the amount of personal exemption allowed to the 1,092
estate pursuant to section 642(b) of the Internal Revenue Code; 1,093
(4) Deduct interest or dividends on obligations of the 1,095
United States and its territories and possessions or of any 1,096
authority, commission, or instrumentality of the United States 1,097
that are exempt from state taxes under the laws of the United 1,098
States; 1,099
(5) Deduct the amount of wages and salaries, if any, not 1,101
otherwise allowable as a deduction but that would have been 1,102
allowable as a deduction in computing federal taxable income for 1,103
the taxable year, had the targeted jobs credit allowed under 1,104
sections 38, 51, and 52 of the Internal Revenue Code not been in 1,105
effect; 1,106
(6) Deduct any interest or interest equivalent on public 1,108
obligations and purchase obligations to the extent included in 1,109
27
federal taxable income; 1,110
(7) Add any loss or deduct any gain resulting from sale, 1,112
exchange, or other disposition of public obligations to the 1,113
extent included in federal taxable income; 1,114
(8) Except in the case of the final return of an estate, 1,116
add any amount deducted by the taxpayer on both its Ohio estate 1,117
tax return pursuant to section 5731.14 of the Revised Code, and 1,118
on its federal income tax return in determining either federal 1,119
adjusted gross income or federal taxable income; 1,120
(9) Deduct any amount included in federal taxable income 1,122
solely because the amount represents a reimbursement or refund of 1,123
expenses that in a previous year the decedent had deducted as an 1,124
itemized deduction pursuant to section 63 of the Internal Revenue 1,125
Code and applicable treasury regulations; 1,126
(10) Deduct any portion of the deduction described in 1,128
section 1341(a)(2) of the Internal Revenue Code, for repaying 1,129
previously reported income received under a claim of right, that 1,130
meets both of the following requirements: 1,131
(a) It is allowable for repayment of an item that was 1,133
included in the taxpayer's taxable income or the decedent's 1,134
adjusted gross income for a prior taxable year and did not 1,135
qualify for a credit under division (A) or (B) of section 5747.05 1,136
of the Revised Code for that year. 1,137
(b) It does not otherwise reduce the taxpayer's taxable 1,139
income or the decedent's adjusted gross income for the current or 1,140
any other taxable year. 1,141
(11) Add any amount claimed as a credit under section 1,143
5747.059 of the Revised Code to the extent that the amount 1,144
satisfies either of the following: 1,145
(a) The amount was deducted or excluded from the 1,147
computation of the taxpayer's federal taxable income as required 1,148
to be reported for the taxpayer's taxable year under the Internal 1,149
Revenue Code;
(b) The amount resulted in a reduction in the taxpayer's 1,151
28
federal taxable income as required to be reported for any of the 1,152
taxpayer's taxable years under the Internal Revenue Code. 1,153
(T) "School district income" and "school district income 1,155
tax" have the same meanings as in section 5748.01 of the Revised 1,156
Code. 1,157
(U) As used in divisions (A)(8), (A)(9), (S)(6), and 1,159
(S)(7) of this section, "public obligations," "purchase 1,160
obligations," and "interest or interest equivalent" have the same 1,161
meanings as in section 5709.76 of the Revised Code. 1,162
(V) "Limited liability company" means any limited 1,164
liability company formed under Chapter 1705. of the Revised Code 1,165
or under the laws of any other state. 1,166
(W) "Pass-through entity investor" means any person who, 1,168
during any portion of a taxable year of a pass-through entity, is 1,169
a partner, member, shareholder, or investor in that pass-through 1,170
entity.
(X) "Banking day" has the same meaning as in section 1,172
1304.01 of the Revised Code. 1,173
(Y) "Month" means a calendar month. 1,175
(Z) "Quarter" means the first three months, the second 1,177
three months, the third three months, or the last three months of 1,178
the taxpayer's taxable year.
(AA) Any term used in this chapter that is not otherwise 1,180
defined in this section and that is not used in a comparable 1,181
context in the Internal Revenue Code and other statutes of the 1,182
United States relating to federal income taxes has the same 1,183
meaning as in section 5733.40 of the Revised Code. 1,184
Sec. 5747.70. (A) EARNINGS ON CONTRIBUTIONS MADE TO A 1,186
VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT ESTABLISHED UNDER 1,187
CHAPTER 3334. OF THE REVISED CODE ARE EXEMPT FROM OHIO STATE 1,188
INCOME TAXATION.
(B) IN COMPUTING OHIO ADJUSTED GROSS INCOME, A DEDUCTION 1,190
FROM FEDERAL ADJUSTED GROSS INCOME IS ALLOWED TO A CONTRIBUTOR 1,191
FOR THE AMOUNT CONTRIBUTED DURING THE TAXABLE YEAR TO A VARIABLE 1,192
29
COLLEGE SAVINGS PROGRAM ACCOUNT AND TO A PURCHASER OF TUITION 1,193
CREDITS UNDER THE OHIO COLLEGE SAVINGS PROGRAM CREATED BY CHAPTER 1,194
3334. OF THE REVISED CODE IF THE AMOUNTS OF SUCH CONTRIBUTIONS 1,196
AND PURCHASES ARE NOT DEDUCTED ON THE CONTRIBUTOR'S FEDERAL
INCOME TAX RETURN. THE COMBINED AMOUNT OF CONTRIBUTIONS AND 1,198
PURCHASES DEDUCTED ON ANY INDIVIDUAL INCOME TAX RETURN IN ANY 1,200
TAXABLE YEAR IS LIMITED TO TWO THOUSAND DOLLARS FOR EACH
BENEFICIARY FOR WHOM CONTRIBUTIONS OR PURCHASES ARE MADE. THE 1,201
DEDUCTION ALLOWED UNDER THIS SECTION IS NOT TRANSFERABLE. IF THE 1,203
COMBINED ANNUAL CONTRIBUTIONS AND PURCHASES FOR A BENEFICIARY 1,204
EXCEED TWO THOUSAND DOLLARS, THE EXCESS MAY BE CARRIED FORWARD 1,205
AND SUBTRACTED IN FUTURE TAXABLE YEARS UNTIL THE CONTRIBUTIONS 1,206
AND PURCHASES HAVE BEEN FULLY DEDUCTED. 1,208
(C) AMOUNTS EXEMPTED OR DEDUCTED UNDER THIS SECTION SHALL 1,210
BE TAXED IN THE TAXABLE YEARS IN WHICH DISTRIBUTIONS OR REFUNDS 1,211
ARE MADE FOR ANY REASON OTHER THAN PAYMENT OF TUITION OR OTHER 1,212
HIGHER EDUCATION EXPENSES OR THE BENEFICIARY'S DEATH, DISABILITY, 1,213
OR RECEIPT OF A SCHOLARSHIP.
Section 2. That existing sections 3334.01, 3334.02, 1,215
3334.08, 3334.10, 3334.12, 3334.15, and 5747.01 of the Revised 1,216
Code are hereby repealed. 1,217