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|
As Introduced
123rd General Assembly
Regular Session
1999-2000 | S. B. No. 161 |
SENATOR GARDNER
A BILL
To amend sections 3334.01, 3334.02, 3334.08, 3334.10, 3334.12,
3334.15, and 5747.01 and to enact sections 3334.18, 3334.19,
3334.20, 3334.21, and 5747.70 of the Revised Code to authorize the
Ohio tuition trust authority to establish a variable college
savings program.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 3334.01, 3334.02, 3334.08, 3334.10,
3334.12, 3334.15, and 5747.01 be amended and sections 3334.18, 3334.19,
3334.20, 3334.21, and 5747.70 of the Revised Code be enacted to read
as follows:
Sec. 3334.01. As used in this chapter:
(A) "Aggregate original principal amount" means the
aggregate of the initial offering prices to the public of college
savings bonds, exclusive of accrued interest, if any. "Aggregate
original principal amount" does not mean the aggregate accreted
amount payable at maturity or redemption of such bonds.
(B) "Beneficiary" means an:
(1) AN individual designated by the purchaser under a
tuition payment contract or through a scholarship program
as the individual on whose behalf tuition credits purchased
under the contract or awarded through the scholarship program will be applied
toward the payment of undergraduate, graduate, or professional tuition;
OR
(2) AN INDIVIDUAL DESIGNATED BY THE CONTRIBUTOR UNDER A VARIABLE
COLLEGE SAVINGS PROGRAM CONTRACT AS THE INDIVIDUAL WHOSE TUITION AND OTHER
HIGHER EDUCATION EXPENSES WILL BE PAID FROM A VARIABLE COLLEGE SAVINGS PROGRAM
ACCOUNT.
(C) "Capital appreciation bond" means a bond for which the following is true:
(1) The principal amount is less than the amount payable
at maturity or early redemption; and
(2) No interest is payable on a current basis.
(D) "Tuition credit" means a credit of the Ohio tuition trust authority
purchased under section 3334.09 of the Revised Code.
(E) "College savings bonds" means revenue and other
obligations issued on behalf of the state or any agency or
issuing authority thereof as a zero-coupon or capital
appreciation bond, and designated as college savings bonds as
provided in this chapter. "College savings bond issue" means any
issue of bonds of which any part has been designated as college
savings bonds.
(F) "Institution of higher education" means a state
institution of higher education, a private college,
university, or other postsecondary institution located in this state that
possesses a certificate of authorization issued by the Ohio board of regents
pursuant to Chapter 1713. of the Revised Code or a certificate of registration
issued by the state board of proprietary school registration under Chapter
3332. of the Revised Code, or an accredited college,
university, or other postsecondary institution located outside this state that
is accredited by an
accrediting organization or professional association recognized
by the authority. To be considered an institution of higher education, an
institution shall meet the definition of an eligible educational institution
under section 529 of the Internal Revenue Code.
(G) "Issuing authority" means any authority, commission,
body, agency, or individual empowered by the Ohio
Constitution or the Revised Code to issue bonds or any other debt obligation
of the state or any agency or department thereof. "Issuer" means
the issuing authority or, if so designated under division (B) of
section 3334.04 of the Revised Code, the treasurer of state.
(H) "Tuition" means the charges imposed to attend an
institution of higher education as an undergraduate, graduate, or professional
student and all fees required as a condition of enrollment, as determined by
the Ohio tuition trust authority. "Tuition" does not include fees charged
to out-of-state residents by state institutions of higher
education, laboratory fees, room and board, or other similar fees
and charges.
(I) "Weighted average tuition" means the tuition cost resulting from the
following calculation:
(1) Add the products of the annual undergraduate tuition
at each four-year state university multiplied by that
institution's total number of undergraduate fiscal year equated
students; and
(2) Divide the gross total of the products from division
(J)(I)(1) of this section by the total number of undergraduate
fiscal year equated students attending four-year state
universities.
(J) "Zero-coupon bond" means a bond which has a stated
interest rate of zero per cent and on which no interest is
payable until the maturity or early redemption of the bond, and
is offered at a substantial discount from its original stated
principal amount.
(K) "State institution of higher education" includes the
state universities listed in section 3345.011 of the Revised
Code, community colleges created pursuant to Chapter 3354. of the
Revised Code, university branches created pursuant to Chapter
3355. of the Revised Code, technical colleges created pursuant to
Chapter 3357. of the Revised Code, state community colleges
created pursuant to Chapter 3358. of the Revised Code, the medical college of
Ohio at Toledo, and the northeastern Ohio universities college of medicine.
(L) "Four-year state university" means those state
universities listed in section 3345.011 of the Revised Code.
(M) "Principal amount" refers to the initial offering
price to the public of an obligation, exclusive of the accrued
interest, if any. "Principal amount" does not refer to the
aggregate accreted amount payable at maturity or redemption of an
obligation.
(N) "Scholarship program" means a program registered with the Ohio tuition
trust authority pursuant to section 3334.18 3334.17 of the
Revised Code.
(O) "Internal Revenue Code" means the
"Internal Revenue Code of 1986," 100 Stat.
2085, 26 U.S.C.A. 1 et seq., as amended.
(P) "Other higher education expenses" means
room and board and books, supplies, equipment, and
nontuition-related fees associated with the cost of attendance
of a beneficiary at an institution of higher education, but only
to the extent that such expenses meet the definition of
"qualified higher education expenses" under section 529 of the
Internal Revenue Code. "Other higher education
expenses" does not include tuition as defined in division
(H) of this section.
(Q) "Purchaser" means
the person signing the tuition payment contract, who controls
the account and acquires tuition credits for an account under
the terms and conditions of the contract.
(R) "CONTRIBUTOR" MEANS A PERSON WHO SIGNS A VARIABLE COLLEGE
SAVINGS PROGRAM CONTRACT WITH THE OHIO TUITION TRUST AUTHORITY AND
CONTRIBUTES TO AND OWNS THE ACCOUNT CREATED UNDER THE CONTRACT.
Sec. 3334.02. (A) In order to help make higher education
affordable and accessible to all citizens of Ohio, to maintain
state institutions of higher education by helping to provide a
stable financial base to these institutions, to provide the
citizens of Ohio with financing assistance for higher education
and protection against rising tuition costs, to encourage saving
to enhance the ability of citizens of Ohio to obtain financial
access to institutions of higher education, to encourage
elementary and secondary students in this state to achieve
academic excellence, and to promote a well-educated and
financially secure population to the ultimate benefit of all
citizens of the state of Ohio, there is hereby created the Ohio
college savings program. The program shall consist of the
issuance of college savings bonds and the sale of tuition credits
and, if offered, supplemental credits.
(B) The provisions of Chapter 1707. of the Revised Code
shall not apply to tuition credits
or any agreement or transaction related thereto.
(C) TO PROVIDE THE CITIZENS OF OHIO WITH A CHOICE OF
TAX-ADVANTAGED COLLEGE SAVINGS PROGRAMS AND THE OPPORTUNITY TO PARTICIPATE IN
MORE THAN ONE TYPE OF
COLLEGE SAVINGS PROGRAM AT A TIME, THE OHIO TUITION TRUST
AUTHORITY MAY ESTABLISH AND ADMINISTER A VARIABLE COLLEGE SAVINGS PROGRAM
AS A QUALIFIED STATE TUITION PROGRAM UNDER SECTION 529 OF THE
INTERNAL REVENUE CODE. THE PROGRAM, IF
ESTABLISHED, SHALL
ALLOW CONTRIBUTORS TO MAKE CASH CONTRIBUTIONS TO VARIABLE COLLEGE SAVINGS
PROGRAM ACCOUNTS CREATED FOR THE PURPOSE OF PAYING FUTURE TUITION AND OTHER
HIGHER EDUCATION EXPENSES AND PROVIDING VARIABLE RATES OF RETURN
ON CONTRIBUTIONS.
(D) IF A VARIABLE COLLEGE SAVINGS PROGRAM IS ESTABLISHED, A
PERSON MAY PARTICIPATE SIMULTANEOUSLY IN BOTH THE OHIO COLLEGE
SAVINGS PROGRAM AND THE VARIABLE COLLEGE SAVINGS PROGRAM.
Sec. 3334.08. (A) In addition to any other powers
conferred by this chapter, the Ohio tuition trust authority may
do any of the following:
(1) Impose reasonable residency requirements for
beneficiaries of tuition credits;
(2) Impose reasonable limits on the number of tuition
credit participants;
(3) Impose and collect administrative fees and charges in
connection with any transaction under this chapter;
(4) Purchase insurance from insurers licensed to do
business in this state providing for coverage against any loss in
connection with the authority's property, assets, or activities
or to further ensure the value of tuition credits;
(5) Indemnify or purchase policies of insurance on behalf
of members, officers, and employees of the authority from
insurers licensed to do business in this state providing for
coverage for any liability incurred in connection with any civil
action, demand, or claim against a director, officer, or employee
by reason of an act or omission by the director, officer, or
employee that was not manifestly outside the scope of the
employment or official duties of the director, officer, or employee or
with malicious purpose, in bad
faith, or in a wanton or reckless manner;
(6) Make, execute, and deliver contracts, conveyances, and
other instruments necessary to the exercise and discharge of the
powers and duties of the authority;
(7) Promote, advertise, and publicize the college savings
program AND THE VARIABLE COLLEGE SAVINGS PROGRAM;
(8) Adopt rules under section 111.15 of the Revised Code
for the implementation of the college savings program AND THE VARIABLE
COLLEGE SAVINGS PROGRAM;
(9) Contract, for the provision of all or part of the
services necessary for the management and operation of the
college savings program AND THE VARIABLE COLLEGE SAVINGS PROGRAM, with
a bank, trust company, savings and
loan association, insurance company, or licensed dealer in
securities if the bank, company, association, or dealer is
authorized to do business in this state and information about the
contract is filed with the controlling board pursuant to division
(D)(6) of section 127.16 of the Revised Code;
(10) Contract for other services, or for goods, needed by
the authority in the conduct of its business, including but not
limited to credit card services;
(11) Employ an executive director and other personnel as
necessary to carry out its responsibilities under this chapter,
and fix the compensation of these persons. All employees of the
authority shall be in the unclassified civil service and shall be
eligible for membership in the public employees retirement
system.
(12) Contract with financial consultants, actuaries,
auditors, and other consultants as necessary to carry out its
responsibilities under this chapter;
(13) Enter into agreements with any agency of the state or
its political subdivisions or with private employers under which
an employee may agree to have a designated amount deducted in
each payroll period from the wages or salary due the employee for
the purpose of purchasing tuition credits pursuant to a tuition
payment contract OR MAKING CONTRIBUTIONS PURSUANT TO A VARIABLE COLLEGE
SAVINGS PROGRAM CONTRACT;
(14) Enter into an agreement with the treasurer of state
under which the treasurer of state will receive, and credit to
the Ohio tuition trust fund OR VARIABLE COLLEGE SAVINGS PROGRAM FUND,
from any bank or savings and loan
association authorized to do business in this state, amounts that
a depositor of the bank or association authorizes the bank or
association to withdraw periodically from the depositor's account
for the
purpose of purchasing tuition credits pursuant to a tuition
payment contract OR MAKING CONTRIBUTIONS PURSUANT TO A VARIABLE COLLEGE
SAVINGS PROGRAM CONTRACT;
(15) Solicit and accept gifts, grants, and loans from any
person or governmental agency and participate in any governmental
program;
(16) Impose limits
on the number of credits which may be
purchased on behalf of or assigned or awarded to any beneficiary AND ON THE
TOTAL AMOUNT OF CONTRIBUTIONS THAT MAY BE MADE ON BEHALF OF A BENEFICIARY;
(17) Impose restrictions on the substitution of another
individual for the original beneficiary;
(18) Impose a limit on the age of a beneficiary, above
which tuition credits may not be purchased OR CONTRIBUTIONS MADE on
behalf of that
beneficiary;
(19) Enter into a cooperative agreement with the treasurer
of state to provide for the direct disbursement of payments under
tuition payment OR VARIABLE COLLEGE SAVINGS PROGRAM contracts;
(20) Determine the other higher education expenses for which
tuition credits OR CONTRIBUTIONS may be used;
(21) Terminate any prepaid tuition OR VARIABLE COLLEGE SAVINGS PROGRAM
contract if no
purchases OR CONTRIBUTIONS are made for a period of three years or more
and there
are fewer than a total of five tuition units or tuition credits OR LESS
THAN A DOLLAR AMOUNT SET BY RULE
on account, provided that notice of a possible termination shall
be provided in advance, explaining any options to prevent
termination, and a reasonable amount of time shall be provided
within which to act to prevent a termination;
(22) Perform all acts necessary and proper to carry out
the duties and responsibilities of the authority pursuant to this
chapter.
(B) Except as otherwise specified in this chapter, the
provisions of Chapters 123., 125., and 4117. of the Revised Code
shall not apply to the authority. The department of
administrative services shall, upon the request of the authority,
act as the authority's agent for the purchase of equipment,
supplies, insurance, or services, or the performance of
administrative services pursuant to Chapter 125. of the Revised
Code.
Sec. 3334.10. Divisions (A) and (B) of this section do not apply to
scholarship programs established under section 3334.17 of the Revised Code.
(A) Unless otherwise provided for in the
contract, a tuition payment OR VARIABLE COLLEGE SAVINGS PROGRAM
contract may be terminated by the
purchaser OR CONTRIBUTOR under any of
the following circumstances upon the written request of the purchaser OR
CONTRIBUTOR to the authority:
(1) Upon the death or permanent disability of the beneficiary;
(2) Upon notification to the Ohio tuition trust authority
in writing that the beneficiary is age eighteen or older, has
decided not to attend an institution of higher education, and
requests that the tuition payment contract be terminated;
(3) Upon the beneficiary's completion of the degree requirements at
an institution of higher education;
(4) Upon the rollover of all
contributions to AMOUNTS IN a tuition credit OR VARIABLE
COLLEGE SAVINGS PROGRAM account to the prepaid tuition plan of
AN EQUIVALENT ACCOUNT IN
another state;
(5) Upon the occurrence of other circumstances determined
by the authority to be grounds for termination.
(B) The authority shall determine the method and schedule
for payment of refunds upon termination of a tuition payment
contract.
(1) In cases described by division (A)(2) or (3) of this section, the
amount of the refund shall be equal to ninety-nine
one-hundredths of NOT LESS THAN one per cent of the weighted
average tuition in the
academic year the contract REFUND is terminated
PAID, multiplied by the number of tuition
credits purchased and not used, minus any reasonable charges and fees provided
for by the authority, or such other lesser sum as shall be
determined by the authority but only to the extent that such a
lesser sum is necessary to meet the refund penalty requirements
for qualified state tuition programs under section 529 of the
Internal Revenue Code.
(2) In cases described by division (A)(1) of this section,
the amount of the refund shall be equal to the greater of the following:
(a) One per cent of the
weighted average tuition in the academic year the contract is
terminated, multiplied by the number of tuition credits purchased and not
used;
(b) The total purchase price of all tuition credits purchased for the
beneficiary and not used.
(3) In cases described by division (A)(5) of this section,
the amount of the refund shall be either of the following as
determined by the authority:
(a) The refund provided by division (B)(1) of this section;
(b) The refund provided by division (B)(2) of this
section, or such other lesser sum as shall be
determined by the authority but only to the extent that such a
lesser sum is necessary to meet the refund penalty requirements
for qualified state tuition programs under section 529 of the
Internal Revenue Code.
(C) In the case of a scholarship program, a refund of tuition credits
in the program's account may be made only for just cause with the approval of
the authority. The refund shall be paid to the entity that established
the scholarship program or, with that entity's approval, to the
authority if this is authorized by federal tax
law. The amount of any refund shall be determined by the authority
and shall meet the requirements for refunds made on
account of scholarships under section 529 of the Internal
Revenue Code.
(D) If a beneficiary is awarded a scholarship other than under a
scholarship program, a waiver of tuition, or similar subvention that the
authority
determines cannot be converted into money by the beneficiary, the
authority shall, during each academic term that the beneficiary
furnishes the authority such information about the scholarship,
waiver, or similar subvention as the authority requires, refund
to the person designated in the contract, or, in the case of a beneficiary
under a scholarship program, to the beneficiary an amount equal to the
value that the tuition credits OR CONTRIBUTIONS that are not needed on
account of
the scholarship, waiver, or similar subvention would otherwise
have to the beneficiary that term at the institution of higher education
where the beneficiary is enrolled. The authority may, at its sole
option, designate the institution of higher education at which the
beneficiary is enrolled as the agent of the authority for
purposes of refunds pursuant to this division.
(E) If, in any academic term for which tuition credits
have been used to pay all or part of a beneficiary's tuition, the
beneficiary withdraws from the institution of higher education at
which the beneficiary is enrolled prior to the end of the
academic term, a pro rata share of any refund of tuition as a
result of the withdrawal equal to that portion of the tuition
paid with tuition credits shall be made to the authority, unless
the authority designates a different procedure. The authority
shall credit any refund received, less any reasonable charges and
fees provided for by the authority, to the appropriate account established
under division (F)(1) or (2) of section 3334.11
of the Revised Code.
(F)(1) A CONTRIBUTOR UNDER A VARIABLE COLLEGE SAVINGS PROGRAM
CONTRACT MAY RECEIVE A REFUND OF THE PRINCIPAL CONTRIBUTED, PLUS ACTUAL
INVESTMENT EARNINGS OR
MINUS ACTUAL INVESTMENT LOSSES, LESS ANY ADMINISTRATIVE FEES, AND
LESS ANY AMOUNTS USED TO PROVIDE BENEFITS TO THE BENEFICIARY, IF
THE CONTRACT IS TERMINATED FOR ANY OF THE REASONS SET FORTH IN
DIVISION (A)(1) OR (A)(3) OF THIS
SECTION.
(2) IF A VARIABLE COLLEGE SAVINGS PROGRAM CONTRACT IS TERMINATED
FOR ANY REASON OTHER THAN THOSE SET FORTH IN DIVISION (A)(1)
OR (A)(3) OF THIS
SECTION, THE CONTRIBUTOR MAY RECEIVE A REFUND OF THE PRINCIPAL CONTRIBUTED,
PLUS ACTUAL INVESTMENT
EARNINGS OR MINUS ACTUAL INVESTMENT LOSSES, LESS ANY ADMINISTRATIVE FEES, LESS
ANY AMOUNTS USED TO
PROVIDE BENEFITS TO THE BENEFICIARY FUNDS, AND LESS A PENALTY OF
TEN PER CENT OF THE EARNINGS OF THE ACCOUNT. EARNINGS SHALL BE
CALCULATED AS THE TOTAL VALUE OF THE CONTRACT LESS THE AGGREGATE
CONTRIBUTIONS, OR IN SUCH OTHER MANNER AS PRESCRIBED BY THE
INTERNAL REVENUE CODE.
Sec. 3334.12. Notwithstanding anything to the contrary in
sections 3334.07 and 3334.09 of the Revised Code:
(A) Annually, the Ohio tuition trust authority shall have
the actuarial soundness of the Ohio tuition trust fund evaluated
by a nationally recognized actuary and shall determine whether
additional assets are necessary to defray the obligations of the
authority. If, after the authority sets the price for tuition credits,
circumstances
arise that the executive director determines necessitate an additional
evaluation of the actuarial soundness of the fund, the executive director
shall
have a nationally recognized actuary conduct the necessary
evaluation. If the assets of the fund are insufficient to ensure
the actuarial soundness of the fund, the authority shall adjust
the price of subsequent purchases of tuition credits.
(B) Upon termination of the program or liquidation of the
Ohio tuition trust fund, the Ohio tuition trust reserve fund, and
the Ohio tuition trust operating fund, any remaining assets of
the funds after all obligations of the funds have been satisfied
pursuant to division (B) of section 3334.11 of the Revised Code
shall be transferred to the general revenue fund of the state.
(C) The authority shall prepare and cause to have audited
an annual financial report on all financial activity of the Ohio
tuition trust authority within ninety days of the end of the
fiscal year. The authority shall transmit a copy of the audited
financial report to the governor, the president of the senate,
the speaker of the house of representatives, and the minority
leaders of the senate and the house of representatives. Copies
of the audited financial report also shall be made available,
upon request, to the persons entering into contracts with the
authority and to prospective purchasers of tuition credits AND PROSPECTIVE
CONTRIBUTORS TO VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNTS.
Sec. 3334.15. The right of a person to a tuition credit or a payment under
section 3334.09 of the Revised Code pursuant to a tuition credit contract or
scholarship program, OR MONEY PAID INTO OR OUT OF A VARIABLE COLLEGE
SAVINGS PROGRAM ACCOUNT THAT HAS NOT BEEN TERMINATED, shall not be
subject to execution, garnishment,
attachment, the operation of bankruptcy or the insolvency laws, or other
process of law.
Sec. 3334.18. (A) A VARIABLE COLLEGE SAVINGS PROGRAM
ESTABLISHED BY THE OHIO TUITION TRUST AUTHORITY SHALL INCLUDE
PROVISIONS FOR A CONTRACT TO BE ENTERED INTO BETWEEN A CONTRIBUTOR AND
THE AUTHORITY THAT WILL AUTHORIZE THE CONTRIBUTOR TO OPEN ACCOUNTS
FOR ONE OR MORE BENEFICIARIES AND MAY AUTHORIZE
THE CONTRIBUTOR TO SUBSTITUTE A NEW BENEFICIARY FOR ONE ORIGINALLY
NAMED IN THE CONTRACT.
(B) THE AUTHORITY SHALL ENSURE, AS FAR AS PRACTICABLE, THAT
TOTAL CONTRIBUTIONS MADE TO VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNTS ON
BEHALF OF A BENEFICIARY
DO NOT EXCEED THE AMOUNT NECESSARY TO PROVIDE FOR THE TUITION AND OTHER HIGHER
EDUCATION EXPENSES
OF THE BENEFICIARY.
(C) PARTICIPATION IN THE VARIABLE COLLEGE SAVINGS PROGRAM DOES
NOT GUARANTEE THAT CONTRIBUTIONS AND THE INVESTMENT RETURN ON CONTRIBUTIONS,
IF ANY, WILL BE
ADEQUATE TO COVER FUTURE TUITION AND OTHER HIGHER EDUCATION
EXPENSES OR THAT A BENEFICIARY WILL BE ADMITTED TO OR PERMITTED TO
CONTINUE TO ATTEND AN INSTITUTION OF HIGHER EDUCATION. THE STATE
SHALL HAVE NO DEBT OR OBLIGATION TO ANY CONTRIBUTOR, BENEFICIARY,
OR ANY OTHER PERSON AS A RESULT OF THE ESTABLISHMENT OF THE
PROGRAM.
Sec. 3334.19. (A) IF THE OHIO TUITION TRUST AUTHORITY
ESTABLISHES A VARIABLE COLLEGE SAVINGS PROGRAM, IT SHALL ADOPT AN INVESTMENT
PLAN THAT SETS FORTH INVESTMENT POLICIES AND GUIDELINES TO BE UTILIZED IN
ADMINISTERING THE PROGRAM. THE AUTHORITY MAY
CONTRACT WITH ONE OR MORE INSURANCE COMPANIES, BANKS, OR OTHER
FINANCIAL INSTITUTIONS TO ACT AS ITS INVESTMENT AGENTS AND TO
PROVIDE SUCH SERVICES AS THE AUTHORITY CONSIDERS APPROPRIATE TO
THE INVESTMENT PLAN, INCLUDING:
(1) THE PURCHASE, CONTROL, AND SAFEKEEPING OF ASSETS;
(2) RECORD KEEPING AND ACCOUNTING FOR INDIVIDUAL ACCOUNTS AND
FOR THE PROGRAM AS A WHOLE;
(3) PREPARATION OF CONSOLIDATED BILLINGS AND STATEMENTS OF
ACCOUNT.
(B) THE AUTHORITY OR ITS INVESTMENT AGENTS SHALL MAINTAIN A
SEPARATE ACCOUNT FOR EACH BENEFICIARY OF A VARIABLE COLLEGE
SAVINGS PROGRAM ACCOUNT. IF A BENEFICIARY HAS MORE THAN ONE SUCH
ACCOUNT, THE AUTHORITY OR ITS AGENTS SHALL TRACK TOTAL
CONTRIBUTIONS AND EARNINGS AND PROVIDE A CONSOLIDATED SYSTEM OF
ACCOUNT DISTRIBUTIONS TO INSTITUTIONS OF HIGHER EDUCATION.
(C) THE AUTHORITY OR ITS AGENTS MAY PLACE ASSETS OF THE PROGRAM
IN SAVINGS ACCOUNTS AND MAY PURCHASE FIXED OR VARIABLE LIFE INSURANCE OR
ANNUITY CONTRACTS,
SECURITIES, EVIDENCE OF INDEBTEDNESS, OR OTHER INVESTMENT PRODUCTS PURSUANT TO
THE INVESTMENT PLAN.
(D) CONTRIBUTORS MAY NOT INVEST DIRECTLY UNDER THE INVESTMENT
PLAN.
(E) IF THE AUTHORITY DOES NOT CONTRACT WITH AN INVESTMENT AGENT
TO INVEST VARIABLE COLLEGE SAVINGS PROGRAM FUNDS, THE AUTHORITY SHALL BE THE
TRUSTEE OF THE
PROGRAM. IN SUCH EVENT, THE AUTHORITY SHALL RECEIVE AND HOLD ALL PAYMENTS,
DEPOSITS, AND
CONTRIBUTIONS, AS WELL AS GIFTS, BEQUESTS, ENDOWMENTS, AND
FEDERAL, STATE, OR LOCAL GRANTS AND ANY FUNDS FROM ANY OTHER
SOURCE, PUBLIC OR PRIVATE, AND ALL EARNINGS, UNTIL DISBURSED TO
PAY TUITION OR OTHER HIGHER EDUCATION EXPENSES OR REFUNDS PURSUANT
TO COLLEGE SAVINGS PLANS CONTRACTS. THE AUTHORITY SHALL KEEP SUCH
FUNDS SEGREGATED FROM ALL OTHER ASSETS OF THE AUTHORITY.
(F) THE AUTHORITY AND ANY INVESTMENT AGENTS WITH WHICH IT
CONTRACTS SHALL DISCHARGE THEIR DUTIES WITH RESPECT TO PROGRAM FUNDS WITH THE
CARE AND DILIGENCE
THAT A PRUDENT PERSON FAMILIAR WITH SUCH MATTERS AND WITH THE CHARACTER AND
AIMS OF THE PROGRAM WOULD USE.
(G) THE ASSETS OF THE PROGRAM SHALL BE PRESERVED, INVESTED, AND
EXPENDED SOLELY FOR THE PURPOSES OF THIS CHAPTER AND SHALL NOT BE LOANED OR
OTHERWISE TRANSFERRED OR USED
BY THE STATE FOR ANY OTHER PURPOSE. THIS SECTION SHALL NOT BE CONSTRUED TO
PROHIBIT THE AUTHORITY OR ITS
INVESTMENT AGENTS FROM INVESTING, BY PURCHASE OR OTHERWISE, IN
BONDS, NOTES, OR OTHER OBLIGATIONS OF THE STATE OR ANY AGENCY OR
INSTRUMENTALITY OF THE STATE. UNLESS OTHERWISE SPECIFIED BY THE
AUTHORITY, ASSETS OF THE PROGRAM SHALL BE EXPENDED IN THE
FOLLOWING ORDER OF PRIORITY:
(1) TO MAKE PAYMENTS ON BEHALF OF BENEFICIARIES;
(2) TO MAKE REFUNDS UPON TERMINATION OF VARIABLE COLLEGE SAVINGS
PROGRAM CONTRACTS;
(3) TO PAY THE COSTS OF PROGRAM ADMINISTRATION AND OPERATIONS.
(H) NO RECORDS OF THE AUTHORITY INDICATING THE IDENTITY OF
CONTRIBUTORS AND BENEFICIARIES UNDER THE PROGRAM OR AMOUNTS
CONTRIBUTED TO, EARNED BY, OR DISTRIBUTED FROM PROGRAM ACCOUNTS
ARE PUBLIC RECORDS WITHIN THE MEANING OF SECTION 149.43 of the Revised Code.
Sec. 3334.20. (A) THIS SECTION APPLIES ONLY IF THE OHIO
TUITION TRUST
AUTHORITY DOES NOT CONTRACT WITH AN INVESTMENT AGENT FOR
THE PURPOSES SET FORTH IN SECTION 3334.19 OF THE REVISED
CODE.
(B) THE ASSETS OF THE AUTHORITY RECEIVED UNDER THE VARIABLE
COLLEGE SAVINGS PROGRAM SHALL BE PLACED IN A FUND, WHICH IS HEREBY CREATED AND
SHALL BE KNOWN AS THE
VARIABLE COLLEGE SAVINGS PROGRAM FUND. THE FUND SHALL BE IN THE
CUSTODY OF THE TREASURER OF STATE, BUT SHALL NOT BE PART OF THE
STATE TREASURY. ALL SUCH ASSETS AND THE INTEREST AND INVESTMENT
INCOME EARNED BY THE FUND, AND ALL OTHER RECEIPTS OF THE AUTHORITY
FROM ANY OTHER SOURCE THAT THE AUTHORITY DETERMINES APPROPRIATE,
SHALL BE DEPOSITED IN THE FUND. NO CONTRIBUTOR OR BENEFICIARY
UNDER THE VARIABLE COLLEGE SAVINGS PROGRAM SHALL HAVE ANY CLAIM
AGAINST THE FUNDS OF ANY STATE INSTITUTION OF HIGHER EDUCATION.
ALL INVESTMENT FEES AND OTHER COSTS INCURRED IN CONNECTION WITH
THE EXERCISE OF THE INVESTMENT POWERS OF THE AUTHORITY PURSUANT TO
DIVISIONS (D) AND (E) OF THIS SECTION SHALL BE PAID FROM THE
ASSETS OF THE FUND.
(C)(1) EXCEPT AS MAY BE PROVIDED IN AN AGREEMENT UNDER DIVISION
(A)(19) OF SECTION 3334.08 OF THE REVISED CODE, ALL
DISBURSEMENTS
FROM THE FUND SHALL BE MADE BY THE TREASURER OF STATE ON ORDER OF A
DESIGNEE OF THE AUTHORITY.
(2) THE TREASURER OF STATE SHALL DEPOSIT ANY PORTION OF THE FUND
NOT NEEDED FOR IMMEDIATE USE IN THE SAME MANNER AS STATE FUNDS ARE
DEPOSITED.
(D) THE AUTHORITY IS THE TRUSTEE OF THE FUND. THE AUTHORITY
SHALL HAVE FULL POWER TO INVEST THE ASSETS OF THE FUND AND IN EXERCISING THIS
POWER SHALL BE SUBJECT TO THE LIMITATIONS AND REQUIREMENTS CONTAINED IN
DIVISIONS (H) TO (J) OF
THIS SECTION AND SECTIONS 145.112 AND 145.113 OF THE REVISED
CODE. THE EVIDENCES OF TITLE TO ALL INVESTMENTS SHALL BE DELIVERED
TO THE TREASURER OF STATE OR TO A QUALIFIED TRUSTEE DESIGNATED BY THE
TREASURER OF STATE AS PROVIDED IN SECTION 135.18 OF THE REVISED
CODE.
(E) THE PUBLIC EMPLOYEES RETIREMENT BOARD SHALL, WITH THE
APPROVAL OF THE AUTHORITY, EXERCISE THE INVESTMENT POWERS OF THE
AUTHORITY AS SET FORTH IN DIVISION (D) OF THIS SECTION
UNTIL THE AUTHORITY DETERMINES THAT ASSUMPTION AND EXERCISE BY THE AUTHORITY
OF THE INVESTMENT POWERS IS FINANCIALLY AND ADMINISTRATIVELY FEASIBLE. THE
INVESTMENT POWERS SHALL BE EXERCISED BY THE PUBLIC EMPLOYEES RETIREMENT BOARD
IN A MANNER
AGREED UPON BY THE AUTHORITY THAT MAXIMIZES THE RETURN ON
INVESTMENT AND MINIMIZES THE ADMINISTRATIVE EXPENSES.
(F) IN JANUARY OF EACH YEAR THE AUTHORITY SHALL REPORT
TO EACH PERSON WHO RECEIVED ANY PAYMENTS OR REFUNDS FROM THE AUTHORITY DURING
THE PRECEDING YEAR INFORMATION RELATIVE TO THE VALUE OF THE PAYMENTS
OR REFUNDS TO ASSIST IN DETERMINING THAT PERSON'S TAX LIABILITY.
(G) THE AUTHORITY SHALL REPORT TO THE TAX COMMISSIONER ANY
INFORMATION, AND AT THE TIMES, AS THE TAX COMMISSIONER REQUIRES TO DETERMINE
ANY TAX LIABILITY THAT A PERSON MAY HAVE INCURRED DURING THE PRECEDING YEAR AS
A RESULT OF
HAVING RECEIVED ANY PAYMENTS OR REFUNDS FROM THE AUTHORITY.
(H) TO FACILITATE INVESTMENT OF THE FUNDS, THE AUTHORITY MAY
ESTABLISH A PARTNERSHIP, TRUST, LIMITED LIABILITY COMPANY, CORPORATION,
INCLUDING A CORPORATION EXEMPT FROM
TAXATION UNDER THE INTERNAL
REVENUE CODE, 100 STAT. 2085, 26
U.S.C. 1, AS AMENDED, OR ANY
OTHER LEGAL ENTITY AUTHORIZED TO TRANSACT BUSINESS IN THIS STATE.
(I) IN EXERCISING ITS FIDUCIARY RESPONSIBILITY WITH RESPECT TO
THE INVESTMENT OF THE ASSETS OF THE FUND, IT SHALL BE THE INTENT
OF THE AUTHORITY TO GIVE CONSIDERATION TO INVESTMENTS THAT ENHANCE
THE GENERAL WELFARE OF THE STATE AND ITS CITIZENS WHERE THE
INVESTMENTS OFFER QUALITY, RETURN, AND SAFETY COMPARABLE TO OTHER
INVESTMENTS CURRENTLY AVAILABLE TO THE AUTHORITY. IN FULFILLING
THIS INTENT, EQUAL CONSIDERATION SHALL ALSO BE GIVEN TO
INVESTMENTS OTHERWISE QUALIFYING UNDER THIS SECTION THAT INVOLVE
MINORITY OWNED AND CONTROLLED FIRMS AND FIRMS OWNED AND CONTROLLED
BY WOMEN, EITHER ALONE OR IN JOINT VENTURE WITH OTHER FIRMS.
THE AUTHORITY SHALL ADOPT, IN REGULAR MEETING, POLICIES,
OBJECTIVES, OR CRITERIA FOR THE OPERATION OF THE INVESTMENT PLAN THAT
INCLUDE ASSET ALLOCATION TARGETS AND RANGES, RISK FACTORS, ASSET CLASS
BENCHMARKS, TIME HORIZONS, TOTAL RETURN OBJECTIVES, AND
PERFORMANCE EVALUATION GUIDELINES. IN ADOPTING POLICIES AND
CRITERIA FOR THE SELECTION OF AGENTS WITH WHOM THE AUTHORITY MAY
CONTRACT FOR THE ADMINISTRATION OF THE ASSETS OF THE FUND, THE
AUTHORITY SHALL GIVE EQUAL CONSIDERATION TO MINORITY OWNED AND
CONTROLLED FIRMS, FIRMS OWNED AND CONTROLLED BY WOMEN, AND
VENTURES INVOLVING MINORITY OWNED AND CONTROLLED FIRMS AND FIRMS
OWNED AND CONTROLLED BY WOMEN THAT OTHERWISE MEET THE POLICIES AND
CRITERIA ESTABLISHED BY THE AUTHORITY. AMENDMENTS AND ADDITIONS
TO THE POLICIES AND CRITERIA SHALL BE ADOPTED IN REGULAR MEETING.
THE AUTHORITY SHALL PUBLISH ITS POLICIES, OBJECTIVES, AND CRITERIA
UNDER THIS PROVISION NO LESS OFTEN THAN ANNUALLY AND SHALL MAKE
COPIES AVAILABLE TO INTERESTED PARTIES.
WHEN REPORTING ON THE PERFORMANCE OF INVESTMENTS, THE AUTHORITY
SHALL COMPLY WITH THE PERFORMANCE PRESENTATION STANDARDS ESTABLISHED BY
THE ASSOCIATION FOR INVESTMENT MANAGEMENT AND RESEARCH.
(J) ALL INVESTMENTS SHALL BE PURCHASED AT CURRENT MARKET PRICES
AND THE EVIDENCES OF TITLE TO THE INVESTMENTS SHALL BE PLACED IN THE HANDS OF
THE TREASURER OF STATE, WHO
IS HEREBY DESIGNATED AS CUSTODIAN THEREOF, OR IN THE HANDS OF THE
TREASURER OF STATE'S AUTHORIZED AGENT. THE TREASURER OF STATE OR
THE AGENT SHALL COLLECT THE PRINCIPAL, DIVIDENDS, DISTRIBUTIONS,
AND INTEREST THEREON AS THEY BECOME DUE AND PAYABLE AND PLACE THEM
WHEN SO COLLECTED INTO THE CUSTODIAL FUND.
THE TREASURER OF STATE SHALL PAY FOR INVESTMENTS PURCHASED BY THE
AUTHORITY ON RECEIPT OF WRITTEN OR ELECTRONIC INSTRUCTIONS FROM THE
AUTHORITY OR THE AUTHORITY'S DESIGNATED AGENT AUTHORIZING THE PURCHASE AND
PENDING RECEIPT OF THE EVIDENCE OF TITLE OF THE INVESTMENT BY THE
TREASURER OF STATE OR THE TREASURER OF STATE'S AUTHORIZED AGENT.
THE AUTHORITY MAY SELL INVESTMENTS HELD BY THE AUTHORITY, AND THE
TREASURER OF STATE OR THE TREASURER OF STATE'S AUTHORIZED AGENT
SHALL ACCEPT PAYMENT FROM THE PURCHASER AND DELIVER EVIDENCE OF
TITLE OF THE INVESTMENT TO THE PURCHASER ON RECEIPT OF WRITTEN OR
ELECTRONIC INSTRUCTIONS FROM THE AUTHORITY OR THE AUTHORITY'S
DESIGNATED AGENT AUTHORIZING THE SALE, AND PENDING RECEIPT OF THE
MONEYS FOR THE INVESTMENTS. THE AMOUNT RECEIVED SHALL BE PLACED
IN THE CUSTODIAL FUND. THE AUTHORITY AND THE TREASURER OF STATE
MAY ENTER INTO AGREEMENTS TO ESTABLISH PROCEDURES FOR THE PURCHASE
AND SALE OF INVESTMENTS UNDER THIS DIVISION AND THE CUSTODY OF THE
INVESTMENTS.
NO PURCHASE OR SALE OF ANY INVESTMENT SHALL BE MADE UNDER THIS
SECTION EXCEPT AS AUTHORIZED BY THE AUTHORITY.
ANY STATEMENT OF FINANCIAL POSITION DISTRIBUTED BY THE AUTHORITY
SHALL INCLUDE FAIR VALUE, AS OF THE STATEMENT DATE, OF ALL INVESTMENTS
HELD BY THE AUTHORITY UNDER THIS SECTION.
Sec. 3334.21. THE VARIABLE COLLEGE SAVINGS PROGRAM MAY BE
TERMINATED BY STATUTE OR UPON THE DETERMINATION OF THE OHIO
TUITION TRUST AUTHORITY THAT THE PROGRAM IS NOT FINANCIALLY FEASIBLE.
UPON TERMINATION, ALL AMOUNTS HELD IN PROGRAM ACCOUNTS SHALL BE RETURNED
TO ACCOUNT OWNERS, TO THE EXTENT POSSIBLE, AND ANY UNCLAIMED ASSETS IN
THE PROGRAM SHALL BE TRANSFERRED TO THE UNCLAIMED FUNDS TRUST FUND
AND DISPOSED OF IN ACCORDANCE WITH SECTION 169.05 of the Revised Code.
Sec. 5747.01. Except as otherwise expressly provided or
clearly appearing from the context, any term used in this chapter
has the same meaning as when used in a comparable context in the
Internal Revenue Code, and all other statutes of the United
States relating to federal income taxes.
As used in this chapter:
(A) "Adjusted gross income" or "Ohio adjusted gross
income" means adjusted gross income as defined and used in the
Internal Revenue Code, adjusted as provided in divisions
(A)(1) to (17) of this section:
(1) Add interest or dividends on obligations or securities
of any state or of any political subdivision or authority of any
state, other than this state and its subdivisions and authorities.
(2) Add interest or dividends on obligations of any
authority, commission, instrumentality, territory, or possession
of the United States that are exempt from federal income taxes
but not from state income taxes.
(3) Deduct interest or dividends on obligations of the
United States and its territories and possessions or of any
authority, commission, or instrumentality of the United States to
the extent included in federal adjusted gross income but exempt
from state income taxes under the laws of the United States.
(4) Deduct disability and survivor's benefits to the
extent included in federal adjusted gross income.
(5) Deduct benefits under Title II of the Social Security
Act and tier 1 railroad retirement benefits to the extent
included in federal adjusted gross income under section 86 of the
Internal Revenue Code.
(6) Add, in the case of a taxpayer who is a beneficiary of
a trust that makes an accumulation distribution as defined in
section 665 of the Internal Revenue Code, the portion, if any, of
such distribution that does not exceed the undistributed net
income of the trust for the three taxable years preceding the
taxable year in which the distribution is made. "Undistributed
net income of a trust" means the taxable income of the trust
increased by (a)(i) the additions to adjusted gross income
required under division (A) of this section and (ii) the personal
exemptions allowed to the trust pursuant to section 642(b) of the
Internal Revenue Code, and decreased by (b)(i) the deductions to
adjusted gross income required under division (A) of this
section, (ii) the amount of federal income taxes attributable to
such income, and (iii) the amount of taxable income that has been
included in the adjusted gross income of a beneficiary by reason
of a prior accumulation distribution. Any undistributed net
income included in the adjusted gross income of a beneficiary
shall reduce the undistributed net income of the trust commencing
with the earliest years of the accumulation period.
(7) Deduct the amount of wages and salaries, if any, not
otherwise allowable as a deduction but that would have been
allowable as a deduction in computing federal adjusted gross
income for the taxable year, had the targeted jobs credit allowed
and determined under sections 38, 51, and 52 of the Internal
Revenue Code not been in effect.
(8) Deduct any interest or interest equivalent on public
obligations and purchase obligations to the extent included in
federal adjusted gross income.
(9) Add any loss or deduct any gain resulting from the
sale, exchange, or other disposition of public obligations to the
extent included in federal adjusted gross income.
(10) Regarding tuition credits purchased under Chapter 3334. of the Revised
Code:
(a) Deduct the following:
(i) For credits that as of the end of the taxable
year have not been refunded pursuant to the termination of a tuition payment
contract under section 3334.10 of the Revised
Code, the amount of income related to the
credits, to the extent included in federal adjusted gross income;
(ii) For credits that during the taxable year have
been refunded pursuant to the termination of a tuition payment contract under
section 3334.10 of the Revised Code, the excess of the total purchase price
of the tuition credits refunded over the amount of refund, to the extent the
amount of the excess was not deducted in determining federal adjusted
gross income;
(b) Add the following:
(i) For credits that as of the end of the taxable
year have not been refunded pursuant to the termination of a tuition payment
contract under section 3334.10 of the Revised Code, the amount of loss related
to the credits, to the extent the amount of the loss was deducted in
determining federal adjusted gross income;
(ii) For credits that during the taxable year have
been refunded pursuant to the termination of a tuition payment contract under
section 3334.10 of the Revised
Code, the excess of the amount of refund over
the purchase price of each tuition credit refunded, to the extent not included
in federal adjusted gross income.
(11) Deduct, in the case of a self-employed individual as
defined in section 401(c)(1) of the Internal Revenue Code and to
the extent not otherwise allowable as a deduction in computing
federal adjusted gross income for the taxable year, the amount
paid during the taxable year for insurance that
constitutes medical care for the taxpayer, the taxpayer's spouse, and
dependents. No
deduction under division (A)(11) of this section shall be allowed
to any taxpayer who is eligible to participate in any subsidized
health plan maintained by any employer of the taxpayer or of the
spouse of the taxpayer. No deduction under division (A)(11) of
this section shall be allowed to the extent that the sum of such
deduction and any related deduction allowable in computing
federal adjusted gross income for the taxable year exceeds the
taxpayer's earned income, within the meaning of section 401(c) of
the Internal Revenue Code, derived by the taxpayer from the trade
or business with respect to which the plan providing the medical
coverage is established.
(12) Deduct any amount included in federal adjusted gross
income solely because the amount represents a reimbursement or
refund of expenses that in a previous year the taxpayer had
deducted as an itemized deduction pursuant to section 63 of the
Internal Revenue Code and applicable United States
department of the treasury regulations.
(13) Deduct any portion of the deduction described in
section 1341(a)(2) of the Internal Revenue Code, for repaying
previously reported income received under a claim of right, that
meets both of the following requirements:
(a) It is allowable for repayment of an item that was
included in the taxpayer's adjusted gross income for a prior
taxable year and did not qualify for a credit under division (A)
or (B) of section 5747.05 of the Revised Code for that year;
(b) It does not otherwise reduce the taxpayer's adjusted
gross income for the current or any other taxable year.
(14) Deduct an amount equal to the deposits made to, and
net investment earnings of, a medical savings account during the taxable year,
in accordance with section 3924.66 of the Revised Code. The deduction
allowed by division (A)(14) of this section does not apply to medical
savings account deposits and earnings otherwise deducted or excluded for the
current or any other taxable year from the taxpayer's federal adjusted gross
income.
(15)(a) Add an amount equal to the funds withdrawn from a medical
savings account during the taxable year, and the net investment earnings on
those funds, when the funds withdrawn were used for any purpose other than to
reimburse an account holder for, or to pay, eligible medical expenses, in
accordance with section 3924.66 of the Revised Code;
(b) Add the amounts distributed from a medical savings account
under division (A)(2) of section 3924.68 of the Revised Code during the
taxable year.
(16) Add any amount claimed as a credit under section 5747.059 of the Revised
Code to the extent that such amount satisfies either of the following:
(a) The amount was deducted or excluded from the computation of the
taxpayer's federal adjusted gross income as required to be reported for the
taxpayer's taxable year under the Internal Revenue Code;
(b) The amount resulted in a reduction of the taxpayer's federal adjusted
gross income as required to be reported for any of the taxpayer's taxable
years under the Internal Revenue Code.
(17) Deduct the amount contributed by the taxpayer to an
individual development account program established by a county department of
human services pursuant to sections 329.11 to 329.14 of the Revised Code for
the purpose of matching funds deposited by program participants. On request
of the tax commissioner, the taxpayer shall provide any information that, in
the tax commissioner's opinion, is necessary to establish the amount deducted
under division (A)(17) of this section.
(18) DEDUCT CONTRIBUTIONS TO VARIABLE COLLEGE SAVINGS PROGRAM
ACCOUNTS TO THE EXTENT PERMITTED UNDER DIVISION (B) OF
SECTION 5747.70 of the Revised Code, AND TO THE EXTENT INCLUDED IN FEDERAL ADJUSTED GROSS
INCOME.
(19) ADD AMOUNTS PREVIOUSLY EXEMPTED OR DEDUCTED UNDER SECTION 5747.70
of the Revised Code TO THE EXTENT THAT SUCH AMOUNTS CONSTITUTE DISTRIBUTIONS OR REFUNDS
DURING THE TAXABLE YEAR FROM VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNTS MADE
FOR ANY REASON OTHER THAN PAYMENT OF TUITION OR OTHER HIGHER EDUCATION
EXPENSES OR THE BENEFICIARY'S DEATH, DISABILITY, OR RECEIPT OF A SCHOLARSHIP.
(B) "Business income" means income arising
from
transactions, activities, and sources in the regular course of a
trade or business and includes income from tangible and
intangible property if the acquisition, rental, management, and
disposition of the property constitute integral parts of the
regular course of a trade or business operation.
(C) "Nonbusiness income" means all income other than
business income and may include, but is not limited to,
compensation, rents and royalties from real or tangible personal
property, capital gains, interest, dividends and distributions,
patent or copyright royalties, or lottery winnings, prizes, and
awards.
(D) "Compensation" means any form of remuneration paid to
an employee for personal services.
(E) "Fiduciary" means a guardian, trustee, executor,
administrator, receiver, conservator, or any other person acting
in any fiduciary capacity for any individual, trust, or estate.
(F) "Fiscal year" means an accounting period of twelve
months ending on the last day of any month other than December.
(G) "Individual" means any natural person.
(H) "Internal Revenue Code" means the "Internal Revenue
Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.
(I) "Resident" means:
(1) An individual who is domiciled in this state, subject
to section 5747.24 of the Revised Code;
(2) The estate of a decedent who at the time of death
was domiciled in this state. The domicile tests of section
5747.24 of the Revised Code and any election under section
5747.25 of the Revised Code are not controlling for purposes of
division (I)(2) of this section.
(J) "Nonresident" means an individual or estate that is
not a resident. An individual who is a resident for only part of
a taxable year is a nonresident for the remainder of that taxable
year.
(K) "Pass-through entity" has the same meaning as in section 5733.04 of the
Revised Code.
(L) "Return" means the notifications and reports required
to be filed pursuant to this chapter for the purpose of reporting
the tax due and includes declarations of estimated tax when so
required.
(M) "Taxable year" means the calendar year or the
taxpayer's fiscal year ending during the calendar year, or
fractional part thereof, upon which the adjusted gross income is
calculated pursuant to this chapter.
(N) "Taxpayer" means any person subject to the tax imposed
by section 5747.02 of the Revised Code or any pass-through entity that
makes the election under division (D) of section 5747.08 of the Revised Code.
(O) "Dependents" means dependents as defined in the
Internal Revenue Code and as claimed in the taxpayer's federal
income tax return for the taxable year or which the taxpayer
would have been permitted to claim had the taxpayer filed a
federal income
tax return.
(P) "Principal county of employment" means, in the case of
a nonresident, the county within the state in which a taxpayer
performs services for an employer or, if those services are
performed in more than one county, the county in which the major
portion of the services are performed.
(Q) As used in sections 5747.50 to 5747.55 of the Revised Code:
(1) "Subdivision" means any county, municipal corporation,
park district, or township.
(2) "Essential local government purposes" includes all
functions that any subdivision is required by general law to
exercise, including like functions that are exercised under a
charter adopted pursuant to the Ohio Constitution.
(R) "Overpayment" means any amount already paid that
exceeds the figure determined to be the correct amount of the
tax.
(S) "Taxable income" applies to estates only and means
taxable income as defined and used in the Internal Revenue Code
adjusted as follows:
(1) Add interest or dividends on obligations or securities
of any state or of any political subdivision or authority of any
state, other than this state and its subdivisions and
authorities;
(2) Add interest or dividends on obligations of any
authority, commission, instrumentality, territory, or possession
of the United States that are exempt from federal income taxes
but not from state income taxes;
(3) Add the amount of personal exemption allowed to the
estate pursuant to section 642(b) of the Internal Revenue Code;
(4) Deduct interest or dividends on obligations of the
United States and its territories and possessions or of any
authority, commission, or instrumentality of the United States
that are exempt from state taxes under the laws of the United
States;
(5) Deduct the amount of wages and salaries, if any, not
otherwise allowable as a deduction but that would have been
allowable as a deduction in computing federal taxable income for
the taxable year, had the targeted jobs credit allowed under
sections 38, 51, and 52 of the Internal Revenue Code not been in
effect;
(6) Deduct any interest or interest equivalent on public
obligations and purchase obligations to the extent included in
federal taxable income;
(7) Add any loss or deduct any gain resulting from sale,
exchange, or other disposition of public obligations to the
extent included in federal taxable income;
(8) Except in the case of the final return of an estate,
add any amount deducted by the taxpayer on both its Ohio estate
tax return pursuant to section 5731.14 of the Revised Code, and
on its federal income tax return in determining either federal
adjusted gross income or federal taxable income;
(9) Deduct any amount included in federal taxable income
solely because the amount represents a reimbursement or refund of
expenses that in a previous year the decedent had deducted as an
itemized deduction pursuant to section 63 of the Internal Revenue
Code and applicable treasury regulations;
(10) Deduct any portion of the deduction described in
section 1341(a)(2) of the Internal Revenue Code, for repaying
previously reported income received under a claim of right, that
meets both of the following requirements:
(a) It is allowable for repayment of an item that was
included in the taxpayer's taxable income or the decedent's
adjusted gross income for a prior taxable year and did not
qualify for a credit under division (A) or (B) of section 5747.05
of the Revised Code for that year.
(b) It does not otherwise reduce the taxpayer's taxable
income or the decedent's adjusted gross income for the current or
any other taxable year.
(11) Add any amount claimed as a credit under section 5747.059
of the Revised Code to the extent that the amount satisfies
either of the following:
(a) The amount was deducted or excluded from the computation of the
taxpayer's federal taxable income as required to be reported for the
taxpayer's taxable year under the Internal Revenue Code;
(b) The amount resulted in a reduction in the taxpayer's federal taxable
income as required to be reported for any of the taxpayer's taxable years
under the Internal Revenue Code.
(T) "School district income" and "school district income
tax" have the same meanings as in section 5748.01 of the Revised
Code.
(U) As used in divisions (A)(8), (A)(9), (S)(6), and
(S)(7) of this section, "public obligations," "purchase
obligations," and "interest or interest equivalent" have the same
meanings as in section 5709.76 of the Revised Code.
(V) "Limited liability company" means any limited
liability company formed under Chapter 1705. of the Revised Code
or under the laws of any other state.
(W) "Pass-through entity investor" means any person who, during any portion
of a taxable year of a pass-through entity, is a partner, member, shareholder,
or investor in that pass-through entity.
(X) "Banking day" has the same meaning as in section 1304.01 of the Revised
Code.
(Y) "Month" means a calendar month.
(Z) "Quarter" means the first three months, the second three months, the
third three months, or the last three months of the taxpayer's taxable year.
(AA) Any term used in this chapter that is not otherwise defined in this
section and that is not used in a comparable context in the
Internal Revenue Code and other statutes of the
United States relating to federal income taxes has the same
meaning as in section 5733.40 of the Revised Code.
Sec. 5747.70. (A) EARNINGS ON CONTRIBUTIONS MADE TO A VARIABLE
COLLEGE SAVINGS PROGRAM ACCOUNT ESTABLISHED UNDER CHAPTER 3334. of the Revised Code
ARE EXEMPT FROM OHIO STATE INCOME TAXATION.
(B) IN COMPUTING OHIO ADJUSTED GROSS INCOME, A DEDUCTION
FROM FEDERAL ADJUSTED GROSS INCOME IS ALLOWED TO A CONTRIBUTOR FOR THE
AMOUNT CONTRIBUTED DURING THE TAXABLE YEAR TO A VARIABLE COLLEGE SAVINGS
PROGRAM ACCOUNT AND TO A PURCHASER OF TUITION CREDITS UNDER THE OHIO
COLLEGE SAVINGS PROGRAM CREATED BY CHAPTER 3334. of the Revised Code IF THE AMOUNTS
OF SUCH
CONTRIBUTIONS AND PURCHASES ARE NOT DEDUCTED ON THE CONTRIBUTOR'S FEDERAL
INCOME
TAX RETURN. THE COMBINED AMOUNT OF CONTRIBUTIONS AND PURCHASES DEDUCTED ON
ANY INDIVIDUAL INCOME TAX
RETURN IN ANY TAXABLE YEAR IS LIMITED TO TWO THOUSAND DOLLARS FOR EACH
BENEFICIARY FOR WHOM CONTRIBUTIONS OR PURCHASES ARE MADE. THE DEDUCTION
ALLOWED UNDER THIS SECTION IS NOT
TRANSFERABLE. IF THE COMBINED ANNUAL CONTRIBUTIONS AND PURCHASES FOR A
BENEFICIARY EXCEED
TWO THOUSAND DOLLARS, THE EXCESS MAY BE CARRIED FORWARD AND
SUBTRACTED IN FUTURE TAXABLE YEARS UNTIL THE CONTRIBUTIONS AND PURCHASES HAVE
BEEN
FULLY DEDUCTED.
(C) AMOUNTS EXEMPTED OR DEDUCTED UNDER THIS SECTION SHALL BE
TAXED IN THE TAXABLE YEARS IN WHICH DISTRIBUTIONS OR REFUNDS ARE MADE FOR ANY
REASON OTHER THAN PAYMENT OF TUITION OR OTHER HIGHER EDUCATION EXPENSES OR THE
BENEFICIARY'S DEATH, DISABILITY, OR RECEIPT OF A SCHOLARSHIP.
Section 2. That existing sections 3334.01, 3334.02, 3334.08,
3334.10, 3334.12, 3334.15, and 5747.01 of the Revised Code are
hereby repealed.
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