Establishes the study and stay program whereby a resident taypayer, who received their bachelor's degree in this state, can set aside a portion of his or her tax payments for a down payment on a first home.
TITLE OF BILL: An act to amend the tax law and the state finance law, in relation to establishing the study and stay program
PURPOSE: To establish the Study and Stay Program allowing graduates from New York colleges to set aside a portion of their tax payments for a down payment on a home.
SUMMARY OF PROVISIONS:
Section 1: Amends the tax law by adding a new section 608 establishing the Study and Stay Program. This section defines an "eligible taxpayer" as a resident taxpayer who received a bachelor's degree awarded by a college or university located in New York State after January 1, 2015, who has never had an ownership interest in a residential real property. Defines "ownership interest" as a fee simple interest, joint tenancy, tenancy in common, tenancy by entirety, interest of a tenant-shareholder in a residential cooperative, a life estate, and a land contract.
The Study and Stay Program will allow eligible taxpayers to annually deposit no more than $5,000 of his or her State Personal Income Tax liability into an account designated for such taxpayer in the program. Eligible taxpayers will be allowed to do this for a period not to exceed 10 years after receipt of a bachelor's degree. Moneys so deposited may only be withdrawn for the purpose of a down payment toward the purchase of his or her first owner-occupied residential real property.
The Department of Taxation and Finance shall provide a space on the Personal Income Tax Returns to enable taxpayers to designate moneys into the Study and Stay Program fund. No more than $10 million may be designated to this program in any tax year. Eligible taxpayers must submit proof to the Department of Taxation and Finance of receipt and the date of receipt of a bachelor's degree from a college or university located in the State.
Section 2: Amends the state finance law by adding a new section 85 establishing the Study and Stay Program Fund in the joint custody of the State Comptroller and the Commissioner of Taxation and Finance. The State Comptroller shall create a separate and distinct account for each eligible taxpayer in the Study and Stay Program. The moneys in said account must be made available within 10 days of submission by a taxpayer for their use toward a down payment on a first purchase of residential real property.
Within 60 days of receipt of moneys, the taxpayer must submit a sworn statement to the State Comptroller and the Commissioner of Taxation and Finance certifying that moneys were used toward this purpose.
Any moneys remaining in the account following disbursement to the eligible taxpayer; remaining in the account in the 11th year after receipt of a bachelor's degree; and remaining when the eligible taxpayer ceases to be a resident of New York State shall be returned to the general fund. Additionally, a penalty will be imposed for eligible taxpayers who make a down payment and cease to be a resident
of the State during a certain timeframe. These penalties may be waived due to relocation due to employment requiring residency in another state, or a severe financial hardship.
Section 3: This act shall take effect immediately.
JUSTIFICATION: Earning a college degree is still one of the biggest aspirations for New York's teenagers. A recent survey conducted by the Pew Research Center found that 94% of parents expect their child to attend college. This is because college is seen as the bedrock of the American middle class. A high education not only stimulates intellectual and personal growth, but allows our young adults to develop the skills necessary to begin a successful career.
Unfortunately, it is increasingly expensive to attend college. During the 2012-2013 academic year, it cost the average student $34,085 to attend a private, four-year college in New York. This made us the 10th most expensive state in the country. Likewise, the College Board found that since 2004-2005, public university costs grew by 33%.
To meet this enormous price tag, individuals are taking on greater amounts of student loans. The American Student Association reports that 60% of college students borrow annually to finance their education. In 2012, total outstanding student loan debt reached $966 billion; a level of debt second only to mortgages.
In New York, 60% of the class of 2011 graduated with such debt at an average of $26,388. This figure is equivalent to 55% of the average annual earnings of New York graduates under 30, all but guaranteeing a repayment battle for years to come. At the same time, graduate earnings are not as strong as they once were. Since 2000, earnings for 25 to 34 year-olds holding a bachelor's degree fell 15%. The combination of lower earning and a high debt load make it increasingly difficult for college students to make big purchases, which causes a drag on lifetime wealth.
One such purchase is a home. Following the Great Recession, homeownership rates among recent graduates fell by over 10%. According to the Federal Reserve Bank of New York, for the first time in at least a decade, 30-years olds without a student debt were more likely to own a home than student debtors. It is especially difficult for graduates to purchase a home in New York, which had the third highest down payment rate in the country in 2013.
A college degree should bring a lifetime of rewards, not financial struggle. That is why we propose the establishment of a Study and Stay Program. If enacted, this program will make it affordable once again for college graduates to own a New York home.
Study and Stay will allow graduates from a four-year, New York college to receive a credit of up to $5,000 from their State Income Tax for up to 10 years. When such a graduate seeks to purchase a home, they may use these funds toward the down payment of a first home. With the Study and Stay Program, we can not only allow more graduates to attain the goal of homeownership, but also renew New York as a premier destination for younger generations.
LEGISLATIVE HISTORY: New Bill.
FISCAL IMPLICATIONS: $10 million in tax expenditures when fully phased implemented.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 6699 IN SENATE February 28, 2014 ___________Introduced by Sens. VALESKY, CARLUCCI, KLEIN, SAVINO -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations AN ACT to amend the tax law and the state finance law, in relation to establishing the study and stay program THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The tax law is amended by adding a new section 608 to read as follows: S 608. STUDY AND STAY PROGRAM. (A) FOR THE PURPOSES OF THIS SECTION: (1) "ELIGIBLE TAXPAYER" MEANS A RESIDENT TAXPAYER WHO RECEIVED A BACH- ELOR'S DEGREE AWARDED BY AN INSTITUTION OF HIGHER EDUCATION IN THIS STATE AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, WHO DOES NOT HAVE NOR EVER HAD AN OWNERSHIP INTEREST IN THE RESIDENTIAL REAL PROPERTY IN WHICH HE OR SHE RESIDED. FURTHERMORE, AN ELIGIBLE TAXPAYER SHALL NOT HAVE AN OWNERSHIP IN ANY OTHER RESIDENTIAL REAL PROPERTY, INCLUDING VACATION HOMES OR RESIDENTIAL RENTAL PROPERTY. (2) "OWNERSHIP INTEREST" MEANS AND INCLUDES A FEE SIMPLE INTEREST, A JOINT TENANCY, A TENANCY IN COMMON, A TENANCY BY THE ENTIRETY, THE INTEREST OF A TENANT-SHAREHOLDER IN A RESIDENTIAL COOPERATIVE, A LIFE ESTATE AND A LAND CONTRACT. SUCH TERM SHALL NOT INCLUDE: (A) REMAINDER INTERESTS; (B) A LEASE WITH OR WITHOUT AN OPTION TO PURCHASE; (C) A MERE EXPECTANCY TO INHERIT AN INTEREST IN RESIDENTIAL REAL PROP- ERTY; (D) THE INTEREST THAT A PURCHASER OF RESIDENTIAL REAL PROPERTY ACQUIRES UPON THE EXECUTION OF A PURCHASE CONTRACT; OR (E) AN INTEREST IN REAL ESTATE OTHER THAN RESIDENTIAL REAL PROPERTY. (B) THERE SHALL BE ESTABLISHED BY THE DEPARTMENT A STUDY AND STAY PROGRAM WHEREBY ELIGIBLE TAXPAYERS MAY DESIGNATE, FOR A PERIOD OF NOT MORE THAN THE TEN TAX YEARS FOLLOWING SUCH TAXPAYER'S RECEIPT OF HIS OR HER BACHELOR'S DEGREE, NOT MORE THAN FIVE THOUSAND DOLLARS OF HIS OR HER PAYMENT OF THE TAXES IMPOSED PURSUANT TO THIS ARTICLE FOR A TAX YEAR FOR DEPOSIT INTO AN ACCOUNT DESIGNATED FOR SUCH TAXPAYER WITHIN THE STUDYEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13498-01-4 S. 6699 2
AND STAY PROGRAM FUND ESTABLISHED BY SECTION EIGHTY-FIVE OF THE STATE FINANCE LAW. THE MONEYS SO DEPOSITED INTO AN ELIGIBLE TAXPAYER'S ACCOUNT SHALL ONLY BE WITHDRAWN THEREFROM AND EXPENDED BY SUCH TAXPAYER FOR THE PAYMENT OF THE DOWN PAYMENT FOR HIS OR HER FIRST PURCHASE OF OWNER-OCCU- PIED RESIDENTIAL REAL PROPERTY. (C) THE DESIGNATION OF ALL OR ANY PORTION OF AN ELIGIBLE TAXPAYER'S TAX PAYMENT DURING ANY TAX YEAR, SHALL NOT BE DEEMED TO INCREASE SUCH TAXPAYER'S LIABILITY FOR TAXES PURSUANT TO THIS ARTICLE. THE COMMISSION- ER SHALL INCLUDE A SPACE ON THE PERSONAL INCOME TAX RETURNS TO ENABLE ELIGIBLE TAXPAYERS TO DESIGNATE MONEYS FOR DEPOSIT INTO THE STUDY AND STAY PROGRAM FUND. (D) EACH TAX YEAR, THE COMMISSIONER SHALL TRANSFER, TO THE STATE COMP- TROLLER, FOR DEPOSIT INTO THE APPROPRIATE ACCOUNTS WITHIN THE STUDY AND STAY PROGRAM FUND, ALL MONEYS DESIGNATED BY ELIGIBLE TAXPAYERS PURSUANT TO THIS SECTION; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL MORE THAN TEN MILLION DOLLARS, IN THE AGGREGATE, BE SO DESIGNATED DURING ANY TAX YEAR. (E) DURING THE FIRST YEAR THAT AN ELIGIBLE TAXPAYER DESIGNATES MONEYS FOR DEPOSIT INTO THE STUDY AND STAY PROGRAM FUND, SUCH TAXPAYER SHALL SUBMIT, TO THE DEPARTMENT, SUCH PROOF OF RECEIPT AND THE DATE OF RECEIPT OF A BACHELOR'S DEGREE FROM AN INSTITUTION OF HIGHER EDUCATION LOCATED IN THIS STATE, AS THE COMMISSIONER SHALL DESIGNATE. S 2. The state finance law is amended by adding a new section 85 to read as follows: S 85. STUDY AND STAY PROGRAM FUND. 1. THERE IS HEREBY ESTABLISHED IN THE JOINT CUSTODY OF THE STATE COMPTROLLER AND THE COMMISSIONER OF TAXA- TION AND FINANCE A SPECIAL FUND TO BE KNOWN AS THE "STUDY AND STAY PROGRAM FUND". 2. THE COMPTROLLER SHALL ESTABLISH A SEPARATE AND DISTINCT ACCOUNT, WITHIN THE STUDY AND STAY PROGRAM FUND, FOR EACH ELIGIBLE TAXPAYER WHO DESIGNATES MONEYS FOR DEPOSIT INTO THE FUND PURSUANT TO SECTION SIX HUNDRED EIGHT OF THE TAX LAW. 3. THE FUND SHALL CONSIST OF ALL MONEYS DEPOSITED THEREIN PURSUANT TO SECTION SIX HUNDRED EIGHT OF THE TAX LAW. 4. MONEYS IN EACH ACCOUNT OF THE STUDY AND STAY FUND SHALL BE KEPT SEPARATE AND SHALL NOT BE COMMINGLED WITH OTHER MONEYS IN THE CUSTODY OF THE STATE COMPTROLLER. 5. THE MONEYS IN THE ACCOUNT OF AN ELIGIBLE TAXPAYER SHALL BE MADE AVAILABLE, WITHIN TEN DAYS OF SUBMISSION OF AN APPLICATION THEREFOR, TO SUCH TAXPAYER SOLELY FOR THE PURPOSE OF THE PAYMENT OF THE DOWN PAYMENT FOR HIS OR HER FIRST PURCHASE OF RESIDENTIAL REAL PROPERTY OCCUPIED BY SUCH TAXPAYER AS HIS OR HER PRIMARY RESIDENCE, INCLUDING A MULTIPLE DWELLING HAVING NOT MORE THAN TWO HOUSING UNITS. NO SUCH MONEYS SHALL BE EXPENDED IN AN AMOUNT IN EXCESS OF SUCH DOWN PAYMENT, NOR SHALL SUCH MONEYS BE EXPENDED FOR REAL PROPERTY USED IN A BUSINESS OR TRADE, USED AS A VACATION RESIDENCE OR USED AS AN INVESTMENT, EXCEPT A MULTIPLE DWELLING HAVING NOT MORE THAN TWO HOUSING UNITS IN ONE OF WHICH THE ELIGIBLE TAXPAYER HAS HIS OR HER PRIMARY RESIDENCE. 6. EACH ELIGIBLE TAXPAYER SHALL, WITHIN SIXTY DAYS OF RECEIPT OF MONEYS IN HIS OR HER ACCOUNT PURSUANT TO SUBDIVISION FIVE OF THIS SECTION, SUBMIT A SWORN STATEMENT TO THE STATE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE, IN SUCH FORM AND CONTENT AS SHALL BE DETERMINED BY THE COMMISSIONER OF TAXATION AND FINANCE, CERTIFYING THAT SUCH MONEYS EXPENDED AS REQUIRED PURSUANT TO SUCH SUBDIVISION AND RETURNING TO THE STATE COMPTROLLER ALL MONEYS NOT SO EXPENDED. ALL MONEYS NOT SO EXPENDED AND REPAID TO THE STATE COMPTROLLER SHALL CONSTI-S. 6699 3
TUTE TAX MONEYS PAYABLE TO THE DEPARTMENT OF TAXATION AND FINANCE, PURSUANT TO ARTICLE TWENTY-TWO OF THE TAX LAW. 7. THE FOLLOWING MONEYS IN AN ELIGIBLE TAXPAYER'S ACCOUNT SHALL BE TRANSFERRED TO AND DEPOSITED INTO THE GENERAL FUND: (A) ANY MONEYS REMAINING IN THE ACCOUNT AFTER DISBURSEMENT TO THE ELIGIBLE TAXPAYER PURSUANT TO SUBDIVISION FIVE OF THIS SECTION; (B) ANY MONEYS REMAINING IN THE ACCOUNT OF THE ELIGIBLE TAXPAYER IN THE ELEVENTH TAX YEAR AFTER SUCH TAXPAYER RECEIVED HIS OR HER BACHELOR'S DEGREE; AND (C) ANY MONEYS REMAINING IN THE ACCOUNT OF THE ELIGIBLE TAXPAYER WHEN HE OR SHE CEASES TO BE A RESIDENT OF THE STATE. 8. (A) AN ELIGIBLE TAXPAYER WHO MAKES A DOWN PAYMENT FOR THE PURCHASE OF HIS OR HER PRIMARY RESIDENCE WITH MONEYS FROM HIS OR HER ACCOUNT WITHIN THE STUDY AND STAY PROGRAM FUND, SHALL BE LIABLE TO THE STATE FOR A PENALTY IN THE FOLLOWING AMOUNTS WHEN SUCH TAXPAYER CEASES TO BE A RESIDENT OF THIS STATE WITHIN THE FOLLOWING PERIODS OF TIME AFTER RECEIPT OF MONEYS FROM HIS OR HER ACCOUNT: (I) ONE YEAR ALL MONEYS RECEIVED FROM THE ACCOUNT; (II) TWO YEARS EIGHTY PERCENT OF THE MONEYS RECEIVED FROM THE ACCOUNT; (III) THREE YEARS SIXTY PERCENT OF THE MONEYS RECEIVED FROM THE ACCOUNT; (IV) FOUR YEARS FORTY PERCENT OF THE MONEYS RECEIVED FROM THE ACCOUNT; (V) FIVE YEARS TWENTY PERCENT OF THE MONEYS RECEIVED FROM THE ACCOUNT; AND (VI) MORE THAN FIVE YEARS NO PENALTY. (B) PENALTIES IMPOSED PURSUANT TO THIS SUBDIVISION SHALL CONSTITUTE PERSONAL INCOME TAX PAYABLE PURSUANT TO ARTICLE TWENTY-TWO OF THE TAX LAW. (C) THE PENALTIES IMPOSED BY PARAGRAPH (A) OF THIS SUBDIVISION MAY BE WAIVED, IN THE DISCRETION OF THE COMMISSIONER OF TAXATION AND FINANCE, UPON DEMONSTRATION THAT THE ELIGIBLE TAXPAYER CEASED RESIDENCY IN THE STATE DUE TO: (I) AN EMPLOYMENT RELOCATION OUTSIDE OF THE STATE WHICH REQUIRED RESI- DENCY IN ANOTHER STATE; OR (II) THE SEVERE FINANCIAL HARDSHIP OF THE ELIGIBLE TAXPAYER OR HIS OR HER DEPENDENT. S 3. This act shall take effect immediately.