Sec. 104. Limitation on amounts treated as income under educational ISAs
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/bill/117/s/4551/is/section-104A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
For purposes of calculating the obligation of an ISA recipient to make ISA payments under an educational ISA, the income of the ISA recipient shall not include— the income of any child or dependent of the ISA recipient; any item of income which is not included in the gross income of the ISA recipient; any amount received from an individual retirement plan (as defined in section 7701 of the Internal Revenue Code of 1986), a pension, or an annuity; or any social security benefit (as defined in section 86 of such Code).
In the event that an ISA recipient fails to provide income documentation as reasonably required by the income share agreement, an ISA provider may assign an amount of income to the participant and compute the monthly payment amount for the participant by any of the following methods, to the extent disclosed in the income share agreement: Assigning an income amount obtained from a reasonably reliable third party or a consumer reporting agency, as defined in section 603(f) of the Fair Credit Reporting Act ( 15 U.S.C. 1681a(f) ).
If the participant previously provided income documentation or has had an income assigned in the preceding 1-year period, assuming that such income has increased by up to 10 percent, but such increase may not be applied more than once per 1-year period. Contacting the employer of the participant, or any person or entity reasonably believed to the employer of the participant, to obtain, verify, or update the income information of the participant. Contacting the State revenue department or the Internal Revenue Service to obtain the most recent information available about the income of the participant.
For educational ISA providers, in any case where the ISA provider has no prior history of income information from the participant, assigning a reasonable qualified income based on— the median income for individuals working in the profession for which the educational program of the participant was intended to prepare the participant, as determined by information published by the Bureau of Labor Statistics or other reasonably reliable publicly available data sources; or the median income of participants who attended the same or a reasonably comparable covered educational program or course of study, as determined by information published by the Bureau of Labor Statistics or other reasonably reliable publicly available data sources.
If an ISA provider assigns an income to the income share agreement of a participant, the ISA provider— shall notify the participant in the monthly billing statement, and in each billing statement thereafter while the assigned income remains applicable to the income share agreement of the participant, that income has been assigned and of the rights of the participant under this section; in any tax year for which the ISA provider has made an assumption about an individual’s income using any of the methods described in the prior paragraph and if the participant has authorized ongoing access to the participant’s return information under section 403, shall request such information in each year of the payment term; if the participant does provide income information as reasonably required by the income share agreement within 1 year of the date on which the ISA provider notified the participant that assigned income shall be applied to the income share agreement or if the ISA provider receives updated income information through return information authorized under section 403, then, within 15 days after the date on which the ISA provider receives such information, shall— update each prior instance in which assigned income was applied using such new income information; and reconcile any difference in amounts owed by the participant based on those updates to prior income; and if the participant provides income information more than 1 year after the ISA provider first assigned income to the income share agreement of the participant, may, but shall not be obligated to, update each prior instance in which assigned income was applied using the income information provided by the participant.
An ISA provider that assigns income to an income share agreement shall retain all applicable records relating to the method and data sources used to make such estimation for 3 years after the end of that income share agreement.
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Sec. 104
Limitation on amounts treated as income under educational ISAs
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