Summary: H.R.7 — 106th Congress (1999-2000)All Information (Except Text)

Bill summaries are authored by CRS.

Shown Here:
Reported to House with amendment(s) (03/24/2000)

Education Savings and School Excellence Act of 2000 - Amends the Internal Revenue Code with respect to education individual retirement accounts (education IRAs) to increase maximum annual contribution limits to $2,000 per beneficiary.

Permits tax-free expenditures for qualified elementary and secondary education expenses at a public, private, or religious school. Includes within such expenses tuition, books, tutoring, special needs services, computer equipment, room and board, uniforms, transportation, and home schooling meeting applicable State or local requirements.

Waives the age limitation (18 years old) for contributions on behalf of a special needs beneficiary. Waives the age limitation (30 years old) for deemed distributions and rollover and beneficiary change provisions with respect to a special needs beneficiary.

Limits contribution reductions based on adjusted gross income to individual contributors. (Permits entity contributions regardless of income.)

Permits annual contributions to be made up to such year's tax filing date (not including extensions). Exempts excess contributions from the additional ten percent tax provided such contribution and interest earned are returned within six months after the end of the tax year for which the contribution was made.

Coordinates education IRA distributions with: (1) the HOPE and Lifetime Earning Credit so that IRA distributions will not be part of gross income as long as they are not used for the same expenses as such credits; and (2) qualified tuition programs to allocate excess distributions between such programs, and eliminate the excess tax on excess contributions made to such programs on behalf of the same beneficiary.

Renames the education individual retirement account as the education savings account.

(Sec. 3) Collegiate Learning and Student Savings (CLASS) Act - Permits private higher educational institutions, in addition to currently permitted State institutions, to establish qualified tuition programs. Excludes from gross income such program distributions used for qualified higher education expenses.

Provides that one rollover per year of amounts from one qualified tuition program to another for the benefit of the same beneficiary shall not be considered a distribution.

Includes first cousins as family members for purposes of qualified tuition programs.

Revises the definition of "qualified higher education expenses," including the exclusion of sport- or hobby-related courses unless taken as part of a degree program or to improve job skills.

(Sec. 4) Excludes from gross income certain amounts received under the National Health Corps Scholarship Program, the Armed Forces Health Professions Scholarship and Financial Assistance Program, the National Institutes of Health Undergraduate Scholarship Program, or similar State program.

(Sec. 5) Revises provisions respecting governmental bonds for public school construction that may be issued under the small governmental unit arbitrage rebate exception to: (1) increase bond amounts to $10 million ; and (2) modify expenditure time-period requirements.

(Sec. 7) Revises student loan interest provisions to: (1) eliminate the 60-month deductibility limit; and (2) increase income-based eligibility phaseouts.

(Sec. 8) Eliminates the two percent floor on miscellaneous itemized deductions for the qualified professional development expenses of elementary and secondary school teachers.

(Sec. 9) Extends through 2001 the special deduction for C corporation donations of specified computer equipment and technology to schools and certain related entities.