LB681 LB681
2021 2021
LEGISLATURE OF NEBRASKA
ONE HUNDRED SEVENTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 681
Introduced by Linehan, 39.
Read first time January 20, 2021
Committee: Revenue
1 A BILL FOR AN ACT relating to the Nebraska educational savings plan
2 trust; to amend sections 68-1201, 85-1801, 85-1805, 85-1811,
3 85-1812, and 85-1814, Reissue Revised Statutes of Nebraska, and
4 sections 72-1239.01, 77-3,110, 77-2716, 85-1802, 85-1804, 85-1806,
5 85-1807, 85-1808, 85-1809, 85-1810, 85-1813, 85-1815, 85-1816,
6 85-1817, 85-2802, 85-2803, and 85-2804, Revised Statutes Cumulative
7 Supplement, 2020; to provide additional tax benefits for Nebraska
8 educational savings plan trust accounts; to restate intent; to
9 change provisions relating to withdrawals; to include savings plans
10 for elementary and secondary education in the Nebraska educational
11 savings plan trust; to redefine terms; to transfer provisions; to
12 harmonize provisions; to provide an operative date; and to repeal
13 the original sections.
14 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 68-1201, Reissue Revised Statutes of Nebraska, is
2 amended to read:
3 68-1201 In determining eligibility for the program for aid to
4 dependent children pursuant to section 43-512 as administered by the
5 State of Nebraska pursuant to the federal Temporary Assistance for Needy
6 Families program, 42 U.S.C. 601 et seq., for the low-income home energy
7 assistance program administered by the State of Nebraska pursuant to the
8 federal Energy Policy Act of 2005, 42 U.S.C. 8621 to 8630, for the
9 Supplemental Nutrition Assistance Program administered by the State of
10 Nebraska pursuant to the federal Food and Nutrition Act of 2008, 7 U.S.C.
11 2011 et seq., and for the child care subsidy program established pursuant
12 to section 68-1202, the following shall not be included in determining
13 assets or income:
14 (1) Assets in or income from an educational savings account, a
15 Coverdell educational savings account described in 26 U.S.C. 530, a
16 qualified tuition program established pursuant to 26 U.S.C. 529, or any
17 similar savings account or plan established to save for qualified higher
18 education expenses as defined in section 6 of this act 85-1802;
19 (2) Income from scholarships or grants related to postsecondary
20 education, whether merit-based, need-based, or a combination thereof;
21 (3) Income from postsecondary educational work-study programs,
22 whether federally funded, funded by a postsecondary educational
23 institution, or funded from any other source;
24 (4) Assets in or income from an account under a qualified program as
25 provided in section 77-1402;
26 (5) Income received for participation in grant-funded research on
27 the impact that income has on the development of children in low-income
28 families, except that such exclusion of income must not exceed four
29 thousand dollars per year for a maximum of four years and such exclusion
30 shall only be made if the exclusion is permissible under federal law for
31 each program referenced in this section. No such exclusion shall be made
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1 for such income on or after December 31, 2022; and
2 (6) Income from any tax credits received pursuant to the School
3 Readiness Tax Credit Act.
4 Sec. 2. Section 72-1239.01, Revised Statutes Cumulative Supplement,
5 2020, is amended to read:
6 72-1239.01 (1)(a) The appointed members of the council shall have
7 the responsibility for the investment management of the assets of the
8 retirement systems administered by the Public Employees Retirement Board
9 as provided in section 84-1503, the assets of the Nebraska educational
10 savings plan trust as provided in section 10 of this act created pursuant
11 to sections 85-1801 to 85-1817, the assets of the achieving a better life
12 experience program pursuant to sections 77-1401 to 77-1409, and beginning
13 January 1, 2017, the assets of each retirement system provided for under
14 the Class V School Employees Retirement Act. Except as provided in
15 subsection (4) of this section, the appointed members shall be deemed
16 fiduciaries with respect to the investment of the assets of the
17 retirement systems, of the Nebraska educational savings plan trust, and
18 of the achieving a better life experience program and shall be held to
19 the standard of conduct of a fiduciary specified in subsection (3) of
20 this section. The nonvoting, ex officio members of the council shall not
21 be deemed fiduciaries.
22 (b) As fiduciaries, the appointed members of the council and the
23 state investment officer shall discharge their duties with respect to the
24 assets of the retirement systems, of the Nebraska educational savings
25 plan trust, and of the achieving a better life experience program solely
26 in the interests of the members and beneficiaries of the retirement
27 systems or the interests of the participants and beneficiaries of the
28 Nebraska educational savings plan trust and the achieving a better life
29 experience program, as the case may be, for the exclusive purposes of
30 providing benefits to members, members' beneficiaries, participants, and
31 participants' beneficiaries and defraying reasonable expenses incurred
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1 within the limitations and according to the powers, duties, and purposes
2 prescribed by law.
3 (2)(a) The appointed members of the council shall have the
4 responsibility for the investment management of the assets of state
5 funds. The appointed members shall be deemed fiduciaries with respect to
6 the investment of the assets of state funds and shall be held to the
7 standard of conduct of a fiduciary specified in subsection (3) of this
8 section. The nonvoting, ex officio members of the council shall not be
9 deemed fiduciaries.
10 (b) As fiduciaries, the appointed members of the council and the
11 state investment officer shall discharge their duties with respect to the
12 assets of state funds solely in the interests of the citizens of the
13 state within the limitations and according to the powers, duties, and
14 purposes prescribed by law.
15 (3) The appointed members of the council shall act with the care,
16 skill, prudence, and diligence under the circumstances then prevailing
17 that a prudent person acting in like capacity and familiar with such
18 matters would use in the conduct of an enterprise of a like character and
19 with like aims by diversifying the investments of the assets of the
20 retirement systems, the Nebraska educational savings plan trust, the
21 achieving a better life experience program, and state funds so as to
22 minimize risk of large losses, unless in light of such circumstances it
23 is clearly prudent not to do so. No assets of the retirement systems, the
24 Nebraska educational savings plan trust, or the achieving a better life
25 experience program shall be invested or reinvested if the sole or primary
26 investment objective is for economic development or social purposes or
27 objectives.
28 (4) Neither the appointed members of the council nor the state
29 investment officer shall be deemed fiduciaries with respect to
30 investments of the assets of a retirement system provided for under the
31 Class V School Employees Retirement Act made by or on behalf of the board
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1 of education as defined in section 79-978 or the board of trustees
2 provided for in section 79-980. Neither the council nor any member
3 thereof nor the state investment officer shall be liable for the action
4 or inaction of the board of education or the board of trustees with
5 respect to the investment of the assets of a retirement system provided
6 for under the Class V School Employees Retirement Act, the consequences
7 of any such action or inaction of the board of education or the board of
8 trustees, and any claims, suits, losses, damages, fees, and costs related
9 to such action or inaction or consequences thereof.
10 Sec. 3. Section 77-3,110, Revised Statutes Cumulative Supplement,
11 2020, is amended to read:
12 77-3,110 (1) All funds received pursuant to sections 77-3,109 and
13 77-3,118 shall be remitted to the State Treasurer for credit to the
14 Department of Revenue Miscellaneous Receipts Fund which is hereby
15 created.
16 (2) On or before September 1, 2020, the State Treasurer shall
17 transfer fifty-nine thousand five hundred dollars from the College
18 Savings Plan Expense Fund to the Department of Revenue Miscellaneous
19 Receipts Fund.
20 (2) (3) All money in the Department of Revenue Miscellaneous
21 Receipts Fund shall be administered by the Department of Revenue and
22 shall be used as follows: (a) Any money transferred to the fund under
23 subsection (2) of this section shall be used by the Department of Revenue
24 to defray the costs incurred to implement Laws 2020, LB1042; and (b) All
25 other funds shall be used to defray the cost of production of the
26 publications listed in section 77-3,109 or of the listings described in
27 section 77-3,118 and to carry out any administrative responsibilities of
28 the department.
29 (3) (4) Transfers may be made from the fund to the General Fund at
30 the direction of the Legislature. Any money in the Department of Revenue
31 Miscellaneous Receipts Fund available for investment shall be invested by
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1 the state investment officer pursuant to the Nebraska Capital Expansion
2 Act and the Nebraska State Funds Investment Act.
3 Sec. 4. Section 77-2716, Revised Statutes Cumulative Supplement,
4 2020, is amended to read:
5 77-2716 (1) The following adjustments to federal adjusted gross
6 income or, for corporations and fiduciaries, federal taxable income shall
7 be made for interest or dividends received:
8 (a)(i) There shall be subtracted interest or dividends received by
9 the owner of obligations of the United States and its territories and
10 possessions or of any authority, commission, or instrumentality of the
11 United States to the extent includable in gross income for federal income
12 tax purposes but exempt from state income taxes under the laws of the
13 United States; and
14 (ii) There shall be subtracted interest received by the owner of
15 obligations of the State of Nebraska or its political subdivisions or
16 authorities which are Build America Bonds to the extent includable in
17 gross income for federal income tax purposes;
18 (b) There shall be subtracted that portion of the total dividends
19 and other income received from a regulated investment company which is
20 attributable to obligations described in subdivision (a) of this
21 subsection as reported to the recipient by the regulated investment
22 company;
23 (c) There shall be added interest or dividends received by the owner
24 of obligations of the District of Columbia, other states of the United
25 States, or their political subdivisions, authorities, commissions, or
26 instrumentalities to the extent excluded in the computation of gross
27 income for federal income tax purposes except that such interest or
28 dividends shall not be added if received by a corporation which is a
29 regulated investment company;
30 (d) There shall be added that portion of the total dividends and
31 other income received from a regulated investment company which is
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1 attributable to obligations described in subdivision (c) of this
2 subsection and excluded for federal income tax purposes as reported to
3 the recipient by the regulated investment company; and
4 (e)(i) Any amount subtracted under this subsection shall be reduced
5 by any interest on indebtedness incurred to carry the obligations or
6 securities described in this subsection or the investment in the
7 regulated investment company and by any expenses incurred in the
8 production of interest or dividend income described in this subsection to
9 the extent that such expenses, including amortizable bond premiums, are
10 deductible in determining federal taxable income.
11 (ii) Any amount added under this subsection shall be reduced by any
12 expenses incurred in the production of such income to the extent
13 disallowed in the computation of federal taxable income.
14 (2) There shall be allowed a net operating loss derived from or
15 connected with Nebraska sources computed under rules and regulations
16 adopted and promulgated by the Tax Commissioner consistent, to the extent
17 possible under the Nebraska Revenue Act of 1967, with the laws of the
18 United States. For a resident individual, estate, or trust, the net
19 operating loss computed on the federal income tax return shall be
20 adjusted by the modifications contained in this section. For a
21 nonresident individual, estate, or trust or for a partial-year resident
22 individual, the net operating loss computed on the federal return shall
23 be adjusted by the modifications contained in this section and any
24 carryovers or carrybacks shall be limited to the portion of the loss
25 derived from or connected with Nebraska sources.
26 (3) There shall be subtracted from federal adjusted gross income for
27 all taxable years beginning on or after January 1, 1987, the amount of
28 any state income tax refund to the extent such refund was deducted under
29 the Internal Revenue Code, was not allowed in the computation of the tax
30 due under the Nebraska Revenue Act of 1967, and is included in federal
31 adjusted gross income.
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1 (4) Federal adjusted gross income, or, for a fiduciary, federal
2 taxable income shall be modified to exclude the portion of the income or
3 loss received from a small business corporation with an election in
4 effect under subchapter S of the Internal Revenue Code or from a limited
5 liability company organized pursuant to the Nebraska Uniform Limited
6 Liability Company Act that is not derived from or connected with Nebraska
7 sources as determined in section 77-2734.01.
8 (5) There shall be subtracted from federal adjusted gross income or,
9 for corporations and fiduciaries, federal taxable income dividends
10 received or deemed to be received from corporations which are not subject
11 to the Internal Revenue Code.
12 (6) There shall be subtracted from federal taxable income a portion
13 of the income earned by a corporation subject to the Internal Revenue
14 Code of 1986 that is actually taxed by a foreign country or one of its
15 political subdivisions at a rate in excess of the maximum federal tax
16 rate for corporations. The taxpayer may make the computation for each
17 foreign country or for groups of foreign countries. The portion of the
18 taxes that may be deducted shall be computed in the following manner:
19