AB 387 — Relating to: creating a child care reimbursement account program, providing an income tax subtraction for certain contributions to a child care reimbursement account, and granting rule-making authority. (FE)

71.05 (6) (b) 57.

of the statutes is created to read:

LRB-3528/2 - 2024 Legislature - 3 - ARG&KP:skw SECTION 4 ASSEMBLY BILL 387 71.05 (6) (b) 57.

a.

For taxable years beginning after December 31, 2023, an amount equal to a contribution made during the taxable year to a child care reimbursement account established under s.

224.55.

b.

The total of the subtraction made under this subdivision and any deduction under section 162 of the Internal Revenue Code for contributions to a child care reimbursement account established under s.

224.55 may not exceed an amount equal to $10,000 in a taxable year, or $5,000 for an account owned by a person who is married and files separately.

c.

No subtraction may be made under this subdivision for an amount distributed from a child care reimbursement account established under s.

224.55 and used to claim a credit under section 21 of the Internal Revenue Code.

SECTION 5.

224.55 of the statutes is created to read:

224.55 Child care reimbursement accounts.

(1) D EFINITIONS.In this section:

(a) “Account owner” means the parent or legal guardian of a qualifying child who has established a child care reimbursement account under this section.

(b) “Child care reimbursement account” means an account established under this section.

(c) “Qualifying child” has the meaning given for “qualifying individual” under section 21 (b) (1) (A) of the Internal Revenue Code.

(d) “Qualifying expenses” has the meaning given for “employment-related expenses” under section 21 (b) (2) of the Internal Revenue Code.

(2) PROGRAM.

(a) The department shall establish a child care reimbursement account program.

The program shall allow a parent or other legal guardian with a - 2024 Legislature - 4 - LRB-3528/2 ARG&KP:skw ASSEMBLY BILL 387 SECTION 5 qualifying child to establish a child care reimbursement account from which qualifying expenses are paid.

(b) Any person, with the account owner's permission, may contribute to a child care reimbursement account.

The maximum contribution that may be made to such an account in a calendar year is $10,000.

(c) Subject to par.

(e), only an account owner may withdraw funds held in a child care reimbursement account, and the account owner may withdraw these funds only to pay for the qualifying expenses of a qualifying child.

(d) Subject to par.

(e), any funds contributed to a child care reimbursement account during a calendar year that are not expended for qualifying expenses incurred by December 31 of that year are forfeited to the program vendor under sub.

(3) (a).

(e) If a qualifying child's death results in there being no qualifying child for a child care reimbursement account, all of the following apply:

PageThe 3,account lineowner 7:may direct the vendor to distribute the balance of the child care reimbursement account, including principal and earnings, to those persons who contributed to the account in proportion to their contributions, except that contributions made by the account owner's employer shall not be so distributed.

delete lines 7 and 8 and substitute “to the amount of the limit determined under s.

224.55 (2) (b) in a taxable year, or an amount equal to one-half of the amount of the limit determined under s.

224.55 (2) (b) for an account owned by a person who is married and files separately.”.

PageIf 3,the linevendor 18:required the account owner to make an advance commitment of contributions for the calendar year in which the death occurs, the account owner may rescind this commitment and halt future contributions to the account.

after(f) thatNo lineperson insert:may establish a child care reimbursement account or contribute to the person's child care reimbursement account if, for the same taxable year, any amount is excluded from the income of the person or the person's spouse under section 129 of the Internal Revenue Code.

“(bm)LRB-3528/2 “Household”- has2024 theLegislature meaning- given5 in- s.ARG&KP:skw SECTION 5 ASSEMBLY BILL 387 (3) P ROGRAM VENDOR.

71.58(a) (5).”.The department shall contract with a vendor to administer the program under this section.

3.The program vendor may charge fees to account owners to cover the cost of administering the program and may retain any funds forfeited under sub.

Page(2) 4,(d). line 3:

after(b) “(b)"The insertdepartment “1.".shall determine the factors to be considered in selecting a vendor to administer the child care reimbursement account program.

4.Using the process under s.

Page16.75 4,(2m), linethe 4:department shall solicit from nongovernmental persons competitive sealed proposals to serve as vendor of the programThe department shall select the vendor on the basis of factors determined by the department and shall enter into a contract with the vendor.

delete(c) “The"The contract between the department and substitutethe “Subjectvendor under this subsection shall require the vendor, upon request, to subd.provide information to the department of revenue for purposes of verifying contributions and withdrawals from child care reimbursement accounts.

2.,(4) the".R ULES.

5.The department may promulgate rules to implement and administer this section.

PageSECTION 4,6.0Effective linedate. 4:

after(1) “contribution"This insertact “intakes aeffect taxableon year".the first day of the 7th month beginning after publication.

6.

Page 4, line 5:

delete “in a calendar year" and substitute “, in aggregate from all contributors,".

LRBa0437/1 - 2024 Legislature - 2 - ARG&KP:amn 7.

Page 4, line 5:

after that line insert:

“2.

If the account owner or the account owner's spouse has excluded income under section 129 of the Internal Revenue Code for the same taxable year, the total of contributions to the account for that taxable year may not exceed an amount equal to $10,000 minus the amount excluded from the income of the account owner and the account owner's spouse under section 129 of the Internal Revenue Code.”.

8.

Page 4, line 8:

after “child" insert “or qualifying children".

9.

Page 4, line 9:

delete lines 9 to 12 and substitute:

“(d) Not more than one child care reimbursement account may be established for any household.”.

10.

Page 4, line 13:

before that line insert:

“(e) 1.Except as provided in subd.

2., if funds remain in a child care reimbursement account after there is no qualifying child in the account owner's household, upon notice the vendor shall distribute the balance of the child care reimbursement account to the account owner.”.

11.

Page 4, line 13:

delete “(e)" and substitute “2.".

12.

Page 4, line 15:

delete “1." and substitute “a.".

13.

Page 4, line 19:

delete “2." and substitute “b.".

14.

Page 4, line 22:

delete lines 22 to 25.

15.

Page 5, line 3:

delete the material beginning with “and" and ending with “(d)" on line 4.