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105TH CONGRESS
1ST SESSION
H. R. 1512
To amend the Internal Revenue Code of 1986 to provide incentives for
public-private educational partnerships for public educational institutions
serving disadvantaged students and to provide tax relief to families
who are struggling to pay for college.
IN THE HOUSE OF REPRESENTATIVES
MAY 1, 1997
Mr. RANGEL introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
incentives for public-private educational partnerships for
public educational institutions serving disadvantaged stu-
dents and to provide tax relief to families who are strug-
gling to pay for college.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Education Opportunities Tax Act of 1997’’.
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(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
TITLE I—PUBLIC-PRIVATE
EDUCATION PARTNERSHIPS
SEC. 101. PURPOSE.
The purpose of this title is to facilitate the establish-
ment of working partnerships of educators, businesses,
labor, and community groups to—
(1) enhance the academic curriculum for edu-
cation or training below the college level,
(2) increase graduation and employment rates,
(3) better prepare students for the rigors of col-
lege and the increasingly complex workforce, and
(4) promote the global leadership position of
the United States economy,
by providing a no-cost source of capital to cover the cost
of establishing specialized academies in distressed areas
(referred to as ‘‘education zones’’) and by providing tax
credits to employers who hire recent graduates of such
academies.
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SEC. 102. INCENTIVES FOR EDUCATION ZONES.
(a) IN GENERAL.—Part III of subchapter U of chap-
ter 1 (relating to additional incentives for empowerment
zones), as amended by subsection (b), is amended by in-
serting after subpart B the following new subpart:
‘‘Subpart C—Incentives for Education Zones
‘‘Sec. 1397B. Credit to holders of qualified zone academy bonds.
‘‘Sec. 1397C. Credit for employing recent qualified zone academy
graduates.
‘‘SEC. 1397B. CREDIT TO HOLDERS OF QUALIFIED ZONE
ACADEMY BONDS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
payer who holds a qualified zone academy bond on the
credit allowance date of such bond which occurs during
the taxable year, there shall be allowed as a credit against
the tax imposed by this chapter for such taxable year the
amount determined under subsection (b).
‘‘(b) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—The amount of the credit
determined under this subsection with respect to any
qualified zone academy bond is the amount equal to
the product of—
‘‘(A) the credit rate determined by the Sec-
retary under paragraph (2) for the month in
which such bond was issued, multiplied by
‘‘(B) the face amount of the bond held by
the taxpayer on the credit allowance date.
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‘‘(2) DETERMINATION.—During each calendar
month, the Secretary shall determine a credit rate
which shall apply to bonds issued during the follow-
ing calendar month. The credit rate for any month
is the percentage which the Secretary estimates will
permit the issuance of qualified zone academy bonds
without discount and without interest cost to the is-
suer.
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The
credit allowed under subsection (a) for any taxable year
shall not exceed the excess of—
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over
‘‘(2) the sum of the credits allowable under part
IV of subchapter A (other than subpart C thereof,
relating to refundable credits).
‘‘(d) QUALIFIED ZONE ACADEMY BOND.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified zone
academy bond’ means any bond issued as part of an
issue if—
‘‘(A) 95 percent or more of the proceeds of
such issue are to be used for a qualified pur-
pose with respect to a qualified zone academy,
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‘‘(B) the bond is issued by a State or local
government within the jurisdiction of which
such academy is located,
‘‘(C) the issuer—
‘‘(i) designates such bond for purposes
of this section, and
‘‘(ii) certifies that it has written as-
surances that the private business con-
tribution requirement of paragraph (2) will
be met with respect to such academy, and
‘‘(D) the term of each bond which is part
of such issue does not exceed the maximum
term permitted under paragraph (3).
‘‘(2) PRIVATE
BUSINESS
CONTRIBUTION
RE-
QUIREMENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the private business contribution re-
quirement of this paragraph is met with respect
to any issue if the qualified zone academy has
written commitments from private entities to
make qualified contributions having a present
value (as of the date of issuance of the issue)
of not less than 50 percent of the proceeds of
the issue.
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‘‘(B) QUALIFIED
CONTRIBUTIONS.—For
purposes of subparagraph (A), the term ‘quali-
fied contribution’ means any contribution (of a
type and quality acceptable to the academy)
of—
‘‘(i) equipment for use in the qualified
zone academy,
‘‘(ii) technical assistance in developing
curriculum or in training teachers in order
to promote appropriate market driven tech-
nology in the classroom,
‘‘(iii) services of employees as mentors
or classroom teachers,
‘‘(iv) internships, fieldtrips, or other
educational opportunities outside the acad-
emy for students, or
‘‘(v) any other property or service
specified by the academy.
‘‘(3) TERM REQUIREMENT.—During each cal-
endar month, the Secretary shall determine the max-
imum term permitted under this paragraph for
bonds issued during the following calendar month.
Such maximum term shall be the term which the
Secretary estimates will result in the present value
of the obligation to repay the principal on the bond
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being equal to 50 percent of the face amount of the
bond. Such present value shall be determined using
as a discount rate the average annual interest rate
of tax-exempt obligations having a term of 10 years
or more which are issued during the month. If the
term as so determined is not a multiple of a whole
year, such term shall be rounded to the next highest
whole year.
‘‘(4) QUALIFIED ZONE ACADEMY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
zone academy’ means any public educational in-
stitution described in subparagraph (B) which
provides education or training below the college
level if such institution is operated under a spe-
cial academic program designed in cooperation
with business to enhance the academic curricu-
lum, increase graduation and employment rates,
and better prepare students for the rigors of
college and the increasingly complex workforce.
‘‘(B) EDUCATION
ZONE
INSTITUTION.—
For purposes of subparagraph (A), an edu-
cational institution is described in this subpara-
graph if—
‘‘(i) such institution is located in an
empowerment zone or enterprise commu-
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nity (including any such zone or commu-
nity designated after the date of the enact-
ment of this section), or
‘‘(ii) there is a reasonable expectation
(as of the date of issuance of the bonds)
that at least 35 percent of the students at-
tending such institution will be members of
families which have incomes which on an
annual basis are 70 percent or less of the
Bureau of Labor Statistics lower living
standard.
‘‘(5) QUALIFIED
PURPOSE.—The term ‘quali-
fied purpose’ means, with respect to any qualified
zone academy—
‘‘(A) constructing or renovating such an
academy,
‘‘(B) providing equipment for use at such
academy,
‘‘(C) developing course materials for edu-
cation to be provided at such academy, and
‘‘(D) training teachers for such academy.
‘‘(e) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—
‘‘(1) NATIONAL LIMITATION.—There is a na-
tional zone academy bond limitation for each cal-
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endar year. Such limitation is $6,000,000,000 for
1998, 1999, and 2000 and zero thereafter.
‘‘(2) ALLOCATION
OF
LIMITATION.—The na-
tional zone academy bond limitation for a calendar
year shall be allocated by the Secretary among the
States on the basis of their respective populations of
individuals below the poverty line (as defined by the
Office of Management and Budget). The limitation
amount allocated to a State under the preceding
sentence shall be allocated by the State education
agency to qualified zone academies within such
State.
‘‘(3) DESIGNATION
SUBJECT
TO
LIMITATION
AMOUNT.—The maximum aggregate face amount of
bonds issued during any calendar year which may be
designated under subsection (d)(1) with respect to
any qualified zone academy shall not exceed the limi-
tation amount allocated to such academy under
paragraph (2) for such calendar year.
‘‘(4) CARRYOVER OF USED LIMITATION.—If for
any calendar year—
‘‘(A) the limitation amount for any State,
exceeds
‘‘(B) the amount of bonds issued during
such year which are designated under sub-
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section (d)(1) with respect to qualified zone
academies within such State,
the limitation amount for such State for the follow-
ing calendar year shall be increased by the amount
of such excess.
‘‘(f) OTHER DEFINITIONS.—For purposes of this sec-
tion—
‘‘(1) CREDIT
ALLOWANCE
DATE.—The term
‘credit allowance date’ means, with respect to any
issue, the last day of the 1-year period beginning on
the date of issuance of such issue and the last day
of each successive 1-year period thereafter.
‘‘(2) BOND.—The term ‘bond’ includes any ob-
ligation.
‘‘(3) STATE.—The term ‘State’ includes the
District of Columbia and any possession of the Unit-
ed States.
‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross
income includes the amount of the credit allowed to the
taxpayer under this section.
‘‘SEC. 1397C. CREDIT FOR EMPLOYING RECENT QUALIFIED
ZONE ACADEMY GRADUATES.
‘‘(a) IN GENERAL.—For purposes of subpart F of
part IV of subchapter A (relating to rules for computing
work opportunity credit), an individual shall be treated as
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(2) Subsection (b) of section 1394 is amend-
ed—
(A) by striking ‘‘section 1397C’’ in para-
graph (2) and inserting ‘‘section 1397E’’, and
(B) by striking ‘‘section 1397B’’ in para-
graph (3) and inserting ‘‘section 1397D’’.
(3) The table of subparts for part III of sub-
chapter U of chapter 1 is amended by striking the
last item and inserting the following:
‘‘Subpart C. Incentives for education zones.
‘‘Subpart D. General provisions.’’
(4) The table of sections for subpart D of such
part III, as so redesignated, is amended to read as
follows:
‘‘Sec. 1397D. Enterprise zone business defined.
‘‘Sec. 1397E. Qualified zone property defined.’’
(5) The table of sections for part IV of sub-
chapter U of chapter 1 is amended to read as fol-
lows:
‘‘Sec. 1397F. Regulations.’’
(c) EFFECTIVE DATE.—The amendments made by
this section—
(1) to the extent related to 1397B of the Inter-
nal Revenue Code of 1986 (as added by this section)
shall apply to obligations issued after December 31,
1997, and
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(2) to the extent related to section 1397C of
such Code (as so added) shall apply to individuals
who begin work for the employer after such date.
TITLE II—HOPE SCHOLARSHIP
CREDIT
SEC. 201. HOPE SCHOLARSHIP CREDIT.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable personal
credits) is amended by inserting after section 23 the fol-
lowing new section:
‘‘SEC. 24. HOPE SCHOLARSHIP CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year the amount
of qualified higher education expenses paid by the tax-
payer during such taxable year for education furnished
during any academic period beginning in such year.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR
LIMITATION.—The amount al-
lowed as a credit under subsection (a) for any tax-
able year with respect to the qualified higher edu-
cation expenses of any 1 individual shall not exceed
$1,500 ($1,000 if the individual was an eligible stu-
dent in 2 or more prior taxable years).
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‘‘(2) CREDIT ALLOWED FOR ONLY 4 TAXABLE
YEARS.—No credit shall be allowed under subsection
(a) for a taxable year with respect to the qualified
higher education expenses of an individual unless the
taxpayer elects to have this section apply with re-
spect to such individual for such year. An election
under this paragraph shall not take effect with re-
spect to an individual for any taxable year if an elec-
tion under this paragraph (by the taxpayer or any
other individual) is in effect with respect to such in-
dividual for any 4 prior taxable years.
‘‘(3) CREDIT ALLOWED FOR YEAR ONLY IF IN-
DIVIDUAL IS AT LEAST 1⁄2 TIME STUDENT FOR POR-
TION OF YEAR.—No credit shall be allowed under
subsection (a) for a taxable year with respect to the
qualified higher education expenses of an individual
unless such individual is an eligible student for at
least one academic period which begins during such
year.
‘‘(4) CREDIT
ALLOWED
ONLY
FOR
FIRST
YEARS OF POSTSECONDARY EDUCATION.—No credit
shall be allowed under subsection (a) for a taxable
year with respect to the qualified higher education
expenses of an individual if the individual has com-
pleted (before the beginning of such taxable year)
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the first 4 years of postsecondary education at an
institution of higher education.
‘‘(c) LIMITATION BASED ON MODIFIED ADJUSTED
GROSS INCOME.—
‘‘(1) IN GENERAL.—The amount which would
(but for this subsection) be taken into account under
subsection (a) for the taxable year shall be reduced
(but not below zero) by the amount determined
under paragraph (2).
‘‘(2) AMOUNT
OF
REDUCTION.—The amount
determined under this paragraph is the amount
which bears the same ratio to the amount which
would be so taken into account as—
‘‘(A) the excess of—
‘‘(i) the taxpayer’s modified adjusted
gross income for such taxable year, over
‘‘(ii) $50,000 ($80,000 in the case of
a joint return), bears to
‘‘(B) $20,000.
‘‘(3) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
the adjusted gross income of the taxpayer for the
taxable year increased by any amount excluded from
gross income under section 911, 931, or 933.
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‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.—The
credit allowed under subsection (a) for any taxable year
shall not exceed the excess of—
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over
‘‘(2) the sum of the credits allowable under part
IV of subchapter A (other than subpart C thereof,
relating to refundable credits).
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED
HIGHER
EDUCATION
EX-
PENSES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
higher education expenses’ means tuition and
fees required for the enrollment or attendance
of—
‘‘(i) the taxpayer,
‘‘(ii) the taxpayer’s spouse, or
‘‘(iii) any dependent of the taxpayer
with respect to whom the taxpayer is al-
lowed a deduction under section 151,
at an institution of higher education.
‘‘(B) EXCEPTION FOR EDUCATION INVOLV-
ING SPORTS, ETC.—Such term does not include
expenses with respect to any course or other
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education involving sports, games, or hobbies,
unless such course or other education is part of
the individual’s degree program.
‘‘(C) 
EXCEPTION
FOR
NONACADEMIC
FEES.—Such term does not include student ac-
tivity fees, athletic fees, insurance expenses, or
other expenses unrelated to an individual’s aca-
demic course of instruction.
‘‘(2) INSTITUTION OF HIGHER EDUCATION.—
The term ‘institution of higher education’ means an
institution—
‘‘(A) which is described in section 481 of
the Higher Education Act of 1965 (20 U.S.C.
1088), as in effect on the date of the enactment
of this section, and
‘‘(B) which is eligible to participate in a
program under title IV of such Act.
‘‘(3) ELIGIBLE STUDENT.—The term ‘eligible
student’ means, with respect to any academic period,
a student who—
‘‘(A) meets the requirements of section
484(a)(1) of the Higher Education Act of 1965
(20 U.S.C. 1091(a)(1)), as in effect on the date
of the enactment of this section, and
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‘‘(B) is carrying at least 1⁄2 the normal
full-time work load for the course of study the
student is pursuing.
‘‘(f) TREATMENT OF EXPENSES PAID BY DEPEND-
ENT.—If a deduction under section 151 with respect to
an individual is allowed to another taxpayer for a taxable
year beginning in the calendar year in which such individ-
ual’s taxable year begins—
‘‘(1) no credit shall be allowed under subsection
(a) to such individual for such individual’s taxable
year, and
‘‘(2) qualified higher education expenses paid
by such individual during such individual’s taxable
year shall be treated for purposes of this section as
paid by such other taxpayer.
‘‘(g) TREATMENT OF CERTAIN PREPAYMENTS.—If
qualified higher education expenses are paid by the tax-
payer during a taxable year for an academic period which
begins during the first 3 months following such taxable
year, such academic period shall be treated for purposes
of this section as beginning during such taxable year.
‘‘(h) SPECIAL RULES.—
‘‘(1) DENIAL OF CREDIT IF INDIVIDUAL CON-
VICTED OF DRUG OFFENSE.—No credit shall be al-
lowed under subsection (a) with respect to the quali-
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fied higher education expenses of an individual for
any taxable year if the individual has been convicted
before the end of such year of a Federal or State fel-
ony offense consisting of the possession or distribu-
tion of a controlled substance.
‘‘(2) DENIAL OF CREDIT IF INDIVIDUAL FAILS
TO
MAKE
SATISFACTORY
ACADEMIC
PROGRESS.—
If—
‘‘(A) an election was in effect under this
section with respect to the qualified higher edu-
cation expenses of an individual for any taxable
year, and
‘‘(B) such individual failed to make satis-
factory academic progress described in section
484(c) of the Higher Education Act of 1965
during such year,
no credit shall be allowed under subsection (a) with
respect to qualified higher education expenses of
such individual for a succeeding taxable year.
‘‘(3) NO DOUBLE BENEFIT.—No credit shall be
allowed under subsection (a) for any taxable year for
any expense for which a deduction is allowed under
any other provision of this chapter.
‘‘(4) 
IDENTIFICATION
REQUIREMENT.—No
credit shall be allowed under subsection (a) to a tax-
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payer with respect to the qualified higher education
expenses of an individual unless the taxpayer in-
cludes the name and taxpayer identification number
of such individual on the return of tax for the tax-
able year.
‘‘(5) ADJUSTMENT
FOR
CERTAIN
SCHOLAR-
SHIPS.—The amount of qualified higher education
expenses otherwise taken into account under sub-
section (a) with respect to an individual for an aca-
demic period shall be reduced (before the application
of subsections (b) and (c)) by the sum of—
‘‘(A) any amounts paid for the benefit of
such individual which are allocable to such pe-
riod as—
‘‘(i) a qualified scholarship which is
excludable from gross income under section
117,
‘‘(ii) an educational assistance allow-
ance under chapter 30, 31, 32, 34, or 35
of title 38, United States Code, or under
chapter 1606 of title 10, United States
Code,
‘‘(iii) a payment which is excludable
from gross income under section 127, or
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‘‘(iv) a payment (other than a gift, be-
quest, devise, or inheritance within the
meaning of section 102(a)) for such indi-
vidual’s educational expenses, or attrib-
utable to such individual’s enrollment at an
institution of higher education, which is ex-
cludable from gross income under any law
of the United States, and
‘‘(B) the amount excludable from gross in-
come under section 135 which is allocable to
such expenses with respect to such individual
for such period.
‘‘(6) NO
CREDIT
FOR
MARRIED
INDIVIDUALS
FILING SEPARATE RETURNS.—If the taxpayer is a
married individual (within the meaning of section
7703), this section shall apply only if the taxpayer
and the taxpayer’s spouse file a joint return for the
taxable year.
‘‘(7) NONRESIDENT ALIENS.—If the taxpayer is
a nonresident alien individual for any portion of the
taxable year, this section shall apply only if such in-
dividual is treated as a resident alien of the United
States for purposes of this chapter by reason of an
election under subsection (g) or (h) of section 6013.
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‘‘(8) COORDINATION WITH OTHER STUDENT FI-
NANCIAL ASSISTANCE.—The credit provided under
subsection (a), and any payment provided under
subsection (j), shall not be taken into account for
purposes of determining eligibility for, or the
amount of, any student financial assistance provided
under the Higher Education Act of 1965.
‘‘(i) INFLATION ADJUSTMENTS.—
‘‘(1) DOLLAR
LIMITATION
ON
AMOUNT
OF
CREDIT.—
‘‘(A) IN GENERAL.—In the case of a tax-
able year beginning after 1997, the $1,500 and
$1,000 amounts in subsection (b)(1)(A) shall be
increased by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar
year 1996’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
‘‘(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple
of $50, such amount shall be rounded to the
next lowest multiple of $50.
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‘‘(2) INCOME LIMITS.—
‘‘(A) IN GENERAL.—In the case of a tax-
able year beginning after 2000, the $50,000
and $80,000 amounts in subsection (c)(2) shall
each be increased by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar
year 1999’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
‘‘(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple
of $5,000, such amount shall be rounded to the
next lowest multiple of $5,000.
‘‘(j) CREDIT TO BE REFUNDABLE.—
‘‘(1) IN
GENERAL.—Each qualified student
shall be entitled to the refundable Hope Credit.
‘‘(2) PAYMENT
BY
EDUCATIONAL
INSTITU-
TION.—Each institution of higher education shall
pay, as an agent of the Secretary of the Treasury,
the refundable Hope Credit to each qualified student
attending such institution.
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‘‘(3) QUALIFIED
STUDENT.—For purposes of
this subsection, the term ‘qualified student’ means,
with respect to any calendar year, any eligible stu-
dent if—
‘‘(A) the credit provided by subsection (a)
would have been allowable to the applicable tax-
payer with respect to such student but for the
waiver under subparagraph (D) and the limita-
tion based on such taxpayer’s income tax liabil-
ity,
‘‘(B) the applicable taxpayer certifies to
the institution that it is reasonable to expect
that such taxpayer will not be allowed the maxi-
mum credit under this section by reason of hav-
ing insufficient income tax liability,
‘‘(C) such applicable taxpayer provides to
the institution of higher education such infor-
mation as is necessary to determine the amount
of the refundable Hope credit to which the stu-
dent is entitled, and
‘‘(D) such applicable taxpayer irrevocably
waives the right to claim such credit for such
year.
For purposes of this subsection, the applicable tax-
payer is the student or, if any other taxpayer is al-
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lowed a deduction under section 151 for such stu-
dent, such other taxpayer.
‘‘(4) REFUNDABLE
HOPE
CREDIT.—For pur-
poses of this subsection, the term ‘refundable Hope
Credit’ means, with respect to a student, the amount
of the credit provided by subsection (a) which would
have been allowable to the applicable taxpayer with
respect to such student but for the waiver under
paragraph (3)(D) and the limitation based on such
taxpayer’s income tax liability.
‘‘(5) PAYMENTS TO ELIGIBLE EDUCATIONAL IN-
STITUTIONS.—The Secretary of the Treasury shall
pay, either in advance or by way of reimbursement,
to each institution of higher education an amount
equal to the aggregate payments made under this
subsection by such institution to qualified students.
Section 1324 of title 31, United States Code, shall
apply to the payments required under this para-
graph in the same manner as if such payments were
refunds of overpayments of tax.
‘‘(6) RECAPTURE IF PAYMENT EXCEEDS COR-
RECT AMOUNT.—If the payments made under this
subsection with respect to any qualified student for
any calendar year exceed the amount of the refund-
able Hope credit to which the applicable taxpayer
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with respect to such student is entitled, such excess
shall be assessed and collected in the same manner
as an underpayment of tax imposed by this chapter
for such year on such taxpayer.
‘‘(k) REGULATIONS.—The Secretary may prescribe
such regulations as may be necessary or appropriate to
carry out this section, including regulations providing for
a recapture of credit allowed under this section in cases
where there is a refund in a subsequent taxable year of
any amount which was taken into account in determining
the amount of such credit.’’
(b) EXTENSION OF PROCEDURES APPLICABLE TO
MATHEMATICAL OR CLERICAL ERRORS.—Paragraph (2)
of section 6213(g) (relating to the definition of mathe-
matical or clerical errors) is amended by striking ‘‘and’’
at the end of subparagraph (G), by striking the period
at the end of subparagraph (H) and inserting ‘‘, and’’,
and by inserting after subparagraph (H) the following new
subparagraph:
‘‘(I) an omission of a correct TIN required
under section 24(h)(4) (relating to higher edu-
cation tuition and fees) to be included on a re-
turn.’’
(c) RETURNS RELATING
TO HIGHER EDUCATION
EXPENSES.—
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(1) IN GENERAL.—Subpart B of part III of
subchapter A of chapter 61 (relating to information
concerning transactions with other persons) is
amended by inserting after section 6050R the fol-
lowing new section:
‘‘SEC. 6050S. RETURNS RELATING TO HIGHER EDUCATION
EXPENSES.
‘‘(a) IN GENERAL.—Any person—
‘‘(1) which is an institution of higher education
which receives payments for qualified higher edu-
cation expenses with respect to any individual for
any calendar year or which pays any amount under
section 24(j) with respect to any individual for any
calendar year, or
‘‘(2) which is engaged in a trade or business
which, in the course of such trade or business makes
payments during any calendar year to any individual
which constitute reimbursements or refunds (or
similar amounts) of qualified higher education ex-
penses of such individual,
shall make the return described in subsection (b) with re-
spect to the individual at such time as the Secretary may
by regulations prescribe.
‘‘(b) FORM AND MANNER OF RETURNS.—A return
is described in this subsection if such return—
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‘‘(1) is in such form as the Secretary may pre-
scribe,
‘‘(2) contains—
‘‘(A) the name, address, and TIN of the
individual with respect to whom payments de-
scribed in subsection (a) were received from (or
were paid to),
‘‘(B) the name, address, and TIN of any
individual certified by the individual described
in subparagraph (A) as the taxpayer who will
claim the individual as a dependent for pur-
poses of the deduction allowable under section
151 for any taxable year ending with or within
the calendar year,
‘‘(C) the—
‘‘(i) aggregate amount of payments
for qualified higher education expenses re-
ceived with respect to the individual de-
scribed in subparagraph (A) during the
calendar year, and
‘‘(ii) aggregate amount of reimburse-
ments or refunds (or similar amounts)
paid to such individual during the calendar
year, and
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‘‘(D) such other information as the Sec-
retary may prescribe.
‘‘(c) APPLICATION TO GOVERNMENTAL UNITS.—For
purposes of this section—
‘‘(1) a governmental unit or any agency or in-
strumentality thereof shall be treated as a person,
and
‘‘(2) any return required under subsection (a)
by such governmental entity shall be made by the of-
ficer or employee appropriately designated for the
purpose of making such return.
‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under
subsection (a) shall furnish to each individual whose name
is required to be set forth in such return under subpara-
graph (A) or (B) of subsection (b)(2) a written statement
showing—
‘‘(1) the name, address, and phone number of
the information contact of the person required to
make such return, and
‘‘(2) the aggregate amounts described in sub-
paragraph (C) of subsection (b)(2).
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the
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year following the calendar year for which the return
under subsection (a) was required to be made.
‘‘(e) DEFINITIONS.—For purposes of this section, the
terms ‘institution of higher education’ and ‘qualified high-
er education expenses’ have the respective meanings given
such terms by section 24.
‘‘(f) RETURNS WHICH WOULD BE REQUIRED TO BE
MADE BY 2 OR MORE PERSONS.—Except to the extent
provided in regulations prescribed by the Secretary, in the
case of any amount received by any person on behalf of
another person, only the person first receiving such
amount shall be required to make the return under sub-
section (a).
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out the pro-
visions of this section. No penalties shall be imposed under
section 6724 with respect to any return or statement re-
quired under this section until such time as such regula-
tions are issued.’’
(2) ASSESSABLE PENALTIES.—Section 6724(d)
(relating to definitions) is amended—
(A) by redesignating clauses (x) through
(xv) as clauses (xi) through (xvi), respectively,
in paragraph (1)(B) and by inserting after
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clause (ix) of such paragraph the following new
clause:
‘‘(x) section 6050S (relating to re-
turns relating to payments for qualified
higher education expenses),’’, and
(B) by striking ‘‘or’’ at the end of the next
to last subparagraph, by striking the period at
the end of the last subparagraph and inserting
‘‘, or’’, and by adding at the end the following
new subparagraph:
‘‘(Z) section 6050S(d) (relating to returns
relating to qualified higher education ex-
penses).’’
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of
chapter 61 is amended by inserting after the item
relating to section 6050R the following new item:
‘‘Sec. 6050S. Returns relating to higher education expenses.’’
(d) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 26 is amended by
inserting ‘‘(other than section 24)’’ after ‘‘amount of
credits’’.
(2) The table of sections for subpart A of part
IV of subchapter A of chapter 1 is amended by in-
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serting after the item relating to section 23 the fol-
lowing new item:
‘‘Sec. 24. Hope scholarship credit.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenses paid after December
31, 1996 (in taxable years ending after such date), for
education furnished in academic periods beginning after
June 30, 1997.
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