‘‘(B) a contributor to such program on be-
half of a designated beneficiary, with respect to 
any distribution or earnings under such pro-
gram. 
‘‘(2) GIFT
TAX
TREATMENT
OF
CONTRIBU-
TIONS.—For purposes of chapters 12 and 13— 
‘‘(A) IN GENERAL.—Any contribution to a 
qualified first-time homeowner assistance pro-
gram on behalf of any designated beneficiary— 
‘‘(i) shall be treated as a completed 
gift to such beneficiary which is not a fu-
ture interest in property, and 
‘‘(ii) shall not be treated as a qualified 
transfer under section 2503(e). 
‘‘(B) TREATMENT OF EXCESS CONTRIBU-
TIONS FOR GIFT TAX PURPOSES.—If the aggre-
gate amount of contributions described in sub-
paragraph (A) during the calendar year by a 
donor exceeds the limitation for such year 
under section 2503(b), such aggregate amount 
shall, at the election of the donor, be taken into 
account for purposes of such section ratably 
over the 5-year period beginning with such cal-
endar year. 
‘‘(3) DISTRIBUTIONS.— 
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‘‘(A) 
IN
GENERAL.—Any 
distribution 
under a qualified first-time homeowner assist-
ance program shall be includible in the gross in-
come of the distributee in the manner as pro-
vided under section 72 to the extent not ex-
cluded from gross income under this paragraph. 
‘‘(B) 
DISTRIBUTIONS
FOR
QUALIFIED 
DOWN PAYMENT ASSISTANCE.—For purposes of 
this paragraph, if— 
‘‘(i) distributions under a qualified 
first-time homeowner assistance program 
do not exceed the qualified down payment 
assistance, no amount shall be includible in 
gross income, and 
‘‘(ii) in any other case, the amount 
otherwise includible in gross income shall 
be reduced by an amount which bears the 
same ratio to such amount as such assist-
ance bear to such distributions. 
‘‘(C) CHANGE IN BENEFICIARIES OR PRO-
GRAMS.— 
‘‘(i) ROLLOVERS.—Subparagraph (A) 
shall not apply to that portion of any dis-
tribution which, within 60 days of such 
distribution, is transferred— 
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‘‘(I) to another qualified distribu-
tion under a qualified first-time home-
owner assistance program or the ben-
efit of the designated beneficiary, or 
‘‘(II) to the credit of another des-
ignated beneficiary under a qualified 
distribution under a qualified first- 
time homeowner assistance program 
who is a member of the family of the 
designated beneficiary with respect to 
which the distribution was made. 
‘‘(ii) CHANGE IN DESIGNATED BENE-
FICIARIES.—Any change in the designated 
beneficiary of an interest in a qualified dis-
tribution under a qualified first-time home-
owner assistance program shall not be 
treated as a distribution for purposes of 
subparagraph (A) if the new beneficiary is 
a member of the family of the old bene-
ficiary. 
‘‘(iii) LIMITATION ON CERTAIN ROLL-
OVERS.—Clause (i)(I) shall not apply to 
any transfer if such transfer occurs within 
12 months from the date of a previous 
transfer to any qualified distribution under 
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a qualified first-time homeowner assistance 
program for the benefit of the designated 
beneficiary. 
‘‘(4) ESTATE TAX TREATMENT.— 
‘‘(A) IN GENERAL.—No amount shall be 
includible in the gross estate of any individual 
for purposes of chapter 11 by reason of an in-
terest in a qualified distribution under a quali-
fied first-time homeowner assistance program. 
‘‘(B) AMOUNTS INCLUDIBLE IN ESTATE OF 
DESIGNATED
BENEFICIARY
IN
CERTAIN 
CASES.—Subparagraph (A) shall not apply to 
amounts distributed on account of the death of 
a beneficiary. 
‘‘(C) AMOUNTS INCLUDIBLE IN ESTATE OF 
DONOR
MAKING
EXCESS
CONTRIBUTIONS.—In 
the case of a donor who makes the election de-
scribed in paragraph (2)(B) and who dies be-
fore the close of the 5-year period referred to 
in such paragraph, notwithstanding subpara-
graph (A), the gross estate of the donor shall 
include the portion of such contributions prop-
erly allocable to periods after the date of death 
of the donor. 
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‘‘(5) OTHER GIFT TAX RULES.—For purposes 
of chapters 12 and 13— 
‘‘(A) TREATMENT
OF
DISTRIBUTIONS.— 
Except as provided in subparagraph (B), in no 
event shall a distribution from a qualified dis-
tribution under a qualified first-time home-
owner assistance program be treated as a tax-
able gift. 
‘‘(B) TREATMENT
OF
DESIGNATION
OF 
NEW
BENEFICIARY.—The taxes imposed by 
chapters 12 and 13 shall apply to a transfer by 
reason of a change in the designated beneficiary 
under the program (or a rollover to the account 
of a new beneficiary) unless the new beneficiary 
is— 
‘‘(i) assigned to the same generation 
as (or a higher generation than) the old 
beneficiary (determined in accordance with 
section 2651), and 
‘‘(ii) a member of the family of the 
old beneficiary. 
‘‘(6) ADDITIONAL TAX FOR DISTRIBUTIONS NOT 
USED
FOR
QUALIFIED
DOWNPAYMENT
ASSIST-
ANCE.— 
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‘‘(A) IN GENERAL.—The tax imposed by 
this chapter for any taxable year on any tax-
payer who receives a payment or distribution 
from a qualified first-time homeowner assist-
ance program which is includible in gross in-
come shall be increased by 10 percent of the 
amount which is so includible. 
‘‘(B) 
EXCEPTIONS.—Subparagraph 
(A) 
shall not apply if the payment or distribution 
is— 
‘‘(i) made to a beneficiary (or to the 
estate of the designated beneficiary) on or 
after the death of the designated bene-
ficiary, 
‘‘(ii) attributable to the designated 
beneficiary’s being disabled (within the 
meaning of section 72(m)(7)), or 
‘‘(iii) an amount which is includible in 
gross income solely by application of para-
graph (2)(C)(i)(II) for the taxable year. 
‘‘(C) CONTRIBUTIONS RETURNED BEFORE 
CERTAIN
DATE.—Subparagraph (A) shall not 
apply to the distribution of any contribution 
made during a taxable year on behalf of the 
designated beneficiary if— 
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‘‘(i) such distribution is made before 
the first day of the sixth month of the tax-
able year following the taxable year, and 
‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in gross income for the taxable year in 
which such excess contribution was made. 
‘‘(e) REPORTS.—Each officer or employee having 
control of the qualified distribution under a qualified first- 
time homeowner assistance program or their designee 
shall make such reports regarding such program to the 
Secretary and to designated beneficiaries with respect to 
contributions, distributions, and such other matters as the 
Secretary may require. The reports required by this sub-
section shall be filed at such time and in such manner 
and furnished to such individuals at such time and in such 
manner as may be required by the Secretary. 
‘‘(f) REGULATIONS.—Notwithstanding any other pro-
vision of this section, the Secretary shall prescribe such 
regulations as may be necessary or appropriate to carry 
out the purposes of this section and to prevent abuse of 
such purposes, including regulations under chapters 11, 
12, and 13 of this title.’’. 
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(b) CONFORMING AMENDMENTS.— 
(1) TAX ON EXCESS CONTRIBUTIONS.— 
(A) IN GENERAL.—Subsection (a) of sec-
tion 4973 of such Code is amended by striking 
‘‘or’’ at the end of paragraph (5), by inserting 
‘‘or’’ at the end of paragraph (6), and by in-
serting after paragraph (6) the following new 
paragraph: 
‘‘(7) a first-time homeowner assistance account 
(as defined in section 530A),’’. 
(B) 
EXCESS
CONTRIBUTION.—Section 
4973 of such Code is amended by adding at the 
end the following new subsection: 
‘‘(i) EXCESS CONTRIBUTIONS TO FIRST-TIME HOME-
OWNER ASSISTANCE ACCOUNT.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—In the case of a first-time 
homeowner assistance account (as defined in section 
530A) (within the meaning of section 529A), the 
term ‘excess contributions’ means the amount by 
which the amount contributed for the taxable year to 
such account (other than contributions under section 
530A(d)(3)(C)) exceeds the contribution limit under 
section 530A(b)(2)(C). 
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‘‘(2) SPECIAL RULE.—For purposes of this sub-
section, any contribution which is distributed out of 
the first-time homeowner assistance account (as so 
defined) in a distribution to which the last sentence 
of section 530A(d)(6)(C) applies shall be treated as 
an amount not contributed.’’. 
(2) Section 26(b)(2) is amended by striking 
‘‘and’’ at the end of subparagraph (X), by striking 
the period at the end of subparagraph (Y) and in-
serting ‘‘, and’’, and by inserting after subparagraph 
(Y) the following: 
‘‘(Z) section 530A(d)(3)(A) (relating to ad-
ditional tax on first-time homeowner assistance 
account distributions not used for qualified 
homeowner assistance).’’. 
(3) PENALTY
FOR
FAILURE
TO
FILE
RE-
PORTS.—Section 6693(a)(2) of such Code is amend-
ed by striking ‘‘and’’ at the end of subparagraph 
(E), by striking the period at the end of subpara-
graph (F) and inserting ‘‘, and’’, and by inserting 
after subparagraph (F) the following: 
‘‘(G) section 530A(e) (relating to qualified 
first-time 
homeowner 
assistance 
program), 
and’’. 
(4) Section 877A of such Code is amended— 
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(A) in subsection (e)(2) by inserting ‘‘a 
qualified first-time homeowner assistance pro-
gram (as defined in section 530A),’’ after 
‘‘530),’’, and 
(B) in subsection (g)(6) by inserting 
‘‘530A(c)(3),’’ after ‘‘529(c)(3),’’. 
(5) Section 4965(c) of such Code is amended by 
striking ‘‘or’’ at the end of paragraph (7), by strik-
ing the period at the end of paragraph (8) and in-
serting ‘‘, or’’, and by inserting after paragraph (8) 
the following new paragraph: 
‘‘(9) a program described in section 530A.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for part VIII of subchapter F of chapter 1 of such Code 
is amended by adding at the end the following new item: 
‘‘Sec. 530A. Qualified first-time homeowner assistance program.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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