S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4427

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 30, 2015
                               ___________

Introduced  by M. of A. RAMOS -- read once and referred to the Committee
  on Ways and Means

AN ACT to amend the tax law, in relation to establishing  a  first  time
  home  buyer  income  tax  deduction for monies deposited into a house,
  townhouse, condominium or unit in a  cooperative  housing  corporation
  purchase  account  and  providing for penalties for unauthorized with-
  drawals from such an account

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  Subsection (c) of section 612 of the tax law is amended by
adding a new paragraph 42 to read as follows:
  (42)  THE  AMOUNT  THAT  MAY BE SUBTRACTED FROM FEDERAL ADJUSTED GROSS
INCOME PURSUANT TO SUBSECTION (W) OF THIS SECTION.
  S 2. Section 612 of the tax law is amended by adding a new  subsection
(w) to read as follows:
  (W) DEDUCTIONS FOR MONIES DEPOSITED INTO A HOUSE, TOWNHOUSE, CONDOMIN-
IUM OR UNIT IN A COOPERATIVE CORPORATION PURCHASE ACCOUNT.  (1) AN INDI-
VIDUAL  AS  A FIRST TIME HOME BUYER SHALL BE ENTITLED TO DEDUCT ANNUALLY
FROM HIS OR HER FEDERAL ADJUSTED GROSS INCOME THAT AMOUNT, NOT TO EXCEED
FIVE THOUSAND DOLLARS, DEPOSITED INTO A  HOUSE  PURCHASE  ACCOUNT.    AN
INDIVIDUAL  AND HIS OR HER SPOUSE SHALL JOINTLY BE ENTITLED TO A MAXIMUM
DEDUCTION OF TEN THOUSAND DOLLARS. THIS AMOUNT MAY  BE  DIVIDED  IN  ANY
MANNER AS THE PARTIES DESIRE FOR INCOME TAX PURPOSES.
  (2) (A) FOR THE PURPOSES OF THIS SUBSECTION, A "FIRST TIME HOME BUYER"
SHALL MEAN AN INDIVIDUAL OR AN INDIVIDUAL AND HIS OR HER SPOUSE, NONE OF
WHOM  HAS  OR  HAD AN OWNERSHIP INTEREST IN A PRINCIPAL RESIDENCE AT ANY
TIME.  NO SUCH PERSONS SHALL OWN ANY OTHER HOME  INCLUDING  VACATION  OR
INVESTMENT RESIDENCES, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION.
  (B) FOR THE PURPOSES OF THIS SUBSECTION, "OWNERSHIP INTEREST" INCLUDES
THE  FOLLOWING:  A  FEE  SIMPLE  INTEREST, A JOINT TENANCY, A TENANCY IN
COMMON, A TENANCY BY THE ENTIRETY, THE INTEREST OF A TENANT-SHARE HOLDER

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03869-02-5
              

A. 4427                             2

IN A COOPERATIVE, A LIFE ESTATE AND A LAND CONTRACT.  INTERESTS WHICH DO
NOT CONSTITUTE OWNERSHIP INTERESTS INCLUDE THE FOLLOWING: (I)  REMAINDER
INTERESTS,  (II)  A LEASE WITH OR WITHOUT AN OPTION TO PURCHASE, (III) A
MERE EXPECTANCY TO INHERIT AN INTEREST IN A RESIDENCE, (IV) THE INTEREST
THAT  A PURCHASER OF A RESIDENCE ACQUIRES ON THE EXECUTION OF A PURCHASE
CONTRACT AND (V) AN INTEREST IN REAL ESTATE OTHER THAN A RESIDENCE.
  (C) TO ESTABLISH THAT AN INDIVIDUAL IS A FIRST TIME  HOME  BUYER,  THE
INDIVIDUAL  SHALL COMPLETE A FORM PROMULGATED BY THE DEPARTMENT CERTIFY-
ING, UNDER THE PENALTIES OF PERJURY, THAT SUCH  INDIVIDUAL  IS  A  FIRST
TIME HOME BUYER.
  (D)  IN THE CASE OF AN INDIVIDUAL AND HIS OR HER SPOUSE, IF EITHER THE
INDIVIDUAL OR HIS OR HER SPOUSE IS NOT A FIRST TIME HOME BUYER,  NEITHER
THE  INDIVIDUAL  NOR  THE  SPOUSE  SHALL BE CONSIDERED A FIRST TIME HOME
BUYER.
  (E) IF AN INDIVIDUAL'S ONLY POTENTIALLY DISQUALIFYING  PRESENT  OWNER-
SHIP  INTEREST  IS  OWNERSHIP  OF  A MOBILE HOME THAT IS NOT PERMANENTLY
ATTACHED TO THE LAND, THE INDIVIDUAL MAY BE CONSIDERED A FIRST TIME HOME
BUYER AND MAY BE ELIGIBLE FOR A HOUSE PURCHASE  ACCOUNT  DEDUCTION.  FOR
THE PURPOSES OF THIS SUBPARAGRAPH A "MOBILE HOME" SHALL MEAN A STRUCTURE
WHICH  IS PERMANENTLY ATTACHED, BEING PERMANENTLY ANCHORED TO REAL PROP-
ERTY AND HAS HAD WHEELS AND  OTHER  COMPONENTS  USED  IN  TRANSPORTATION
REMOVED.  IF, DUE TO HIS OR HER OWNERSHIP OF A MOBILE HOME, THE INDIVID-
UAL HAS CLAIMED A REAL ESTATE TAX OR HOME MORTGAGE DEDUCTION ON  HIS  OR
HER  INCOME TAX RETURNS, SUCH INDIVIDUAL SHALL NOT BE CONSIDERED A FIRST
TIME HOME BUYER REGARDLESS OF WHETHER THE MOBILE  HOME  WAS  PERMANENTLY
ATTACHED TO THE LAND.
  (F) AN INDIVIDUAL MUST NOT INTEND TO USE ANY PORTION OF THE REAL PROP-
ERTY  PURCHASED  USING  THE  HOUSE  PURCHASE ACCOUNT FUNDS IN A TRADE OR
BUSINESS, OR AS A VACATION HOME OR AS AN INVESTMENT, EXCEPT AS AN  OWNER
OCCUPIED MULTIPLE DWELLING WITH NO MORE THAN TWO RENTAL UNITS.
  (3)  FOR  PURPOSES OF THIS SUBSECTION A "HOUSE PURCHASE ACCOUNT" SHALL
MEAN AN ACCOUNT ORGANIZED OR CREATED IN THIS  STATE  FOR  THE  EXCLUSIVE
BENEFIT OF AN INDIVIDUAL AND HIS OR HER SPOUSE WHO IS A FIRST TIME HOME,
TOWNHOUSE,  CONDOMINIUM  OR  UNIT  IN  A COOPERATIVE HOUSING CORPORATION
PURCHASER OR INDIVIDUAL WHO  HAS  CONTRACTED  WITH  A  BUILDER  FOR  THE
CONSTRUCTION  OF  A PRINCIPAL RESIDENCE. EVERY SUCH ACCOUNT SHALL COMPLY
WITH THE FOLLOWING REQUIREMENTS:
  (A) THE ACCOUNT SHALL BE HELD IN A BANKING ORGANIZATION, AS DEFINED IN
SECTION TWO OF THE BANKING  LAW,  NATIONAL  BANKING  ASSOCIATION,  STATE
CHARTERED CREDIT UNION, FEDERAL MUTUAL SAVINGS BANK, FEDERAL SAVINGS AND
LOAN  ASSOCIATION,  OR  FEDERAL CREDIT UNION AND SUCH ACCOUNT WAS ESTAB-
LISHED PURSUANT TO THIS SUBSECTION.
  (B) ANY AMOUNT IN THE ACCOUNT IS NONFORFEITABLE.
  (C) THE FUNDS IN SUCH ACCOUNT SHALL NOT BE COMMINGLED WITH  ANY  OTHER
MONIES OF THE INDIVIDUAL BY THE TRUSTEE.
  (D)  MONIES WITHDRAWN FROM SUCH ACCOUNT AND INTEREST WHICH HAS ACCRUED
SHALL NOT BE CONSIDERED AS INCOME TO THE INDIVIDUAL  AND  TAXED  IF  THE
MONIES  ARE  APPLIED  FOR THE PURCHASE OR CONSTRUCTION OF A HOUSE, TOWN-
HOUSE, CONDOMINIUM OR UNIT IN A COOPERATIVE HOUSING  CORPORATION  TO  BE
USED  AS  A PRIMARY RESIDENCE OF THE INDIVIDUAL FOR A PERIOD OF NOT LESS
THAN TWO YEARS AFTER PURCHASE OR CONSTRUCTION.
  (4) WITHIN SIXTY DAYS AFTER WITHDRAWAL OF MONIES FROM A HOUSE PURCHASE
ACCOUNT, AN INDIVIDUAL SHALL SUBMIT SATISFACTORY PROOF  TO  THE  COMMIS-
SIONER, UPON FORMS PROVIDED BY THE DEPARTMENT, THAT THE MONIES WITHDRAWN
WERE USED FOR THE PURCHASE OR CONSTRUCTION OF A HOUSE, TOWNHOUSE, CONDO-
MINIUM  OR  UNIT IN A COOPERATIVE HOUSING CORPORATION. IN THE EVENT THAT

A. 4427                             3

AN INDIVIDUAL WITHDRAWS ALL OR ANY PART OF THE MONIES FROM  THE  ACCOUNT
AND  DOES NOT EITHER APPLY THE MONIES TO THE PURCHASE OR CONSTRUCTION OF
A HOUSE, TOWNHOUSE, CONDOMINIUM OR UNIT IN A COOPERATIVE HOUSING  CORPO-
RATION,  OR  FAILS  TO  SUBMIT TO THE COMMISSIONER THE PROOF AS REQUIRED
PURSUANT TO THIS  PARAGRAPH,  SUCH  INDIVIDUAL  SHALL  HAVE  THE  ENTIRE
ACCOUNT  TAXED,  INCLUDING  INTEREST WHICH HAS ACCRUED, AS THOUGH IT WAS
INCOME IN THE YEARS THAT THE MONIES FROM THE ACCOUNT WERE WITHDRAWN.  IN
THE EVENT THAT AN INDIVIDUAL DOES NOT USE THE HOUSE,  TOWNHOUSE,  CONDO-
MINIUM  OR  UNIT IN A COOPERATIVE HOUSING CORPORATION AS A PRIMARY RESI-
DENCE FOR A PERIOD OF NOT LESS THAN TWO  YEARS  AFTER  THE  PURCHASE  OR
CONSTRUCTION  SUCH  INDIVIDUAL  SHALL  HAVE  THE  ENTIRE  HOUSE PURCHASE
ACCOUNT TAXED, INCLUDING INTEREST WHICH HAS ACCRUED, AS  THOUGH  IT  WAS
INCOME IN THE YEAR THAT THE MONIES FROM THE ACCOUNT WERE WITHDRAWN.  FOR
THE  PURPOSES  OF THIS PARAGRAPH, THE TWO YEAR PERIOD SHALL BEGIN TO RUN
AT THE TIME TITLE TO THE HOUSE, TOWNHOUSE, CONDOMINIUM,  OR  UNIT  IN  A
COOPERATIVE HOUSING CORPORATION PASSES TO THE INDIVIDUAL.
  (5)  THE  COMMISSIONER  SHALL  ESTABLISH  A PENALTY OF TEN PERCENT FOR
THOSE HOUSE PURCHASE ACCOUNTS WHICH ARE TAXED IN ACCORDANCE  WITH  PARA-
GRAPH  FOUR OF THIS SUBSECTION.  THE PENALTY SHALL BE IN ADDITION TO THE
TAX DUE FOR THOSE FUNDS INAPPROPRIATELY APPLIED. SUCH PENALTY  SHALL  BE
WAIVED  BY  THE  COMMISSIONER  IF THE INDIVIDUAL CAN SHOW PROOF THAT THE
REASON THE INDIVIDUAL DID NOT USE THE HOUSE, TOWNHOUSE,  CONDOMINIUM  OR
UNIT  IN  A COOPERATIVE HOUSING CORPORATION AS A PRIMARY RESIDENCE FOR A
PERIOD OF TWO YEARS OR MORE AFTER THE PURCHASE OR CONSTRUCTION, WAS  DUE
TO EITHER:
  (A)  AN  EMPLOYMENT  RELOCATION  OUTSIDE THE STATE AND SUCH RELOCATION
REQUIRED THE INDIVIDUAL TO BECOME A RESIDENT OF ANOTHER STATE; OR
  (B) AN UNFORESEEABLE FINANCIAL EMERGENCY.
  FOR PURPOSES OF THIS PARAGRAPH, AN "UNFORESEEABLE FINANCIAL EMERGENCY"
SHALL MEAN A SEVERE FINANCIAL HARDSHIP TO THE INDIVIDUAL RESULTING  FROM
A  SUDDEN  AND  UNEXPECTED ILLNESS OR ACCIDENT OF THE INDIVIDUAL OR OF A
DEPENDENT.  THE CIRCUMSTANCES THAT CONSTITUTE AN UNFORESEEABLE EMERGENCY
WILL DEPEND UPON THE FACTS OF EACH CASE, HOWEVER,  WITHDRAWAL  OF  HOUSE
PURCHASE  ACCOUNT  FUNDS MAY NOT BE MADE, WITHOUT PENALTY, TO THE EXTENT
THAT SUCH HARDSHIP IS OR MAY BE RELIEVED BY EITHER:
  (I) REIMBURSEMENT OR COMPENSATION BY INSURANCE OR OTHERWISE; OR
  (II) LIQUIDATION OF THE INDIVIDUAL'S ASSETS, TO THE EXTENT THE  LIQUI-
DATION OF SUCH ASSETS WOULD NOT ITSELF CAUSE SEVERE FINANCIAL HARDSHIP.
  (6)  THE  COMMISSIONER  IS HEREBY DIRECTED TO PROMULGATE ALL RULES AND
REGULATIONS,  AFTER  CONSULTATION  WITH  THE  DEPARTMENT  OF   FINANCIAL
SERVICES,  NECESSARY  TO IMPLEMENT THE PROVISIONS OF THIS SUBSECTION AND
TO MAXIMIZE THE EFFECT OF THIS  SUBSECTION.  THE  COMMISSIONER  AND  THE
SUPERINTENDENT  OF  FINANCIAL  SERVICES ARE HEREBY DIRECTED TO COOPERATE
WITH EACH OTHER IN THE ESTABLISHMENT, SUPERVISION AND REGULATION OF  THE
INDIVIDUAL  HOUSE  PURCHASE  ACCOUNTS  AUTHORIZED  TO BE CREATED IN THIS
SUBSECTION.
  S 3. This act shall take effect on the one hundred twentieth day after
it shall have become a law and shall apply to taxable  years  commencing
on  or after January first of the year next succeeding the year in which
it shall have become a  law;  provided  however,  that  paragraph  6  of
subsection (w) of section 612 of the tax law, as added by section two of
this act, shall take effect immediately.

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4427--B

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 30, 2015
                               ___________

Introduced  by  M.  of  A.  RAMOS,  SKOUFIS,  SCHIMMINGER, SANTABARBARA,
  MOSLEY, HOOPER, COOK, SKARTADOS, JOYNER,  SEPULVEDA,  CAHILL,  DAVILA,
  OTIS,  BLAKE, JEAN-PIERRE, LUPINACCI -- Multi-Sponsored by -- M. of A.
  ABBATE, BRENNAN,  ENGLEBRIGHT,  McDONALD,  THIELE  --  read  once  and
  referred  to  the  Committee  on  Ways and Means -- recommitted to the
  Committee on Ways and Means in accordance with Assembly Rule 3, sec. 2
  -- committee discharged, bill amended, ordered  reprinted  as  amended
  and  recommitted to said committee -- again reported from said commit-
  tee with amendments, ordered reprinted as amended and  recommitted  to
  said committee

AN  ACT  to amend the private housing finance law, in relation to estab-
  lishing the New York state first home savings program,  which  author-
  izes  first time home buyers to establish savings accounts to purchase
  a home; and to amend the  tax  law,  in  relation  to  establishing  a
  personal income tax deduction for deposits into such accounts

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The private housing finance law is amended by adding a  new
article 28 to read as follows:
                             ARTICLE XXVIII
                        NEW YORK STATE FIRST HOME
                             SAVINGS PROGRAM
SECTION 1250. PROGRAM ESTABLISHED.
        1251. PURPOSES.
        1252. DEFINITIONS.
        1253. FUNCTIONS OF THE COMPTROLLER.
        1254. POWERS OF THE COMPTROLLER.
        1255. PROGRAM REQUIREMENTS; FIRST HOME SAVINGS ACCOUNT.
        1256. PROGRAM LIMITATIONS; FIRST HOME SAVINGS ACCOUNT.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03869-06-6

A. 4427--B                          2
              

  S  1250. PROGRAM ESTABLISHED. THERE IS HEREBY ESTABLISHED A FIRST HOME
SAVINGS PROGRAM AND SUCH PROGRAM SHALL BE KNOWN AND MAY BE CITED AS  THE
"NEW YORK STATE FIRST HOME SAVINGS PROGRAM".
  S  1251.  PURPOSES.  THE PURPOSES OF THE PROGRAM SHALL BE TO AUTHORIZE
THE ESTABLISHMENT OF FAMILY SAVINGS ACCOUNTS AND TO  PROVIDE  GUIDELINES
FOR THE MAINTENANCE OF SUCH ACCOUNTS TO:
  1.  ENABLE  RESIDENTS  OF THIS STATE TO BENEFIT FROM THE TAX INCENTIVE
PROVIDED  FOR  QUALIFIED  STATE  FIRST  HOME  SAVINGS   ACCOUNTS   UNDER
SUBSECTION (W) OF SECTION SIX HUNDRED TWELVE OF THE TAX LAW; AND
  2.  INCENTIVIZE  RESIDENTS  TO  SAVE  FOR THE PURCHASE OF A FIRST HOME
WITHIN THE STATE.
  S 1252. DEFINITIONS. AS USED IN  THIS  ARTICLE,  THE  FOLLOWING  TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
  1.  "ACCOUNT" OR "FIRST HOME SAVINGS ACCOUNT" SHALL MEAN AN INDIVIDUAL
SAVINGS ACCOUNT ESTABLISHED IN ACCORDANCE WITH THE  PROVISIONS  OF  THIS
ARTICLE  FOR  THE  EXCLUSIVE  BENEFIT  OF  AN INDIVIDUAL, AND HIS OR HER
SPOUSE, THAT IS A FIRST TIME BUYER OF A HOME, TOWNHOME,  CONDOMINIUM  OR
UNIT IN A COOPERATIVE HOUSING CORPORATION.
  2.  "ACCOUNT  OWNER"  SHALL MEAN A PERSON WHO ENTERS INTO A FIRST HOME
SAVINGS AGREEMENT PURSUANT TO THE PROVISIONS OF THIS ARTICLE,  INCLUDING
A  PERSON  WHO  ENTERS INTO SUCH AN AGREEMENT AS A FIDUCIARY OR AGENT ON
BEHALF OF A TRUST, ESTATE, PARTNERSHIP, ASSOCIATION, COMPANY  OR  CORPO-
RATION.  THE ACCOUNT OWNER MAY ALSO BE THE DESIGNATED BENEFICIARY OF THE
ACCOUNT.
  3. "DESIGNATED BENEFICIARY" SHALL MEAN, WITH RESPECT TO AN ACCOUNT  OR
ACCOUNTS,  THE  INDIVIDUAL DESIGNATED AS THE INDIVIDUAL WHOSE FIRST HOME
PURCHASE EXPENSES ARE EXPECTED TO BE PAID FROM THE ACCOUNT OR ACCOUNTS.
  4. "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION  AUTHORIZED  TO
DO  BUSINESS  IN  THE STATE, AND (A) WHICH IS AN AUTHORIZED FIDUCIARY TO
ACT AS A TRUSTEE PURSUANT TO THE PROVISIONS OF AN ACT OF CONGRESS  ENTI-
TLED  "EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT  OF  1974",  AS  SUCH
PROVISIONS MAY BE AMENDED FROM TIME TO TIME, OR  AN  INSURANCE  COMPANY;
AND  (B)(I)  IS  LICENSED  OR  CHARTERED  BY THE DEPARTMENT OF FINANCIAL
SERVICES, (II) IS CHARTERED BY AN  AGENCY  OF  THE  FEDERAL  GOVERNMENT,
(III)  IS  SUBJECT  TO THE JURISDICTION AND REGULATION OF THE SECURITIES
AND EXCHANGE COMMISSION OF THE FEDERAL GOVERNMENT,  (IV)  IS  ANY  OTHER
ENTITY  OTHERWISE  AUTHORIZED TO ACT IN THIS STATE AS A TRUSTEE PURSUANT
TO THE PROVISIONS OF AN ACT OF CONGRESS  ENTITLED  "EMPLOYEE  RETIREMENT
INCOME  SECURITY  ACT  OF  1974", AS SUCH PROVISIONS MAY BE AMENDED FROM
TIME TO TIME, (V) OR ANY BANKING ORGANIZATION AS DEFINED IN  SUBDIVISION
ELEVEN  OF SECTION TWO OF THE BANKING LAW, NATIONAL BANKING ASSOCIATION,
STATE CHARTERED CREDIT  UNION,  FEDERAL  MUTUAL  SAVINGS  BANK,  FEDERAL
SAVINGS AND LOAN ASSOCIATION OR FEDERAL CREDIT UNION.
  5.  "FIRST  TIME HOME BUYER" SHALL MEAN AN INDIVIDUAL OR AN INDIVIDUAL
AND HIS OR HER SPOUSE, NEITHER OF WHOM HAS OR HAD AN OWNERSHIP  INTEREST
IN A PRINCIPAL RESIDENCE AT ANY TIME. NO SUCH PERSON SHALL OWN ANY OTHER
HOME  INCLUDING  VACATION  OR INVESTMENT RESIDENCES, EXCEPT AS OTHERWISE
PROVIDED IN THIS SUBDIVISION. IF EITHER THE INDIVIDUAL  OR  HIS  OR  HER
SPOUSE  IS  NOT  A FIRST TIME HOME BUYER, NEITHER THE INDIVIDUAL NOR THE
SPOUSE SHALL BE CONSIDERED A FIRST TIME HOME BUYER. IF  AN  INDIVIDUAL'S
ONLY  POTENTIALLY  DISQUALIFYING PRESENT OWNERSHIP INTEREST IS OWNERSHIP
OF A MOBILE HOME THAT IS NOT PERMANENTLY ATTACHED TO THE LAND, THE INDI-
VIDUAL SHALL BE CONSIDERED A FIRST TIME HOME BUYER AND SHALL BE ELIGIBLE
FOR A HOUSE PURCHASE ACCOUNT DEDUCTION. FOR THE PURPOSES OF THIS ARTICLE
A "MOBILE HOME" SHALL MEAN A STRUCTURE WHICH  IS  PERMANENTLY  ATTACHED,
BEING PERMANENTLY ANCHORED TO REAL PROPERTY AND HAS HAD WHEELS AND OTHER

A. 4427--B                          3

COMPONENTS  USED IN TRANSPORTATION REMOVED. IF, DUE TO HIS OR HER OWNER-
SHIP OF A MOBILE HOME, THE INDIVIDUAL HAS CLAIMED A REAL ESTATE  TAX  OR
HOME  MORTGAGE DEDUCTION ON HIS OR HER PERSONAL INCOME TAX RETURNS, SUCH
INDIVIDUAL SHALL NOT BE CONSIDERED A FIRST TIME HOME BUYER REGARDLESS OF
WHETHER THE MOBILE HOME WAS PERMANENTLY ATTACHED TO THE LAND.
  6.  "OWNERSHIP  INTEREST"  SHALL  MEAN  A FEE SIMPLE INTEREST, A JOINT
TENANCY, A TENANCY IN COMMON, A TENANCY BY THE ENTIRETY, THE INTEREST OF
A TENANT-SHARE HOLDER  IN  A  COOPERATIVE,  A  LIFE  ESTATE  OR  A  LAND
CONTRACT.  INTERESTS WHICH DO NOT CONSTITUTE OWNERSHIP INTERESTS INCLUDE
THE FOLLOWING: (A) REMAINDER INTERESTS, (B) A LEASE WITH OR  WITHOUT  AN
OPTION  TO  PURCHASE,  (C) A MERE EXPECTANCY TO INHERIT AN INTEREST IN A
RESIDENCE, (D) THE INTEREST THAT A PURCHASER OF A RESIDENCE ACQUIRES  ON
THE  EXECUTION OF A PURCHASE CONTRACT AND (E) AN INTEREST IN REAL ESTATE
OTHER THAN A RESIDENCE.
  7. "MEMBER OF FAMILY" SHALL  MEAN:  A  FAMILY  MEMBER  AS  DEFINED  IN
SECTION 529 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
  8. "PROGRAM" SHALL MEAN THE NEW YORK FIRST HOME SAVINGS PROGRAM ESTAB-
LISHED PURSUANT TO THIS ARTICLE.
  9.  "QUALIFIED FIRST HOME PURCHASE EXPENSES" SHALL MEAN MONIES APPLIED
FOR THE PURCHASE OR CONSTRUCTION OF A HOUSE, TOWNHOUSE,  CONDOMINIUM  OR
UNIT IN A COOPERATIVE HOUSING CORPORATION WITHIN THE STATE TO BE USED AS
A  PRIMARY RESIDENCE OF THE INDIVIDUAL FOR A PERIOD OF NOT LESS THAN TWO
YEARS AFTER PURCHASE OR CONSTRUCTION.
  10. "QUALIFIED RESIDENTIAL HOUSING" SHALL  MEAN  A  HOUSE,  TOWNHOUSE,
CONDOMINIUM  OR  UNIT  IN  A  COOPERATIVE HOUSING CORPORATION WITHIN THE
STATE.
  11. "QUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN ACCOUNT  TO
PAY  THE QUALIFIED FIRST HOME PURCHASE EXPENSE OF THE DESIGNATED BENEFI-
CIARY OF THE ACCOUNT.
  12. "NONQUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN  ACCOUNT
BUT SHALL NOT INCLUDE:
  (A) A QUALIFIED WITHDRAWAL; OR
  (B)  A WITHDRAWAL MADE AS THE RESULT OF THE DEATH OR DISABILITY OF THE
DESIGNATED BENEFICIARY OF AN ACCOUNT.
  13. "COMPTROLLER" SHALL MEAN THE STATE COMPTROLLER.
  14. "MANAGEMENT CONTRACT" SHALL MEAN  THE  CONTRACT  EXECUTED  BY  THE
COMPTROLLER AND A FINANCIAL ORGANIZATION SELECTED TO ACT AS A DEPOSITORY
AND MANAGER OF THE PROGRAM.
  15. "FIRST HOME SAVINGS AGREEMENT" SHALL MEAN AN AGREEMENT BETWEEN THE
COMPTROLLER OR A FINANCIAL ORGANIZATION AND THE ACCOUNT OWNER.
  16.  "PROGRAM MANAGER" SHALL MEAN A FINANCIAL ORGANIZATION SELECTED BY
THE COMPTROLLER TO ACT AS A DEPOSITORY AND MANAGER OF THE PROGRAM.
  17. "COMMISSIONER" SHALL MEAN THE COMMISSIONER  OF  THE  TAXATION  AND
FINANCE.
  S 1253. FUNCTIONS OF THE COMPTROLLER.  1. THE COMPTROLLER SHALL IMPLE-
MENT  THE  PROGRAM  UNDER  THE  TERMS AND CONDITIONS ESTABLISHED BY THIS
ARTICLE AND A MEMORANDUM OF UNDERSTANDING WITH THE COMMISSIONER RELATING
TO ANY TERMS OR CONDITIONS NOT OTHERWISE EXPRESSLY PROVIDED FOR IN  THIS
ARTICLE.
  2. IN FURTHERANCE OF SUCH IMPLEMENTATION THE COMPTROLLER SHALL:
  (A)  DEVELOP AND IMPLEMENT THE PROGRAM IN A MANNER CONSISTENT WITH THE
PROVISIONS OF THIS ARTICLE THROUGH RULES AND REGULATIONS ESTABLISHED  IN
ACCORDANCE WITH THE STATE ADMINISTRATIVE PROCEDURE ACT;
  (B) ENGAGE THE SERVICES OF CONSULTANTS ON A CONTRACT BASIS FOR RENDER-
ING PROFESSIONAL AND TECHNICAL ASSISTANCE AND ADVICE;

A. 4427--B                          4

  (C)  SEEK RULINGS AND OTHER GUIDANCE FROM THE UNITED STATES DEPARTMENT
OF TREASURY AND THE INTERNAL REVENUE SERVICE RELATING TO THE PROGRAM;
  (D)  MAKE  CHANGES TO THE PROGRAM REQUIRED FOR THE PARTICIPANTS IN THE
PROGRAM TO OBTAIN THE STATE INCOME TAX BENEFITS OR TREATMENT PROVIDED BY
THIS ARTICLE;
  (E) CHARGE, IMPOSE AND COLLECT ADMINISTRATIVE FEES AND SERVICE CHARGES
IN CONNECTION WITH ANY AGREEMENT, CONTRACT OR  TRANSACTION  RELATING  TO
THE PROGRAM;
  (F) DEVELOP MARKETING PLANS AND PROMOTION MATERIAL;
  (G)  ESTABLISH THE METHODS BY WHICH THE FUNDS HELD IN SUCH ACCOUNTS BE
DISPERSED;
  (H) ESTABLISH THE METHOD BY WHICH FUNDS SHALL BE ALLOCATED TO PAY  FOR
ADMINISTRATIVE COSTS; AND
  (I)  DO  ALL  THINGS NECESSARY AND PROPER TO CARRY OUT THE PURPOSES OF
THIS ARTICLE.
  S 1254. POWERS OF THE COMPTROLLER. 1. THE  COMPTROLLER  MAY  IMPLEMENT
THE  PROGRAM THROUGH USE OF FINANCIAL ORGANIZATIONS AS ACCOUNT DEPOSITO-
RIES AND MANAGERS. UNDER THE PROGRAM, INDIVIDUALS MAY ESTABLISH ACCOUNTS
DIRECTLY WITH AN ACCOUNT DEPOSITORY.
  2. THE COMPTROLLER MAY SOLICIT PROPOSALS FROM FINANCIAL  ORGANIZATIONS
TO  ACT AS DEPOSITORIES AND MANAGERS OF THE PROGRAM. FINANCIAL ORGANIZA-
TIONS SUBMITTING PROPOSALS  SHALL  DESCRIBE  THE  INVESTMENT  INSTRUMENT
WHICH WILL BE HELD IN ACCOUNTS.  THE COMPTROLLER SHALL SELECT AS PROGRAM
DEPOSITORIES  AND  MANAGERS  THE  FINANCIAL ORGANIZATION, FROM AMONG THE
BIDDING FINANCIAL ORGANIZATIONS THAT DEMONSTRATES THE MOST  ADVANTAGEOUS
COMBINATION,  BOTH  TO POTENTIAL PROGRAM PARTICIPANTS AND THIS STATE, OF
THE FOLLOWING FACTORS:
  (A) FINANCIAL STABILITY AND INTEGRITY OF THE FINANCIAL ORGANIZATION;
  (B) THE SAFETY OF THE INVESTMENT INSTRUMENT BEING OFFERED;
  (C) THE ABILITY OF THE INVESTMENT INSTRUMENT TO TRACK INCREASING COSTS
OF RESIDENTIAL HOUSING;
  (D) THE ABILITY OF THE FINANCIAL ORGANIZATION TO SATISFY RECORDKEEPING
AND REPORTING REQUIREMENTS;
  (E) THE FINANCIAL ORGANIZATION'S PLAN FOR PROMOTING  THE  PROGRAM  AND
THE INVESTMENT IT IS WILLING TO MAKE TO PROMOTE THE PROGRAM;
  (F)  THE  FEES,  IF ANY, PROPOSED TO BE CHARGED TO PERSONS FOR OPENING
ACCOUNTS;
  (G) THE MINIMUM INITIAL DEPOSIT AND  MINIMUM  CONTRIBUTIONS  THAT  THE
FINANCIAL ORGANIZATION WILL REQUIRE;
  (H)  THE  ABILITY  OF BANKING ORGANIZATIONS TO ACCEPT ELECTRONIC WITH-
DRAWALS, INCLUDING PAYROLL DEDUCTION PLANS; AND
  (I) OTHER BENEFITS TO THE STATE  OR  ITS  RESIDENTS  INCLUDED  IN  THE
PROPOSAL, INCLUDING FEES PAYABLE TO THE STATE TO COVER EXPENSES OF OPER-
ATION OF THE PROGRAM.
  3.  THE  COMPTROLLER MAY ENTER INTO A CONTRACT WITH A FINANCIAL ORGAN-
IZATION. SUCH FINANCIAL ORGANIZATION MANAGEMENT MAY PROVIDE ONE OR  MORE
TYPES OF INVESTMENT INSTRUMENT.
  4. THE COMPTROLLER MAY SELECT MORE THAN ONE FINANCIAL ORGANIZATION FOR
THE PROGRAM.
  5.  A MANAGEMENT CONTRACT SHALL INCLUDE, AT A MINIMUM, TERMS REQUIRING
THE FINANCIAL ORGANIZATION TO:
  (A) TAKE ANY ACTION REQUIRED TO KEEP THE PROGRAM  IN  COMPLIANCE  WITH
REQUIREMENTS  OF  SECTION  TWELVE HUNDRED FIFTY-FIVE OF THIS ARTICLE AND
ANY ACTIONS NOT CONTRARY TO ITS CONTRACT TO MANAGE THE PROGRAM TO QUALI-
FY AS A "FIRST HOME SAVINGS ACCOUNT" UNDER SUBSECTION (W) OF SECTION SIX
HUNDRED TWELVE OF THE TAX LAW;

A. 4427--B                          5

  (B) KEEP ADEQUATE RECORDS OF EACH ACCOUNT, KEEP  EACH  ACCOUNT  SEGRE-
GATED  FROM  EACH  OTHER  ACCOUNT,  AND PROVIDE THE COMPTROLLER WITH THE
INFORMATION NECESSARY TO PREPARE  THE  STATEMENTS  REQUIRED  BY  SECTION
TWELVE HUNDRED FIFTY-FIVE OF THIS ARTICLE;
  (C)  COMPILE AND TOTAL INFORMATION CONTAINED IN STATEMENTS REQUIRED TO
BE PREPARED UNDER SECTION TWELVE HUNDRED FIFTY-FIVE OF THIS ARTICLE  AND
PROVIDE SUCH COMPILATIONS TO THE COMPTROLLER;
  (D) IF THERE IS MORE THAN ONE PROGRAM MANAGER, PROVIDE THE COMPTROLLER
WITH  SUCH  INFORMATION  NECESSARY  TO DETERMINE COMPLIANCE WITH SECTION
TWELVE HUNDRED FIFTY-FIVE OF THIS ARTICLE;
  (E) PROVIDE THE COMPTROLLER OR HIS DESIGNEE ACCESS TO  THE  BOOKS  AND
RECORDS OF THE PROGRAM MANAGER TO THE EXTENT NEEDED TO DETERMINE COMPLI-
ANCE WITH THE CONTRACT;
  (F) HOLD ALL ACCOUNTS FOR THE BENEFIT OF THE ACCOUNT OWNER;
  (G)  BE  AUDITED  AT  LEAST  ANNUALLY  BY  A  FIRM OF CERTIFIED PUBLIC
ACCOUNTANTS SELECTED BY THE PROGRAM MANAGER AND THAT THE RESULTS OF SUCH
AUDIT BE PROVIDED TO THE COMPTROLLER;
  (H) PROVIDE THE COMPTROLLER WITH COPIES OF ALL REGULATORY FILINGS  AND
REPORTS  MADE  BY IT DURING THE TERM OF THE MANAGEMENT CONTRACT OR WHILE
IT IS HOLDING ANY ACCOUNTS, OTHER THAN CONFIDENTIAL FILINGS  OR  REPORTS
THAT WILL NOT BECOME PART OF THE PROGRAM. THE PROGRAM MANAGER SHALL MAKE
AVAILABLE  FOR  REVIEW  BY  THE  COMPTROLLER THE RESULTS OF ANY PERIODIC
EXAMINATION OF SUCH MANAGER BY ANY STATE OR FEDERAL  BANKING,  INSURANCE
OR  SECURITIES  COMMISSION,  EXCEPT  TO  THE  EXTENT THAT SUCH REPORT OR
REPORTS MAY NOT BE DISCLOSED UNDER APPLICABLE LAW OR THE RULES  OF  SUCH
COMMISSION; AND
  (I)  ENSURE THAT ANY DESCRIPTION OF THE PROGRAM, WHETHER IN WRITING OR
THROUGH THE USE OF ANY MEDIA, IS CONSISTENT WITH THE MARKETING  PLAN  AS
DEVELOPED   PURSUANT   TO  THE  PROVISIONS  OF  SECTION  TWELVE  HUNDRED
FIFTY-THREE OF THIS ARTICLE.
  6. THE COMPTROLLER MAY PROVIDE THAT AN AUDIT SHALL BE CONDUCTED OF THE
OPERATIONS AND FINANCIAL POSITION OF THE PROGRAM DEPOSITORY AND  MANAGER
AT  ANY TIME IF THE COMPTROLLER HAS ANY REASON TO BE CONCERNED ABOUT THE
FINANCIAL POSITION,  THE  RECORDKEEPING  PRACTICES,  OR  THE  STATUS  OF
ACCOUNTS OF SUCH PROGRAM DEPOSITORY AND MANAGER.
  7.  DURING  THE TERM OF ANY CONTRACT WITH A PROGRAM MANAGER, THE COMP-
TROLLER SHALL CONDUCT AN EXAMINATION OF SUCH MANAGER AND ITS HANDLING OF
ACCOUNTS. SUCH EXAMINATION SHALL BE CONDUCTED  AT  LEAST  BIENNIALLY  IF
SUCH  MANAGER  IS  NOT  OTHERWISE SUBJECT TO PERIODIC EXAMINATION BY THE
SUPERINTENDENT OF FINANCIAL  SERVICES,  THE  FEDERAL  DEPOSIT  INSURANCE
CORPORATION OR OTHER SIMILAR ENTITY.
  8.  (A)  IF SELECTION OF A FINANCIAL ORGANIZATION AS A PROGRAM MANAGER
OR DEPOSITORY IS NOT RENEWED, AFTER THE END OF ITS TERM:
  (I) ACCOUNTS PREVIOUSLY ESTABLISHED AND HELD IN INVESTMENT INSTRUMENTS
AT SUCH FINANCIAL ORGANIZATION MAY BE TERMINATED;
  (II) ADDITIONAL CONTRIBUTIONS MAY BE MADE TO SUCH ACCOUNTS;
  (III) NO NEW ACCOUNTS MAY BE PLACED WITH SUCH FINANCIAL  ORGANIZATION;
AND
  (IV) EXISTING ACCOUNTS HELD BY SUCH DEPOSITORY SHALL REMAIN SUBJECT TO
ALL OVERSIGHT AND REPORTING REQUIREMENTS ESTABLISHED BY THE COMPTROLLER.
  (B)  IF  THE  COMPTROLLER  TERMINATES  A  FINANCIAL  ORGANIZATION AS A
PROGRAM MANAGER OR DEPOSITORY, HE OR SHE SHALL TAKE CUSTODY OF  ACCOUNTS
HELD  BY SUCH FINANCIAL ORGANIZATION AND SHALL SEEK TO PROMPTLY TRANSFER
SUCH ACCOUNTS TO ANOTHER FINANCIAL ORGANIZATION THAT IS  SELECTED  AS  A
PROGRAM MANAGER OR DEPOSITORY AND INTO INVESTMENT INSTRUMENTS AS SIMILAR
TO THE ORIGINAL INSTRUMENTS AS POSSIBLE.

A. 4427--B                          6

  9. THE COMPTROLLER MAY ENTER INTO SUCH CONTRACTS AS IT DEEMS NECESSARY
AND PROPER FOR THE IMPLEMENTATION OF THE PROGRAM.
  S  1255.  PROGRAM  REQUIREMENTS;  FIRST HOME SAVINGS ACCOUNT. 1. FIRST
HOME SAVINGS ACCOUNTS ESTABLISHED PURSUANT TO  THE  PROVISIONS  OF  THIS
ARTICLE SHALL BE GOVERNED BY THE PROVISIONS OF THIS SECTION.
  2.  A  FIRST  HOME  SAVINGS  ACCOUNT  MAY  BE OPENED BY ANY PERSON WHO
DESIRES TO SAVE MONEY FOR  THE  PAYMENT  OF  THE  QUALIFIED  FIRST  HOME
PURCHASE  EXPENSES  OF  A  DESIGNATED  BENEFICIARY. AN ACCOUNT OWNER MAY
DESIGNATE ANOTHER PERSON AS SUCCESSOR OWNER OF THE ACCOUNT IN THE  EVENT
OF  THE  DEATH  OF  THE ORIGINAL ACCOUNT OWNER. SUCH PERSON WHO OPENS AN
ACCOUNT OR ANY SUCCESSOR OWNER SHALL BE CONSIDERED THE ACCOUNT OWNER.
  (A) AN APPLICATION FOR SUCH ACCOUNT SHALL BE IN THE FORM PRESCRIBED BY
THE PROGRAM AND CONTAIN THE FOLLOWING:
  (I) THE NAME, ADDRESS AND SOCIAL SECURITY NUMBER OR EMPLOYER IDENTIFI-
CATION NUMBER OF THE ACCOUNT OWNER;
  (II) THE DESIGNATION OF A DESIGNATED BENEFICIARY;
  (III) THE NAME, ADDRESS, AND SOCIAL SECURITY NUMBER OF THE  DESIGNATED
BENEFICIARY; AND
  (IV) SUCH OTHER INFORMATION AS THE PROGRAM MAY REQUIRE.
  (B)  THE  COMPTROLLER  AND THE CORPORATION MAY ESTABLISH A NOMINAL FEE
FOR SUCH APPLICATION.
  3. ANY PERSON, INCLUDING THE ACCOUNT OWNER, MAY MAKE CONTRIBUTIONS  TO
THE ACCOUNT AFTER THE ACCOUNT IS OPENED.
  4. CONTRIBUTIONS TO ACCOUNTS MAY BE MADE ONLY IN CASH.
  5.  AN  ACCOUNT  OWNER MAY WITHDRAW ALL OR PART OF THE BALANCE FROM AN
ACCOUNT AS AUTHORIZED UNDER RULES  GOVERNING  THE  PROGRAM.  SUCH  RULES
SHALL INCLUDE PROVISIONS THAT WILL GENERALLY ENABLE THE DETERMINATION AS
TO  WHETHER  A  WITHDRAWAL  IS  A NONQUALIFIED WITHDRAWAL OR A QUALIFIED
WITHDRAWAL.
  6. (A) AN ACCOUNT OWNER MAY CHANGE THE DESIGNATED  BENEFICIARY  OF  AN
ACCOUNT  TO  AN  INDIVIDUAL  WHO  IS A MEMBER OF THE FAMILY OF THE PRIOR
DESIGNATED BENEFICIARY IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY  THE
MEMORANDUM  OF UNDERSTATING PURSUANT TO THE PROVISIONS OF SECTION TWELVE
HUNDRED FIFTY-THREE.
  (B) AN ACCOUNT OWNER MAY TRANSFER ALL OR A PORTION OF  AN  ACCOUNT  TO
ANOTHER  FIRST HOME SAVINGS ACCOUNT, THE SUBSEQUENT DESIGNATED BENEFICI-
ARY OF WHICH IS A MEMBER OF THE FAMILY AS DEFINED IN SECTION 529 OF  THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED.
  (C)  CHANGES  IN  DESIGNATED  BENEFICIARIES  AND  TRANSFERS UNDER THIS
SUBDIVISION SHALL NOT BE PERMITTED TO THE EXTENT THAT THEY  WOULD  CAUSE
ALL  ACCOUNTS FOR THE SAME BENEFICIARY TO EXCEED THE PERMITTED AGGREGATE
MAXIMUM ACCOUNT BALANCE.
  7. THE PROGRAM SHALL PROVIDE SEPARATE ACCOUNTING FOR  EACH  DESIGNATED
BENEFICIARY.
  8.  NO ACCOUNT OWNER OR DESIGNATED BENEFICIARY OF ANY ACCOUNT SHALL BE
PERMITTED TO DIRECT THE INVESTMENT OF ANY CONTRIBUTIONS TO AN ACCOUNT OR
THE EARNINGS THEREON MORE THAN TWO TIMES IN ANY CALENDAR YEAR.
  9. NEITHER AN ACCOUNT OWNER NOR A DESIGNATED BENEFICIARY  MAY  USE  AN
INTEREST IN AN ACCOUNT AS SECURITY FOR A LOAN. ANY PLEDGE OF AN INTEREST
IN AN ACCOUNT SHALL BE OF NO FORCE AND EFFECT.
  10.  THE  COMPTROLLER SHALL PROMULGATE RULES OR REGULATIONS TO PREVENT
CONTRIBUTIONS ON BEHALF OF A DESIGNATED  BENEFICIARY  IN  EXCESS  OF  AN
AMOUNT  THAT  WOULD CAUSE THE AGGREGATE ACCOUNT BALANCE FOR ALL ACCOUNTS
FOR A DESIGNATED BENEFICIARY TO EXCEED A  MAXIMUM  ACCOUNT  BALANCE,  AS
ESTABLISHED FROM TIME TO TIME BY THE COMPTROLLER.

A. 4427--B                          7

  11.  CONTRIBUTIONS FIRST HOME SAVINGS ACCOUNTS SHALL BE LIMITED TO ONE
HUNDRED THOUSAND DOLLARS PER ACCOUNT. THIS AMOUNT SHALL  NOT  TAKE  INTO
CONSIDERATION  ANY  GAIN  OR  LOSS  TO THE PRINCIPAL INVESTMENT INTO THE
ACCOUNT.
  12.  IN THE EVENT THAT AN INDIVIDUAL MAKES A "NONQUALIFIED WITHDRAWAL"
OF MONIES FROM THE FIRST HOME SAVINGS ACCOUNT SUCH INDIVIDUAL SHALL HAVE
THE ENTIRE ACCOUNT TAXED, INCLUDING  ANY  INTEREST,  AS  THOUGH  IT  WAS
INCOME  IN  THE  TAX  YEARS  THE MONIES WERE WITHDRAWN. IN THE EVENT THE
INDIVIDUAL DOES NOT USE THE QUALIFIED RESIDENTIAL HOUSING AS  A  PRIMARY
RESIDENCE  FOR A PERIOD OF NOT LESS THAN TWO YEARS AFTER THE PURCHASE OR
CONSTRUCTION OF SUCH HOUSING,  THE  INDIVIDUAL  SHALL  HAVE  THE  ENTIRE
ACCOUNT  TAXED,  INCLUDING  ANY INTEREST, AS THOUGH IT WAS INCOME IN THE
TAX YEARS THE MONIES WERE WITHDRAWN. FOR PURPOSES OF THIS  ARTICLE,  THE
TWO  YEAR  PERIOD  SHALL  BEGIN  AT THE TIME TITLE IS TRANSFERRED TO THE
FIRST TIME HOME BUYER. THE PENALTY SHALL BE IN ADDITION TO ANY TAXES DUE
FOR THE INAPPROPRIATE USE OF MONIES IN A FIRST HOME SAVINGS ACCOUNT.
  13. PENALTIES MAY BE WAIVED BY THE COMMISSIONER IF THE INDIVIDUAL  CAN
SHOW  PROOF  THAT  THE  REASON  THE INDIVIDUAL DID NOT USE THE QUALIFIED
RESIDENTIAL HOUSING AS A PRIMARY RESIDENCE FOR A PERIOD OF TWO YEARS  OR
MORE AFTER THE PURCHASE OR CONSTRUCTION WAS DUE TO EITHER:
  (A)  AN  EMPLOYMENT  RELOCATION  OUTSIDE THE STATE AND SUCH RELOCATION
REQUIRED THE INDIVIDUAL TO BECOME A RESIDENT OF ANOTHER STATE; OR
  (B) AN UNFORESEEABLE FINANCIAL EMERGENCY.
  FOR PURPOSES OF THIS SUBDIVISION, AN "UNFORESEEABLE FINANCIAL EMERGEN-
CY" SHALL MEAN A SEVERE FINANCIAL HARDSHIP TO THE  INDIVIDUAL  RESULTING
FROM A SUDDEN AND UNEXPECTED ILLNESS OR ACCIDENT OF THE INDIVIDUAL OR OF
A  DEPENDENT.  THE CIRCUMSTANCES THAT CONSTITUTE AN UNFORESEEABLE FINAN-
CIAL EMERGENCY WILL DEPEND ON THE FACTS OF  EACH  CASE,  HOWEVER,  WITH-
DRAWAL  OF ACCOUNT FUNDS MAY NOT BE MADE, WITHOUT PENALTY, TO THE EXTENT
THAT SUCH HARDSHIP IS OR MAY BE RELIEVED BY EITHER:
  (I) REIMBURSEMENT OR COMPENSATION BY INSURANCE OR OTHERWISE; OR
  (II) LIQUIDATION OF THE INDIVIDUAL'S ASSETS TO THE EXTENT  THE  LIQUI-
DATION OF SUCH ASSETS WOULD NOT ITSELF CAUSE SEVERE FINANCIAL HARDSHIP.
  14.  THE COMMISSION AND THE COMPTROLLER ARE DIRECTED TO PROMULGATE ALL
RULES AND REGULATIONS NECESSARY TO  IMPLEMENT  THE  PROVISIONS  OF  THIS
SUBSECTION  AND ARE HEREBY DIRECTED TO ESTABLISH, SUPERVISE AND REGULATE
FIRST HOME SAVINGS ACCOUNTS AUTHORIZED TO BE CREATED BY THIS SECTION.
  15. (A) IF THERE IS ANY DISTRIBUTION FROM AN ACCOUNT TO ANY INDIVIDUAL
OR FOR THE BENEFIT OF  ANY  INDIVIDUAL  DURING  A  CALENDAR  YEAR,  SUCH
DISTRIBUTION  SHALL  BE REPORTED TO THE INTERNAL REVENUE SERVICE AND THE
ACCOUNT OWNER, THE DESIGNATED BENEFICIARY, OR  THE  DISTRIBUTEE  TO  THE
EXTENT REQUIRED BY FEDERAL LAW OR REGULATION.
  (B)  STATEMENTS  SHALL BE PROVIDED TO EACH ACCOUNT OWNER AT LEAST ONCE
EACH YEAR WITHIN SIXTY DAYS AFTER THE END OF THE TWELVE MONTH PERIOD  TO
WHICH  THEY  RELATE. THE STATEMENT SHALL IDENTIFY THE CONTRIBUTIONS MADE
DURING A PRECEDING TWELVE MONTH PERIOD, THE TOTAL CONTRIBUTIONS MADE  TO
THE  ACCOUNT  THROUGH THE END OF THE PERIOD, THE VALUE OF THE ACCOUNT AT
THE END OF SUCH PERIOD, DISTRIBUTIONS MADE DURING SUCH  PERIOD  AND  ANY
OTHER  INFORMATION  THAT THE COMPTROLLER SHALL REQUIRE TO BE REPORTED TO
THE ACCOUNT OWNER.
  (C) STATEMENTS AND INFORMATION RELATING TO ACCOUNTS SHALL BE  PREPARED
AND FILED TO THE EXTENT REQUIRED BY FEDERAL AND STATE TAX LAWS.
  16.  (A)  A  LOCAL  GOVERNMENT  OR  ORGANIZATION  DESCRIBED IN SECTION
501(C)(3) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, MAY OPEN AND
BECOME THE ACCOUNT OWNER OF AN ACCOUNT TO FUND SCHOLARSHIPS FOR  PERSONS
WHOSE IDENTITY WILL BE DETERMINED UPON DISBURSEMENT.

A. 4427--B                          8

  (B)  IN  THE  CASE  OF ANY ACCOUNT OPENED PURSUANT TO PARAGRAPH (A) OF
THIS SUBDIVISION THE REQUIREMENT SET FORTH IN SUBDIVISION  TWO  OF  THIS
SECTION  THAT  A DESIGNATED BENEFICIARY BE DESIGNATED WHEN AN ACCOUNT IS
OPENED SHALL NOT APPLY AND EACH INDIVIDUAL WHO RECEIVES AN  INTEREST  IN
SUCH ACCOUNT AS A SCHOLARSHIP SHALL BE TREATED AS A DESIGNATED BENEFICI-
ARY WITH RESPECT TO SUCH INTEREST.
  17.  AN ANNUAL FEE MAY BE IMPOSED UPON THE ACCOUNT OWNER FOR THE MAIN-
TENANCE OF THE ACCOUNT.
  18. THE PROGRAM SHALL DISCLOSE THE FOLLOWING INFORMATION IN WRITING TO
EACH ACCOUNT OWNER AND PROSPECTIVE ACCOUNT OWNER OF A FIRST HOME SAVINGS
ACCOUNT:
  (A) THE TERMS AND CONDITIONS  FOR  PURCHASING  A  FIRST  HOME  SAVINGS
ACCOUNT;
  (B) ANY RESTRICTIONS ON THE SUBSTITUTION OF BENEFICIARIES;
  (C)  THE PERSON OR ENTITY ENTITLED TO TERMINATE THE FIRST HOME SAVINGS
AGREEMENT;
  (D) THE PERIOD OF TIME DURING WHICH A BENEFICIARY MAY RECEIVE BENEFITS
UNDER THE FIRST HOME SAVINGS AGREEMENT;
  (E) THE TERMS AND CONDITIONS  UNDER  WHICH  MONEY  MAY  BE  WHOLLY  OR
PARTIALLY WITHDRAWN FROM THE PROGRAM, INCLUDING, BUT NOT LIMITED TO, ANY
REASONABLE CHARGES AND FEES THAT MAY BE IMPOSED FOR WITHDRAWAL;
  (F) THE PROBABLE TAX CONSEQUENCES ASSOCIATED WITH CONTRIBUTIONS TO AND
DISTRIBUTIONS FROM ACCOUNTS; AND
  (G)  ALL  OTHER  RIGHTS AND OBLIGATIONS PURSUANT TO FIRST HOME SAVINGS
AGREEMENTS, AND ANY  OTHER  TERMS,  CONDITIONS,  AND  PROVISIONS  DEEMED
NECESSARY  AND APPROPRIATE BY THE TERMS OF THE MEMORANDUM OF UNDERSTAND-
ING ENTERED INTO PURSUANT TO SECTION TWELVE HUNDRED FIFTY-THREE OF  THIS
ARTICLE.
  19.  FIRST  HOME  SAVINGS AGREEMENTS SHALL BE SUBJECT TO SECTION FOUR-
TEEN-C OF THE BANKING LAW AND THE "TRUTH-IN-SAVINGS" REGULATIONS PROMUL-
GATED THEREUNDER.
  20. NOTHING IN THIS ARTICLE OR IN ANY  FIRST  HOME  SAVINGS  AGREEMENT
ENTERED  INTO PURSUANT TO THIS ARTICLE SHALL BE CONSTRUED AS A GUARANTEE
BY THE STATE THAT A BENEFICIARY WILL QUALIFY FOR THE PURCHASE OF A HOME.
  21. TO ESTABLISH THAT AN INDIVIDUAL IS A FIRST TIME  HOME  BUYER,  THE
INDIVIDUAL SHALL COMPLETE A FORM PROMULGATED BY THE COMPTROLLER CERTIFY-
ING,  UNDER  THE  PENALTIES  OF PERJURY, THAT SUCH INDIVIDUAL IS A FIRST
TIME HOME BUYER.
  22. AN INDIVIDUAL MUST NOT INTEND TO USE ANY PORTION OF THE REAL PROP-
ERTY PURCHASED USING THE HOUSE PURCHASE ACCOUNT  FUNDS  IN  A  TRADE  OR
BUSINESS,  OR AS A VACATION HOME OR AS AN INVESTMENT, EXCEPT AS AN OWNER
OCCUPIED MULTIPLE DWELLING WITH NO MORE THAN TWO RENTAL UNITS.
  23. MONIES WITHDRAWN FROM FIRST HOME SAVINGS ACCOUNTS AND ANY INTEREST
WHICH HAS ACCRUED SHALL NOT BE CONSIDERED AS INCOME  TO  THE  INDIVIDUAL
AND  TAXED  AS  SUCH  IF  THE  MONIES  ARE  APPLIED  FOR THE PURCHASE OR
CONSTRUCTION OF A QUALIFIED FIRST HOME PURCHASE.
  S 1256. PROGRAM LIMITATIONS; FIRST HOME SAVINGS ACCOUNT. 1. NOTHING IN
THIS ARTICLE SHALL BE CONSTRUED TO:
  (A) GIVE ANY DESIGNATED BENEFICIARY ANY RIGHTS OR LEGAL INTEREST  WITH
RESPECT  TO  AN ACCOUNT UNLESS THE DESIGNATED BENEFICIARY IS THE ACCOUNT
OWNER;
  (B) GUARANTEE THAT A DESIGNATED BENEFICIARY WILL BE FINANCIALLY QUALI-
FIED TO PURCHASE A HOME;
  (C) CREATE STATE RESIDENCY FOR AN INDIVIDUAL MERELY BECAUSE THE  INDI-
VIDUAL IS A DESIGNATED BENEFICIARY; OR

A. 4427--B                          9

  (D)  GUARANTEE  THAT  AMOUNTS  SAVED  PURSUANT  TO THE PROGRAM WILL BE
SUFFICIENT TO COVER THE DOWN PAYMENT OR CLOSING COSTS  PURSUANT  TO  THE
PURCHASE OF A QUALIFIED FIRST HOME.
  2.  (A) NOTHING IN THIS ARTICLE SHALL CREATE OR BE CONSTRUED TO CREATE
ANY OBLIGATION OF THE COMPTROLLER, THE STATE, OR ANY AGENCY  OR  INSTRU-
MENTALITY OF THE STATE TO GUARANTEE FOR THE BENEFIT OF ANY ACCOUNT OWNER
OR DESIGNATED BENEFICIARY WITH RESPECT TO:
  (I) THE RATE OF INTEREST OR OTHER RETURN ON ANY ACCOUNT; AND
  (II) THE PAYMENT OF INTEREST OR OTHER RETURN ON ANY ACCOUNT.
  (B)  THE  COMPTROLLER  BY  RULE OR REGULATION SHALL PROVIDE THAT EVERY
CONTRACT, APPLICATION, DEPOSIT SLIP OR OTHER SIMILAR DOCUMENT  THAT  MAY
BE USED IN CONNECTION WITH A CONTRIBUTION TO AN ACCOUNT CLEARLY INDICATE
THAT  THE  ACCOUNT IS NOT INSURED BY THE STATE AND NEITHER THE PRINCIPAL
DEPOSITED NOR THE INVESTMENT RETURN IS GUARANTEED BY THE STATE.
  S 2. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 44 to read as follows:
  (44) THE AMOUNT THAT MAY BE SUBTRACTED  FROM  FEDERAL  ADJUSTED  GROSS
INCOME PURSUANT TO SUBSECTION (W) OF THIS SECTION.
  S  3. Section 612 of the tax law is amended by adding a new subsection
(w) to read as follows:
  (W) DEDUCTIONS FOR MONIES DEPOSITED INTO A FIRST HOME SAVINGS ACCOUNT.
AN INDIVIDUAL SHALL BE ABLE TO DEDUCT ANNUALLY FROM HIS OR  HER  FEDERAL
ADJUSTED  GROSS INCOME THAT AMOUNT, NOT TO EXCEED FIVE THOUSAND DOLLARS,
DEPOSITED INTO A FIRST HOME SAVINGS ACCOUNT CREATED AS DEFINED IN  ARTI-
CLE  TWENTY-EIGHT  OF THE PRIVATE HOUSING FINANCE LAW. AN INDIVIDUAL AND
HIS OR HER SPOUSE SHALL JOINTLY BE ENTITLED TO A  MAXIMUM  DEDUCTION  OF
TEN  THOUSAND  DOLLARS.  THIS AMOUNT MAY BE DIVIDED IN ANY MANNER AS THE
PARTIES DESIRE FOR INCOME TAX PURPOSES.
  S 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law, and shall apply to taxable years  commencing
on  or  after  the first of January next succeeding the date on which it
shall have become law; provided however, that subdivision 14 of  section
1255 of the private housing finance law, as added by section one of this
act, shall take effect immediately.