(a) Legislative findings. -- The Legislature hereby finds and declares that:
(1) It is an essential function of state government to encourage postsecondary education in order to increase the education level of the residents of the State of West Virginia.
(2) Tuition, fees and other costs at institutions of higher education are difficult for many to afford and are difficult to predict in order to enable individuals and families to plan for the payment of such costs.
(3) Students in elementary and secondary schools tend to achieve a higher standard of performance when the payment of tuition, fees and other costs for their higher education is secured.
(4) It is in the best interest of the people of the State of West Virginia and is necessary for the public health, safety and welfare to encourage state residents desiring a higher education to enroll in institutions of higher education in order to provide well-educated and informed citizens.
(b) Purpose. -- In light of the findings described in subsection (a) of this section and in light of the purposes of this article, the Legislature declares that the purpose of this section is to encourage higher education and the means of paying costs relating thereto by (1) authorizing establishment of higher education savings plan programs; and (2) providing funding for such programs through the sale and purchase of School Building Authority revenue bonds to be used to make capital improvements for primary and secondary educational facilities in this state, or through the sale and purchase of refunding revenue bonds, as provided in this article.
(c) Authorization. -- The School Building Authority is authorized to offer to the general public one or more higher education savings plan programs. In order to establish, operate and maintain an efficient and effective program or programs, the School Building Authority shall have such additional powers as are necessary or reasonably desirable to implement such a program or programs. These additional powers shall include, but are not limited to, the power to:
(1) Issue revenue bonds in accordance with the provisions of this section and as authorized by this article;
(2) Permit employees of the State of West Virginia and its subdivisions to purchase through payroll deductions by their employer bonds of not less than $1,000 maturity increments when issued pursuant to this section;
(3) As deemed appropriate and practical, offer bond issues which take into consideration the various needs of different individuals participating in a higher education savings plan program;
(4) Offer a rate or rates of interest on bonds purchased pursuant to such a program which encourages maximum participation;
(5) Execute a separate trust agreement or agreements under section twelve of this article for bonds sold pursuant to an individual higher education savings plan program established under this section;
(6) Transfer available moneys of the School Building Authority, including revenues, investment earnings on funds or accounts established in connection with the issuance of bonds and moneys available from any other source, to funds or accounts as may be necessary or desirable in establishing a higher education savings plan program, including, but not limited to, escrow funds, investment agreements or similar instruments;
(7) Establish program guidelines for the administration of a higher education savings plan program.
(d) Construction. -- Other sections of this article which apply generally to bonds issued under this article shall apply to the revenue bonds or refunding revenue bonds issued under this section. If any language in this section conflicts with language in another section of this article, the language of this section shall control unless such a construction would be unlawful, or would not be in the public interest, or would be contrary to the statements of finding and purpose of this section.
(e) Tax treatment. --
(1) The amount which an individual expends during a taxable year in the purchase of revenue bonds or refunding revenue bonds issued pursuant to this section shall be allowed as a deduction from federal adjusted gross income for such year, or, if not fully deducted during such year, for the remaining four years, until fully deducted, for purposes of the tax imposed by article twenty-one, chapter eleven of this code, except as provided in subdivision (3) of this subsection.
(2) The interest which an individual earns on revenue bonds or refunding revenue bonds issued under this section shall not be subject to the tax imposed by article twenty-one, chapter eleven of this code, except as provided in subdivision (3) of this subsection.
(3) If the owner of a revenue bond or refunding revenue bonds purchased under this section sells it or receives the proceeds of such bond at maturity or otherwise during a taxable year and does not, within four years of the date of such sale or other disposition, expend an amount equal to such proceeds for tuition, fees, books, reasonable room and board, and child care costs necessary to enable a person to attend an institution of higher education, such proceeds of sale or other disposition not so spent shall be taxed under article twenty-one, chapter eleven of this code, by application of the applicable rate to the taxpayer to the amount not so spent. The amount of tax imposed shall be due and payable on April 15 of the taxable year immediately succeeding the fourth taxable year in which the bond was sold or otherwise disposed of.
(f) Confidentiality. -- The identity of any individual purchasing revenue bonds under this section, the amount of the bonds so purchased by any individual and the amount allowed as an income tax deduction shall be and remain confidential information: Provided, That nothing herein shall prohibit the disclosure of the number of individuals purchasing the bonds, the aggregate amount of bond purchased, or other general information which does not breach any individual's confidentiality.
(g) Reports. -- The School Building Authority and the indenture trustee of an individual higher education savings plan program shall make such reports regarding such bonds to the Tax Commissioner and to the individuals of record who own the bonds with respect to bond principal and interest (and the years to which they relate) and such other matters as the Tax Commissioner may reasonably require. The reports required by this section shall be filed with the Tax Commissioner at least annually, at such time and in such manner as the Tax Commissioner may by regulation require.