BILL ANALYSIS Ó SENATE GOVERNANCE & FINANCE COMMITTEE Senator Lois Wolk, Chair BILL NO: AB 1796 HEARING: 6/18/14 AUTHOR: Linder FISCAL: Yes VERSION: 4/10/14 TAX LEVY: No CONSULTANT: Bouaziz FRANCHISE TAX BOARD: REFUNDS: DIRECT DEPOSIT: CALIFORNIA'S 529 COLLEGE SAVINGS PLAN Requires the Franchise Tax Board to revise the personal income tax return form instructions to include information about directly depositing a refund into the Golden State Scholarshare College Savings Trust. Background and Existing Law Federal and state law enables taxpayers to save for college by putting money in tax-advantaged investments, a 529 college savings account and a Golden State Scholarshare College Savings Trust (ScholarShare) respectively. After-tax contributions allow earnings to grow tax-deferred, and disbursements, when used for tuition and other qualified expenses, are federal and state tax-free. State law allows a taxpayer to direct deposit refunds into a checking or savings account, including a ScholarShare account. Proposed Law Assembly Bill 1796 requires the Franchise Tax Board (FTB) to revise the personal income tax return form instructions, in the most cost effective manner, to include information about the ability of a taxpayer to directly deposit a portion of the refund into the Golden State ScholarShare College Savings Trust. The ScholarShare Investment Board must provide the FTB with a description of the ScholarShare program on or before a specified date provided by the FTB. The length of the description is limited to five lines. State Revenue Impact AB 1796 -- 04/10/14 -- Page 2 None. Comments 1. Purpose of the bill . According to the author, "AB 1796 encourages college savings by requiring the Franchise Tax Board to revise the personal income tax form instructions to include a brief description of the option for the taxpayer to deposit a portion of their tax refund into the Golden State ScholarShare College Savings Trust." 2. Just to be clear . AB 1796 only adds instructions to inform a taxpayer that they can request a direct deposit of a refund into a ScholarShare account, which a taxpayer can already do now. This bill neither facilitates nor instructs a taxpayer on how to open a ScholarShare account. Assembly Actions Assembly Revenue and Taxation9-0 Assembly Appropriations 17-0 Assembly Floor 78-0 Support and Opposition (06/12/14) Support : California Community Colleges Chancellor's Office; California State Students Association. Opposition : None received.