Amended in Assembly April 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1956

Introduced by Assembly Member Bonilla

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(Coauthors: Assembly Members Buchanan, Maienschein, Nestande, Patterson, Rodriguez, and Ting)

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February 19, 2014

An act to add Section 17053 to the Revenue and Taxation Code, relating to taxation begin insert , to take effect immediately, tax levy end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 1956, as amended, Bonilla. Personal income tax: credit: qualified tuition begin delete plan. end delete begin insert program. end insert

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill would begin insert , for taxable years beginning on or after January 1, 2015, end insert allow a begin delete refundable end delete credit in the amount of 20% of the monetary contributions made to a qualified tuition begin delete plan account end delete begin insert program end insert , as defined, by a qualified taxpayer, as defined, not to exceed $500 begin delete per return end delete . This bill would provide for the payment of credit amount in excess of tax liability upon on appropriation for that purpose.

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This bill would take effect immediately as a tax levy.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 17053 is added to the Revenue and
Taxation Code, to read:

17053.  

(a)  begin insert (1) end insert begin insert   end insert For taxable years beginning on or after January
1, begin delete 2014 end delete begin insert 2015 end insert , there shall be allowed begin insert to a qualified taxpayer end insert a
credit begin delete , refundable as provided in subdivision (f), end delete against the “net
tax,” as defined in Section 17039, in begin delete the amount of 20 percent of
the monetary contributions made by a qualified taxpayer to a
qualified tuition plan account that the qualified taxpayer owns
during the taxable year, not to exceed five hundred dollars ($500)
per return. end delete begin insert an amount as determined by paragraph (2). end insert

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(2) The credit amount allowed pursuant to this section shall be
the lesser of the following:

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(A) Twenty percent of the monetary contributions made by a
qualified taxpayer to a qualified tuition program that the qualified
taxpayer owns during the taxable year.

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(B) Five hundred dollars ($500).

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(b) For the purposes of this section:

(1) “Nonqualified withdrawal” means begin delete a withdrawal of funds
from a qualified tuition plan account for purposes that are not
qualified higher education expenses, as defined in Section 529 of
the Internal Revenue Code end delete begin insert any payment or distribution from a
qualified tuition program that is subject to additional tax pursuant
to Section 529(c)(6) end insert begin insert of the Internal Revenue Code end insert begin insert , relating to
additional tax end insert .

(2) “Qualified taxpayer” means an individual who, on behalf
of a beneficiary, contributes money to a qualified tuition begin delete plan
account end delete begin insert program end insert for which the individual is the account owner
and has one of the following annual adjusted gross incomes:

(A) If the qualified taxpayer’s filing status is single, married
begin insert filing separately end insert , or domestic registered partner filing separately,
one hundred thousand dollars ($100,000) or less.

(B) If the qualified taxpayer files as a head of household,
surviving spouse, as defined in Section 17046, married filing
jointly, or domestic partner filing jointly, two hundred thousand
dollars ($200,000) or less.

(3) “Qualified tuition begin delete plan” end delete begin insert program end insert begin insert ” end insert means a qualified tuition
program, as defined in Section 529 of the Internal Revenue begin delete Code,
and established pursuant to the Golden State Scholarshare Trust
Act (Article 19 (commencing with Section 69980) of Chapter 2
of Part 42 of Division 5 of Title 3 of the Education Code) end delete begin insert Code end insert .

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(4) “Qualified tuition plan account” means an account described
in Section 529(b)(1)(A)(ii) of the Internal Revenue Code.

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(c) In the case of married taxpayers or registered domestic
partners who file separate returns, the credit may be taken by either
spouse or registered domestic partner or divided equally between
the spouses or registered domestic partners.

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(d) The credit shall be recaptured in the amount of 10 percent
of any nonqualified withdrawals for a qualified tuition plan account
for which the credit has been claimed, up to a maximum of the
total credits received under this section.

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(e) The Scholarshare Investment Board shall verify the amount
of the contribution made and the name of the accountholder for
the Franchise Tax Board.

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(d) When a qualified taxpayer receives a nonqualified
withdrawal, in addition to any tax imposed under this part, an
additional tax shall be imposed in an amount that is the lesser of
10 percent of that nonqualified withdrawal or the total amount of
credit allowed under subdivision (a) for the taxable year and all
prior taxable years in which the qualified taxpayer was allowed
a credit pursuant to this section.

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(f)

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begin insert (e) end insert  That portion of any credit allowed under this section that is
in excess of tax liability shall, upon an appropriation by the
Legislature, be paid to the begin insert qualified end insert taxpayer.

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(g)

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begin insert (f) end insert  (1) The Franchise Tax Board may prescribe rules, guidelines,
or procedures necessary or appropriate to carry out the purposes
of this section.

(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

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begin insert SEC. 2. end insert   

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This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

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