BILL NUMBER: AB 2726 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member McCarty
FEBRUARY 19, 2016
An act to add and repeal Section 17053 of the Revenue and Taxation
Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 2726, as introduced, McCarty. Personal income taxes: credit:
Scholarshare account contributions.
The Personal Income Tax Law, in conformity with federal income tax
law, provides that a qualified tuition program is exempt from taxes.
Existing law establishes the Golden State Scholarshare College
Savings Trust as a qualified tuition program. Existing law excludes
from gross income of a beneficiary of, or contributor to, a qualified
tuition program qualified distributions or earnings under that
program, as specified.
This bill, for taxable years beginning on or after January 1,
2016, and before January 1, 2021, would allow a credit under the
Personal Income Tax Law in an amount equal to 20% of the monetary
contributions made to one or more Scholarshare accounts by a
qualified taxpayer, as defined, during the taxable year, not to
exceed $500. This bill would include findings and declarations
specifying the objectives, performance indicators, and data
collection and reporting requirements related to this credit.
This bill would take effect immediately as a tax levy.
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) (1) For each taxable year beginning on or after
January 1, 2016, and before January 1, 2021, there shall be allowed
to a qualified taxpayer a credit against the "net tax," as defined in
Section 17039, in an amount as determined by paragraph (2).
(2) The credit amount allowed pursuant to this section shall be
the lesser of the following:
(A) Twenty percent of the monetary contributions made by a
qualified taxpayer to one or more accounts established pursuant to a
qualified tuition program during the taxable year.
(B) Five hundred dollars ($500).
(b) For the purposes of this section:
(1) "Qualified higher education expenses" means qualified higher
education expenses, as defined in Section 529(e)(3) of the Internal
Revenue Code.
(2) "Qualified taxpayer" means an individual who, on behalf of a
beneficiary, contributes money to a qualified tuition program for
which the individual is the account owner and has one of the
following California adjusted gross incomes:
(A) In the case of a single individual or married individual
filing a separate return, seventy-five thousand dollars ($75,000) or
less.
(B) In the case of a head of household or surviving spouse, as
defined in Section 17046, or a married couple filing a joint return,
one hundred fifty thousand dollars ($150,000) or less.
(3) "Qualified tuition program" means a qualified tuition program,
as defined in Section 529(b) of the Internal Revenue Code and as
established pursuant to Article 19 (commencing with Section 69989) of
Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code.
(c) In the case of any distribution in excess of qualified higher
education expenses, the aggregate amount of credit allowed under
subdivision (a) that reduced tax in any taxable year shall be added
to the tax of the qualified taxpayer in the taxable year of such
distribution to the extent that such distribution is attributable to
the aggregate amount of contributions for which a credit is allowed
under this section in taxable years beginning on or after January 1,
2016, and before January 1, 2021.
(d) (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.
(e) This section shall remain in effect only until December 1,
2021, and as of that date is repealed.
SEC. 2. For the purposes of complying with Section 41 of the
Revenue and Taxation Code, the Legislature finds and declares all of
the following:
(a) Objectives:
(1) Provide a tax incentive to motivate California families to
open and contribute to a Scholarshare account, California's 529
college savings plan account, for the purposes of saving for future
college expenses, thereby encouraging more Californians to pursue a
postsecondary education and reducing the amount of student loan debt
they may accumulate upon graduation.
(2) Reduce the amount of student loan debt on a dollar-for-dollar
basis, thereby increasing a person's ability to purchase a home, car,
and other products that help stimulate economic activity.
(b) Performance indicators:
(1) The number of tax credits issued by the Franchise Tax Board
under Section 17053 of the Revenue and Taxation Code.
(2) The dollar amount of tax credits issued by the Franchise Tax
Board under Section 17053 of the Revenue and Taxation Code.
(3) Taxpayer income information of those who qualified and used
the tax credit.
(4) The number of new Scholarshare accounts opened during the
calendar year.
(c) Data collection and reporting requirements:
(1) The Scholarshare Investment Board shall collect data on the
amount of tax credits issued and taxpayer income from the Franchise
Tax Board within 120 days from the filing date of the tax return of a
taxable year.
(2) The Scholarshare Investment Board shall collect data on the
total amount of contributions made to Scholarshare accounts by March
1 of each year the credit is claimed on a tax return.
(3) The Scholarshare Investment Board shall survey new and
existing Scholarshare account owners to collect information about
their motivation to do all of the following:
(A) Open a Scholarshare account.
(B) Contribute to a Scholarshare account.
(C) Increase the frequency and amount of contributions to a
Scholarshare account.
(D) Refer a Scholarshare account to friends and family.
(4) (A) The Scholarshare Investment Board shall compile an annual
report that will include, but not be limited to, prior year and
cumulative baseline data and information. The report shall be
compiled for, and delivered to, the Legislature by July 31 of each
year the credit is in effect.
(B) The requirement for submitting a report imposed under
subparagraph (A) is inoperative on December 1, 2021, pursuant to
Section 10231.5 of the Government Code.
(C) A report to be submitted pursuant to subparagraph (A) shall be
submitted in compliance with Section 9795 of the Government Code.
SEC. 3. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.