BILL ANALYSIS                                                                                                                                                                                                    �




                     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.