California Legislature—2013–14 Regular Session

Assembly Bill No. 1956

Introduced by Assembly Member Bonilla

February 19, 2014

An act to add Section 17053 to the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 1956, as introduced, Bonilla. Personal income tax: credit: qualified tuition plan.

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

This bill would allow a refundable credit in the amount of 20% of the monetary contributions made to a qualified tuition plan account, as defined, by a qualified taxpayer, as defined, not to exceed $500 per return. This bill would provide for the payment of credit amount in excess of tax liability upon on appropriation for that purpose.

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) For taxable years beginning on or after January 1,
2014, there shall be allowed a credit, refundable as provided in
subdivision (f), against the “net tax,” as defined in Section 17039,
in 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.

(b) For the purposes of this section:

(1) “Nonqualified withdrawal” means 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.

(2) “Qualified taxpayer” means an individual who, on behalf
of a beneficiary, contributes money to a qualified tuition plan
account 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,
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 plan” means a qualified tuition program,
as defined in Section 529 of the Internal Revenue 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).

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

(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.

(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.

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

(f) 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 taxpayer.

(g) (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.