Amended in Assembly May 15, 2014

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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(Principal coauthor: Assembly Member V. Manuel Pérez)

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(Coauthors: Assembly Members Buchanan, Maienschein, Nestande, begin insert Olsen, end insert Patterson, Rodriguez, begin delete and end delete Ting begin insert , Waldron, and Wieckowski end insert )

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(Coauthors: Senators Cannella and Vidak)

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February 19, 2014

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

LEGISLATIVE COUNSEL’S DIGEST

AB 1956, as amended, Bonilla. Personal income tax: credit: qualified tuition program.

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

This bill would, for taxable years beginning on or after January 1, 2015, begin insert and before January 1, 2020, end insert allow a credit in the amount of 20% of the monetary contributions made to a qualified tuition program, as defined, by a qualified taxpayer, as defined, not to exceed $500. This bill would provide for the payment of begin insert a end insert credit amount in excess of tax liability upon begin delete on end delete begin insert an end insert appropriation begin insert by the Legislature end insert for that purpose.

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 taxable years beginning on or after January
1, 2015, begin insert and before January 1, 2020, end insert 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 a qualified tuition program that the qualified
taxpayer owns during the taxable year.

(B) Five hundred dollars ($500).

(b) For the purposes of this section:

(1) “Nonqualified withdrawal” means any payment or
distribution from a qualified tuition program that is subject to
additional tax pursuant to Section 529(c)(6) of the Internal Revenue
Code, relating to additional tax.

(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 annual adjusted gross incomes:

(A) If the qualified taxpayer’s filing status is single, married
filing separately, 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 program” means a qualified tuition
program, as defined in Section 529 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) 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.

(e) 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 qualified taxpayer.

(f) (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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(g) This section shall remain in effect only until December 1,
2020, and as of that date is repealed.

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SEC. 2.  

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