Bill Text: CA AB757 | 2009-2010 | Regular Session | Introduced

California Assembly Bill 757 (Prior Session Legislation)

Introduced

Bill Title: Income taxes: education savings account.

Sponsorship: Partisan Bill (Republican 1)

Status: (Introduced - Dead) 2010-02-02 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB757 Detail]

Download: California-2009-AB757-Introduced.html

BILL NUMBER: AB 757	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Niello

                        FEBRUARY 26, 2009

   An act to add Section 17141 to the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 757, as introduced, Niello. Income taxes: education savings
account.
   The Personal Income Tax Law provides for the specified treatment
of amounts deposited in an education savings account that meets
specified requirements.
   This bill would allow amounts to be deposited in an education
savings account, as defined, established for purposes of paying for
qualified education expenses, as defined. Interest earned by the
account and distributions would not be subject to taxation, as
provided.
   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 17141 is added to the Revenue and Taxation
Code, to read:
   17141.  (a) Notwithstanding any other provision of this part or
Part 11 (commencing with Section 23001) to the contrary, any amount
deposited by a taxpayer during the taxable year in an education
savings account shall not be includable in the gross income of the
beneficiary of the account, except as otherwise provided in this
section.
   (b) For purposes of this section:
   (1) "Education savings account" means a trustee or custodial
account that meets both of the following requirements:
   (A) Is established by an individual, or established jointly by an
individual and his or her spouse, and designated as an education
savings account by the trustee or custodian.
   (B) Is established for the exclusive benefit of any individual
establishing the account or his or her spouse, or their dependents,
if the written governing instrument creating the account provides for
the following:
   (i) All contributions to the account are required to be in cash.
   (ii) The account is established to pay, pursuant to the
requirements and limitations of this section, for the qualified
education expenses of an individual establishing the account or his
or her spouse, or their dependents.
   (2) "Trustee or custodian" means a bank as defined by Section 408
(n) of the Internal Revenue Code, or any person authorized pursuant
to Section 409(a) of the Internal Revenue Code, to act as the trustee
or custodian of an individual retirement account.
   (3) "Qualified education expenses" means education expenses
related to attending a school teaching kindergarten and grades 1 to
12, inclusive, in this state. "Education expenses" include tuition,
fees, books, supplies, equipment, room and board, academic tutoring,
the purchase of computer technology, equipment, or Internet access or
related services, uniforms, transportation, and supplementary items
and services such as extended day programs as required or provided by
the school.
   (4) "Dependent" shall have the same meaning as that term is
defined by Section 152 of the Internal Revenue Code.
   (c) Any amount withdrawn or distributed from an education savings
account shall be subject to a penalty in an amount equal to 10
percent of the payment or distribution, unless the payment or
distribution is made to pay for the qualified education expenses of
an individual that established the account or his or her spouse or
their dependents.
   (d) Notwithstanding any other provision of this part, the transfer
of an individual's interest in an education savings account to his
or her former spouse under a dissolution decree or under a written
instrument incident to a dissolution is not to be considered a
taxable transfer made by that individual as long as the transferred
moneys are deposited into another education savings account
established by the former spouse.
   (e) The trustee or custodian of an education savings account shall
make annual calendar year reports concerning the status of the
account. The report shall contain the information required in
paragraph (1) and be furnished or filed in the manner and time
specified in paragraph (2).
   (1) The annual calendar year report shall contain the following
information for transactions occurring during the calendar year:
   (A) The amount of contributions.
   (B) The amount of distributions.
   (C) The name and address of the trustee or custodian.
   (D) Any other information as the Franchise Tax Board may require.
   (2) The annual report shall be furnished to the individual on
whose behalf the account is established. The report shall be
furnished on or before the first day of February following the
calendar year for which the report is required. The Franchise Tax
Board may require the annual report to be filed with the board at the
time the board specifies.
   (f) The trustee or custodian of an education savings account shall
provide a disclosure statement to the individual for whom the
account is established. The disclosure statement shall contain the
information and shall be in a form as may be required by the
Franchise Tax Board.
   (g) Notwithstanding any other law, for purposes of this part and
Part 11 (commencing with Section 23001), any interest earned by the
education savings account shall be exempt from taxation if the
distributions are made for purposes of paying qualified education
expenses.
  SEC. 2.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.