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SB-63 Personal Income Tax Law: exclusion: student loan debt forgiveness. (2019-2020)

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Date Published: 01/07/2019 09:00 PM
SB63:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill No. 63


Introduced by Senator Hertzberg
(Coauthors: Senators Atkins, Bates, Galgiani, Glazer, Grove, and Stone)

January 07, 2019


An act to add and repeal Section 17144.6 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 63, as introduced, Hertzberg. Personal Income Tax Law: exclusion: student loan debt forgiveness.
The Personal Income Tax Law provides for various exclusions from gross income, including an exclusion for the amount of student loan indebtedness repaid or canceled pursuant to a specified federal law.
This bill would exclude from gross income the amount of student loan indebtedness discharged on or after January 1, 2019, and before January 1, 2024, for an eligible individual who is granted a discharge under specified conditions, as provided, including that individual attended a Brightwood College school.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 17144.6 is added to the Revenue and Taxation Code, to read:

17144.6.
 (a) Section 108(f)(1) of the Internal Revenue Code, relating to student loans in general, is modified to additionally provide that in the case of an individual, gross income does not include any amount that, but for this section, would be includable in gross income by reason of the discharge, in whole or in part, of any student loan if the individual is an eligible individual for the taxable year.
(b) Section 108(f)(2) of the Internal Revenue Code, relating to student loan, is modified to additionally provide that a student loan means a student obligation note or other debt evidencing a loan to any individual for the purpose of attending a for-profit higher education company or for the purpose of consolidating or refinancing a loan used to attend a for-profit higher education company, which is either a guaranteed student loan, an educational loan, or a loan eligible for consolidation or refinancing under Part B of Title IV of the Higher Education Act of 1965, as amended (20 U.S.C. Sec. 1071 et seq.).
(c) For purposes of this section, an individual is an eligible individual for a taxable year if any of the following apply during the taxable year:
(1) The individual is granted a discharge of any student loan pursuant to a discharge agreement.
(2) (A) The individual is granted a discharge of any student loan pursuant to subdivision (c) of Section 685.206 of Title 34 of the Code of Federal Regulations, as it read January 1, 2019, because the individual successfully asserts that the school did something wrong or failed to do something that it should have done.
(B) The individual is granted a discharge of any student loan pursuant to paragraph (1) of subdivision (a) of Section 685.214 of Title 34 of the Code of Federal Regulations, as it read January 1, 2019, because the individual could not complete a program of study due to the school closing.
(3) The individual attended a Brightwood College school on or before December 5, 2018, is granted a discharge of any student loan made in connection with attending that school, and that discharge is not covered by paragraph (1) or (2).
(e) This section shall apply to discharges of indebtedness occurring on or after January 1, 2019, and before January 1, 2024.
(f) This section shall remain in effect only until December 1, 2024, and as of that date is repealed.

SEC. 2.

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