Bill Text: PA SB1611 | 2011-2012 | Regular Session | Introduced

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Bill Title: In educational improvement tax credit, further providing for definitions and for qualification and application; and, in educational opportunity scholarship tax credit, further providing for definitions and for qualification and application.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2012-10-10 - Referred to FINANCE [SB1611 Detail]

Download: Pennsylvania-2011-SB1611-Introduced.html

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PRINTER'S NO. 2469
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1611 Session of2012
INTRODUCED BY WILLIAMS, ERICKSON, STACK, YUDICHAK AND WAUGH, OCTOBER 10, 2012
REFERRED TO FINANCE, OCTOBER 10, 2012
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in educational improvement tax credit, further
providing for definitions and for qualification and
application; and, in educational opportunity scholarship tax
credit, further providing for definitions and for
qualification and application.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "educational improvement
organization," "pre-kindergarten scholarship organization" and
"scholarship organization" in section 1702-F of the act of March
4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971,
amended or added October 9, 2009 (P.L.451, No.48) and July 2,
2012 (P.L.751, No.85), are amended to read:
Section 1702-F. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Educational improvement organization." A nonprofit entity
which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
(2) contributes [at least 80%] a minimum percentage of
its annual receipts as grants to a public school, a chartered
school as defined in section 1376.1 of act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949, or
a private school approved under section 1376 of the Public
School Code of 1949, for innovative educational programs in
accordance with section 1703-F(b.1).
For purposes of this definition, a nonprofit entity
"contributes" its annual cash receipts when it expends or
otherwise irrevocably encumbers those funds for expenditure
during the then current fiscal year of the nonprofit entity or
during the next succeeding fiscal year of the nonprofit entity.
A nonprofit entity shall include a school district foundation,
public school foundation, charter school foundation or cyber
charter school foundation.
* * *
"Pre-kindergarten scholarship organization." A nonprofit
entity which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.) or is operated as a separate
segregated fund by a scholarship organization that has been
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qualified under section 1703-F; and
(2) contributes [at least 80%] a minimum percentage of
its annual cash receipts to a pre-kindergarten scholarship
program, in accordance with section 1703-F(b.1) by expending
or otherwise irrevocably encumbering those funds for
distribution during the then current fiscal year of the
organization or during the next succeeding fiscal year of the
organization.
* * *
"Scholarship organization." A nonprofit entity which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
(2) contributes [at least 80%] a minimum percentage of
its annual cash receipts to a scholarship program, in
accordance with section 1703-F(b.1).
For purposes of this definition, a nonprofit entity
"contributes" its annual cash receipts to a scholarship program
when it expends or otherwise irrevocably encumbers those funds
for distribution during the then current fiscal year of the
nonprofit entity or during the next succeeding fiscal year of
the nonprofit entity.
* * *
Section 2. Section 1703-F of the act is amended by adding a
subsection to read:
Section 1703-F. Qualification and application.
* * *
(b.1) Annual cash receipts.--
(1) For fiscal years 2012-2013 and 2013-2014, a
scholarship organization, a pre-kindergarten scholarship
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organization or an educational improvement organization must
contribute at least 80% of its annual cash receipts in
accordance with section 1702-F.
(2) For fiscal years 2014-2015 and 2015-2016, a
scholarship organization, a pre-kindergarten scholarship
organization or an educational improvement organization must
contribute at least 82.5% of its annual cash receipts in
accordance with section 1702-F.
(3) For fiscal years 2016-2017 and 2017-2018, a
scholarship organization, a pre-kindergarten scholarship
organization or an educational improvement organization must
contribute at least 85% of its annual cash receipts in
accordance with section 1702-F.
(4) For fiscal years 2018-2019 and 2019-2020, a
scholarship organization, a pre-kindergarten scholarship
organization or an educational improvement organization must
contribute at least 87.5% of its annual cash receipts in
accordance with section 1702-F.
(5) For fiscal year 2020-2021 and each fiscal year
thereafter, a scholarship organization, a pre-kindergarten
scholarship organization or an educational improvement
organization must contribute at least 90% of its annual cash
receipts in accordance with section 1702-F.
* * *
Section 3. Sections 1702-G.1 and 1703-G.1 of the act, added
July 2, 2012 (P.L.751, No.85), are amended to read:
Section 1702-G.1. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
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"Applicant." An eligible student who applies for a
scholarship.
"Assessment." The Pennsylvania System of School Assessment
test, the Keystone Exam, an equivalent local assessment or
another test established by the State Board of Education to meet
the requirements of section 2603-B(d)(10)(i) of the Public
School Code of 1949 and required under the No Child Left Behind
Act of 2001 (Public Law 107-110, 115 Stat. 1425) or its
successor statute or any other test required to achieve other
standards established by the Department of Education for the
public school or school district under 22 Pa. Code § 403.3
(relating to single accountability system).
"Attendance boundary." A geographic area of residence used
by a school district to assign a student to a public school.
"Average daily membership." As defined in section 2501(3) of
the Public School Code of 1949.
"Business firm." An entity authorized to do business in this
Commonwealth and subject to a tax under Article XVI of the act
of May 17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921, or taxes imposed under Article III, IV, VI,
VII, VIII, IX or XV. The term includes a pass-through entity.
"Contribution." A donation of cash, personal property or
services, the value of which is the net cost of the donation to
the donor or the pro rata hourly wage, including benefits, of
the individual performing the services.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Elementary school." A school which is not a secondary
school.
"Eligible student." A student or a student with a disability
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who:
(1) resides within the attendance boundary of a low-
achieving school as of the first day of classes of the school
year; and
(2) is a member of a household which has a household
income no greater than the maximum annual household income
allowance.
"Household." An individual who lives alone or with the
following: a spouse, parent and their unemancipated minor
children, other unemancipated minor children who are related by
blood or marriage or other adults or unemancipated minor
children living in the household who are dependent upon the
individual.
"Household income." All moneys or property received by a
household of whatever nature and from whatever source derived.
The term does not include the following:
(1) Periodic payments for sickness and disability other
than regular wages received during a period of sickness or
disability.
(2) Disability, retirement or other payments arising
under workers' compensation acts, occupational disease acts
and similar legislation by any government.
(3) Payments commonly recognized as old-age or
retirement benefits paid to persons retired from service
after reaching a specific age or after a stated period of
employment.
(4) Payments commonly known as public assistance or
unemployment compensation payments by a governmental agency.
(5) Payments to reimburse actual expenses.
(6) Payments made by employers or labor unions for
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programs covering hospitalization, sickness, disability or
death, supplemental unemployment benefits, strike benefits,
Social Security and retirement.
(7) Compensation received by United States servicemen
serving in a combat zone.
"Income allowance."
(1) The following shall apply:
(i) After June 30, 2012, and through June 30, 2013,
$12,000 for each dependent member of the household.
(ii) After June 30, 2013, and through June 30, 2014,
$15,000 for each dependent member of the household.
(2) Beginning July 1, 2014, the Department of Community
and Economic Development shall annually adjust the income
allowance amounts under paragraph (1) to reflect any upward
changes in the Consumer Price Index for All Urban Consumers
for the Pennsylvania, New Jersey, Delaware and Maryland area
in the preceding 12 months and shall immediately submit the
adjusted amounts to the Legislative Reference Bureau for
publication as a notice in the Pennsylvania Bulletin.
"Kindergarten." A one-year formal educational program that
occurs during the school year immediately prior to first grade.
The term includes a part-time and a full-time program.
"Low-achieving school." A public school that ranked in the
lowest 15% of its designation as an elementary school or a
secondary school based on combined mathematics and reading
scores from the annual assessment administered in the previous
school year and for which the Department of Education has posted
results on its publicly accessible Internet website. The term
does not include a charter school, cyber charter school or area
vocational-technical school.
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"Maximum annual household income allowance."
(1) Except as stated in paragraph (2) and subject to
adjustment under paragraph (3), the sum of:
(i) Either:
(A) after June 30, 2012, and through June 30,
2013, not more than $60,000; or
(B) after June 30, 2013, not more than $75,000.
(ii) The applicable income allowance.
(2) With respect to a student with a disability, as
calculated by multiplying:
(i) the applicable amount under paragraph (1); by
(ii) the applicable support level factor according
to the following table:
Support Level Support Level Factor
1 1.50
2 2.993
(3) Beginning July 1, 2014, the Department of Community
and Economic Development shall annually adjust the income
amounts under paragraphs (1) and (2) to reflect any upward
changes in the Consumer Price Index for All Urban Consumers
for the Pennsylvania, New Jersey, Delaware and Maryland area
in the preceding 12 months and shall immediately submit the
adjusted amounts to the Legislative Reference Bureau for
publication as a notice in the Pennsylvania Bulletin.
"Nonpublic school." A school which is a nonprofit
organization and which is located in the Commonwealth. The term
does not include a public school.
"Parent." An individual who:
(1) is a resident of the Commonwealth; and
(2) either:
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(i) has legal custody or guardianship of a student;
or
(ii) keeps in his home a student and supports the
student gratis as if the student were a lineal descendant
of the individual.
"Participating nonpublic school." A nonpublic school which
notifies the Department of Education under section 1710-G.1 that
it wishes to participate in the program.
"Participating public school." A public school in a school
district which notifies the Department of Education under
section 1710-G.1(b) that it wishes to participate in the
program. The term shall not include a low-achieving school.
"Pass-through entity." A partnership as defined in section
301(n.0), a single-member limited liability company treated as a
disregarded entity for Federal income tax purposes or a
Pennsylvania S corporation as defined in section 301(n.1).
"Public School Code of 1949." The act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949.
"Program." The Educational Opportunity Scholarship Tax
Credit Program established under this article.
"Recipient." An applicant who receives a scholarship.
"Scholarship." An award given to an applicant for the
recipient to pay tuition and school-related fees necessary to
attend a participating nonpublic school or a participating
public school located in a school district which is not the
recipient's school district of residence.
"Scholarship organization." A nonprofit entity which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
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(2) contributes [at least 80%] a minimum percentage of
its annual cash receipts to a scholarship program in
accordance with section 1703-G.1(b.1).
For purposes of this definition, a nonprofit entity
"contributes" its annual cash receipts to a scholarship program
when it expends or otherwise irrevocably encumbers those funds
for distribution during the then current fiscal year of the
nonprofit entity or during the next succeeding fiscal year of
the nonprofit entity.
"School." An elementary school or a secondary school at
which the compulsory attendance requirements of the Commonwealth
may be met and which meets the applicable requirements of Title
VI of the Civil Rights Act of 1964 (Public Law 88-352, 78 Stat.
241).
"School age." The age of an individual from the earliest
admission age to a school's kindergarten or, when no
kindergarten is provided, the school's earliest admission age
for beginners, until the end of the school year the individual
attains 21 years of age or graduation from high school,
whichever occurs first.
"School district of residence." The school district in which
the student's primary domicile is located.
"School-related fees." Fees charged by a school to all
students for books, instructional materials, technology
equipment and services, uniforms and activities.
"Secondary school." A school with an eleventh grade.
"Special education school." A school or program within a
school that is designated specifically and exclusively for
students with any of the disabilities listed in 34 CFR § 300.8
(relating to child with a disability) and meets one of the
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following:
(1) is licensed under the act of January 28, 1988
(P.L.24, No.11), known as the Private Academic Schools Act;
(2) is accredited by an accrediting association approved
by the State Board of Education;
(3) is a school for the blind or deaf receiving
Commonwealth appropriations; or
(4) is operated by or under the authority of a bona fide
religious institution or by the Commonwealth or any political
subdivision thereof.
"Student." An individual who meets all of the following:
(1) Is school age.
(2) Is a resident of this Commonwealth.
(3) Attends or is about to attend a school.
"Student with a disability." A student who meets all of the
following:
(1) Is either enrolled in a special education school or
has otherwise been identified, in accordance with 22 Pa. Code
Ch. 14 (relating to special education services and programs),
as a "child with a disability," as defined in 34 CFR § 300.8
(relating to child with a disability).
(2) Needs special education and related services.
"Support level." The level of support needed by an eligible
student with a disability, as provided in the following matrix:
Support Level 1 - The student is not enrolled in a
special education school.
Support Level 2 - The student is enrolled as a student in
a special education school.
Section 1703-G.1. Qualification and application.
(a) Establishment.--The Educational Opportunity Scholarship
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Tax Credit Program is established. The program shall provide tax
credits to entities that provide contributions to scholarship
organizations. The scholarship organizations must enhance the
educational opportunities available to students in this
Commonwealth by providing scholarships to eligible students who
reside within the attendance boundary of low-achieving schools
to attend schools which are not low-achieving schools and which
are not a public school within the school district of residence.
(b) Information.--In order to qualify under this article, a
scholarship organization must submit information to the
department that enables the department to confirm that the
scholarship organization is exempt from taxation under section
501(c)(3) of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 1 et seq.).
(b.1) Annual cash receipts.--
(1) For fiscal years 2012-2013 and 2013-2014, a
scholarship organization must contribute at least 80% of its
annual cash receipts in accordance with section 1702-G.1.
(2) For fiscal years 2014-2015 and 2015-2016, a
scholarship organization must contribute at least 82.5% of
its annual cash receipts, in accordance with section
1702-G.1.
(3) For fiscal years 2016-2017 and 2017-2018, a
scholarship organization must contribute at least 85% of its
annual cash receipts in accordance with section 1702-G.1.
(4) For fiscal years 2018-2019 and 2019-2020, a
scholarship organization must contribute at least 87.5% of
its annual cash receipts in accordance with section 1702-G.1.
(5) For fiscal year 2020-2021 and each each fiscal year
thereafter, a scholarship organization must contribute at
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least 90% of its annual cash receipts in accordance with
section 1702-G.1.
(c) Annual certification of eligibility.--By August 15,
2012, and by February 15, 2013, and each February 15 thereafter,
a scholarship organization must certify to the department that
the organization is eligible to participate in the program.
(d) Report.--
(1) A scholarship organization must agree to report the
following information on a form provided by the department by
September 1, 2013, and each September 1 thereafter:
(i) The total number of applications for
scholarships received during the immediately preceding
school year from eligible students in grades kindergarten
through eight.
(ii) The number of scholarships awarded during the
immediately preceding school year to eligible students in
grades kindergarten through eight.
(iii) The total and average amounts of the
scholarships awarded during the immediately preceding
school year to eligible students in grades kindergarten
through eight.
(iv) The total number of applications for
scholarships received during the immediately preceding
school year from eligible students in grades 9 through
12.
(v) The number of scholarships awarded during the
immediately preceding school year to eligible students in
grades 9 through 12.
(vi) The total and average amounts of the
scholarships awarded during the immediately preceding
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school year to eligible students in grades 9 through 12.
(vii) Where the scholarship organization collects
information on a county-by-county basis, the total number
and the total amount of scholarships awarded during the
immediately preceding school year to residents of each
county in which the scholarship organization awarded
scholarships.
(viii) The number of scholarships awarded during the
immediately preceding school year to applicants with a
household income that does not exceed 185% of the Federal
poverty level.
(ix) The total and average amounts of the
scholarships awarded during the immediately preceding
school year to applicants with a household income that
does not exceed 185% of the Federal poverty level.
(x) The number of scholarships awarded during the
immediately preceding school year to applicants with a
household income that does not exceed 185% of the Federal
poverty level and who reside within a first class school
district.
(xi) The total and average amounts of the
scholarships awarded during the immediately preceding
school year to applicants with a household income that
does not exceed 185% of the Federal poverty level and who
reside within a first class school district.
(xii) The number of scholarships awarded during the
immediately preceding school year to applicants with a
household income that does not exceed 185% of the Federal
poverty level and who reside within a school district
with an average daily membership greater than 7,500 and
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that receives an advance of its basic education subsidy
at any time.
(xiii) The total and average amounts of the
scholarships awarded during the immediately preceding
school year to applicants with a household income that
does not exceed 185% of the Federal poverty level and who
reside within a school district with an average daily
membership greater than 7,500 and that receives an
advance of its basic education subsidy at any time.
(xiv) The number of scholarships awarded during the
immediately preceding school year to applicants with a
household income that does not exceed 185% of the Federal
poverty level and who reside within a school district
that receives an advance of its basic education subsidy
at any time and is either subject to a declaration of
financial distress under section 691 of the Public School
Code of 1949 or engaged in litigation against the
Commonwealth in which the school district seeks financial
assistance from the Commonwealth to allow the school
district to continue to operate.
(xv) The total and average amounts of the
scholarships awarded during the immediately preceding
school year to applicants with a household income that
does not exceed 185% of the Federal poverty level and who
reside within a school district that receives an advance
of its basic education subsidy at any time and is either
subject to a declaration of financial distress under
section 691 of the Public School Code of 1949 or is
engaged in litigation against the Commonwealth in which
the school district seeks financial assistance from the
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Commonwealth to allow the school district to continue to
operate.
(xvi) The total number of scholarship applications
processed and the amounts of any application fees charged
either per scholarship application or in the aggregate
through a third-party processor.
(xvii) The scholarship organization's Federal Form
990 or other Federal form indicating the tax status of
the scholarship organization for Federal tax purposes, if
any, and a copy of a compilation, review or audit of the
scholarship organization's financial statements conducted
by a certified public accounting firm.
(2) No later than May 1, 2013, and each May 1
thereafter, the department shall annually distribute such
sample forms, together with the forms on which the reports
are required to be made, to each listed scholarship
organization.
(3) The department may not require any other information
to be provided by scholarship organizations, except as
expressly authorized in this article.
(e) Notification.--The department shall notify a scholarship
organization that it meets the requirements of this article for
that fiscal year no later than 60 days after the scholarship
organization submits the information required under this
section.
(f) Publication.--The department shall annually publish a
list of each scholarship organization qualified under this
section in the Pennsylvania Bulletin and shall post and update
the list as necessary on the publicly accessible Internet
website of the department.
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Section 4. This act shall take effect in 60 days.
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