Bill Text: VA SB1194 | 2011 | Regular Session | Introduced
Bill Title: Income tax, corporate; tax credits for donations to nonprofit organizations providing scholarships.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-02-08 - Senate: Left in Finance [SB1194 Detail]
Download: Virginia-2011-SB1194-Introduced.html
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11100824D Be it enacted by the General Assembly of Virginia: 1. That the Code of Virginia is amended by adding in Chapter 3 of Title 58.1 an article numbered 13.3, consisting of sections numbered 58.1-439.25 through 58.1-439.28, as follows: § 58.1-439.25. Definitions. As used in this article, unless the context requires a different meaning: "Business entity" means a business that is subject to the taxes imposed by Article 10 (§ 58.1-400 et seq.) of Chapter 3. "Qualified educational expenses" means school-related tuition and instructional fees and materials, including textbooks, workbooks, and supplies used solely for school-related work. "Scholarship foundation" means a nonstock, nonprofit corporation that is exempt from taxation under § 501(c)(3) of the Internal Revenue Code of 1986, as amended, and established to provide financial aid for the education of students residing in the Commonwealth. "Student" means a child who is a resident of Virginia and (i) enrolled in the Commonwealth's public schools for the year prior to receiving a scholarship foundation scholarship, (ii) is a prior recipient of a scholarship foundation scholarship, (iii) is eligible to enter kindergarten or first grade, or (iv) was not a resident of Virginia during the preceding school year. § 58.1-439.26. Tax credit for donations to scholarship foundations by business entities. A. 1. For taxable years beginning on and after January 1, 2012, a business entity may receive a credit against any tax due under Article 10 (§ 58.1-400 et seq.) of Chapter 3, in an amount equal to 90 percent of its monetary contribution to a scholarship foundation included on the list published annually by the Department in accordance with the provisions of § 58.1-439.27, except that no business entity shall receive any credit against any bank franchise tax imposed by a city, town, or county under the authority granted in § 58.1-1208, 58.1-1209 or 58.1-1210. The credit shall be allowed to be claimed for the taxable year following the year of such contribution. B. Tax credits shall be awarded to taxpayers by the Department of Taxation on a first-come, first-served basis in accordance with procedures established by the Department under the following conditions: 1. The total amount of tax credits that may be granted each fiscal year under this section shall not exceed $25 million. 2. Any tax credit that is not used by a business entity in the taxable year following the year in which the contribution is made may be carried forward or carried back and may be refundable or transferable. 3. Every business entity seeking the credit allowed under this section shall submit with the income tax return verification from each scholarship foundation to which monetary donations have been made by the taxpayer during the taxable year. C. In a form approved by the Department, taxpayers shall request and receive preauthorization for a specified tax credit amount from the Department. The Department's preauthorization notice shall accompany the monetary donation from the taxpayer to the scholarship foundation, which shall, within 20 days, return the notice to the Department certifying the amount of the monetary donation and date received. Preauthorization notices not acted upon by the taxpayer within 60 days of issuance shall be void. No tax credit shall be approved by the Department for activities that are a part of a taxpayer's normal course of business. § 58.1-439.27. Scholarship foundation eligibility and requirements; list of foundations receiving contributions. A. Scholarship foundations seeking to receive and administer tax-credit-approved funds shall submit information to the Department, which shall determine whether an applicant is a scholarship foundation as defined in § 58.1-439.25. The Department shall prescribe through regulations what reasonable information shall be submitted by such foundations. Notice of approval or denial, including reasons for denial, shall be issued by the Department to the applicant within 60 days after the information is submitted. Any approval shall not be withheld unreasonably. B. The Department shall submit a list of all scholarship foundations receiving contributions from business entities to the Chairmen of the House and Senate Finance Committees no later than December 1 of each year. § 58.1-439.28. Guidelines for scholarship foundations. A. A scholarship foundation, as defined in § 58.1-439.25 and included on the list published annually by the Department in accordance with the provisions of § 58.1-439.27, shall disburse annually at least 90 percent of its tax-credit-derived funds for qualified educational expenses through scholarships to eligible students. B. In awarding scholarships, the scholarship foundation shall (i) not limit scholarships to students of one school, and (ii) comply with Title VI of the Civil Rights Act of 1964, as amended. Payment of the scholarship by the eligible scholarship foundation shall be by individual warrant or check made payable to and mailed to the eligible school that the student's parent or legal guardian indicates. C. Scholarship foundations shall ensure that eligible schools selected by scholarship students (i) are in compliance with the Commonwealth's and locality's health and safety laws and codes; (ii) hold a valid occupancy permit as required by the locality; (iii) comply with Title VI of the Civil Rights Act of 1964, as amended; and (iv) comply with nonpublic school accreditation requirements as set forth in § 22.1-19 and administered by the Virginia Council for Private Education or maintain an assessment system that annually measures scholarship students' progress in reading and math using a national norm-referenced achievement test, including but not limited to the Stanford Achievement Test, California Achievement Test, and Iowa Test of Basic Skills. D. The amount of a scholarship provided to any student for any single school year by all eligible scholarship foundations from eligible contributions shall not exceed the lesser of (i) the actual qualified educational expenses or (ii) 90 percent of the per-pupil amount distributed to each local school division as the state's share of the standards of quality costs using the composite index of ability to pay as defined in the general appropriation act. E. Scholarship foundations shall develop procedures for disbursing scholarships in periodic payments throughout the school year to ensure scholarships are portable. F. An audit of the scholarship foundation's tax-credit-derived funds, which complies with generally accepted accounting principles and is conducted by a certified public accountant, shall be conducted annually and a summary report made available to the public upon request. The report shall include (i) the total number and dollar amount of contributions received during the previous calendar year, (ii) the total number and dollar amount of qualified educational expenses scholarships awarded during the previous calendar year to every student, and (iii) the percentage of first-time recipients of qualified educational expenses scholarships. G. The Department shall publish annually on its website a list of each scholarship organization qualified under this section. Once an organization has been qualified by the Department, it shall remain qualified until the Department removes the organization from its annual list. The Department shall remove an organization from the annual list if it no longer meets the requirements of this section. The Department may periodically require a qualified organization to submit updated or additional information for purposes of determining whether or not the organization continues to meet the requirements of this section.
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