House File 320 - Introduced
HOUSE FILE
BY BOAL, J.K. VAN FOSSEN, ROBERTS,
LUKAN, MADDOX, CHAMBERS, FREEMAN,
CARROLL, TYMESON, J.R. VAN FOSSEN,
HOFFMAN, GREINER, S. OLSON,
EICHHORN, SANDS, DRAKE, SODERBERG,
DIX, HORBACH, ELGIN, JONES,
BAUDLER, HUTTER, HUSEMAN, and
ALONS
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing that contributions made to certain school
2 tuition organizations may be treated as credits under the
3 individual income tax and including an applicability date
4 provision.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
6 TLSB 2637HH 81
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PAG LIN
1 1 Section 1. NEW SECTION. 422.11K SCHOOL TUITION
1 2 ORGANIZATION TAX CREDIT.
1 3 1. The taxes imposed under this division less the credits
1 4 allowed under sections 422.12 and 422.12B shall be reduced by
1 5 a school tuition organization tax credit equal to the amount
1 6 of the voluntary cash contributions made by the taxpayer
1 7 during the tax year to a school tuition organization, not to
1 8 exceed either of the following:
1 9 a. Five hundred dollars for a single individual.
1 10 b. Six hundred twenty=five dollars for a married couple.
1 11 2. To be eligible for this credit, all of the following
1 12 shall apply:
1 13 a. A deduction pursuant to section 170 of the Internal
1 14 Revenue Code for any amount of the contribution is not taken
1 15 for state tax purposes.
1 16 b. The contribution does not designate that any part of
1 17 the contribution be used for the direct benefit of any
1 18 dependent of the taxpayer or for any other student designated
1 19 by the taxpayer.
1 20 3. Any credit in excess of the tax liability is not
1 21 refundable but the excess for the tax year may be credited to
1 22 the tax liability for the following five tax years or until
1 23 depleted, whichever is the earlier.
1 24 4. Married taxpayers who file separate returns or file
1 25 separately on a combined return form must determine the tax
1 26 credit under subsection 1, paragraph "b", based upon their
1 27 combined net income and allocate the total credit amount to
1 28 each spouse in the proportion that each spouse's respective
1 29 net income bears to the total combined net income.
1 30 Nonresidents or part=year residents of Iowa must determine
1 31 their tax credit in the ratio of their Iowa source net income
1 32 to their all source net income. Nonresidents or part=year
1 33 residents who are married and elect to file separate returns
1 34 or to file separately on a combined return form must allocate
1 35 the tax credit between the spouses in the ratio of each
2 1 spouse's Iowa source net income to the combined Iowa source
2 2 net income of the taxpayers.
2 3 5. For purposes of this section:
2 4 a. "Disabled student" means a student who has any of the
2 5 following conditions:
2 6 (1) Hearing impairment.
2 7 (2) Visual impairment.
2 8 (3) Preschool moderate delay.
2 9 (4) Preschool severe delay.
2 10 (5) Preschool speech or language delay.
2 11 b. "New student" means a child who did not attend an
2 12 accredited nonpublic school in Iowa during the previous school
2 13 year.
2 14 c. "Qualified school" means a preschool for disabled
2 15 students in this state or a nonpublic elementary or secondary
2 16 school in this state which is accredited under section 256.11
2 17 and adheres to the provisions of the federal Civil Rights Act
2 18 of 1964 and chapter 216.
2 19 d. (1) "School tuition organization" means a charitable
2 20 organization in this state that is exempt from federal income
2 21 taxation under section 501(c)(3) of the Internal Revenue Code
2 22 and that allocates at least ninety percent of its annual
2 23 revenue for educational scholarships or tuition grants to
2 24 children to allow them to attend any qualified school of their
2 25 parents' choice of which one=third of the children who receive
2 26 scholarships or grants are new students. Once a child has
2 27 been deemed a new student that child shall continue to be
2 28 counted as a new student for each school year the child
2 29 receives a scholarship or grant from the organization to
2 30 attend a qualified school.
2 31 (2) A school tuition organization shall only award
2 32 educational scholarships and tuition grants to children who
2 33 reside in Iowa. In addition, to qualify as a school tuition
2 34 organization, the charitable organization shall provide
2 35 educational scholarships or tuition grants to students without
3 1 limiting availability to only students of one school and shall
3 2 prioritize the provision of such scholarships and grants to
3 3 students from families whose incomes are less than three
3 4 hundred percent of the federal poverty level, as defined by
3 5 the most recently revised income guidelines published by the
3 6 United States department of health and human services.
3 7 6. A school tuition organization that receives a voluntary
3 8 cash contribution pursuant to this section shall report to the
3 9 department, in a form prescribed by the department, by
3 10 February 28 of each year all of the following information:
3 11 a. The name, address, and contact name of the school
3 12 tuition organization.
3 13 b. The total number of contributions received during the
3 14 previous calendar year.
3 15 c. The total dollar amount of contributions received
3 16 during the previous calendar year.
3 17 d. The total number of children awarded educational
3 18 scholarships or tuition grants during the previous calendar
3 19 year and the number of these children who are new students.
3 20 e. The total dollar amount of educational scholarships and
3 21 tuition grants awarded during the previous calendar year.
3 22 f. For each school to which educational scholarships or
3 23 tuition grants were awarded all of the following shall be
3 24 provided:
3 25 (1) The name and address of the school.
3 26 (2) The number of educational scholarships and tuition
3 27 grants awarded during the previous calendar year.
3 28 (3) The total dollar amount of educational scholarships
3 29 and tuition grants awarded during the previous calendar year.
3 30 Sec. 2. APPLICABILITY DATE. This Act applies to tax years
3 31 beginning on or after January 1, 2006.
3 32 EXPLANATION
3 33 This bill provides for an individual income tax credit
3 34 equal to the voluntary contributions made to a school tuition
3 35 organization that is exempt from federal income tax. The tax
4 1 credit is limited to $500 for single individuals and $625 for
4 2 married persons filing jointly. If married individuals file
4 3 separately, the $625 is divided between them based upon each
4 4 individual's net income. At least 90 percent of total
4 5 contributions must be used by the school tuition organization
4 6 to provide educational scholarships or tuition grants to
4 7 children attending nonpublic schools or preschools for
4 8 disabled students that are accredited under state law and
4 9 adhere to the federal Civil Rights Act of 1964 and the state
4 10 civil rights law. In addition, one=third of the scholarships
4 11 or grants must be provided to students who attended a public
4 12 school in the previous year. The contribution may not be
4 13 deducted as a charitable deduction for state tax purposes or
4 14 be designated for the direct benefit of the taxpayer's
4 15 dependents or another student designated by the taxpayer. The
4 16 prioritization of the scholarships and grants shall be to
4 17 families with incomes of less than 300 percent of the federal
4 18 poverty level. All assistance must go to students residing in
4 19 Iowa and must be available to students in more than one
4 20 school.
4 21 The school tuition organization must report to the
4 22 department of revenue information related to the amount of
4 23 contributions made to the organization, and the number,
4 24 school, and amount of scholarships and grants awarded.
4 25 The bill applies to tax years beginning on or after January
4 26 1, 2006.
4 27 LSB 2637HH 81
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