House File 528 - Introduced
HOUSE FILE
BY JOCHUM, HOGG, WENDT, SWAIM,
GASKILL, FREVERT, MERTZ,
REASONER, QUIRK, WHITEAD,
PETERSEN, McCARTHY, HUSER,
and MILLER
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act allowing individual income tax credits for contributions
2 made to certain school charitable organizations and including
3 an applicability date provision.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 422.11K SCHOOL CHARITABLE
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 charitable organization tax credit equal to twenty=
1 6 five percent of the amount of voluntary cash contributions
1 7 made by the taxpayer during the tax year to a school
1 8 charitable organization, not to exceed either of the
1 9 following:
1 10 a. Five hundred dollars for a single individual.
1 11 b. Seven hundred fifty dollars for a married couple.
1 12 2. The taxpayer shall not be entitled to the credit unless
1 13 the credit is preapproved by the department as provided in
1 14 subsection 4.
1 15 3. To be eligible for this credit, all of the following
1 16 shall apply:
1 17 a. A deduction pursuant to section 170 of the Internal
1 18 Revenue Code for any amount of the contribution is not taken
1 19 for state tax purposes.
1 20 b. The contribution does not designate that any part of
1 21 the contribution be used for the direct benefit of any
1 22 dependent of the taxpayer or any other child designated by the
1 23 taxpayer.
1 24 4. To receive the tax credit, the taxpayer shall apply for
1 25 the credit to the department by January 31 following the end
1 26 of the calendar year in which a contribution was made. If the
1 27 taxpayer and school charitable organization qualify, the
1 28 department shall approve the application for credit and so
1 29 notify the taxpayer by April 1 following receipt of the
1 30 application. However, the department of revenue shall only
1 31 grant approval under this section for a total of five million
1 32 dollars in credits in the fiscal year beginning July 1, 2006,
1 33 and for a total of ten million dollars in credits in the
1 34 fiscal years beginning on or after July 1, 2007. Once the
1 35 qualified applications total more than five million dollars or
2 1 ten million dollars, as applicable, in credits, the department
2 2 shall award the approved credits on the basis of the date of
2 3 application for credit and the remaining approved credits
2 4 shall be awarded in the subsequent fiscal year. The
2 5 department shall notify the taxpayer of the year for which the
2 6 credit is approved. The department shall prepare application
2 7 forms which may be made available to charitable organizations
2 8 that may qualify as school charitable organizations.
2 9 5. Any credit in excess of the tax liability is not
2 10 refundable but the excess for the tax year may be credited to
2 11 the tax liability for the following five tax years or until
2 12 depleted, whichever is the earlier.
2 13 6. Married taxpayers who file separate returns or file
2 14 separately on a combined return form must determine the tax
2 15 credit under subsection 1, paragraph "b", based upon their
2 16 combined net income and allocate the total credit amount to
2 17 each spouse in the proportion that each spouse's respective
2 18 net income bears to the total combined net income.
2 19 Nonresidents or part=year residents of Iowa must determine
2 20 their tax credit in the ratio of their Iowa source net income
2 21 to their all source net income. Nonresidents or part=year
2 22 residents who are married and elect to file separate returns
2 23 or to file separately on a combined return form must allocate
2 24 the tax credit between the spouses in the ratio of each
2 25 spouse's Iowa source net income to the combined Iowa source
2 26 net income of the taxpayers.
2 27 7. For purposes of this section:
2 28 a. "Qualified school" means a public or private nonprofit
2 29 preschool, as defined in section 237A.1, located in this state
2 30 or a public or nonpublic elementary or secondary school in
2 31 this state which is accredited under section 256.11 and
2 32 adheres to the provisions of the federal Civil Rights Act of
2 33 1964 and chapter 216. A qualified school shall not
2 34 discriminate on the basis of race, creed, color, national
2 35 origin, sex, age, or disability.
3 1 b. (1) "School charitable organization" means a
3 2 charitable organization in this state that is exempt from
3 3 federal taxation under section 501(c)(3) of the Internal
3 4 Revenue Code, whose governing board consists of, but is not
3 5 limited to, parents, teachers, and members of the general
3 6 public, and that allocates at least ninety percent of its
3 7 annual revenue for educational expenses, scholarships, or
3 8 tuition grants to children to allow them to attend any
3 9 qualified school of their parents' choice.
3 10 (2) A school charitable organization shall not
3 11 discriminate on the basis of race, creed, color, national
3 12 origin, sex, age, or disability. A school charitable
3 13 organization shall only award educational expense payments,
3 14 scholarships, and tuition grants to children who reside in
3 15 Iowa. In addition, to qualify as a school charitable
3 16 organization, the charitable organization shall only provide
3 17 educational expense payments, scholarships, or tuition grants
3 18 to children from families whose incomes are less than three
3 19 hundred percent of the federal poverty level, as defined by
3 20 the most recently revised income guidelines published by the
3 21 United States department of health and human services.
3 22 8. A school charitable organization that receives a
3 23 voluntary cash contribution pursuant to this section shall
3 24 report to the department, on a form prescribed by the
3 25 department, by February 28 of each year all of the following
3 26 information:
3 27 a. The name, address, and contact name of the school
3 28 charitable organization.
3 29 b. The total number of contributions received during the
3 30 previous calendar year.
3 31 c. The total dollar amount of contributions received
3 32 during the previous calendar year.
3 33 d. The total number of children awarded educational
3 34 expense payments, scholarships, or tuition grants during the
3 35 previous calendar year.
4 1 e. The total dollar amount of educational expense
4 2 payments, scholarships, and tuition grants awarded during the
4 3 previous calendar year.
4 4 f. For each school to which educational expense payments,
4 5 scholarships, or tuition grants were awarded all of the
4 6 following shall be provided:
4 7 (1) The name and address of the school.
4 8 (2) The number of educational expense payments,
4 9 scholarships, and tuition grants awarded during the previous
4 10 calendar year.
4 11 (3) The total dollar amount of educational expense
4 12 payments, scholarships, and tuition grants awarded during the
4 13 previous calendar year.
4 14 9. The department shall annually file a report with the
4 15 chairpersons and ranking members of the senate and house
4 16 committees on ways and means detailing a compilation of the
4 17 information received from the reports of all school charitable
4 18 organizations filed pursuant to the requirements of subsection
4 19 8.
4 20 Sec. 2. APPLICABILITY DATE. This Act applies to tax years
4 21 beginning on or after January 1, 2006, but before January 1,
4 22 2014.
4 23 EXPLANATION
4 24 This bill provides for an individual income tax credit
4 25 equal to 25 percent of voluntary contributions made to a
4 26 school charitable organization that is exempt from federal
4 27 income tax. The annual tax credit would be limited to $500
4 28 for single individuals and $750 for married persons filing
4 29 jointly. If married individuals file separately, the $750 is
4 30 divided between them based upon each individual's net income.
4 31 The bill limits the total tax credits to be granted at $5
4 32 million for the 2006 tax year and $10 million for all
4 33 subsequent tax years and requires preapproval of taxpayer
4 34 credits. The bill requires the organization to use at least
4 35 90 percent of total contributions to provide educational
5 1 expense payments, scholarships, or tuition grants to children
5 2 attending public or nonpublic elementary or secondary schools
5 3 or public and private nonprofit preschools that are accredited
5 4 under state law and adhere to the federal Civil Rights Act of
5 5 1964 and the state civil rights law. The educational expense
5 6 payments, scholarships, and tuition grants are to be awarded
5 7 only to families whose incomes are less than 300 percent of
5 8 the federal poverty level. The bill provides that the
5 9 contribution may not be deducted as a charitable contribution
5 10 for state tax purposes.
5 11 The bill will apply to tax years beginning on or after
5 12 January 1, 2006, but before January 1, 2014.
5 13 LSB 2253YH 81
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