Senate File 386 - Introduced
SENATE FILE
BY BRUNKHORST
Passed Senate, Date Passed House, 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 tuition organizations and including an
3 applicability date provision.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 2181SS 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 seventy=five
1 6 percent of the amount of the voluntary cash contributions made
1 7 by the taxpayer during the tax year to a school tuition
1 8 organization, not to exceed either of the following:
1 9 a. Seven hundred dollars for a single individual.
1 10 b. Eight hundred 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 any other student designated by
1 19 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 child requiring special
2 5 education, as defined in section 256B.2, subsection 1.
2 6 b. "New student" means a child who did not attend an
2 7 accredited nonpublic school in Iowa during the previous school
2 8 year.
2 9 c. "Qualified school" means a preschool for disabled
2 10 students in this state or a nonpublic elementary or secondary
2 11 school in this state which is accredited under section 256.11
2 12 and adheres to the provisions of the federal Civil Rights Act
2 13 of 1964 and chapter 216.
2 14 d. "School tuition organization" means a charitable
2 15 organization in this state that is exempt from federal
2 16 taxation under all of section 501(c)(3) of the Internal
2 17 Revenue Code and that does all of the following:
2 18 (1) Allocates at least ninety percent of its annual
2 19 revenue for educational scholarships or tuition grants to
2 20 children to allow them to attend any qualified school of their
2 21 parents' choice of which one=third of the children who receive
2 22 scholarships or grants are new students. Once a child has
2 23 been deemed a new student, that child shall continue to be
2 24 counted as a new student for each school year the child
2 25 receives a scholarship or grant from the organization to
2 26 attend a qualified school.
2 27 (2) Only awards educational scholarships and tuition
2 28 grants to children who reside in Iowa.
2 29 (3) Provides educational scholarships or tuition grants to
2 30 students without limiting availability to only students of one
2 31 school.
2 32 (4) Prioritizes the providing of such scholarships and
2 33 grants to students from families whose incomes are less than
2 34 two hundred percent of the federal poverty level, as defined
2 35 by the most recently revised income guidelines published by
3 1 the United States department of health and human services.
3 2 6. A school tuition organization that receives a voluntary
3 3 cash contribution pursuant to this subsection shall report to
3 4 the department, on a form prescribed by the department, by
3 5 February 28 of each year all of the following information:
3 6 a. The name, address, and contact name of the school
3 7 tuition organization.
3 8 b. The total number of contributions received during the
3 9 previous calendar year.
3 10 c. The total dollar amount of contributions received
3 11 during the previous calendar year.
3 12 d. The total number of children awarded educational
3 13 scholarships or tuition grants during the previous calendar
3 14 year and the number of these children who are new students,
3 15 who reside in the state, and who are from families with
3 16 incomes of less than two hundred percent of the federal
3 17 poverty level.
3 18 e. The total dollar amount of educational scholarships and
3 19 tuition grants awarded during the previous calendar year.
3 20 f. For each school to which educational scholarships or
3 21 tuition grants were awarded all of the following shall be
3 22 provided:
3 23 (1) The name and address of the school.
3 24 (2) The number of educational scholarships and tuition
3 25 grants awarded during the previous calendar year.
3 26 (3) The total dollar amount of educational scholarships
3 27 and tuition grants awarded during the previous calendar year.
3 28 7. The department shall annually file a report with the
3 29 chairpersons and ranking members of the senate and house
3 30 committees on ways and means detailing a compilation of the
3 31 information received from the reports of all school tuition
3 32 organizations filed pursuant to the requirements of subsection
3 33 6.
3 34 8. This section is repealed January 1, 2014.
3 35 Sec. 2. APPLICABILITY DATE. This Act applies to tax years
4 1 beginning on or after January 1, 2006, but before January 1,
4 2 2014.
4 3 EXPLANATION
4 4 This bill provides for an individual income tax credit
4 5 equal to 75 percent of the voluntary contributions made to a
4 6 school tuition organization that is exempt from federal income
4 7 tax. The tax credit is limited to $700 for single individuals
4 8 and $800 for married persons filing jointly. If married
4 9 individuals file separately, the $800 is divided between them
4 10 based upon each individual's net income. At least 90 percent
4 11 of total contributions must be used by the school tuition
4 12 organization to provide educational scholarships or tuition
4 13 grants to children attending nonpublic schools or preschools
4 14 for disabled students that are accredited under state law and
4 15 adhere to the federal Civil Rights Act of 1964 and the state
4 16 civil rights law. In addition, one=third of the scholarships
4 17 or grants must be provided to students who did not attend a
4 18 nonpublic school in the previous year. The contribution may
4 19 not be deducted as a charitable deduction for state tax
4 20 purposes or be designated for the direct benefit of the
4 21 taxpayer's dependents or any other student designated by the
4 22 taxpayer.
4 23 The school tuition organization must limit scholarships and
4 24 grants to children that reside in Iowa, must provide
4 25 scholarships and grants to students at more than one school,
4 26 and must prioritize the awarding of scholarships and grants to
4 27 students of low=income families.
4 28 The school tuition organization must report to the
4 29 department of revenue information related to the amount of
4 30 contributions made to the organization, and the number,
4 31 school, and amount of scholarships and grants awarded.
4 32 The bill applies to tax years beginning on or after January
4 33 1, 2006, but before January 1, 2014.
4 34 LSB 2181SS 81
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