H.F. 464 Section 1. NEW SECTION . 422.11R Home school grant 1 organization tax credit. 2 1. For purposes of this section: 3 a. “Certified enrollment” means the number of eligible 4 children that are currently receiving competent private 5 instruction from the qualified instructor submitting a 6 participation form pursuant to subsection 6, paragraph “d” . 7 b. “Competent private instruction” means the same as 8 provided in section 299A.1. 9 c. “Eligible child” means a child of compulsory attendance 10 age who is under competent private instruction and who is a 11 member of a household whose total annual income during the 12 calendar year before the child receives a home school grant 13 for purposes of this section does not exceed an amount equal 14 to three times the most recently published federal poverty 15 guidelines in the federal register by the United States 16 department of health and human services. 17 d. “Home school grant” means a grant to an eligible child to 18 cover the qualified educational expenses of the eligible child. 19 e. “Home school grant organization” means a charitable 20 organization in this state qualifying under section 501(c)(3) 21 of the Internal Revenue Code as an organization that is exempt 22 from federal taxation under section 501(a) of the Internal 23 Revenue Code and that does all of the following: 24 (1) Allocates at least ninety percent of its annual revenue 25 in home school grants for eligible children to allow them to 26 receive competent private instruction of their parents’ choice. 27 (2) Awards home school grants only to eligible children who 28 reside in Iowa. 29 (3) Provides home school grants to eligible children 30 without limiting availability to only children of one home. 31 (4) Prepares an annual financial statement certified by a 32 public accounting firm. 33 f. “Qualified educational expenses” means expenses incurred 34 by a parent or guardian that are directly related to providing 35 -1- LSB 2182YH (3) 85 mm/sc 1/ 7

H.F. 464 competent private instruction for the eligible child under 1 chapter 299A. “Qualified educational expenses” includes but is 2 not limited to textbooks, payment to a licensed or accredited 3 tutor or practitioner, curriculum materials, tuition or fees 4 for live or online education programs, education materials and 5 services for an eligible child with disabilities, standardized 6 test fees, transportation expenses, and computer and internet 7 access fees. 8 g. “Qualified instructor” means a person who is providing 9 competent private instruction, as defined in section 299A.1, 10 in this state. 11 h. “Total approved tax credits” means for tax years 12 beginning on or after January 1, 2014, eight million seven 13 hundred fifty thousand dollars. 14 2. The taxes imposed under this division, less the credits 15 allowed under section 422.12, shall be reduced by a home school 16 grant organization tax credit equal to sixty-five percent of 17 the amount of the voluntary cash or noncash contributions 18 made by the taxpayer during the tax year to a home school 19 grant organization, subject to the total dollar value of 20 the organization’s tax credit certificates as computed in 21 subsection 7. The tax credit shall be claimed by use of a tax 22 credit certificate as provided in subsection 6. 23 3. To be eligible for the credit, all of the following shall 24 apply: 25 a. A deduction pursuant to section 170 of the Internal 26 Revenue Code for any amount of the contribution is not taken 27 for state tax purposes. 28 b. The contribution does not designate that any part of the 29 contribution be used for the direct benefit of any dependent 30 of the taxpayer or any other eligible child designated by the 31 taxpayer. 32 c. The value of a noncash contribution shall be appraised 33 pursuant to rules of the director. 34 4. Any credit in excess of the tax liability is not 35 -2- LSB 2182YH (3) 85 mm/sc 2/ 7

H.F. 464 refundable but the excess for the tax year may be credited to 1 the tax liability for the following five tax years or until 2 depleted, whichever is the earlier. 3 5. Married taxpayers who file separate returns or file 4 separately on a combined return form must determine the tax 5 credit under subsection 2 based upon their combined net income 6 and allocate the total credit amount to each spouse in the 7 proportion that each spouse’s respective net income bears to 8 the total combined net income. Nonresidents or part-year 9 residents of Iowa must determine their tax credit in the ratio 10 of their Iowa source net income to their all source net income. 11 Nonresidents or part-year residents who are married and elect 12 to file separate returns or to file separately on a combined 13 return form must allocate the tax credit between the spouses 14 in the ratio of each spouse’s Iowa source net income to the 15 combined Iowa source net income of the taxpayers. 16 6. a. In order for the taxpayer to claim the home school 17 grant organization tax credit, a tax credit certificate issued 18 by the home school grant organization to which the contribution 19 was made shall be attached to the person’s tax return. The tax 20 credit certificate shall contain the taxpayer’s name, address, 21 tax identification number, the amount of the contribution, the 22 amount of the credit, and other information required by the 23 department. 24 b. The department shall authorize a home school grant 25 organization to issue tax credit certificates for contributions 26 made to the home school grant organization. The aggregate 27 amount of tax credit certificates that the department shall 28 authorize for a home school grant organization for a tax 29 year shall be determined for that organization pursuant to 30 subsection 7. However, a home school grant organization shall 31 not be authorized to issue tax credit certificates unless the 32 organization is controlled by a board of directors consisting 33 of at least seven members. The names and addresses of the 34 members shall be provided to the department and shall be made 35 -3- LSB 2182YH (3) 85 mm/sc 3/ 7

H.F. 464 available by the department to the public, notwithstanding any 1 state confidentiality restrictions. 2 c. Pursuant to rules of the department, a home school grant 3 organization shall initially register with the department. The 4 organization’s registration shall include proof of section 5 501(c)(3) status and provide a detailed description of the 6 geographic area the home school grant organization serves. 7 Once the home school grant organization has registered, it is 8 not required to subsequently register unless the geographic 9 area it serves changes. 10 d. Each qualified instructor that desires to be served by 11 a home school grant organization shall submit a participation 12 form annually to the department by November 1 providing the 13 following information: 14 (1) Certified enrollment as of October 1, or the first 15 Monday in October if October 1 falls on a Saturday or Sunday. 16 (2) The home school grant organization that represents the 17 qualified instructor. A qualified instructor shall only be 18 represented by one home school grant organization. 19 7. a. Each year by December 1, the department shall 20 authorize home school grant organizations to issue tax 21 credit certificates for the following tax year. Tax credit 22 certificates available for issue by each home school grant 23 organization shall be determined in the following manner: 24 (1) Total the certified enrollment of each participating 25 qualified instructor to arrive at the total participating 26 certified enrollment. 27 (2) Determine the per eligible child tax credit available 28 by dividing the total approved tax credits by the total 29 participating certified enrollment. 30 (3) Multiply the per eligible child tax credit by the 31 total participating certified enrollment of each home school 32 assistance organization. 33 b. For purposes of calculating certified enrollment in 34 this subsection, an eligible child receiving competent private 35 -4- LSB 2182YH (3) 85 mm/sc 4/ 7

H.F. 464 instruction from more than one qualified instructor shall 1 only be counted once. In the event an eligible child is 2 included in the certified enrollment of multiple qualified 3 instructors being represented by different home school grant 4 organizations, that eligible child shall be counted in the 5 certified enrollment of the qualified instructor providing the 6 greatest percentage of competent private instruction to the 7 eligible child. 8 8. A home school grant organization that receives a 9 voluntary cash or noncash contribution pursuant to this 10 section shall report to the department, on a form prescribed 11 by the department, by January 12 of each tax year, all of the 12 following information: 13 a. The name and address of the members and the chairperson 14 of the governing board of the home school grant organization. 15 b. The total number and dollar value of contributions 16 received and the total number and dollar value of the tax 17 credits approved during the previous tax year. 18 c. A list of the individual donors for the previous tax year 19 that includes the dollar value of each donation and the dollar 20 value of each approved tax credit. 21 d. The total number of eligible children utilizing home 22 school grants for the school year in progress and the total 23 dollar value of the grants. 24 e. The name and address of each qualified instructor 25 for which home school grants are currently being utilized, 26 detailing the number of eligible students and the total dollar 27 value of grants being utilized for each qualified instructor 28 served by a home school grant organization. 29 Sec. 2. Section 422.33, Code 2013, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 30. The taxes imposed under this division 32 shall be reduced by a home school grant organization tax 33 credit allowed under section 422.11R. The maximum amount of 34 tax credits that may be approved under this subsection for a 35 -5- LSB 2182YH (3) 85 mm/sc 5/ 7

H.F. 464 tax year equals twenty-five percent of the home school grant 1 organization’s tax credits that are authorized pursuant to 2 section 422.11R, subsection 7, for a tax year. 3 Sec. 3. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 4 immediate importance, takes effect upon enactment. 5 Sec. 4. APPLICABILITY. This Act applies to tax years 6 beginning on or after January 1, 2014. 7 EXPLANATION 8 This bill creates a nonrefundable individual and corporate 9 income tax credit equal to 65 percent of the voluntary 10 contributions made to a home school grant organization. 11 “Home school grant organization” is defined in the bill 12 as a 501(c)(3) tax-exempt charitable organization in Iowa 13 that allocates at least 90 percent of its annual revenue to 14 providing home school grants to Iowa children of compulsory 15 attendance age who are under competent private instruction and 16 who are members of households that have total annual incomes of 17 less than three times the federal poverty level. Additionally, 18 a home school grant organization must not limit availability 19 of grants to only children of one home, and must prepare an 20 annual financial statement certified by a public accounting 21 firm. “Home school grants” are grants to eligible children, 22 as defined in the bill, to cover expenses, including those 23 specified in the bill, incurred by a parent or guardian that 24 are directly related to providing competent private instruction 25 under Code chapter 299A. 26 Contributions may not be deducted as a charitable deduction 27 for state tax purposes or be designated for the direct benefit 28 of the taxpayer’s dependents or any other eligible child 29 designated by the taxpayer. 30 A home school grant organization is required to register 31 with the department of revenue and shall be authorized to 32 issue tax credit certificates in amounts equal to the total 33 certified enrollment of the qualified instructors served by 34 the organization multiplied by a per eligible student tax 35 -6- LSB 2182YH (3) 85 mm/sc 6/ 7

H.F. 464 credit amount. The amount is determined by dividing the total 1 approved tax credits ($8.75 million per year) by the total 2 certified enrollment of all qualified instructors served by 3 home school grant organizations. For purposes of calculating 4 the credit amount per home school grant organization, an 5 eligible child may only be counted once. If the eligible child 6 is included in the certified enrollment of multiple qualified 7 instructors being represented by different home school grant 8 organizations, the eligible child shall be counted in the 9 certified enrollment of the qualified instructor providing 10 the greatest percentage of competent private instruction to 11 the eligible child. “Certified enrollment” and “qualified 12 instructor” are both defined in the bill. 13 The tax credit is claimed by attaching the tax credit to 14 the taxpayer’s income tax return. Any credit in excess of the 15 taxpayer’s tax liability may be carried forward for a period 16 of five years. 17 The total home school grant organization tax credits that 18 may be approved in a tax year for the corporate income tax 19 cannot exceed 25 percent of the total credits authorized for 20 all home school grant organizations for a tax year. 21 Home school grant organizations are required to report 22 to the department of revenue information related to the 23 organization’s governing board, the amount of contributions 24 received and the names of donors, the name and address of each 25 qualified instructor, the number of eligible children utilizing 26 grants, and the total amount of the grants. 27 The bill takes effect upon enactment and applies to tax years 28 beginning on or after January 1, 2014. 29 -7- LSB 2182YH (3) 85 mm/sc 7/ 7