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House File 292 - IntroducedA Bill ForAn Act 1creating a private instruction organization tax credit
2available against the individual and corporate income taxes,
3and including effective date and retroactive applicability
4provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 422.11X Private instruction
2organization tax credit.
31. The taxes imposed under this subchapter, less the credits
4allowed under section 422.12, shall be reduced by a private
5instruction tax credit equal to sixty-five percent of the
6amount of the voluntary cash or noncash contributions made
7by the taxpayer during the tax year to a private instruction
8organization, subject to the maximum total value of tax credits
9allowed in subsection 8. The tax credit shall be claimed by
10use of a tax credit certificate as provided in subsection 7.
112. To be eligible for this credit, all of the following
12shall apply:
13a. A deduction pursuant to section 170 of the Internal
14Revenue Code for any amount of the contribution is not taken
15for state tax purposes.
16b. The contribution does not designate that any part of the
17contribution be used for the direct benefit of any dependent of
18the taxpayer or any other student designated by the taxpayer.
19c. The value of a noncash contribution shall be appraised
20pursuant to rules of the director.
213. Any credit in excess of the tax liability is not
22refundable but the excess for the tax year may be credited to
23the tax liability for the following five tax years or until
24depleted, whichever is the earlier.
254. Married taxpayers who file separate returns must
26determine the tax credit under subsection 1 based upon their
27combined net income and allocate the total credit amount to
28each spouse in the proportion that each spouse’s respective net
29income bears to the total combined net income. Nonresidents
30or part-year residents of Iowa must determine their tax credit
31in the ratio of their Iowa source net income to their all
32source net income. Nonresidents or part-year residents who are
33married and elect to file separate returns must allocate the
34tax credit between the spouses in the ratio of each spouse’s
35Iowa source net income to the combined Iowa source net income
-1-1of the taxpayers.
25. An individual may claim the tax credit allowed a
3partnership, limited liability company, S corporation, estate,
4or trust electing to have the income taxed directly to the
5individual. The amount claimed by the individual shall be
6based upon the pro rata share of the individual’s earnings of
7the partnership, limited liability company, S corporation,
8estate, or trust.
96. For purposes of this section:
10a. “Eligible student” means a student who is a member of
11a household whose total annual income during the calendar
12year before the student receives a grant for purposes of this
13section does not exceed an amount equal to four times the most
14recently published federal poverty guidelines in the federal
15register by the United States department of health and human
16services.
17b. “Grant” means grants to students to cover all or part of
18qualified private instruction.
19c. “Private instruction organization” means a charitable
20organization in this state that is exempt from federal taxation
21under section 501(c)(3) of the Internal Revenue Code and that
22does all of the following:
23(1) Allocates at least ninety percent of its annual revenue
24in grants for eligible students to allow them to receive
25qualified private instructions of their parents’ choice.
26(2) Only awards grants to eligible students who reside in
27Iowa.
28(3) Provides grants to eligible students without limiting
29availability to a type of qualified private instruction.
30(4) Only provides grants to eligible students in a certain
31geographic area within the state.
32(5) Prepares an annual reviewed financial statement
33certified by a public accounting firm.
34d. “Qualified private instruction” means independent private
35instruction or competent private instruction under chapter
-2-1299A.
27. a. In order for the taxpayer to claim the private
3instruction organization tax credit under subsection 1, a
4tax credit certificate issued by the private instruction
5organization to which the contribution was made shall be
6included with the person’s tax return. The tax credit
7certificate shall contain the taxpayer’s name, address, tax
8identification number, the amount of the contribution, the
9amount of the credit, and other information required by the
10department.
11b. (1) The department shall authorize a private instruction
12organization to issue tax credit certificates for contributions
13made to the private instruction organization, limited by the
14maximum total dollar value of the tax credits available for the
15calendar year in subsection 8. The aggregate amount of tax
16credit certificates that the department shall authorize for a
17private instruction organization for a calendar year shall be
18determined for that organization by the department equal to the
19product of the following:
20(a) The maximum total dollar value of the tax credits
21available for the calendar year.
22(b) The ratio of the number of households submitting a
23participation form to the department for a particular private
24instruction organization to the total participation forms
25submitted.
26(2) However, a private instruction organization shall not
27be authorized to issue tax credit certificates unless the
28organization is controlled by a board of directors consisting
29of at least seven members. The names and addresses of the
30members shall be provided to the department and shall be made
31available by the department to the public, notwithstanding any
32state confidentiality restrictions.
33c. Pursuant to rules of the department, a private
34instruction organization shall initially register with the
35department. The organization’s registration shall include
-3-1proof of Internal Revenue Code section 501(c)(3) status
2and provide the geographic area the private instruction
3organization serves. Once the private instruction organization
4has registered, it is not required to subsequently register
5unless the geographic area it serves changes.
6d. Each household that receives funds from a private
7instruction organization shall submit a participation form
8annually to the department by November 1. For the 2023
9calendar year only, each household served by a private
10instruction organization shall submit a participation form to
11the department by August 1, 2023.
128. The maximum total dollar value of the tax credits for
13the 2023 calendar year shall not exceed ten million dollars.
14For calendar years beginning on or after January 1, 2024, the
15maximum total value of tax credits shall not exceed twenty
16million dollars.
179. Each year by December 1, the department shall authorize
18private instruction organizations to issue tax credit
19certificates for the following calendar year. However, for the
202023 calendar year only, the department, by September 1, 2023,
21shall authorize private instruction organizations to issue tax
22credit certificates for the 2023 calendar year.
2310. A private instruction organization that receives a
24voluntary cash or noncash contribution pursuant to this section
25shall report to the department, on a form prescribed by the
26department, by January 15 of each calendar year all of the
27following information:
28a. The name and address of the members and the chairperson
29of the governing board of the private instruction organization.
30b. The total number and dollar value of contributions
31received and the total number and dollar value of the tax
32credits approved during the previous calendar year.
33c. A list of the individual donors for the previous calendar
34year that includes the dollar value of each donation and the
35dollar value of each approved tax credit.
-4- 1d. The total number of eligible students utilizing grants
2for the school year in progress and the total dollar value of
3the grants.
4e. The name and address of each household at which grants
5are currently being utilized.
6f. The name of the person providing private instruction and
7the number of eligible students receiving private instruction
8by the person.
9 Sec. 2. Section 422.33, Code 2023, is amended by adding the
10following new subsection:
11 NEW SUBSECTION. 33. The taxes imposed under this subchapter
12shall be reduced by a private instruction organization tax
13credit as provided pursuant to section 422.11X.
14 Sec. 3. EFFECTIVE DATE. This Act, being deemed of immediate
15importance, takes effect upon enactment.
16 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies
17retroactively to January 1, 2023, for tax years beginning on
18or after that date.
19EXPLANATION
20The inclusion of this explanation does not constitute agreement with
21the explanation’s substance by the members of the general assembly.
22This bill provides an individual and corporate income
23tax credit equal to a maximum 65 percent of the voluntary
24contributions made to a private instruction organization that
25is exempt from federal income tax. At least 90 percent of
26total contributions must be used by the private instruction
27organization to provide grants to students who are members
28of households that have total annual income that does not
29exceed four times the most recently published federal poverty
30guidelines. The contribution may not be deducted as a
31charitable deduction for state tax purposes or be designated
32for the direct benefit of a dependent or any other student
33designated by the taxpayer.
34The private instruction organization must limit the grants
35to students who reside in Iowa, must provide grants without
-5-1limiting the type of private instruction received, and only
2provide grants to students in a certain geographic area.
3The tax credit is claimed by attaching a tax credit
4certificate to the taxpayer’s tax return. A private
5instruction organization is authorized to issue a tax credit
6certificate in an amount determined by the department. The
7amount available for each private instruction organization
8is determined by multiplying the maximum total value of tax
9credits available for the calendar year with the ratio of the
10number of households submitting a participation form to the
11department of revenue for a particular private instruction
12organization to the total participation forms submitted. Each
13household that receives funds from a private instruction
14organization must submit a participation form to the department
15of revenue. For calendar year 2023 the maximum total value
16of tax credits available shall not exceed $10 million and for
17calendar years beginning on or after January 1, 2024, the
18maximum total value of credits shall not exceed $20 million.
19The private instruction organization must report to the
20department of revenue by January 15 of each calendar year
21the members of the governing board, the total dollar value
22of contributions received and the total dollar value of
23tax credits approved, a list of donors, the total number of
24students receiving grants for the school year, the name and
25address of each household utilizing the grants, and the name
26of the person providing private instruction and the number of
27eligible students receiving private instruction by the person.
28The bill takes effect upon enactment and applies
29retroactively to tax years beginning on or after January 1,
302023.
-6-jm/jh
2available against the individual and corporate income taxes,
3and including effective date and retroactive applicability
4provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 422.11X Private instruction
2organization tax credit.
31. The taxes imposed under this subchapter, less the credits
4allowed under section 422.12, shall be reduced by a private
5instruction tax credit equal to sixty-five percent of the
6amount of the voluntary cash or noncash contributions made
7by the taxpayer during the tax year to a private instruction
8organization, subject to the maximum total value of tax credits
9allowed in subsection 8. The tax credit shall be claimed by
10use of a tax credit certificate as provided in subsection 7.
112. To be eligible for this credit, all of the following
12shall apply:
13a. A deduction pursuant to section 170 of the Internal
14Revenue Code for any amount of the contribution is not taken
15for state tax purposes.
16b. The contribution does not designate that any part of the
17contribution be used for the direct benefit of any dependent of
18the taxpayer or any other student designated by the taxpayer.
19c. The value of a noncash contribution shall be appraised
20pursuant to rules of the director.
213. Any credit in excess of the tax liability is not
22refundable but the excess for the tax year may be credited to
23the tax liability for the following five tax years or until
24depleted, whichever is the earlier.
254. Married taxpayers who file separate returns must
26determine the tax credit under subsection 1 based upon their
27combined net income and allocate the total credit amount to
28each spouse in the proportion that each spouse’s respective net
29income bears to the total combined net income. Nonresidents
30or part-year residents of Iowa must determine their tax credit
31in the ratio of their Iowa source net income to their all
32source net income. Nonresidents or part-year residents who are
33married and elect to file separate returns must allocate the
34tax credit between the spouses in the ratio of each spouse’s
35Iowa source net income to the combined Iowa source net income
-1-1of the taxpayers.
25. An individual may claim the tax credit allowed a
3partnership, limited liability company, S corporation, estate,
4or trust electing to have the income taxed directly to the
5individual. The amount claimed by the individual shall be
6based upon the pro rata share of the individual’s earnings of
7the partnership, limited liability company, S corporation,
8estate, or trust.
96. For purposes of this section:
10a. “Eligible student” means a student who is a member of
11a household whose total annual income during the calendar
12year before the student receives a grant for purposes of this
13section does not exceed an amount equal to four times the most
14recently published federal poverty guidelines in the federal
15register by the United States department of health and human
16services.
17b. “Grant” means grants to students to cover all or part of
18qualified private instruction.
19c. “Private instruction organization” means a charitable
20organization in this state that is exempt from federal taxation
21under section 501(c)(3) of the Internal Revenue Code and that
22does all of the following:
23(1) Allocates at least ninety percent of its annual revenue
24in grants for eligible students to allow them to receive
25qualified private instructions of their parents’ choice.
26(2) Only awards grants to eligible students who reside in
27Iowa.
28(3) Provides grants to eligible students without limiting
29availability to a type of qualified private instruction.
30(4) Only provides grants to eligible students in a certain
31geographic area within the state.
32(5) Prepares an annual reviewed financial statement
33certified by a public accounting firm.
34d. “Qualified private instruction” means independent private
35instruction or competent private instruction under chapter
-2-1299A.
27. a. In order for the taxpayer to claim the private
3instruction organization tax credit under subsection 1, a
4tax credit certificate issued by the private instruction
5organization to which the contribution was made shall be
6included with the person’s tax return. The tax credit
7certificate shall contain the taxpayer’s name, address, tax
8identification number, the amount of the contribution, the
9amount of the credit, and other information required by the
10department.
11b. (1) The department shall authorize a private instruction
12organization to issue tax credit certificates for contributions
13made to the private instruction organization, limited by the
14maximum total dollar value of the tax credits available for the
15calendar year in subsection 8. The aggregate amount of tax
16credit certificates that the department shall authorize for a
17private instruction organization for a calendar year shall be
18determined for that organization by the department equal to the
19product of the following:
20(a) The maximum total dollar value of the tax credits
21available for the calendar year.
22(b) The ratio of the number of households submitting a
23participation form to the department for a particular private
24instruction organization to the total participation forms
25submitted.
26(2) However, a private instruction organization shall not
27be authorized to issue tax credit certificates unless the
28organization is controlled by a board of directors consisting
29of at least seven members. The names and addresses of the
30members shall be provided to the department and shall be made
31available by the department to the public, notwithstanding any
32state confidentiality restrictions.
33c. Pursuant to rules of the department, a private
34instruction organization shall initially register with the
35department. The organization’s registration shall include
-3-1proof of Internal Revenue Code section 501(c)(3) status
2and provide the geographic area the private instruction
3organization serves. Once the private instruction organization
4has registered, it is not required to subsequently register
5unless the geographic area it serves changes.
6d. Each household that receives funds from a private
7instruction organization shall submit a participation form
8annually to the department by November 1. For the 2023
9calendar year only, each household served by a private
10instruction organization shall submit a participation form to
11the department by August 1, 2023.
128. The maximum total dollar value of the tax credits for
13the 2023 calendar year shall not exceed ten million dollars.
14For calendar years beginning on or after January 1, 2024, the
15maximum total value of tax credits shall not exceed twenty
16million dollars.
179. Each year by December 1, the department shall authorize
18private instruction organizations to issue tax credit
19certificates for the following calendar year. However, for the
202023 calendar year only, the department, by September 1, 2023,
21shall authorize private instruction organizations to issue tax
22credit certificates for the 2023 calendar year.
2310. A private instruction organization that receives a
24voluntary cash or noncash contribution pursuant to this section
25shall report to the department, on a form prescribed by the
26department, by January 15 of each calendar year all of the
27following information:
28a. The name and address of the members and the chairperson
29of the governing board of the private instruction organization.
30b. The total number and dollar value of contributions
31received and the total number and dollar value of the tax
32credits approved during the previous calendar year.
33c. A list of the individual donors for the previous calendar
34year that includes the dollar value of each donation and the
35dollar value of each approved tax credit.
-4- 1d. The total number of eligible students utilizing grants
2for the school year in progress and the total dollar value of
3the grants.
4e. The name and address of each household at which grants
5are currently being utilized.
6f. The name of the person providing private instruction and
7the number of eligible students receiving private instruction
8by the person.
9 Sec. 2. Section 422.33, Code 2023, is amended by adding the
10following new subsection:
11 NEW SUBSECTION. 33. The taxes imposed under this subchapter
12shall be reduced by a private instruction organization tax
13credit as provided pursuant to section 422.11X.
14 Sec. 3. EFFECTIVE DATE. This Act, being deemed of immediate
15importance, takes effect upon enactment.
16 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies
17retroactively to January 1, 2023, for tax years beginning on
18or after that date.
19EXPLANATION
20The inclusion of this explanation does not constitute agreement with
21the explanation’s substance by the members of the general assembly.
22This bill provides an individual and corporate income
23tax credit equal to a maximum 65 percent of the voluntary
24contributions made to a private instruction organization that
25is exempt from federal income tax. At least 90 percent of
26total contributions must be used by the private instruction
27organization to provide grants to students who are members
28of households that have total annual income that does not
29exceed four times the most recently published federal poverty
30guidelines. The contribution may not be deducted as a
31charitable deduction for state tax purposes or be designated
32for the direct benefit of a dependent or any other student
33designated by the taxpayer.
34The private instruction organization must limit the grants
35to students who reside in Iowa, must provide grants without
-5-1limiting the type of private instruction received, and only
2provide grants to students in a certain geographic area.
3The tax credit is claimed by attaching a tax credit
4certificate to the taxpayer’s tax return. A private
5instruction organization is authorized to issue a tax credit
6certificate in an amount determined by the department. The
7amount available for each private instruction organization
8is determined by multiplying the maximum total value of tax
9credits available for the calendar year with the ratio of the
10number of households submitting a participation form to the
11department of revenue for a particular private instruction
12organization to the total participation forms submitted. Each
13household that receives funds from a private instruction
14organization must submit a participation form to the department
15of revenue. For calendar year 2023 the maximum total value
16of tax credits available shall not exceed $10 million and for
17calendar years beginning on or after January 1, 2024, the
18maximum total value of credits shall not exceed $20 million.
19The private instruction organization must report to the
20department of revenue by January 15 of each calendar year
21the members of the governing board, the total dollar value
22of contributions received and the total dollar value of
23tax credits approved, a list of donors, the total number of
24students receiving grants for the school year, the name and
25address of each household utilizing the grants, and the name
26of the person providing private instruction and the number of
27eligible students receiving private instruction by the person.
28The bill takes effect upon enactment and applies
29retroactively to tax years beginning on or after January 1,
302023.
-6-jm/jh