Bill Text: AZ HB2080 | 2017 | Fifty-third Legislature 1st Regular | Introduced
Bill Title: STO; credit cap; low-income qualification
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2017-01-18 - House read second time [HB2080 Detail]
Download: Arizona-2017-HB2080-Introduced.html
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REFERENCE TITLE: STO; credit cap; low-income qualification |
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State of Arizona House of Representatives Fifty-third Legislature First Regular Session 2017
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HB 2080 |
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Introduced by Representative Coleman: Senator Brophy McGee
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AN ACT
Amending sections 43-1183, 43-1501, 43-1502, 43-1503, 43-1504, 43-1505, 43-1602 and 43-1603, Arizona Revised Statutes; relating to school tuition organization income tax credits.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 43-1183, Arizona Revised Statutes, is amended to read:
43-1183. Credit for contributions to school tuition organization
A. Beginning from and after June 30, 2006, a credit is allowed against the taxes imposed by this title for the amount of voluntary cash contributions made by the taxpayer during the taxable year to a school tuition organization that is certified pursuant to chapter 15 of this title at the time of donation.
B. The amount of the credit is the total amount of the taxpayer's contributions for the taxable year under subsection A of this section and is preapproved by the department of revenue pursuant to subsection D of this section.
C. The department of revenue:
1. Shall not allow tax credits under this section and section 20‑224.06 that exceed in the aggregate a combined total of ten million dollars in any fiscal year. Beginning in fiscal year 2007‑2008 through fiscal year 2016-2017, the aggregate dollar amount of the tax credit cap from the previous fiscal year shall be annually increased by twenty percent. Beginning in fiscal year 2017-2018, the aggregate dollar amount of the tax credit cap from the previous fiscal year shall be annually increased by the greater of the following:
(a) The percentage of the annual increase, if any, in the metropolitan Phoenix consumer price index published by the United States bureau of labor statistics.
(b) Two percent.
2. Shall preapprove tax credits under this section and section 20‑224.06 subject to subsection D of this section.
3. Shall allow the tax credits under this section and section 20‑224.06 on a first come, first served basis.
D. For the purposes of subsection C, paragraph 2 of this section, before making a contribution to a school tuition organization, the taxpayer under this title or title 20 must notify the school tuition organization of the total amount of contributions that the taxpayer intends to make to the school tuition organization. Before accepting the contribution, the school tuition organization shall request preapproval from the department of revenue for the taxpayer's intended contribution amount. The department of revenue shall preapprove or deny the requested amount within twenty days after receiving the request from the school tuition organization. If the department of revenue preapproves the request, the school tuition organization shall immediately notify the taxpayer, and the department of insurance in the case of a credit under section 20‑224.06, that the requested amount was preapproved by the department of revenue. In order to receive a tax credit under this subsection, the taxpayer shall make the contribution to the school tuition organization within twenty days after receiving notice from the school tuition organization that the requested amount was preapproved. If the school tuition organization does not receive the preapproved contribution from the taxpayer within the required twenty days, the school tuition organization shall immediately notify the department of revenue, and the department of insurance in the case of a credit under section 20‑224.06, and the department of revenue shall no longer include this preapproved contribution amount when calculating the limit prescribed in subsection C, paragraph 1 of this section.
E. If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years' income tax liability.
F. Co-owners of a business, including corporate partners in a partnership and stockholders of an S corporation as defined in section 1361 of the internal revenue code, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest. The total of the credits allowed all such owners may not exceed the amount that would have been allowed a sole owner.
G. The credit allowed by this section is in lieu of any deduction pursuant to section 170 of the internal revenue code and taken for state tax purposes.
H. A taxpayer shall not claim a credit under this section and also under section 43‑1184 with respect to the same contribution.
I. The tax credit is not allowed if the taxpayer designates the taxpayer's contribution to the school tuition organization for the direct benefit of any specific student.
J. The department of revenue, with the cooperation of the department of insurance, shall adopt rules and publish and prescribe forms and procedures necessary for the administration of this section.
Sec. 2. Section 43-1501, Arizona Revised Statutes, is amended to read:
43-1501. Definitions
In this chapter, unless the context otherwise requires:
1. "Allocate" includes reserving money for an award of a multiyear educational scholarship or tuition grant for a specific student.
2. "Custodian" means a resident of this state who is a parent or an authorized out-of-home care provider or, if none, the legal guardian of a qualified student, as defined in section 43‑1505.
3. "Federal poverty level" means the federal poverty level guidelines published annually by the United States department of health and human services.
3. 4. "Fiscal year" means the fiscal year of the state as prescribed in section 35‑102.
4. 5. "Qualified school" means a preschool that offers services to students with disabilities, nongovernmental primary school or secondary school that is located in this state and that does not discriminate on the basis of race, color, disability, familial status or national origin and that requires all teaching staff and personnel that have unsupervised contact with students to be fingerprinted. Qualified school does not include a charter school or programs operated by a charter school.
Sec. 3. Section 43-1502, Arizona Revised Statutes, is amended to read:
43-1502. Certification as a school tuition organization
A. A nonprofit organization in this state that is exempt or has applied for exemption from federal taxation under section 501(c)(3) of the internal revenue code may apply to the department of revenue for certification as a school tuition organization, and the department shall certify the school tuition organization if it meets the requirements prescribed by this chapter. An organization must apply for certification on a form prescribed and furnished on request by the department.
B. The department shall:
1. Maintain a public registry of currently certified school tuition organizations.
2. Make the registry available to the public on request.
3. Post the registry on the department's official website.
C. The department shall send written notice by certified mail to a school tuition organization if the department determines that the school tuition organization has engaged in any of the following activities:
1. Failing Failed or refusing refused to allocate at least ninety per cent ninety-five percent of annual revenues from contributions made for the purposes of sections 20‑224.06, 20‑224.07, 43‑1183 and 43-1184 for educational scholarships or tuition grants.
2. Failing Failed or refusing refused to file the annual reports required by section 43‑1506.
3. Limiting Limited the availability of scholarships to students of only one school.
4. Encouraging Encouraged, facilitating facilitated or knowingly permitting permitted taxpayers to engage in actions prohibited by this article.
5. Knowingly colluding colluded with any other school tuition organization to circumvent the limits of section 43‑1504, subsection C B.
D. A school tuition organization that receives notice from the department pursuant to subsection C of this section has ninety days to correct the violation identified by the department in the notice. If a school tuition organization fails or refuses to comply after ninety days, the department may remove the organization from the list of certified school tuition organizations and shall make available to the public notice of removal as soon as possible. An organization that is removed from the list of certified school tuition organizations must notify any taxpayer who attempts to make a contribution that the contribution is not eligible for the tax credit and offer to refund all donations received after the date of the notice of termination of certification.
E. A school tuition organization may request an administrative hearing on the revocation of its certification as provided by title 41, chapter 6, article 10. Except as provided in section 41‑1092.08, subsection H, a decision of the department is subject to judicial review pursuant to title 12, chapter 7, article 6.
Sec. 4. Section 43-1503, Arizona Revised Statutes, is amended to read:
43-1503. Operational requirements for school tuition organizations
A. A certified school tuition organization must be established to receive contributions from taxpayers for the purposes of income tax credits under sections 43‑1183 and 43‑1184 and insurance premium tax credits under sections 20‑224.06 and 20‑224.07 and to pay educational scholarships or tuition grants to allow students to attend any qualified school of their parents' or custodians' choice.
B. To be eligible for certification and retain certification, the school tuition organization:
1. Must allocate at least ninety ninety-five percent of its annual revenue from contributions made for the purposes of sections 20‑224.06, 20‑224.07, 43‑1183 and 43‑1184 for educational scholarships or tuition grants.
2. Shall not limit the availability of educational scholarships or tuition grants to only students of one school.
3. Must allow the department of revenue to verify that the educational scholarships and tuition grants that are issued are awarded to students who attend a qualified school.
4. Must not knowingly collude with any other school tuition organization to circumvent the limits of section 43‑1504, subsection C B.
5. Must not award educational scholarships or tuition grants to students who are simultaneously enrolled in a district school or charter school and a qualified school.
6. Shall include on the organization's website, if one exists, the percentage and total dollar amount of educational scholarships and tuition grants awarded during the previous fiscal year to:
(a) Students whose family income meets the economic eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785) for free or reduced‑price lunches does not exceed the federal poverty level.
(b) Students whose family income exceeds the threshold prescribed by subdivision (a) of this paragraph but does not exceed one hundred eighty‑five percent of the economic eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785) for free or reduced‑price lunches federal poverty level but does not exceed one hundred thirty-three percent of the federal poverty level.
Sec. 5. Section 43-1504, Arizona Revised Statutes, is amended to read:
43-1504. Special provisions; corporate donations for low‑income scholarships; rules
A. A school tuition organization that receives contributions from a corporation for the purposes of section 20‑224.06 or 43‑1183 must use at least ninety per cent ninety-five percent of those contributions to provide educational scholarships or tuition grants only to children whose family income does not exceed one hundred eighty-five per cent of the income limit required to qualify a child for reduced price lunches under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785) one hundred thirty-three percent of the federal poverty level and to whom any of the following applies:
1. Attended a governmental primary or secondary school as a full‑time student students as defined in section 15‑901 or attended a preschool program that offers services to students with disabilities at a governmental school for at least ninety days of the prior fiscal year or one full semester and transferred from a governmental school to a qualified school.
2. Enroll in a qualified school in a kindergarten program or a preschool program that offers services to students with disabilities.
3. Is Are the dependent of a member of the armed forces of the United States who is stationed in this state pursuant to military orders.
4. Received an educational scholarship or tuition grant under paragraph 1, 2 or 3 of this subsection or chapter 16, article 1 of this title if the children continue to attend a qualified school in a subsequent year.
B. A child is eligible to receive an educational scholarship or tuition grant under subsection A of this section if the child meets the criteria to receive a reduced price lunch but does not actually claim that benefit.
C. B. In 2006, a school tuition organization shall not issue an educational scholarship or a tuition grant for the purposes of section 20‑224.06 or 43‑1183 in an amount that exceeds four thousand two hundred dollars for students in a disabled preschool or kindergarten program, in A preschool program that offers services to students with disabilities or in grades one through eight or five thousand five hundred dollars for students in grades nine through twelve. In each year after 2006, the limitation amount for a scholarship or a grant under this subsection shall be increased by one hundred dollars.
D. C. A school tuition organization shall require that student beneficiaries use the educational scholarships or tuition grants on a full‑time basis. If a child leaves the school before completing an entire school year, the school shall refund a prorated amount of the educational scholarship or tuition grant to the school tuition organization that issued the scholarship or grant. The school tuition organization shall allocate any refunds it receives under this subsection for educational scholarships or tuition grants.
E. D. Students who receive an educational scholarship or tuition grant under this section shall be allowed to attend any qualified school of their parents' choice.
F. E. The department of revenue, with the cooperation of the department of insurance, shall adopt rules and publish and prescribe forms and procedures necessary for the administration of this section.
Sec. 6. Section 43-1505, Arizona Revised Statutes, is amended to read:
43-1505. Special provisions; corporate donations for displaced students and students with disabilities; definition
A. A school tuition organization that receives contributions for the purposes of section 20‑224.07 or 43‑1184 must use at least ninety per cent ninety-five percent of those contributions to provide educational scholarships or tuition grants to qualified students.
B. The amount of an educational scholarship or a tuition grant that is issued by a school tuition organization under this section shall not exceed the cost of tuition for the student to attend the qualified school or ninety per cent ninety‑five percent of the amount of state aid that otherwise would be computed for the student as provided in title 15, chapter 9, article 5, whichever is less. On request from a school tuition organization, the department of education shall provide to the school tuition organization in a timely manner the amount computed for the student under this subsection that represents the ninety per cent ninety‑five percent limitation prescribed in this subsection.
C. A school tuition organization shall require that student beneficiaries use the educational scholarships or tuition grants on a full‑time basis. If a child leaves the school before completing an entire school year, the school shall refund a prorated amount of the educational scholarship or tuition grant to the school tuition organization that issued the scholarship or grant. The school tuition organization shall allocate any refunds it receives under this subsection for educational scholarships or tuition grants.
D. Qualified students who receive an educational scholarship or tuition grant under this section shall be allowed to attend any qualified school of their custodians' choice.
E. For the purposes of this section, "qualified student" means a student, including a student who previously qualified for an educational scholarship or tuition grant under this section and continues to attend a qualified school, who has been either:
1. Placed in foster care pursuant to title 8, chapter 4 at any time before the student graduates from high school or obtains a general equivalency diploma.
2. Identified as having a disability under section 504 of the rehabilitation act (29 United States Code section 794) or identified at any time by a school district as a child with a disability as defined in section 15‑761 or a child with a disability who is eligible to receive services from a school district under section 15‑763.
Sec. 7. Section 43-1602, Arizona Revised Statutes, is amended to read:
43-1602. Certification as a school tuition organization
A. A nonprofit organization in this state that is exempt or has applied for exemption from federal taxation under section 501(c)(3) of the internal revenue code may apply to the department of revenue for certification as a school tuition organization, and the department shall certify the school tuition organization if it meets the requirements prescribed by this chapter. An organization must apply for certification on a form prescribed and furnished on request by the department.
B. The department shall:
1. Maintain a public registry of currently certified school tuition organizations.
2. Make the registry available to the public on request.
3. Post the registry on the department's official website.
C. The department shall send written notice by certified mail to a school tuition organization if the department determines that the school tuition organization has engaged in any of the following activities:
1. Failing Failed or refusing refused to allocate at least ninety per cent ninety-five percent of annual revenues from contributions made for the purposes of sections 43‑1089 and 43‑1089.03 for educational scholarships or tuition grants.
2. Failing Failed or refusing refused to file the annual reports required by section 43‑1604.
3. Limiting Limited the availability of scholarships to students of only one school.
4. Encouraging Encouraged, facilitating facilitated or knowingly permitting permitted taxpayers to engage in actions prohibited by this article.
5. Awarding Awarded, restricting restricted or reserving reserved educational scholarships or tuition grants for use by a particular student based solely on the recommendation of the donor.
D. A school tuition organization that receives notice from the department pursuant to subsection C of this section has ninety days to correct the violation identified by the department in the notice. If a school tuition organization fails or refuses to comply after ninety days, the department may remove the organization from the list of certified school tuition organizations and shall make available to the public notice of removal as soon as possible. An organization that is removed from the list of certified school tuition organizations must notify any taxpayer who attempts to make a contribution that the contribution is not eligible for the tax credit and offer to refund all donations received after the date of the notice of termination of certification.
E. A school tuition organization may request an administrative hearing on the revocation of its certification as provided by title 41, chapter 6, article 10. Except as provided in section 41‑1092.08, subsection H, a decision of the department is subject to judicial review pursuant to title 12, chapter 7, article 6.
Sec. 8. Section 43-1603, Arizona Revised Statutes, is amended to read:
43-1603. Operational requirements for school tuition organizations; notice; qualified schools
A. A certified school tuition organization must be established to receive contributions from taxpayers for the purposes of income tax credits under sections 43‑1089 and 43‑1089.03 and to pay educational scholarships or tuition grants to allow students to attend any qualified school of their parents' choice.
B. To be eligible for certification and retain certification, the school tuition organization:
1. Must allocate at least ninety ninety-five percent of its annual revenue from contributions made for the purposes of sections 43‑1089 and 43‑1089.03 for educational scholarships or tuition grants.
2. Shall not limit the availability of educational scholarships or tuition grants to only students of one school.
3. May allow donors to recommend student beneficiaries, but shall not award, designate or reserve scholarships solely on the basis of donor recommendations.
4. Shall not allow donors to designate student beneficiaries as a condition of any contribution to the organization, or facilitate, encourage or knowingly permit the exchange of beneficiary student designations in violation of section 43‑1089, subsection F.
5. Shall include on the organization's website, if one exists, the percentage and total dollar amount of educational scholarships and tuition grants awarded during the previous fiscal year to:
(a) Students whose family income meets the economic eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785) for free or reduced‑price lunches does not exceed the federal poverty level guidelines published annually by the United States department of health and human services.
(b) Students whose family income exceeds the threshold prescribed by subdivision (a) of this paragraph but does not exceed one hundred eighty-five percent of the economic eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785) for free or reduced‑price lunches federal poverty level threshold described by subdivision (a) of this paragraph but does not exceed one hundred thirty-three percent of the federal poverty level.
6. Must not award educational scholarships or tuition grants to students who are simultaneously enrolled in a district school or charter school and a qualified school.
C. A school tuition organization shall include the following notice in any printed materials soliciting donations, in applications for scholarships and on its website, if one exists:
Notice
A school tuition organization cannot award, restrict or reserve scholarships solely on the basis of a donor's recommendation.
A taxpayer may not claim a tax credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer's own dependent.
D. In evaluating applications and awarding, designating or reserving scholarships, a school tuition organization:
1. Shall not award, designate or reserve a scholarship solely on the recommendation of any person contributing money to the organization, but may consider the recommendation among other factors.
2. Shall consider the financial need of applicants.
E. A taxpayer's contribution to a school tuition organization that exceeds the amount of the credit allowed by section 43‑1089 but does not exceed the amount of the credit allowed by section 43‑1089.03 is considered a contribution pursuant to section 43‑1089.03. A school tuition organization must use at least ninety ninety-five percent of contributions made pursuant to section 43‑1089.03 for educational scholarships or tuition grants for students to whom any of the following applies:
1. Attended a governmental primary or secondary school as a full‑time student students as defined in section 15‑901 or attended a preschool program that offers services to students with disabilities at a governmental school for at least ninety days of the prior fiscal year and transferred from a governmental school to a qualified school.
2. Enrolls Enroll in a qualified school in a kindergarten program or a preschool program that offers services to students with disabilities.
3. Is Are the dependent of a member of the armed forces of the United States who is stationed in this state pursuant to military orders.
4. Received an educational scholarship or tuition grant under paragraph 1, 2 or 3 of this subsection or under chapter 15 of this title if the student continues to attend a qualified school in a subsequent year.
F. In awarding educational scholarships or tuition grants from contributions made pursuant to section 43‑1089.03, a school tuition organization shall give priority to students and siblings of students on a waiting list for scholarships if the school tuition organization maintains a waiting list.
G. If an individual educational scholarship or tuition grant exceeds the school's tuition, the amount in excess shall be returned to the school tuition organization that made the award or grant. The school tuition organization may allocate the returned monies as a multiyear award for that student and report the award pursuant to section 43‑1604, paragraph 5, subdivision (b) or may allocate the returned monies for educational scholarships or tuition grants for other students.
