Bill Text: IL SB3744 | 2009-2010 | 96th General Assembly | Introduced

---

Bill Title: Amends the Illinois Income Tax Act. Creates a credit for businesses that make contributions to (i) educational improvement organizations, (ii) qualified scholarship organizations, or (iii) qualified pre-kindergarten scholarship organizations. Sets forth the amount of the credit. Provides that educational improvement organizations, scholarship organizations, and qualified pre-kindergarten scholarship organizations must submit certain information to the Department of Commerce and Economic Opportunity. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2010-03-08 - Rule 3-9(a) / Re-referred to Assignments [SB3744 Detail]

Download: Illinois-2009-SB3744-Introduced.html

---

96TH GENERAL ASSEMBLY State of Illinois 2009 and 2010 SB3744 Introduced 2/11/2010, by Sen. Kimberly A. Lightford SYNOPSIS AS INTRODUCED:
35 ILCS 5/219 new
Amends the Illinois Income Tax Act. Creates a credit for businesses that make contributions to (i) educational improvement organizations, (ii) qualified scholarship organizations, or (iii) qualified pre-kindergarten scholarship organizations. Sets forth the amount of the credit. Provides that educational improvement organizations, scholarship organizations, and qualified pre-kindergarten scholarship organizations must submit certain information to the Department of Commerce and Economic Opportunity. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.
LRB096 20510 HLH 36571 b
FISCAL NOTE ACT MAY APPLY
A BILL FOR
SB3744 LRB096 20510 HLH 36571 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by adding
Section 219 as follows:
(35 ILCS 5/219 new)
Sec. 219. Credit for contributions to educational
improvement organizations and scholarship organizations.
(a) For taxable years beginning on or after January 1,
2011, each business that, during the taxable year, makes a
contribution to (i) an educational improvement organization or
(ii) a qualified scholarship organization is entitled to a
credit against the tax imposed under subsections (a) and (b) of
Section 201 in an amount equal to 75% of the amount
contributed. However, if the business provides a written
commitment to the Department that it will provide an equal
contribution in the next taxable year, and such a contribution
is made, then the business is entitled to a credit in both
taxable years in an amount equal to 90% of the amount
contributed during the taxable year. The written commitment
must be made in the form and manner prescribed by the
Department. A credit awarded under this subsection (a) may not
exceed $300,000 per taxable year.

SB3744 - 2 - LRB096 20510 HLH 36571 b
(b) In addition, each business that, during the taxable
year, makes a contribution to a qualified pre-kindergarten
scholarship organization is entitled to a credit against the
tax imposed under subsections (a) and (b) of Section 201 in an
amount equal to (i) 100% of the first $10,000 contributed by
the business during the taxable year, and (ii) 90% of any
additional amounts contributed by the business during the
taxable year. A credit awarded under this subsection (b) may
not exceed $150,000 per taxable year.
(c) For the purposes of this Section:
"Department" means the Department of Commerce and
Economic Opportunity.
"Educational improvement organization" means a
non-profit entity that (i) is exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code of 1986 and
(ii) contributes at least 80% of its annual receipts as
grants to a public school for innovative educational
programs.
"Eligible pre-kindergarten student" means a student,
including an eligible student with a disability, who is
enrolled in a pre-kindergarten program and is a member of a
household with a household income of no more than the
maximum annual household income.
"Eligible student" means a school-age student,
including an eligible student with a disability, who is a
resident of the State of Illinois, who is enrolled in a

SB3744 - 3 - LRB096 20510 HLH 36571 b
school and is a member of a household with a household
income of no more than the maximum annual household income.
"Eligible student with a disability" means a
pre-kindergarten student or a school-age student who meets
all of the following: (i) is either enrolled in a special
education school or otherwise meets the definition of
"children with disabilities," as defined in Section
14-1.02 of the School Code; (ii) needs special education
and related services; (iii) is enrolled in a
pre-kindergarten program or in a school; and (iv) is a
member of a household with a household income of not more
than the maximum annual household income.
"Household" means a household in which one or more
eligible students resides with a spouse, parent,
grandparent, sibling, or legal guardian.
"Household income" means all moneys or property
received of whatever nature and from whatever source
derived. The term does not include the following: (i)
periodic payments for sickness and disability other than
regular wages received during a period of sickness or
disability; (ii) disability, retirement, or other payments
arising under workers' compensation Acts, occupational
disease Acts, and similar legislation by any unit of
government; (iii) payments commonly recognized as old-age
or retirement benefits paid to persons retired from service
after reaching a specific age or after a stated period of

SB3744 - 4 - LRB096 20510 HLH 36571 b
employment; (iv) payments commonly known as public
assistance or unemployment compensation payments by a
governmental agency; (v) payments to reimburse actual
expenses; (vi) payments made by employers or labor unions
for programs covering hospitalization, sickness,
disability or death, supplemental unemployment benefits,
strike benefits, social security and retirement; and (vii)
compensation received by United States servicemen serving
in a combat zone.
"Innovative educational program" means an advanced
academic or similar program that is not part of the regular
academic program of a public school, but that enhances the
curriculum or academic program of the public school or
provides pre-kindergarten programs to public school
students.
"Maximum annual household income" means (i) 200% of the
federal poverty level, as that level is calculated for a
family of 4, or (ii) with respect to a household with an
eligible student with a disability, the maximum household
income calculated under item (i) multiplied by (A) 1.5 or
(B) 3.0 if the household has at least one eligible student
with a disability who is enrolled in a special education
school.
"Pre-kindergarten program" means a program of
instruction for 3-year-old or 4-year-old students that
utilizes a curriculum aligned with the curriculum of the

SB3744 - 5 - LRB096 20510 HLH 36571 b
school with which it is affiliated and which provides one
of the following: (i) a minimum of 2 hours of instructional
and developmental activities per day at least 60 days per
school year or (ii) a minimum of 2 hours of instructional
and developmental activities per day at least 20 days over
the summer recess.
"Pre-kindergarten scholarship organization" means a
nonprofit entity which: (i) either is exempt from taxation
under Section 501(c)(3) of the Internal Revenue Code of
1986 or is operated as a separate segregated fund by a
qualified scholarship organization and (ii) contributes at
least 80% of its annual cash receipts to a pre-kindergarten
scholarship program by expending those funds for
distribution during the then current fiscal year of the
organization or during the next succeeding fiscal year of
the organization.
"Pre-kindergarten scholarship program" means a program
to provide tuition to eligible pre-kindergarten students
to attend a pre-kindergarten program operated by or in
conjunction with a school located in this State and that
includes an application and review process for the purpose
of making awards to eligible pre-kindergarten students and
awards scholarships to eligible pre-kindergarten students
without limiting availability to only students of one
school.
"Qualified scholarship organization" means a

SB3744 - 6 - LRB096 20510 HLH 36571 b
non-profit entity that (i) is exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code of 1986 and
(ii) contributes at least 80% of its annual receipts to a
scholarship program.
"Scholarship program" means a program to provide
tuition to eligible students to attend a public or
non-public pre-kindergarten, kindergarten, elementary, or
secondary school in the State. A scholarship program must
include an application and review process for the purpose
of making awards to eligible students. The award of
scholarships to eligible students shall be made without
limiting availability to only students of one school.
"School" means a public or nonpublic pre-kindergarten,
kindergarten, elementary school, or secondary school and
attendance at which satisfies requirements of Section 26-1
of the School Code and which meets the applicable
requirements of Title VI of the Civil Rights Act of 1964.
"School age" means children from the earliest
admission age to a school's pre-kindergarten or
kindergarten program or, when no pre-kindergarten or
kindergarten program is provided, the school's earliest
admission age for beginners, until the end of the school
year in which the student attains 21 years of age or
graduation from high school, whichever occurs first.
"Special education school" means a school or program
within a school that is designated specifically and

SB3744 - 7 - LRB096 20510 HLH 36571 b
exclusively for students with disabilities as defined by
Section 14-1.02 of the School Code and meets at least one
of the following criteria: (i) the program is a non-public
program approved under Section 14-7.02 of the School Code;
(ii) is accredited by the State Board of Education; (iii)
is a school for the blind or deaf receiving State funding;
(iv) is operated by or under the authority of a bona fide
religious institution or by the State of Illinois or any
political subdivision thereof; or (v) is a facility created
under a special education joint agreement under Section
10-22.31 of the School Code.
(d) In order to qualify under this Section, a scholarship
organization, a pre-kindergarten scholarship organization, or
an educational improvement organization must submit
information to the Department that enables the Department to
confirm that the organization is exempt from taxation under
section 501(c)(3) of the Internal Revenue Code of 1986. A
scholarship organization or pre-kindergarten scholarship
organization must certify to the Department that the
organization is eligible to participate in the program
established under this Section and must agree to annually
report the following information to the Department by December
1, 2011 and September 1 of each year thereafter:
(1) the number of scholarships awarded during the
immediately preceding school year to eligible
pre-kindergarten students;

SB3744 - 8 - LRB096 20510 HLH 36571 b
(2) the total and average amounts of the scholarships
awarded during the immediately preceding school year to
eligible pre-kindergarten students;
(3) the number of scholarships awarded during the
immediately preceding school year to eligible students in
grades kindergarten through 8;
(4) the total and average amounts of the scholarships
awarded during the immediately preceding school year to
eligible students in grades kindergarten through 8;
(5) the number of scholarships awarded during the
immediately preceding school year to eligible students in
grades 9 through 12;
(6) the total and average amounts of the scholarships
awarded during the immediately preceding school year to
eligible students in grades 9 through 12; and
(7) if the scholarship organization or
pre-kindergarten scholarship organization collects
information on a county-by-county basis, the total number
and the total amount of scholarships awarded during the
immediately preceding school year to residents of each
county in which the scholarship organization or
pre-kindergarten scholarship organization awarded
scholarships.
The information required under items (1) through (7) of
this subsection shall be submitted on a form provided by the
Department. No later than September 1, 2011 and May 1 of each

SB3744 - 9 - LRB096 20510 HLH 36571 b
year thereafter, the Department shall annually distribute such
sample forms, together with the forms on which the reports are
required to be made, to each listed scholarship organization
and pre-kindergarten scholarship organization. The Department
may not require any other information to be provided by
scholarship organizations or pre-kindergarten scholarship
organizations, except as expressly authorized in this Section.
(e) An application submitted by an educational improvement
organization must describe its proposed innovative educational
program or programs in the form and manner prescribed by the
Department. The Department shall consult with the State Board
of Education as necessary. The Department shall review and
approve or disapprove the application. In order to be eligible
to participate in the program established under this Section,
an educational improvement organization must agree to annually
report the following information to the department by December
1, 2011 and September 1 of each year thereafter:
(1) the name of the innovative educational program or
programs and the total amount of the grant or grants made
to those programs during the immediately preceding school
year;
(2) a description of how each grant was utilized during
the immediately preceding school year and a description of
any demonstrated or expected innovative educational
improvements;
(3) the names of the public schools and school

SB3744 - 10 - LRB096 20510 HLH 36571 b
districts where innovative educational programs that
received grants during the immediately preceding school
year were implemented; and
(4) if the educational improvement organization
collects information on a county-by-county basis, the
total number and the total amount of grants made during the
immediately preceding school year for programs at public
schools in each county in which the educational improvement
organization made grants.
The information required under items (1) through (4) of
this subsection shall be submitted on a form provided by the
Department. No later than September 1, 2011 and May 1 of each
year thereafter, the Department shall annually distribute such
sample forms, together with the forms on which the reports are
required to be made, to each listed educational improvement
organization. The Department may not require any other
information to be provided by educational improvement
organizations, except as expressly authorized in this Section.
(f) The Department shall notify the scholarship
organization, pre-kindergarten scholarship organization, or
educational improvement organization that the organization
meets the requirements of this Section for that fiscal year no
later than 60 days after the organization has submitted the
information required under this Section. The Department shall
annually publish in the Illinois Register a list of each
scholarship organization, pre-kindergarten scholarship

SB3744 - 11 - LRB096 20510 HLH 36571 b
organization, or educational improvement organization
qualified. The list shall also be posted and updated as
necessary on the publicly accessible internet website of the
Department.
(g) A taxpayer shall apply to the Department for a tax
credit under this Section. The taxpayer shall receive a tax
credit under this Section if the scholarship organization,
pre-kindergarten scholarship organization, or educational
improvement organization that receives the contribution
appears on the list established under subsection (f). Tax
credits under this Section shall be awarded by the Department
on a first-come, first-served basis within the limitation
established under subsection (h) of this Section. A
contribution by a business to a scholarship organization,
pre-kindergarten scholarship organization or educational
improvement organization shall be made no later than 60 days
following the approval of the application.
(h) The total aggregate amount of all tax credits approved
under this Section shall not exceed $10,000,000 in a fiscal
year. The total aggregate amount of all tax credits approved
under this Section for contributions from business firms to
scholarship organizations shall not exceed $7,000,000. The
total aggregate amount of all tax credits approved under this
Section for contributions from business firms to educational
improvement organizations shall not exceed $2,000,000. The
total aggregate amount of all tax credits approved under this

SB3744 - 12 - LRB096 20510 HLH 36571 b
Section for contributions from business firms to
pre-kindergarten scholarship programs shall not exceed
$1,000,000 in a fiscal year. No tax credit shall be approved
under this Section for activities that are a part of the
taxpayer's normal course of business.
(i) For partners, shareholders of Subchapter S
corporations, and owners of limited liability companies, if the
liability company is treated as a partnership for purposes of
federal and State income taxation, there is allowed a credit
under this Section to be determined in accordance with the
determination of income and distributive share of income under
Sections 702 and 704 and Subchapter S of the Internal Revenue
Code.
(j) A credit awarded under this Section may not reduce the
taxpayer's liability to less than zero.
(k) The Department shall provide a list of all scholarship
organizations, pre-kindergarten scholarship organizations and
educational improvement organizations receiving contributions
from business firms granted a tax credit under this article to
the General Assembly by June 30th of each year. The Department
in consultation with the State Board of Education shall develop
guidelines to determine the eligibility of an innovative
educational program.
(f) This Section is exempt from the provisions of Section
250.
Section 99. Effective date. This Act takes effect upon

SB3744 - 13 - LRB096 20510 HLH 36571 b
becoming law.