Citations Affected: IC 6-3.1; IC 20-50; noncode.
Synopsis: Scholarship granting organization tax credit. Provides a
state tax credit to a taxpayer that makes a contribution to a scholarship
granting organization for use by the scholarship granting organization
in a scholarship program to provide scholarships to eligible students.
Defines "eligible student" as an individual who: (1) has legal settlement
in Indiana; (2) is between five and 22 years of age; (3) either has been
or is currently enrolled in a participating school; (4) is enrolling in
kindergarten or was previously enrolled in a public school; and (5)
either: (A) has an annual household income of not more than 300% of
the federal income poverty level; or (B) received a scholarship as an
eligible student in the immediately preceding school year. Sets forth a
process for the department of state revenue to certify a scholarship
program administered by a scholarship granting organization.
Effective: Upon passage.
January 10, 2008, read first time and referred to Committee on Education and Career
Development.
January 17, 2008, amended, reported favorably _ Do Pass.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
credit.
Sec. 12. A contribution shall be treated as having been made for
use in a school scholarship program if:
(1) the contribution is made directly to a scholarship granting
organization; and
(2) either:
(A) not later than the date of the contribution the taxpayer
designates in writing to the scholarship granting
organization that the contribution is to be used only for a
school scholarship program; or
(B) the scholarship granting organization provides the
taxpayer with written confirmation that the contribution
will be dedicated solely for use in a school scholarship
program.
Sec. 13. The department, on an Internet web site used by the
department to provide information to the public, shall provide the
following information:
(1) The application for the credit provided in this chapter.
(2) A timeline for receiving the credit provided in this chapter.
(3) The total amount of credits awarded under this chapter
during the current calendar year.
Sec. 14. The department shall adopt rules under IC 4-22-2 to
implement this chapter.
IC 20-33-2-7;
(3) either has been or is currently enrolled in a participating
school;
(4) is enrolling in kindergarten or was previously enrolled in
a public school; and
(5) either:
(A) has an annual household income of not more than three
hundred percent (300%) of the federal income poverty
level as determined annually by the federal Office of
Management and Budget under 42 U.S.C. 9902; or
(B) received a scholarship under this article in the
immediately preceding school year or the immediately
preceding term of the current school year and qualified
under clause (A) in the first year that the individual
received a scholarship under this article.
(b) The term, for the calendar year beginning January 1, 2009,
does not include any student enrolling in kindergarten.
Sec. 6. (a) "Participating school" refers to a public or nonpublic
school that:
(1) an eligible student is required to pay tuition to attend;
(2) voluntarily agrees to enroll an eligible student; and
(3) is accredited by either the state board or a national or
regional accreditation agency that is recognized by the state
board.
(b) The term does not include a public school in a school
corporation where the eligible student has legal settlement under
IC 20-26-11.
Sec. 7. "Scholarship granting organization" refers to an
organization that:
(1) is exempt from federal income taxation under Section
501(c)(3) of the Internal Revenue Code; and
(2) is organized at least in part to grant school scholarships.
Sec. 8. "School scholarship" refers to a grant to pay only the
cost of education for an eligible student as determined for the
school year (as defined in IC 20-18-2-17) for which the scholarship
will be granted.
Chapter 2. Exchange of Information; Rules
Sec. 1. The department of state revenue shall maintain a
publicly available list of the school scholarship programs certified
by the department of state revenue. The list must contain names,
addresses, and any other information that the department of state
revenue determines is necessary for the public to determine which
scholarship granting organizations conduct school scholarship
programs. A current list must be posted on an Internet web site
used by the department of state revenue to provide information to
the public.
Chapter 3. Scholarship Granting Organizations; Certification;
Administration of Contributions
Sec. 1. A program qualifies for certification as a school
scholarship program if:
(1) the program:
(A) is administered by a scholarship granting organization;
and
(B) has the primary purpose of providing school
scholarships to eligible students; and
(2) the scholarship granting organization administering the
program:
(A) applies to the department of state revenue on the form
and in the manner prescribed by the department of state
revenue; and
(B) enters into an agreement with the department of state
revenue to comply with this article.
Sec. 2. The department of state revenue shall certify all
programs that meet the qualifications under section 1 of this
chapter as school scholarship programs.
Sec. 3. An agreement entered into under section 1 of this chapter
between the department of state revenue and a scholarship
granting organization must require the scholarship granting
organization to do the following:
(1) Provide a receipt to taxpayers for contributions made to
the scholarship granting organization that will be used in a
school scholarship program. The department of state revenue
shall prescribe a standardized form for the receipt issued
under this subdivision. The receipt must indicate the value of
the contribution and portion of the contribution being
designated for use in a school scholarship program.
(2) Distribute at least ninety percent (90%) of the total
amount of contributions as school scholarships to eligible
students.
(3) Distribute one hundred percent (100%) of any income
earned on contributions as school scholarships to eligible
students.
(4) Conduct criminal background checks on all the
scholarship granting organization's employees and board
members and exclude from employment or governance any
individual who might reasonably pose a risk to the
appropriate use of contributed funds.
(5) Make the reports required by this chapter.
Sec. 4. An agreement entered into under section 1 of this chapter
may not prohibit a scholarship granting organization from
receiving contributions other than contributions described in
section 3(1) of this chapter.
Sec. 5. An agreement entered into under section 1 of this chapter
must prohibit a scholarship granting organization from
distributing school scholarships for use by an eligible student to:
(1) enroll in a school that has:
(A) paid staff or board members; or
(B) relatives of paid staff or board members;
in common with the scholarship granting support
organization;
(2) enroll in a school that the scholarship granting
organization knows does not qualify as a participating school;
or
(3) pay for the cost of education for a public school where the
eligible student is entitled to enroll without the payment of
tuition.
Sec. 6. (a) A scholarship granting organization must publicly
report to the department of state revenue by August 1 of each year
the following information regarding the organization's
scholarships awarded in the previous school year:
(1) The name and address of the scholarship granting
organization.
(2) The total number and total dollar amount of contributions
received during the previous school year.
(3) The:
(A) total number and total dollar amount of scholarships
awarded during the previous school year; and
(B) total number and total dollar amount of school
scholarships awarded during the previous school year.
(b) The report must be certified under penalties of perjury by
the chief executive officer of the scholarship granting organization.
Sec. 7. The department of state revenue shall prescribe a
standardized form for scholarship granting organizations to report
information required under this chapter.
Sec. 8. The department of state revenue may, in a proceeding
under IC 4-21.5, suspend or terminate the certification of an
organization as a scholarship granting organization if the
department of state revenue establishes that the scholarship
granting organization has intentionally and substantially failed to
comply with the requirements of this article or an agreement
entered into under this article.
Sec. 9. If the department of state revenue suspends or
terminates the certification of an organization as a scholarship
granting organization, the department of state revenue shall notify
affected eligible students and their parents of the decision as
quickly as possible. An eligible student affected by a suspension or
termination of a scholarship granting organization's certification
shall remain an eligible student under this article until the end of
the school year after the school year in which the scholarship
granting organization's certification is suspended or terminated,
regardless of whether the scholarship student currently meets the
definition of an eligible student.
Sec. 10. The department of state revenue may conduct either a
financial review or an audit of a scholarship granting organization
if the department of state revenue has evidence of fraud.
Sec. 11. The department of state revenue shall adopt rules under
IC 4-22-2 to implement this article.