Introduced Version
SENATE BILL No. 528
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.1-33; IC 20-51.
Synopsis: School scholarship 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; and (3) either: (A)
qualifies for the federal free or reduced price lunch program; 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 1, 2009 (retroactive).
Yoder, Stutzman
January 15, 2009, read first time and referred to Committee on Tax and Fiscal Policy.
Introduced
First Regular Session 116th General Assembly (2009)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in
this style type, and deletions will appear in
this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in
this style type. Also, the
word
NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in
this style type or
this style type reconciles conflicts
between statutes enacted by the 2008 Regular Session of the General Assembly.
SENATE BILL No. 528
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 6-3.1-33; (09)IN0528.1.1. -->
SECTION 1. IC 6-3.1-33 IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2009 (RETROACTIVE)]:
Chapter 33. School Scholarship Tax Credit
Sec. 1. As used in this chapter, "pass through entity" means:
(1) a corporation that is exempt from the adjusted gross
income tax under IC 6-3-2-2.8(2);
(2) a partnership;
(3) a limited liability company; or
(4) a limited liability partnership.
Sec. 2. As used in this chapter, "school scholarship program"
refers to a grant program that is certified as a school scholarship
program by the department of education under IC 20-51.
Sec. 3. As used in this chapter, "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) conducts a school scholarship program.
Sec. 4. As used in this chapter, "state tax liability" means a
taxpayer's total tax liability that is incurred under:
(1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(2) IC 6-5.5 (the financial institutions tax); and
(3) IC 27-1-18-2 (the insurance premiums tax);
as computed after the application of the credits that under
IC 6-3.1-1-2 are to be applied before the credit provided by this
chapter.
Sec. 5. As used in this chapter, "taxpayer" means an individual
or entity that has state tax liability.
Sec. 6. Each taxable year, a taxpayer is entitled to a credit
against the taxpayer's state tax liability for a charitable
contribution that the taxpayer makes during the taxable year to a
scholarship granting organization for use by the scholarship
granting organization in conducting a school scholarship program.
The amount of the taxpayer's credit is equal to thirty-five percent
(35%) of the amount of the charitable contribution made to the
scholarship granting organization for a school scholarship
program during the taxable year.
Sec. 7. A taxpayer is not entitled to a carryover, carryback, or
refund of an unused credit.
Sec. 8. (a) If:
(1) a pass through entity does not have state tax liability
against which the credit may be applied; and
(2) the pass through entity would be eligible for a credit if the
pass through entity were a taxpayer;
a shareholder, partner, or member of the pass through entity is
entitled to a credit under this chapter.
(b) The amount of the credit to which a shareholder, partner, or
member of a pass through entity is entitled is equal to:
(1) the credit determined for the pass through entity for the
taxable year; multiplied by
(2) the percentage of the pass through entity's distributive
income to which the shareholder, partner, or member is
entitled.
Sec. 9. To apply a credit against the taxpayer's state tax liability,
a taxpayer must claim the credit on the taxpayer's annual state tax
return or returns in the manner prescribed by the department. The
taxpayer shall submit to the department the information that the
department determines is necessary for the department to
determine whether the taxpayer is eligible for the credit.
Sec. 10. A charitable contribution shall be treated as having
been given for a school scholarship program if:
(1) the charitable contribution is given to a scholarship
granting organization that conducts a school scholarship
program; and
(2) either:
(A) the taxpayer designates in a writing delivered to the
scholarship granting organization not later than the date
the charitable contribution is made that the charitable
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 charitable
contribution will be dedicated for use in a school
scholarship program.
Sec. 11. The total amount of tax credits awarded under this
chapter may not exceed five million dollars ($5,000,000) in any
state fiscal year.
Sec. 12. The department shall provide on the Internet web site
used by the department 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 fiscal year.
SOURCE: IC 20-51; (09)IN0528.1.2. -->
SECTION 2. IC 20-51 IS ADDED TO THE INDIANA CODE AS
A
NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE UPON
PASSAGE]:
ARTICLE 51. EDUCATIONAL SCHOLARSHIPS
Chapter 1. Definitions
Sec. 1. The definitions in this chapter apply throughout this
article.
Sec. 2. "Agreement" refers to an agreement between the
department of state revenue and an applicant that applies for
certification of a school scholarship program.
Sec. 3. "Contribution" refers to a contribution to a scholarship
granting organization for a school scholarship program.
Sec. 4. "Educational scholarship" refers to a grant to pay tuition
and fees that would otherwise be charged to:
(1) an eligible student; or
(2) a parent of an eligible student.
Sec. 5. "Eligible student" refers to an individual who:
(1) has legal settlement in Indiana;
(2) is at least five (5) years of age and less than twenty-two
(22) years of age on the date in the school year specified in
IC 20-33-2-7; and
(3) either:
(A) qualifies for the federal free or reduced price lunch
program; 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.
Sec. 6. "Federal free or reduced price lunch program" refers to
the national free or reduced price lunch program established under
42 U.S.C. 1751 et seq.
Sec. 7. "Participating school" refers to a public or nonpublic
school that:
(1) an eligible student is required to pay tuition to attend; and
(2) voluntarily agrees to enroll an eligible student.
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. 8. "Scholarship granting organization" refers to an
organization that is:
(1) exempt from federal income taxation under Section
501(c)(3) of the Internal Revenue Code; and
(2) organized at least in part to grant educational
scholarships.
Sec. 9. "School scholarship" refers to an educational scholarship
awarded by a scholarship granting organization.
Sec. 10. "Tuition and fees" means tuition, fees, and other costs
that:
(1) an eligible student; or
(2) a parent of an eligible student;
is required to pay to enroll the eligible student in an elementary
school program or high school program of a participating school.
The term includes any payment for textbooks, transportation, and
uniforms if the payments are typical for all other students
attending the participating school.
Chapter 2. Exchange of Information; Rules
Sec. 1. The department of state revenue shall maintain a
publicly available list of the school scholarship programs that are
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 any
Internet web site used by the department of state revenue to
provide information to the public about educational matters.
Chapter 3. Educational Scholarship Organizations;
Certification; Administration of Contributions
Sec. 1. As used in this chapter, "scholarship" refers to a school
scholarship.
Sec. 2. A scholarship granting organization may apply to the
department of state revenue for certification of an educational
scholarship program as a school scholarship program.
Sec. 3. An educational scholarship program qualifies for
certification as a school scholarship program if the applicant for
certification:
(1) is a scholarship granting organization;
(2) applies to the department of state revenue on the form and
in the manner prescribed by the department of state revenue;
(3) enters into an agreement with the department of state
revenue to comply with this article; and
(4) demonstrates the applicant's financial viability to the
department of state revenue, if the applicant will receive at
least fifty thousand dollars ($50,000) in contributions in a
school year, by filing with the department of state revenue
before the beginning of the school year financial information
that demonstrates the financial viability of the scholarship
granting organization.
Sec. 4. The department of state revenue shall certify all
qualifying applicants for certification as scholarship granting
organizations.
Sec. 5. An agreement must require a scholarship granting
organization to do the following:
(1) Provide a department of state revenue approved receipt to
taxpayers for contributions made to the scholarship granting
organization that will be used in a scholarship program. The
department of state revenue shall prescribe the form of the
receipt. The form must indicate:
(A) the amount of a contribution; and
(B) the part of the contribution that is being designated for
use in a scholarship program.
(2) Distribute at least ninety percent (90%) of the total
amount of contributions as scholarships to eligible students.
(3) Distribute one hundred percent (100%) of any income
earned on contributions as 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) Maintain with the department of state revenue proof of the
scholarship granting organization's continuing financial
viability as required in section 3(4) of this chapter for each
school year in which the scholarship granting organization
will receive at least fifty thousand dollars ($50,000) in
contributions.
(6) Make the reports required by this chapter.
Sec. 6. An agreement must prohibit a scholarship granting
organization from distributing scholarships for use by an eligible
student:
(1) to 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) to enroll in a school that the scholarship granting
organization knows does not qualify as a participating school;
or
(3) to pay tuition and fees for a public school where the
eligible student is entitled to enroll without the payment of
tuition.
Sec. 7. (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 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 scholarships
awarded during the previous school year to students
qualifying for the federal free and reduced price lunch
program.
(b) The report must be certified under penalties of perjury by
the chief executive officer of the scholarship granting organization.
Sec. 8. The department of state revenue shall prescribe a form
for scholarship granting organizations to report information
required under this chapter.
Sec. 9. 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. 10. 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 scholarship students and their parents of the decision as
quickly as possible. A scholarship 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 qualifies
for the federal free or reduced price lunch program.
Sec. 11. The department of state revenue may conduct either a
financial review or an audit of a scholarship granting organization
if the department has evidence of fraud.
SOURCE: ; (09)IN0528.1.3. -->
SECTION 3. [EFFECTIVE JANUARY 1, 2009 (RETROACTIVE)]
(a) IC 6-3.1-33, as added by this act, applies only to contributions
made in taxable years beginning after December 31, 2008.
(b) The department of education after consultation with the
department of state revenue, may adopt temporary rules in the
manner provided for the adoption of emergency rules to implement
IC 20-51, as added by this act. A temporary rule adopted under
this SECTION expires on the earliest of the following:
(1) The date another temporary rule is adopted under this
SECTION that supersedes or repeals the previously adopted
temporary rule.
(2) The date that a permanent rule adopted under IC 4-22-2
supersedes or repeals a temporary rule adopted under this
SECTION.
(3) The date specified in the temporary rule.
(4) June 30, 2011.
SOURCE: ; (09)IN0528.1.4. -->
SECTION 4.
An emergency is declared for this act.