SUMMARY:  This bill would amend Title 20 and Title 48 to revise the law regarding scholarships or grants awarded within the fiscal year, make reports to DOR confidential, and establish penalties for violators of the code.  It also would further amend the code to simplify the tax credit allowed to the actual amount expended or 75% of the taxpayer’s tax liability, whichever is less.  Other qualifications are listed for the procedures that would be allowed for donations.

REQUIREMENTS:

• Once student eligibility is established, it would remain in effect for as long as a scholarship or grant is received.
• Non-public pre-kindergarten would be added as a qualified program.
• DOE could not request any information other than what is already required.
• Procedures to obligate funds are prescribed:
• • Actual transfer of funds to recipient organization;
  • Full or partial single-year or multi-year scholarships can be granted during one fiscal year; and, if actual payout is not until a subsequent year, funds must be kept in a separate account or investment fund;
  • Transfer of funds to a scholarship account or investment for future obligations under a multi-year scholarship already awarded in the current or previous fiscal year;
  • Transfer of funds to scholarship fund or investment account for specific school(s) in the following year even though no specific recipients have been named in the current year;
  • Transfer to scholarship fund or investment account that the Board of Directors of the organization has dedicated to scholarships or grants to students yet to be identified;
  • Transfers among student scholarship organizations.
• Contributions would count only for the fiscal year donated.
• Audit must show that within 120 days at the end of the fiscal year 90% of annual revenue is obligated.
• If any scholarship organization failed to comply with law, the following penalties would apply:
• • Removal from the DOE approved organizations list;
  • Cease operations and transfer funds to another, acceptable scholarship organization;
  • All applications for tax credits that were pre-approved would be rejected by the Department of Revenue on or after removal from the DOE list.
• There would be no repercussions to donors if they contributed prior to removal from DOE list
• An officer or director of an organization found intentionally violating the law would be charged with a misdemeanor.
• A donor’s tax credit would be for the amount contributed or 75% of his/her income tax liability, whichever is less.
• A donor could specify a qualified school or program to receive the donation.
• The Department of Revenue Commissioner’s response time would be reduced from 30 to 15 days after the request is received.
• The donor has 30 business days after 7 days from the date of DOR approval to make the actual contribution.
• The scholarship organization shall provide a copy of each letter of confirmation of donations to DOR on a monthly basis.  DOR will verify this list with pre-approved list.
• DOR would list on its web site the amount of tax credits that are available and update the list quarterly.

NOTES:

• This bill seeks to amend last year's "neo-voucher" bill, passed to allow citizens to make donations to organizations that provide vouchers and to have those donations count as a tax credit (not deduction--credit).  The amendments sought in this bill would raise significantly the amount of allowable contributions while allowing the donor to designate where the funds are to go.
• Will this law be challenged as a diversion of tax dollars to private, even religious schools?