AS PASSED SENATE:

            This bill would amend Chapter 2A of Title 20 of the O.C.G.A. to change provisions of several definitions; requirements for the organizations; and taxation reporting requirements, imposition, rate and computation of income taxes relating to qualified education tax credits. It would require that a student be enrolled in and attended a Georgia public school “for at least six weeks,” but it does not change the “or eligible to enroll” phrase in reference to pre-kindergarten, kindergarten or first grade. The attendance requirement could be waived if a student would be assigned to a school that the OSA deemed a low-performing school, or who is a documented victim of violence or threat of violence, or whose parents inform the public school in writing that they do not want their child to participate in instruction or exercises that conflict with religious beliefs.

            It adds to the requirement for at least 90% of its annual revenue to be obligated for scholarships or tuition grants annually with the following:

1.      If the annual revenue is $1.5 million or less, then the 90% requirement holds;

2.      If the annual revenue is $1.5 million but not more than $10 million, then 93% must be obligated;

3.      If the annual revenue is more than $10 million and not more than $20 million, then 95% 94% must be obligated.

4.      If the annual revnue is more than $20 million, then 95% must be obligated.

The organization would have until the end of the calendar year following the donations to obligate the donations to specific students. Once specific students are determined, if multi-year scholarships are obligated and verified in writing, the organization may distribute the entire amount to the institution to be held according to DOR rules. If the organization distributes the scholarships or grants to a specified student on an annual basis and that   If a student becomes ineligible or the organization elects not to continue disbursement for all years, then they must designate any remaining revenue to a new specific student on or before the end of the following calendar year return the remaining amount to the scholarship organization immediately. If an obligation is for multi-years, but the amount is distributed annually, and if the student becomes ineligible, or if the organization chooses no longer to distribute the funds, then the organization has until the end of the following calendar year to designate another student to receive the scholarship or grant.

The organization would be required to give preferences consideration to students with financial needs based on the federal adjusted gross income from the parents’ income tax return, adjusted according to family size and using a modified scale published by O.E.C.D. If no income tax return has been filed in the two previous years, the financial status would be determined by the parents’ paystubs from the 30 consecutive days closest to when the applicant applied. Unemployment, social security and child support would all be considered. It would also have to hold obligated revenues not designated for specific recipients in a bank or investment account owned by the organization and over which it has complete control.

The organization would have to provide a copy of an audit to the DOR that verifies that all the above rules regarding the management and distribution of scholarships and tuition grants. Should the organization be found not in compliance, the DOR would have to post on its website the details of the failure. Until the organization files an amended audit indicating compliance, the DOR would not pre-approve any further contributions to that organization.

The bill would add to the taxation reporting requirements for the organizations that the form used to report to the DOR by January 12 of each tax year have “the federal adjusted gross income, as defined in the US IRS Code of 1986, for families of scholarship recipients as well as the number of dependents in such families.” It adjusts current wording to allow the release of the added information, but all else would remain confidential.

It goes on the define a corporation as a limited liability company duly formed under state law and a Subchapter ‘S’ corporation under IRS code. Defined in Code Section 14-2-140. An individual who is a member of a LLC or is a shareholder of a Subchaper ‘S; corporation could receive a tax credit for the amount donated up to $10,000.00 on the portion of income tax actually paid by the LLC or Subchapter ‘S’ corporation. It would not allow a tax credit if the taxpayer designated his/her donation for any particular individual, whether or not the individual is a dependent of the taxpayer. It also prohibits the student scholarship organization or any private school from offering an exchange for contributing to the organization for the direct benefit of an individual, whether or not related to the taxpayer. If they are found to have committed such an exchange, the student scholarship would be revoked of all privileges.

It gives to the DOE the responsibility of accepting electronic notification, in a manner it determines, of the total amount of intended contributions. It relieves the DOE of providing written notice of preapproval or denial.