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H0076.................................................by BARRETT AND DENNEY INCOME TAX CREDIT - Adds to existing law to provide a school choice income tax credit for qualified donations made to qualifying students in support of the education of a student enrolled in an educational program within the state of Idaho at the elementary or secondary level. 01/28 House intro - 1st rdg - to printing 01/31 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature First Regular Session - 2005 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 76 BY BARRETT AND DENNEY 1 AN ACT 2 RELATING TO STATE INCOME TAX CREDITS; AMENDING CHAPTER 30, TITLE 63, IDAHO 3 CODE, BY THE ADDITION OF A NEW SECTION 63-3029H, IDAHO CODE, TO PROVIDE A 4 SCHOOL CHOICE INCOME TAX CREDIT FOR QUALIFIED DONATIONS MADE TO QUALIFYING 5 STUDENTS IN SUPPORT OF THE EDUCATION OF A STUDENT ENROLLED IN AN EDUCA- 6 TIONAL PROGRAM WITHIN THE STATE OF IDAHO AT THE ELEMENTARY OR SECONDARY 7 LEVEL; AND PROVIDING AN EFFECTIVE DATE. 8 Be It Enacted by the Legislature of the State of Idaho: 9 SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is 10 hereby amended by the addition thereto of a NEW SECTION, to be known and des- 11 ignated as Section 63-3029H, Idaho Code, and to read as follows: 12 63-3029H. SCHOOL CHOICE TAX CREDIT. (1) Purpose. The purpose of this sec- 13 tion is to provide parents or legal guardians of students, regardless of eco- 14 nomic status, additional educational choices in the education of their chil- 15 dren at the elementary and secondary levels, by allowing any donor to receive 16 a credit against income taxes due to the state of Idaho when the donor donates 17 money directly to a parent or legal guardian of a student, or makes expendi- 18 tures as a parent or legal guardian of a student, for the education of a qual- 19 ifying student. 20 (2) Definitions. The following definitions shall apply to this section: 21 (a) "Qualified donation" which may hereinafter also be referred to as 22 "donation" means a donation which is in compliance with the terms and con- 23 ditions of this section. 24 (b) "Qualified donor" which may hereinafter also be referred to as 25 "donor" means any person who or qualified entity which: 26 (i) Is qualified to file an Idaho full-year resident tax return; 27 and 28 (ii) Either makes a qualified donation to the qualified parent or 29 qualified guardian of a qualifying student, or is a qualified parent 30 or qualified legal guardian who expends funds directly on the educa- 31 tion of the qualifying student. 32 (c) "Qualified entity" which may hereinafter also be referred to as 33 "entity" means a corporation or a limited liability company which elects 34 to be taxed as a corporation. 35 (d) "Qualified expenses" which may hereinafter also be referred to as 36 "expenses" means money spent to cover the costs of educating a student and 37 may include, but is not limited to, tuition, textbooks, curricula support 38 materials and activities, uniforms, and mileage to transport the student 39 to and from school and related academic school activities. 40 (e) "Qualified parent" or "qualified legal guardian" which may hereinaf- 41 ter also be referred to as "parent" or "legal guardian" means the parent 42 or legal guardian of a qualifying student, which parent or legal guardian: 43 (i) Had the actual physical custody of the qualifying student for 2 1 at least six (6) months of the specific tax year in question; and 2 (ii) Resided in the state of Idaho for at least ten (10) months of 3 the specific tax year in question and was qualified to file an Idaho 4 full-year resident tax return for such year. 5 (f) "Qualified student" which may hereinafter also be referred to as 6 "student," as to any specific tax year, means a child who: 7 (i) Has attained, on or before January 1 of such year, the age of 8 seven (7) years or more, but has not attained, on or before December 9 31 of such year, nineteen (19) years of age; and 10 (ii) During said specific tax year was enrolled in an educational 11 program within the state of Idaho at the elementary or secondary 12 level; and 13 (iii) Participates in an educational program which is in compliance 14 with all applicable laws relating to the education of such child, 15 including if applicable, the compulsory school attendance require- 16 ments of section 9, article IX of the constitution of the state of 17 Idaho, and of section 33-202, Idaho Code; and 18 (iv) Has a qualified parent or qualified legal guardian. 19 (3) Limits on donations -- Records. 20 (a) The parent or legal guardian shall not accept donations in excess of: 21 (i) One thousand eight hundred dollars ($1,800) for any student 22 seven (7) years of age, 23 (ii) Two thousand seven hundred dollars ($2,700) for any student 24 eight (8) through twelve (12) years of age, and 25 (iii) Three thousand six hundred dollars ($3,600) for any student 26 thirteen (13) through eighteen (18) years of age, 27 unless a student is a special needs student, in which case the parent or 28 legal guardian shall not accept donations for such special needs student 29 in excess of sixty-five percent (65%) of the previous year's total expen- 30 ditures per full-time average daily attendance as determined by the 31 department of education. For each tax year, adjustments to the donation 32 limitation specified in paragraphs (a)(i) through (iii) of this subsection 33 (3), shall be made based on the unadjusted consumer price index for all 34 urban consumers as issued by the United States department of labor. 35 (b) It is the responsibility of the parent or legal guardian of a student 36 to maintain accurate records of the financial support received for each 37 student for which the parent or legal guardian has received one (1) or 38 more donations. 39 (4) Credits allowed. For taxable years commencing on and after January 1, 40 2006, there shall be allowed, at the election of the taxpayer and subject to 41 the limitations provided herein, a credit against the income tax imposed by 42 the provisions of this chapter for donations made to or by a parent or legal 43 guardian in support of the education of a student as follows: 44 (a) For individual tax returns, at the election of the taxpayer, either: 45 (i) A credit equal to the donation, but not to exceed the lesser of 46 one thousand dollars ($1,000) or forty percent (40%) of the tax lia- 47 bility for the taxable year; or 48 (ii) A credit equal to the donation, but not to exceed twelve and 49 one-half percent (12.5%) of the tax liability for the taxable year. 50 (b) For corporate or entity tax returns, at the election of such tax- 51 payer, either: 52 (i) A credit equal to the total donations by the corporation or 53 entity for the tax year, but not to exceed the lesser of ten thousand 54 dollars ($10,000) or forty percent (40%) of the tax liability of the 55 corporation or entity for the taxable year; or 3 1 (ii) A credit equal to the total donations by the corporation or 2 entity, but not to exceed twelve and one-half percent (12.5%) of the 3 tax liability of the corporation or entity for the taxable year. 4 (5) Phase-in credits allowed based on age of student. For the tax year 5 2006, eligible students on whom the tax credit may be claimed shall be limited 6 to students specified in paragraph (a) of this subsection, and one (1) addi- 7 tional age group shall be added as specified in paragraphs (b) and (c) of this 8 subsection in each succeeding tax year until the tax year 2009, at which time 9 all students as specified in paragraph (d) of this subsection are eligible for 10 donations: 11 (a) Students thirteen (13) through eighteen (18) years of age, for tax 12 year 2006. 13 (b) Students eight (8) through twelve (12) years of age, for tax year 14 2007. 15 (c) Students seven (7) years of age, for tax year 2008. 16 (d) All qualifying students as defined in subsection (2)(f)(i) of this 17 section, for tax year 2009 and each tax year thereafter. 18 (6) Special applications. The other provisions of this section notwith- 19 standing, a credit shall be allowed for donations to, or by a parent or legal 20 guardian for, a student: 21 (a) Enrolled in an out-of-district public charter district for tuition 22 expense which may be charged by a charter district. 23 (b) Enrolled in an out-of-district public school for transportation costs 24 to the nearest bus stop in the out-of-district school transportation zone. 25 Eligible transportation costs shall be computed as allowed in section 26 33-1503, Idaho Code. 27 (c) Enrolled in a public charter school for transportation costs for any 28 student living more than one and one-half (1 1/2) miles from the charter 29 school. Eligible transportation costs shall be computed as allowed in sec- 30 tion 33-1503, Idaho Code. 31 (d) Enrolled at a secondary school for the cost of taking a core curricu- 32 lum course because the course is not provided by the secondary school. 33 (7) Expenses reported. On a form prescribed by the state tax commission, 34 the parent or legal guardian shall record and verify all expenses made by the 35 parent or legal guardian for the elementary or secondary education of each 36 student for which a tax credit is claimed. Such form shall provide for calcu- 37 lating the difference between legally allowed donations collected for each 38 student as specified in subsection (3)(a) of this section and expenses 39 reported for each student. If the amount of donations collected exceeds the 40 actual expenditures, then the parent or legal guardian shall remit the differ- 41 ence to the state tax commission. This form shall be filed with the tax credit 42 form. 43 (8) Liability for improperly taken credits. In the event the alleged stu- 44 dent was in fact not a qualified student for the tax year in question, the 45 liability for recapture of the improperly taken credit shall attach to the 46 parent or legal guardian of the alleged student for whom the credit was taken; 47 provided however, if the donor had actual knowledge of the failure of the 48 alleged student to be a qualifying student at the time the donor filed the 49 Idaho income tax return in which the credit was taken, the qualified donor 50 shall also be liable for the recapture. 51 (9) File tax forms. A form prescribed by the state tax commission shall 52 be furnished by the parent or legal guardian to each donor for each student 53 for whom a donation was made in a tax year, by not later than January 30 of 54 the year following the tax year in which the donation was made. The parent or 55 legal guardian shall also file such form with the parent or legal guardian's 4 1 Idaho tax return for the tax year in which any funds were expended by the par- 2 ent or legal guardian for the elementary or secondary education of the stu- 3 dent. The form shall contain at least the following information: 4 (a) The name, address, social security number and the dollar amount of 5 donations made by each donor; and 6 (b) The name, address and age on January 1 and December 31 of the tax 7 year in question, and social security number of the student; and 8 (c) The name, address and social security number of the parent or legal 9 guardian of the student; and 10 (d) A certification that the student was in fact a qualified student for 11 the tax year in question and that the donations were actually used for the 12 education of the student, and a statement of the basis on which the stu- 13 dent was in fact a qualified student for the tax year in question. 14 The donor shall file a copy of each such form with the Idaho tax return of the 15 donor for the year in which the donation was made. 16 (10) Tax forms. The state tax commission shall provide forms for: 17 (a) Computing the tax credit, which form shall include the name and 18 address of the school attended, the social security number of the student, 19 and the name, address and social security number of the parent or guardian 20 of the student. 21 (b) Certifying that the student was a qualified student for the tax year 22 and that the donations were used for the education of the student as 23 required by subsection (9)(d) of this section. This certification shall be 24 filed with the tax credit form. 25 (c) Stating the basis on which the student was in fact a qualified stu- 26 dent in the tax year as required by subsection (9)(d) of this section. 27 This statement shall be filed with the tax credit form. 28 (d) Recording and verifying qualified expenses and calculating the amount 29 a parent or legal guardian owes to the state tax commission when the 30 amount of legally collected donations exceeds authorized expenses. 31 (11) Disclaimer. No parent or legal guardian of a qualifying student and 32 no private educational institution shall, on account of educating a child for 33 whom a tax credit is claimed under the provisions of this section, be consid- 34 ered a recipient of governmental financial assistance for the purpose of 35 imposing any rule, guideline, order, requirement or regulation upon such par- 36 ent, guardian or educational institution, or for any other purpose. 37 (12) Reports on use of credit. The state tax commission shall compile a 38 report each year which includes the number of returns on which this credit was 39 taken, the total dollar amount of tax credited, and the number of students on 40 whom the credit was taken. The state tax commission shall make the reports 41 available to the general public. 42 (13) The state tax commission shall promulgate rules as are necessary to 43 execute, enforce and effectuate the provisions of this section. 44 SECTION 2. This act shall be in full force and effect on and after Janu- 45 ary 1, 2006.
STATEMENT OF PURPOSE RS 14750 This is a pilot project that phases in over three years. The purpose of this legislation is designed so any parent, regardless of economic status, has additional educational choices for their elementary and secondary aged children. This is accomplished by allowing any donor who pays an Idaho State income tax to receive a credit against income taxes due when the donor donates money directly to the parent (s) for the purpose of educating their student. There are caps to the amounts of donations made and received. This legislation also contains requirements enabling the State Tax Commission to track the donations and expenditures. FISCAL NOTE Other states like Utah and South Carolina have completed comprehensive economic studies on their school choice proposals that show substantial savings to their states' General Fund. This legislation would result in savings to the Idaho General Fund over time. There is a short-term fiscal impact to the General Fund, using static economic calculations. 2006 - 2512 eligible regular students x $3600 = $9,043,200 326 eligible special education students x $8500 x 0.65=$1,801.200 Total Age 13-18 General Fund impact - $10,844,400 2007 - 2576 eligible regular students x $2700 = $6,955,200 335 eligible special education students x $8500x0.65=$1,850,900 Total age 8-12 General Fund impact - $19,650,500 2008 - 550 eligible regular students x $1800 = $990,000 71 eligible special education students x $8500x0.65=$392,300 Grand total Fiscal Year 2008 General Fund Impact $21,032,800 Contact Name: Rep Lenore Hardy Barrett Phone: 208 332-1000 Rep Lawerence Denney 208 332-1000 STATEMENT OF PURPOSE/FISCAL NOTE H 76