Print Friendly HOUSE BILL NO. 76 – Income tax credit, school choice
HOUSE BILL NO. 76
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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;
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
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
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
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
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
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
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
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.
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
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
Name: Rep Lenore Hardy Barrett
Phone: 208 332-1000
Rep Lawerence Denney
STATEMENT OF PURPOSE/FISCAL NOTE H 76