83R593 BEF-D
By: Paxton S.B. No. 1015
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax or insurance premium tax credit for
contributions made to certain certified nonprofit educational
assistance organizations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter L to read as follows:
SUBCHAPTER L. TAX CREDIT FOR CONTRIBUTIONS TO CERTAIN NONPROFIT
EDUCATIONAL ASSISTANCE ORGANIZATIONS
Sec. 171.601. DEFINITIONS. In this subchapter:
(1) "Educational expenses" means expenses for student
tuition, fees, transportation costs, textbooks, school supplies,
and tutoring related to:
(A) a course at a public school or charter school
that is part of the required curriculum under Section 28.002,
Education Code, or a course that is the equivalent at a qualified
nonpublic school;
(B) a high school equivalency certificate; or
(C) an apprenticeship training program under
Chapter 133, Education Code.
(2) "Eligible student" means a student who is a
resident of this state and has not been issued a high school diploma
or a high school equivalency certificate. For purposes of this
subchapter, a student who attends a juvenile justice alternative
education program under Section 37.011, Education Code, is not an
eligible student.
(3) "Qualified nonpublic school" means a nonpublic
primary or secondary school located in this state that is
accredited or actively in the process of accreditation by a state,
regional, or national organization that is recognized by the Texas
Private School Accreditation Commission.
Sec. 171.602. ELIGIBILITY AND AMOUNT OF CREDIT. (a) Except
as otherwise provided by this subchapter, a taxable entity that
makes a contribution of $500 or more to a certified nonprofit
educational assistance organization may claim a credit against the
tax imposed under this chapter in the amount and under the
conditions and limitations provided by this subchapter.
(b) Subject to Section 171.607, the amount of the credit
that may be claimed on a report is equal to the lesser of 100 percent
of total contributions made to a certified nonprofit educational
assistance organization during the calendar year that contains the
end of the accounting period on which the report is based or 75
percent of the taxable entity's tax liability under this chapter.
(c) If a taxable entity is eligible for a credit that
exceeds the limitation prescribed by Subsection (b) or Section
171.607, the taxable entity may carry the unused credit forward for
not more than two consecutive reports.
(d) A taxable entity may not claim a credit under this
subchapter for a contribution made to a certified nonprofit
educational assistance organization if the taxable entity requires
that the contribution benefit a particular student or school.
Sec. 171.603. ELIGIBILITY REQUIREMENTS FOR CERTIFICATION
OF NONPROFIT EDUCATIONAL ASSISTANCE ORGANIZATION. (a) An
organization may apply to the comptroller for certification as a
certified nonprofit educational assistance organization. To
qualify for certification, the organization:
(1) must be exempt from federal tax under Section
501(a) of the Internal Revenue Code of 1986 by being listed as an
exempt organization in Section 501(c)(3) of that code and meeting
all other applicable requirements for that exemption;
(2) must be in good standing with the state;
(3) must agree to allocate at least 90 percent of its
annual revenue from contributions received from taxable entities to
provide scholarships to eligible students for educational
expenses;
(4) must agree not to award 100 percent of the
scholarships described by Subdivision (3) to students who attend a
particular school or to pay educational expenses incurred only at a
particular school;
(5) must agree not to award or decline to award a
scholarship described by Subdivision (3) on the basis of a
student's race, color, ethnicity, gender, or national origin;
(6) must agree to deposit contributions from taxable
entities that are allocated for scholarships described by
Subdivision (3) in a bank account separate from any other account
the organization may have;
(7) must agree not to award a scholarship described by
Subdivision (3) in an amount that exceeds the amount prescribed by
Section 171.606;
(8) must agree not to award a scholarship described by
Subdivision (3) based solely on a student's athletic ability or
potential; and
(9) must not be owned or operated by a person who has
during the previous seven state fiscal years filed for bankruptcy.
(b) For purposes of Subsection (a)(9), a person is
considered to operate an organization if the person has the ability
to directly influence or direct the management, expenditures, or
policies of the organization.
(c) The comptroller may certify an organization as a
certified nonprofit educational assistance organization only if
the organization qualifies under Subsection (a) and also agrees to:
(1) notify the comptroller of the organization's
intent to provide scholarships described by Subsection (a)(3);
(2) submit an annual information report as provided by
Section 171.605;
(3) cooperate with the comptroller when conducting a
criminal background check on the owner or operator of the
organization;
(4) comply with the other requirements of this
subchapter, including Sections 171.604(d) and (f) and 171.606; and
(5) pay the comptroller the amount of any revenue that
is not awarded as required by Section 171.604.
Sec. 171.604. AWARD OF SCHOLARSHIPS. (a) Except as
provided by Subsection (b), a certified nonprofit educational
assistance organization shall award all revenue from a contribution
from a taxable entity allocated to provide scholarships to eligible
students for educational expenses not later than the first
anniversary of the date the contribution was made.
(b) A certified nonprofit educational assistance
organization may carry forward not more than 10 percent of the
revenue described by Subsection (a) for an additional year, but
shall award that revenue not later than the second anniversary of
the date the contribution was made.
(c) If a certified nonprofit educational assistance
organization does not award revenue described by Subsection (a) as
required by Subsections (a) and (b), the organization shall pay the
comptroller an amount equal to the amount of revenue not awarded as
required by those subsections not later than the 30th day after the
last day the revenue was required to be awarded.
(d) A certified nonprofit educational assistance
organization must award at least 25 percent of its annual revenue
used to provide scholarships to students described by Subsection
(e), unless the pool of eligible students who apply for a
scholarship is insufficient to meet the requirement.
(e) A scholarship provided to satisfy the requirement of
Subsection (d) must be provided to a student who:
(1) is educationally disadvantaged, as defined by
Section 5.001, Education Code; and
(2) attends school in a public school district or at a
campus that was assigned a performance rating that reflects
unacceptable performance in the most recent performance ratings
released under Section 39.054, Education Code.
(f) A certified nonprofit educational assistance
organization may not award a scholarship to a student to attend a
qualified nonpublic school unless the organization first obtains
the written consent of the student's parent or legal guardian.
Sec. 171.605. ANNUAL REPORT. (a) Not later than June 30 of
each year, each certified nonprofit educational assistance
organization shall report to the Texas Education Agency:
(1) the name and address of the organization;
(2) the total number and dollar amount of
contributions from taxable entities received by the organization
under this subchapter and Chapter 230, Insurance Code, since the
previous report was submitted;
(3) the total number and dollar amount of scholarships
awarded by the organization under this subchapter and Chapter 230,
Insurance Code, since the previous report was submitted;
(4) the percentage of the organization's revenue from
contributions used to award scholarships under this subchapter and
Chapter 230, Insurance Code, since the previous report was
submitted;
(5) the name and address of each school attended by an
eligible student who was awarded a scholarship by the organization
under this subchapter and Chapter 230, Insurance Code, since the
previous report was submitted;
(6) the total number and dollar amount of scholarships
awarded to eligible students by the organization under this
subchapter and Chapter 230, Insurance Code, per school since the
previous report was submitted; and
(7) any other information the Texas Education Agency
or the comptroller requires.
(b) The report must:
(1) comply with generally accepted accounting
principles; and
(2) be certified as free of material misstatements by
a certified public accountant.
(c) The Texas Education Agency shall post on its website for
at least three years each report submitted under this section.
(d) The Texas Education Agency, after consulting with the
comptroller, may adopt rules and forms to implement this section.
Sec. 171.606. SCHOLARSHIP LIMIT AMOUNT. (a) Subject to
Subsection (b), the maximum scholarship amount a certified
nonprofit educational assistance organization may award under this
subchapter may not exceed 75 percent of the amount of funding equal
to the statewide average amount to which a school district would be
entitled under the Foundation School Program under Chapter 42,
Education Code, for a student in average daily attendance.
(b) A certified nonprofit educational assistance
organization may award not more than $500 per school year to an
eligible student who elects to use the scholarship to pay only the
cost of:
(1) transportation to attend a public school or
charter school located outside the school district in which the
student resides; or
(2) textbooks, school supplies, or tutoring related to
a course at a public school or charter school.
Sec. 171.607. TOTAL AMOUNT OF CREDITS THAT MAY BE CLAIMED.
(a) For contributions made during 2014, the total amount of tax
credits that may be claimed by all taxable entities under this
subchapter may not exceed $100 million. For contributions made
during 2015 and subsequent years, the total amount of tax credits
that may be claimed by all taxable entities under this subchapter is
equal to:
(1) 100 percent of the maximum amount of tax credits
that could have been claimed by all taxable entities under this
subchapter for contributions made during the preceding year if the
total amount of tax credits actually claimed by taxable entities
under this subchapter for contributions made during the preceding
year was less than 90 percent of the maximum amount that could have
been claimed; and
(2) 110 percent of the maximum amount of tax credits
that could have been claimed by all taxable entities under this
subchapter for contributions made during the preceding year if the
total amount of tax credits actually claimed by taxable entities
under this subchapter for contributions made during the preceding
year was equal to or greater than 90 percent of the maximum amount
that could have been claimed.
(b) The comptroller shall publish on the comptroller's
website the total amount of tax credits available under this
subchapter for each year.
(c) The comptroller by rule shall prescribe procedures by
which the comptroller may allocate credits under this subchapter.
The procedures must provide that credits are allocated on a
"first-come, first-served" basis, based on the date the
contribution was initially made.
Sec. 171.608. IDENTIFICATION OF CERTIFIED NONPROFIT
EDUCATIONAL ASSISTANCE ORGANIZATION. The comptroller shall
establish a procedure by which a taxable entity can:
(1) determine whether an organization is a certified
nonprofit educational assistance organization; and
(2) claim a credit under this subchapter.
Sec. 171.609. NATURE OF FUNDING. The funding authorized by
this subchapter or Chapter 230, Insurance Code, is private,
voluntary, nongovernmental funding. The provision of assistance by
a certified nonprofit educational assistance organization is not an
appropriation of public money or the provision of public assistance
to any school.
Sec. 171.610. APPLICATION FOR CREDIT. A taxable entity
must apply for a credit under this subchapter on or with the tax
report for the period for which the credit is claimed.
Sec. 171.611. RULES; PROCEDURES; FORMS. The comptroller
shall adopt rules, procedures, and forms to administer this
subchapter.
Sec. 171.612. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable
entity may not convey, assign, or transfer the credit allowed under
this subchapter to another taxable entity unless all assets of the
taxable entity are conveyed, assigned, or transferred in the same
transaction.
Sec. 171.613. REVOCATION. (a) The comptroller shall
revoke a certification provided under Section 171.603 if the
comptroller finds that a certified nonprofit educational
assistance organization:
(1) is no longer eligible under Section 171.603(a);
(2) intentionally and substantially violated an
agreement made under Section 171.603; or
(3) intentionally and substantially violates this
subchapter.
(b) Revocation of a certification under this section does
not affect the validity of a tax credit relating to a contribution
made before the date of revocation.
SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
by adding Chapter 230 to read as follows:
CHAPTER 230. TAX CREDIT AGAINST PREMIUM TAXES FOR CERTAIN
CONTRIBUTIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 230.001. DEFINITIONS. In this chapter:
(1) "Certified nonprofit educational assistance
organization" means an organization certified by the comptroller
under Section 171.603, Tax Code.
(2) "State premium tax liability" means any liability
incurred by an entity under Chapters 221 through 224.
Sec. 230.002. AWARD OF SCHOLARSHIPS. A certified nonprofit
educational assistance organization shall comply with any
requirement prescribed by Subchapter L, Chapter 171, Tax Code, in
relation to awarding scholarships under that subchapter.
[Sections 230.003-230.050 reserved for expansion]
SUBCHAPTER B. CREDIT
Sec. 230.051. ELIGIBILITY AND AMOUNT OF CREDIT. (a) An
entity that makes a contribution of $500 or more to a certified
nonprofit educational assistance organization may claim a credit
against the entity's state premium tax liability in the amount and
under the conditions and limitations provided by this chapter.
(b) Subject to Section 230.052, the amount of the credit
that may be claimed on a report is equal to the lesser of 100 percent
of total contributions made to a certified nonprofit educational
assistance organization during the year or 75 percent of the
entity's state premium tax liability if the contribution and the
organization that received the contribution meet the requirements
prescribed by Subchapter L, Chapter 171, Tax Code.
(c) If an entity is eligible for a credit that exceeds the
limitation prescribed by Subsection (b) or Section 230.052, the
entity may carry the unused credit forward for not more than two
years following the year in which the contribution was made.
(d) An entity may not claim a credit under this chapter for a
contribution made to a certified nonprofit educational assistance
organization if the entity requires that the contribution benefit a
particular student or school.
Sec. 230.052. TOTAL AMOUNT OF CREDITS THAT MAY BE CLAIMED.
(a) For contributions made during 2014, the total amount of tax
credits that may be claimed by all entities under this chapter may
not exceed $25 million. For contributions made during 2015 and
subsequent years, the total amount of tax credits that may be
claimed by all entities under this chapter is equal to:
(1) 100 percent of the maximum amount of tax credits
that could have been claimed by all entities under this chapter for
contributions made during the preceding year if the total amount of
tax credits actually claimed by entities under this chapter for
contributions made during the preceding year was less than 90
percent of the maximum amount that could have been claimed; and
(2) 110 percent of the maximum amount of tax credits
that could have been claimed by all entities under this chapter for
contributions made during the preceding year if the total amount of
tax credits actually claimed by entities under this chapter for
contributions made during the preceding year was equal to or
greater than 90 percent of the maximum amount that could have been
claimed.
(b) The comptroller shall publish on the comptroller's
website the total amount of tax credits available under this
chapter for each year.
(c) The comptroller by rule shall prescribe procedures by
which the comptroller may allocate credits under this chapter. The
procedures must provide that credits are allocated on a
"first-come, first-served" basis, based on the date the
contribution was initially made.
Sec. 230.053. APPLICATION FOR CREDIT. An entity must apply
for a credit under this chapter on or with a tax report for which the
credit is claimed.
Sec. 230.054. RULES; PROCEDURES; FORMS. The comptroller
shall adopt rules, procedures, and forms to administer this
chapter.
Sec. 230.055. ASSIGNMENT PROHIBITED; EXCEPTION. An entity
may not convey, assign, or transfer the credit allowed under this
chapter to another entity unless all assets of the entity are
conveyed, assigned, or transferred in the same transaction.
SECTION 3. A taxable entity may claim a credit under
Subchapter L, Chapter 171, Tax Code, as added by this Act, or
Chapter 230, Insurance Code, as added by this Act, only for a
contribution made on or after January 1, 2014, and only in relation
to taxes due on or after January 1, 2014.
SECTION 4. (a) Except as provided by Subsection (b) of this
section, this Act takes effect January 1, 2014.
(b) Section 171.611, Tax Code, as added by this Act, and
Section 230.054, Insurance Code, as added by this Act, take effect
September 1, 2013.