84R2949 BEF-F
By: Miller of Fort Bend H.B. No. 895
A BILL TO BE ENTITLED
AN ACT
relating to a franchise or insurance premium tax credit for
contributions made to certain 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 K to read as follows:
SUBCHAPTER K. TAX CREDIT FOR CONTRIBUTIONS TO CERTAIN EDUCATIONAL
ASSISTANCE ORGANIZATIONS
Sec. 171.551. DEFINITION. In this subchapter, "educational
assistance organization" means an organization that:
(1) according to the organization's charter, has the
primary purpose of awarding scholarships to or paying educational
expenses for eligible students in:
(A) public elementary or secondary schools
located in this state; or
(B) nonpublic elementary or secondary schools
located in this state:
(i) that meet the requirements of Section
171.553;
(ii) at which a student may fulfill this
state's compulsory attendance requirements; and
(iii) that are not in violation of the
federal Civil Rights Act of 1964 (42 U.S.C. Section 2000a et seq.);
and
(2) uses its annual revenue for the purpose provided
by Subdivision (1).
Sec. 171.552. ELIGIBILITY REQUIREMENTS FOR CERTIFICATION
OF EDUCATIONAL ASSISTANCE ORGANIZATION. An organization may apply
to the comptroller for certification as a certified educational
assistance organization. To qualify for certification, the
organization:
(1) must:
(A) be exempt from federal tax under Section
501(a) of the Internal Revenue Code by being listed as an exempt
organization in Section 501(c)(3) of that code;
(B) be in good standing with the state;
(C) be located in the state;
(D) allocate at least 90 percent of its annual
revenue from contributions that are designated for scholarships or
educational expense assistance for eligible students under this
subchapter for student scholarships and assistance for educational
expenses, including tuition, transportation, textbooks, and other
supplies, and for other related educational expense assistance as
described by this section;
(E) award scholarships and assistance for
qualifying educational expenses to eligible students who
demonstrate the greatest financial and academic need;
(F) give each donor a receipt for money
contributed to the organization that includes the name of the
organization, the name of the donor, the amount of the
contribution, the information required by Section 171.556(c), and
any other information required by the comptroller;
(G) demonstrate experience and technical
expertise in:
(i) accepting, processing, and tracking
applications for scholarships or educational expense assistance;
and
(ii) awarding scholarships to students in
primary or secondary schools;
(H) agree to be independently audited on an
annual basis and file the audit with the comptroller; and
(I) disburse within two academic years of receipt
contributions received from and designated by taxable entities for
scholarships or educational expense assistance under this
subchapter; and
(2) may not:
(A) award all scholarships under this subchapter
to students who attend a particular school or pay educational
expenses incurred only at a particular school;
(B) provide to a student a scholarship in an
annual amount that exceeds the amounts provided under Section
171.557(a) unless the money used to provide the portion of the
scholarship in excess of that amount was contributed by a person
other than an entity that notifies the organization under Section
171.556(c) that the entity may apply for a tax credit for the
contribution; and
(C) provide to a student educational expense
assistance in excess of the amount provided under Section
171.557(b) per academic year, including assistance for:
(i) facility fees;
(ii) textbooks;
(iii) school supplies;
(iv) tutoring;
(v) academic after-school programs;
(vi) school or lab fees;
(vii) before-school or after-school child
care; and
(viii) transportation expenses, including
the cost to transfer from one public school to another.
Sec. 171.553. NONPUBLIC SCHOOL REQUIREMENTS. A certified
educational assistance organization may not award scholarships to
or pay educational expenses for eligible students enrolled in
nonpublic schools unless the nonpublic school executes a notarized
affidavit, with supporting documentation, concerning the school's
qualification for scholarships and educational expense assistance
for eligible students who receive assistance from a certified
educational assistance organization, including evidence of:
(1) accreditation or of actively being in the process
of accreditation by the Texas Education Agency or by an
organization recognized by the Texas Private School Accreditation
Commission;
(2) annual administration of a nationally
norm-referenced assessment instrument or the appropriate
assessment instrument required under Section 39.023, Education
Code;
(3) a valid certificate of occupancy; and
(4) policy statements regarding:
(A) admissions;
(B) curriculum;
(C) safety;
(D) food service inspection; and
(E) student to teacher ratios.
Sec. 171.554. ELIGIBILITY. A taxable entity is eligible
for a credit against the tax imposed under this chapter in the
amount and under the conditions and limitations provided by this
subchapter.
Sec. 171.555. ELIGIBILITY OF STUDENTS; INCLUSION IN
CALCULATION OF EQUALIZED WEALTH LEVEL. (a) To qualify for
assistance from a certified educational assistance organization
under this subchapter:
(1) a student:
(A) must:
(i) be in foster care;
(ii) be in institutional care; or
(iii) have a household income not greater
than 200 percent of the income guidelines necessary to qualify for
the national free or reduced-price lunch program established under
42 U.S.C. Section 1751 et seq.; and
(B) must:
(i) have been enrolled in a public school
during the preceding school year;
(ii) be starting school in the state for the
first time;
(iii) be the sibling of a student who is
eligible; or
(iv) if the person attends a nonpublic
school, qualify as a student who is not counted toward a public
school's average daily attendance during the year in which the
student receives the scholarship or educational expense assistance
to attend the school, except as provided by Subsection (b); or
(2) a student must have previously qualified under
Subdivision (1).
(b) A student who receives a scholarship under this
subchapter is included in the weighted average daily attendance of
the school district the student would otherwise attend for purposes
of determining the district's equalized wealth level under Chapter
41, Education Code.
Sec. 171.556. CREDIT FOR CONTRIBUTIONS. (a) A taxable
entity may claim a credit under this subchapter only for money
contributed to a certified educational assistance organization and
designated for scholarships or educational expense assistance for
eligible students.
(b) A taxable entity may not claim a credit under this
subchapter for a contribution made to a certified educational
assistance organization if:
(1) the taxable entity requires that the contribution
benefit a particular person or school; or
(2) the contribution is designated to provide a
scholarship or educational expense assistance for a taxable entity
employee or for a spouse or dependent of a taxable entity employee.
(c) An entity shall notify a certified educational
assistance organization in writing when the entity makes a
contribution if the entity may apply for a tax credit under this
subchapter or Chapter 230, Insurance Code, for the contribution.
An entity may not claim a credit for the contribution unless the
entity provides the notification at the time the contribution is
made. The certified educational assistance organization shall
indicate on the receipt provided under Section 171.552(1)(F) that
the entity made the notification under this subsection.
Sec. 171.557. LIMIT ON AMOUNT OF SCHOLARSHIP OR EDUCATIONAL
EXPENSE ASSISTANCE. (a) The maximum scholarship amount a
certified educational assistance organization may award to a
student under this subchapter using money contributed by an entity
that notifies the organization under Section 171.556(c) that the
entity may apply for a tax credit for the contribution may not
exceed 60 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) The maximum educational expense assistance a certified
educational assistance organization may award to a student under
this subchapter may not exceed $500 for the 2016 state fiscal year,
increased by five percent each subsequent year.
Sec. 171.558. AMOUNTS; LIMITATION ON TOTAL CREDITS. (a)
Subject to Subsections (b) and (c), the amount of a taxable entity's
annual credit is equal to the lesser of the amount of the qualifying
contributions made by the taxable entity or 50 percent of the
taxable entity's tax liability under this chapter.
(b) For the 2016 state fiscal year, the total amount of tax
credits that may be claimed by all entities under this subchapter
and Chapter 230, Insurance Code, may not exceed $65 million. For
each subsequent state fiscal year, the total amount of tax credits
that may be claimed is an amount equal to 105 percent of the total
amount of tax credits that may be claimed in the previous state
fiscal 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.
(d) The comptroller may require a taxable entity to notify
the comptroller of the amount the taxable entity intends or expects
to claim under this subchapter before the beginning of a state
fiscal year or at any other time required by the comptroller.
Sec. 171.559. APPLICATION FOR CREDIT. (a) 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.
(b) The comptroller shall adopt a form for the application
for the credit. A taxable entity must use this form in applying for
the credit and submit with the application the receipt issued under
Section 171.552(1)(F), including the information required by
Section 171.556(c).
Sec. 171.560. RULES; PROCEDURES. (a) The comptroller
shall adopt rules and procedures to implement, administer, and
enforce this subchapter.
(b) A rule adopted under Subsection (a) is binding on any
state or local governmental entity, including a political
subdivision, as necessary to implement, administer, and enforce
this subchapter.
Sec. 171.561. 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. 171.562. REVOCATION. (a) The comptroller shall
revoke a certification provided under Section 171.552 if the
comptroller finds that a certified educational assistance
organization:
(1) is no longer eligible under Section 171.552; or
(2) 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. CREDIT AGAINST PREMIUM TAXES
FOR CERTAIN CONTRIBUTIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 230.001. DEFINITIONS. In this chapter:
(1) "Educational assistance organization" has the
meaning assigned by Section 171.551, Tax Code.
(2) "State premium tax liability" means any liability
incurred by an entity under Chapters 221 through 226.
SUBCHAPTER B. CREDIT
Sec. 230.051. CREDIT. (a) An entity is eligible for a
credit against the entity's state premium tax liability in the
amount and under the conditions and limitations provided by this
chapter.
(b) The amount of the credit is equal to the lesser of the
amount of contributions made to a certified educational assistance
organization or 50 percent of the entity's state premium tax
liability if the contributions and the organizations that received
the contributions meet the requirements prescribed by Subchapter K,
Chapter 171, Tax Code.
Sec. 230.052. LIMITATION. (a) Subject to Subsection (c),
the total credit claimed under this chapter for a taxable year may
not exceed the lesser of the amount determined under Subsection (b)
or 50 percent of the amount of the entity's state premium tax
liability for the taxable year after any other applicable credits.
(b) For the 2016 state fiscal year, the total amount of tax
credits that may be claimed under this chapter and Subchapter K,
Chapter 171, Tax Code, may not exceed $65 million. For each
subsequent state fiscal year, the total amount of tax credits that
may be claimed is an amount equal to 105 percent of the total amount
of tax credits that may be claimed in the previous state fiscal
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.
(d) The comptroller may require an entity to notify the
comptroller of the amount the entity intends or expects to claim
under this chapter before the beginning of a state fiscal year or at
any other time required by the comptroller.
Sec. 230.053. APPLICATION FOR CREDIT. (a) An entity must
apply for a credit under this chapter on or with the tax return for
the taxable year for which the credit is claimed and submit with the
application the receipt issued under Section 171.552(1)(F), Tax
Code, including the information required by Section 171.556(c), Tax
Code.
(b) The comptroller shall adopt a form for the application
for the credit. An entity must use this form in applying for the
credit.
Sec. 230.054. RULES; PROCEDURES. (a) The comptroller
shall adopt rules and procedures to implement, administer, and
enforce this chapter.
(b) A rule adopted under Subsection (a) is binding on any
state or local governmental entity, including a political
subdivision, as necessary to implement, administer, and enforce
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 of the assets of the entity are
conveyed, assigned, or transferred in the same transaction.
SECTION 3. (a) The constitutionality and other validity
under the state or federal constitution of all or any part of
Subchapter K, Chapter 171, Tax Code, or Chapter 230, Insurance
Code, as added by this Act, may be determined in an action for
declaratory judgment in a district court in Travis County under
Chapter 37, Civil Practice and Remedies Code.
(b) An appeal of a declaratory judgment or order, however
characterized, of a district court, including an appeal of the
judgment of an appellate court, holding or otherwise determining
that all or any part of Subchapter K, Chapter 171, Tax Code, or
Chapter 230, Insurance Code, as added by this Act, is
constitutional or unconstitutional, or otherwise valid or invalid,
under the state or federal constitution is an accelerated appeal.
(c) If the judgment or order is interlocutory, an
interlocutory appeal may be taken from the judgment or order and is
an accelerated appeal.
(d) A district court in Travis County may grant or deny a
temporary or otherwise interlocutory injunction or a permanent
injunction on the grounds of the constitutionality or
unconstitutionality, or other validity or invalidity, under the
state or federal constitution of all or any part of Subchapter K,
Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by
this Act.
(e) There is a direct appeal to the supreme court from an
order, however characterized, of a trial court granting or denying
a temporary or otherwise interlocutory injunction or a permanent
injunction on the grounds of the constitutionality or
unconstitutionality, or other validity or invalidity, under the
state or federal constitution of all or any part of Subchapter K,
Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by
this Act.
(f) The direct appeal is an accelerated appeal.
(g) This section exercises the authority granted by Section
3-b, Article V, Texas Constitution.
(h) The filing of a direct appeal under this section will
automatically stay any temporary or otherwise interlocutory
injunction or permanent injunction granted in accordance with this
section pending final determination by the supreme court, unless
the supreme court makes specific findings that the applicant
seeking such injunctive relief has pleaded and proved that:
(1) the applicant has a probable right to the relief it
seeks on final hearing; and
(2) the applicant will suffer a probable injury that
is imminent and irreparable, and that the applicant has no other
adequate legal remedy.
(i) An appeal under this section, including an
interlocutory, accelerated, or direct appeal, is governed, as
applicable, by the Texas Rules of Appellate Procedure, including
Rules 25.1(d)(6), 26.1(b), 28.1, 28.3, 32.1(g), 37.3(a)(1),
38.6(a) and (b), 40.1(b), and 49.4.
SECTION 4. A credit may be claimed under Subchapter K,
Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by
this Act, only for a contribution made on or after the effective
date of this Act.
SECTION 5. Not later than February 15, 2016, the
comptroller of public accounts shall adopt rules as provided by
Section 171.560(a), Tax Code, and Section 230.054(a), Insurance
Code, as added by this Act.
SECTION 6. This Act takes effect January 1, 2016.