SB3744 96TH GENERAL ASSEMBLY

LRB096 20510 HLH 36571 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3744

Introduced 2/11/2010, by Sen. Kimberly A. Lightford

SYNOPSIS AS INTRODUCED:

35 ILCS 5/219 new

Amends the Illinois Income Tax Act. Creates a credit for businesses that make contributions to (i) educational improvement organizations, (ii) qualified scholarship organizations, or (iii) qualified pre-kindergarten scholarship organizations. Sets forth the amount of the credit. Provides that educational improvement organizations, scholarship organizations, and qualified pre-kindergarten scholarship organizations must submit certain information to the Department of Commerce and Economic Opportunity. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by adding Section 219 as follows:

(35 ILCS 5/219 new)

Sec. 219. Credit for contributions to educational improvement organizations and scholarship organizations.

(a) For taxable years beginning on or after January 1, 2011, each business that, during the taxable year, makes a contribution to (i) an educational improvement organization or (ii) a qualified scholarship organization is entitled to a credit against the tax imposed under subsections (a) and (b) of Section 201 in an amount equal to 75% of the amount contributed. However, if the business provides a written commitment to the Department that it will provide an equal contribution in the next taxable year, and such a contribution is made, then the business is entitled to a credit in both taxable years in an amount equal to 90% of the amount contributed during the taxable year. The written commitment must be made in the form and manner prescribed by the Department. A credit awarded under this subsection (a) may not exceed $300,000 per taxable year.

(b) In addition, each business that, during the taxable year, makes a contribution to a qualified pre-kindergarten scholarship organization is entitled to a credit against the tax imposed under subsections (a) and (b) of Section 201 in an amount equal to (i) 100% of the first $10,000 contributed by the business during the taxable year, and (ii) 90% of any additional amounts contributed by the business during the taxable year. A credit awarded under this subsection (b) may not exceed $150,000 per taxable year.

(c) For the purposes of this Section:

"Department" means the Department of Commerce and Economic Opportunity.

"Educational improvement organization" means a non-profit entity that (i) is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986 and (ii) contributes at least 80% of its annual receipts as grants to a public school for innovative educational programs.

"Eligible pre-kindergarten student" means a student, including an eligible student with a disability, who is enrolled in a pre-kindergarten program and is a member of a household with a household income of no more than the maximum annual household income.

"Eligible student" means a school-age student, including an eligible student with a disability, who is a resident of the State of Illinois, who is enrolled in a school and is a member of a household with a household income of no more than the maximum annual household income.

"Eligible student with a disability" means a pre-kindergarten student or a school-age student who meets all of the following: (i) is either enrolled in a special education school or otherwise meets the definition of "children with disabilities," as defined in Section 14-1.02 of the School Code; (ii) needs special education and related services; (iii) is enrolled in a pre-kindergarten program or in a school; and (iv) is a member of a household with a household income of not more than the maximum annual household income.

"Household" means a household in which one or more eligible students resides with a spouse, parent, grandparent, sibling, or legal guardian.

"Household income" means all moneys or property received of whatever nature and from whatever source derived. The term does not include the following: (i) periodic payments for sickness and disability other than regular wages received during a period of sickness or disability; (ii) disability, retirement, or other payments arising under workers' compensation Acts, occupational disease Acts, and similar legislation by any unit of government; (iii) payments commonly recognized as old-age or retirement benefits paid to persons retired from service after reaching a specific age or after a stated period of employment; (iv) payments commonly known as public assistance or unemployment compensation payments by a governmental agency; (v) payments to reimburse actual expenses; (vi) payments made by employers or labor unions for programs covering hospitalization, sickness, disability or death, supplemental unemployment benefits, strike benefits, social security and retirement; and (vii) compensation received by United States servicemen serving in a combat zone.

"Innovative educational program" means an advanced academic or similar program that is not part of the regular academic program of a public school, but that enhances the curriculum or academic program of the public school or provides pre-kindergarten programs to public school students.

"Maximum annual household income" means (i) 200% of the federal poverty level, as that level is calculated for a family of 4, or (ii) with respect to a household with an eligible student with a disability, the maximum household income calculated under item (i) multiplied by (A) 1.5 or (B) 3.0 if the household has at least one eligible student with a disability who is enrolled in a special education school.

"Pre-kindergarten program" means a program of instruction for 3-year-old or 4-year-old students that utilizes a curriculum aligned with the curriculum of the school with which it is affiliated and which provides one of the following: (i) a minimum of 2 hours of instructional and developmental activities per day at least 60 days per school year or (ii) a minimum of 2 hours of instructional and developmental activities per day at least 20 days over the summer recess.

"Pre-kindergarten scholarship organization" means a nonprofit entity which: (i) either is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986 or is operated as a separate segregated fund by a qualified scholarship organization and (ii) contributes at least 80% of its annual cash receipts to a pre-kindergarten scholarship program by expending those funds for distribution during the then current fiscal year of the organization or during the next succeeding fiscal year of the organization.

"Pre-kindergarten scholarship program" means a program to provide tuition to eligible pre-kindergarten students to attend a pre-kindergarten program operated by or in conjunction with a school located in this State and that includes an application and review process for the purpose of making awards to eligible pre-kindergarten students and awards scholarships to eligible pre-kindergarten students without limiting availability to only students of one school.

"Qualified scholarship organization" means a non-profit entity that (i) is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986 and (ii) contributes at least 80% of its annual receipts to a scholarship program.

"Scholarship program" means a program to provide tuition to eligible students to attend a public or non-public pre-kindergarten, kindergarten, elementary, or secondary school in the State. A scholarship program must include an application and review process for the purpose of making awards to eligible students. The award of scholarships to eligible students shall be made without limiting availability to only students of one school.

"School" means a public or nonpublic pre-kindergarten, kindergarten, elementary school, or secondary school and attendance at which satisfies requirements of Section 26-1 of the School Code and which meets the applicable requirements of Title VI of the Civil Rights Act of 1964.

"School age" means children from the earliest admission age to a school's pre-kindergarten or kindergarten program or, when no pre-kindergarten or kindergarten program is provided, the school's earliest admission age for beginners, until the end of the school year in which the student attains 21 years of age or graduation from high school, whichever occurs first.

"Special education school" means a school or program within a school that is designated specifically and exclusively for students with disabilities as defined by Section 14-1.02 of the School Code and meets at least one of the following criteria: (i) the program is a non-public program approved under Section 14-7.02 of the School Code; (ii) is accredited by the State Board of Education; (iii) is a school for the blind or deaf receiving State funding; (iv) is operated by or under the authority of a bona fide religious institution or by the State of Illinois or any political subdivision thereof; or (v) is a facility created under a special education joint agreement under Section 10-22.31 of the School Code.

(d) In order to qualify under this Section, a scholarship organization, a pre-kindergarten scholarship organization, or an educational improvement organization must submit information to the Department that enables the Department to confirm that the organization is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986. A scholarship organization or pre-kindergarten scholarship organization must certify to the Department that the organization is eligible to participate in the program established under this Section and must agree to annually report the following information to the Department by December 1, 2011 and September 1 of each year thereafter:

(1) the number of scholarships awarded during the immediately preceding school year to eligible pre-kindergarten students;

(2) the total and average amounts of the scholarships awarded during the immediately preceding school year to eligible pre-kindergarten students;

(3) the number of scholarships awarded during the immediately preceding school year to eligible students in grades kindergarten through 8;

(4) the total and average amounts of the scholarships awarded during the immediately preceding school year to eligible students in grades kindergarten through 8;

(5) the number of scholarships awarded during the immediately preceding school year to eligible students in grades 9 through 12;

(6) the total and average amounts of the scholarships awarded during the immediately preceding school year to eligible students in grades 9 through 12; and

(7) if the scholarship organization or pre-kindergarten scholarship organization collects information on a county-by-county basis, the total number and the total amount of scholarships awarded during the immediately preceding school year to residents of each county in which the scholarship organization or pre-kindergarten scholarship organization awarded scholarships.

The information required under items (1) through (7) of this subsection shall be submitted on a form provided by the Department. No later than September 1, 2011 and May 1 of each year thereafter, the Department shall annually distribute such sample forms, together with the forms on which the reports are required to be made, to each listed scholarship organization and pre-kindergarten scholarship organization. The Department may not require any other information to be provided by scholarship organizations or pre-kindergarten scholarship organizations, except as expressly authorized in this Section.

(e) An application submitted by an educational improvement organization must describe its proposed innovative educational program or programs in the form and manner prescribed by the Department. The Department shall consult with the State Board of Education as necessary. The Department shall review and approve or disapprove the application. In order to be eligible to participate in the program established under this Section, an educational improvement organization must agree to annually report the following information to the department by December 1, 2011 and September 1 of each year thereafter:

(1) the name of the innovative educational program or programs and the total amount of the grant or grants made to those programs during the immediately preceding school year;

(2) a description of how each grant was utilized during the immediately preceding school year and a description of any demonstrated or expected innovative educational improvements;

(3) the names of the public schools and school districts where innovative educational programs that received grants during the immediately preceding school year were implemented; and

(4) if the educational improvement organization collects information on a county-by-county basis, the total number and the total amount of grants made during the immediately preceding school year for programs at public schools in each county in which the educational improvement organization made grants.

The information required under items (1) through (4) of this subsection shall be submitted on a form provided by the Department. No later than September 1, 2011 and May 1 of each year thereafter, the Department shall annually distribute such sample forms, together with the forms on which the reports are required to be made, to each listed educational improvement organization. The Department may not require any other information to be provided by educational improvement organizations, except as expressly authorized in this Section.

(f) The Department shall notify the scholarship organization, pre-kindergarten scholarship organization, or educational improvement organization that the organization meets the requirements of this Section for that fiscal year no later than 60 days after the organization has submitted the information required under this Section. The Department shall annually publish in the Illinois Register a list of each scholarship organization, pre-kindergarten scholarship organization, or educational improvement organization qualified. The list shall also be posted and updated as necessary on the publicly accessible internet website of the Department.

(g) A taxpayer shall apply to the Department for a tax credit under this Section. The taxpayer shall receive a tax credit under this Section if the scholarship organization, pre-kindergarten scholarship organization, or educational improvement organization that receives the contribution appears on the list established under subsection (f). Tax credits under this Section shall be awarded by the Department on a first-come, first-served basis within the limitation established under subsection (h) of this Section. A contribution by a business to a scholarship organization, pre-kindergarten scholarship organization or educational improvement organization shall be made no later than 60 days following the approval of the application.

(h) The total aggregate amount of all tax credits approved under this Section shall not exceed $10,000,000 in a fiscal year. The total aggregate amount of all tax credits approved under this Section for contributions from business firms to scholarship organizations shall not exceed $7,000,000. The total aggregate amount of all tax credits approved under this Section for contributions from business firms to educational improvement organizations shall not exceed $2,000,000. The total aggregate amount of all tax credits approved under this Section for contributions from business firms to pre-kindergarten scholarship programs shall not exceed $1,000,000 in a fiscal year. No tax credit shall be approved under this Section for activities that are a part of the taxpayer's normal course of business.

(i) For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there is allowed a credit under this Section to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code.

(j) A credit awarded under this Section may not reduce the taxpayer's liability to less than zero.

(k) The Department shall provide a list of all scholarship organizations, pre-kindergarten scholarship organizations and educational improvement organizations receiving contributions from business firms granted a tax credit under this article to the General Assembly by June 30th of each year. The Department in consultation with the State Board of Education shall develop guidelines to determine the eligibility of an innovative educational program.

(f) This Section is exempt from the provisions of Section 250.

Section 99. Effective date. This Act takes effect upon becoming law.