HB1017: Education improvement scholarships; tax credit, reporting and other requirements.
Be it enacted by the General Assembly of Virginia:
1. That §§ 58.1-439.26 and 58.1-439.28 of the Code of Virginia are amended and reenacted as follows:
§ 58.1-439.26. Tax credit for donations to certain scholarship foundations.
A. Notwithstanding the provisions of § 30-19.1:11, for taxable years beginning on or after January 1, 2013, but before January 1, 2028, a person shall be eligible to earn a credit against any tax due under Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 65 percent of the value of the monetary or marketable securities donation made by the person to a scholarship foundation included on the list published annually by the Department of Education in accordance with the provisions of § 58.1-439.28.
No tax credit shall be allowed under this article if the value of the monetary or marketable securities donation made by an individual is less than $500. In addition, tax credits shall be issued only for the first $125,000 in value of donations made by the individual during the taxable year. The maximum aggregate donations of $125,000 for the taxable year for which tax credits may be issued and the minimum required donation of $500 shall apply on an individual basis. Such limitation on the maximum amount of tax credits issued to an individual shall not apply to credits issued to any business entity, including a sole proprietorship.
B. Tax credits shall be issued to persons making monetary or marketable securities donations to scholarship foundations by the Department of Education on a first-come, first-served basis in accordance with procedures established by the Department of Education under the following conditions:
1. The total amount of tax credits that may be issued each fiscal year under this article shall not exceed $25 million.
2. The amount of the credit shall not exceed the person's tax liability pursuant to Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26, as applicable, for the taxable year for which the credit is claimed. Any credit not usable for the taxable year for which first allowed may be carried over for credit against the taxes imposed upon the person pursuant to Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26, as applicable, in the next five succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner.
The amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
C. In a form approved by the Department of Education, the
person seeking to make a monetary or marketable securities donation to a
scholarship foundation or a scholarship foundation on behalf of such person
shall request preauthorization for a specified tax credit amount from the
Superintendent of Public Instruction. The Department of Education's
preauthorization notice shall accompany the monetary or marketable securities
donation from the person to the scholarship foundation, which shall, within
20 40 days, return the notice to the Department of Education
certifying the value and type of donation and date received. Upon receipt and
approval by the Department of Education of the preauthorization notice with
required supporting documentation and certification of the value and type of
the donation by the scholarship foundation, the Superintendent of Public
Instruction shall as soon as practicable, and in no case longer than 30 days,
issue a tax credit certificate to the person eligible for the tax credit. The
person shall attach the tax credit certificate to the applicable tax return
filed with the Department of Taxation or the State Corporation Commission, as
applicable. The Department of Education shall provide a copy of the tax credit
certificate to the scholarship foundation.
Preauthorization notices not acted upon by a donor within 180 days of issuance shall be void. No tax credit shall be approved by the Department of Education for activities that are a part of a person's normal course of business.
§ 58.1-439.28. Guidelines for scholarship foundations.
A. As a condition for qualification by the Department of
Education, a scholarship foundation, as defined in § 58.1-439.25 and included
on the list published annually by the Department of Education pursuant to this
section, shall disburse an amount at least equal to 90 percent of the value of
the donations it receives (for which tax credits were issued under this
article) during each 12-month period ending on June 30 by the immediately
following June 30 for qualified educational expenses through scholarships to
eligible students. Tax-credit-derived funds not used for such scholarships may
only be used for the administrative expenses of the scholarship foundation. Any
scholarship foundation that fails to disburse at least 90 percent of any
donated amount within the appropriate one-year period meet such
disbursal requirement shall, for the first offense, be required to pay a
civil penalty equal to 200 percent of the difference between 90 percent of the
donated amount value of the tax-credit-derived donations it received in
the applicable 12-month period and the amount that was actually disbursed.
Such civil penalty shall be remitted by the scholarship foundation to the
Department of Education within 30 days after the end of the one-year period and
deposited to the general fund. For a second offense within a five-year period,
the scholarship foundation shall be removed from the annual list published pursuant
to this section and shall not be entitled to request preauthorization for
additional tax credits, nor shall it be entitled to receive and administer
additional tax-credit-derived funds for two years. After two years, the
scholarship foundation shall be eligible to reapply to be included on the
annual list to receive and administer tax-credit derived funds. If a
scholarship foundation is authorized to be added to the annual list after such
reapplication, the scholarship foundation shall not be considered to have any
previous offenses for purposes of this subsection. The required disbursement
under this section shall begin with donations received for the period January
1, 2013, through June 30, 2014.
B. By September 30 of each year beginning in 2014
2016, the scholarship foundation shall provide the following information to
the Department of Education: (i) the total number and value of contributions
donations received by the foundation in its most recent fiscal year
ended during the 12-month period ending on June 30 of the prior calendar
year for which tax credits were issued by the Superintendent of Public
Instruction, (ii) the dates when such contributions donations
were received, and (iii) the total number and dollar amount of qualified
educational expenses scholarships awarded from tax-credit-derived donations
and disbursed by the scholarship foundation during its most recent
fiscal year ended the 24-month period ending on June 30 of the current
calendar year. Any scholarship foundation that fails to provide this report
by September 30 shall, for the first offense, be required to pay a $1,000 civil
penalty. Such civil penalty shall be remitted by the scholarship foundation to
the Department of Education by November 1 of the same year and deposited to the
general fund. For a second offense within a five-year period, the scholarship
foundation shall be removed from the annual list published pursuant to this
section and shall not be entitled to request preauthorization for additional
tax credits, nor shall it be entitled to receive and administer additional
tax-credit-derived funds. After two years, the scholarship foundation shall be
eligible to reapply to be included on the annual list to receive and administer
tax-credit derived funds. If a scholarship foundation is authorized to be added
to the annual list after such reapplication, the scholarship foundation shall
not be considered to have any previous offenses for purposes of this
subsection.
C. In awarding scholarships from tax-credit-derived funds, the scholarship foundation shall (i) provide scholarships for qualified educational expenses only to students whose family's annual household income is not in excess of 300 percent of the current poverty guidelines or eligible students with a disability, (ii) not limit scholarships to students of one school, and (iii) comply with Title VI of the Civil Rights Act of 1964, as amended. Payment of scholarships from tax-credit-derived funds by the eligible scholarship foundation shall be by individual warrant or check made payable to and mailed to the eligible school that the student's parent or legal guardian indicates. In mailing such scholarship payments, the eligible scholarship foundation shall include a written notice to the eligible school that the source of the scholarship was donations made by persons receiving tax credits for the same pursuant to this article.
D. Scholarship foundations shall ensure that schools selected by students to which tax-credit-derived funds may be paid (i) are in compliance with the Commonwealth's and locality's health and safety laws and codes; (ii) hold a valid occupancy permit as required by the locality; (iii) comply with Title VI of the Civil Rights Act of 1964, as amended; and (iv) are nonpublic schools that comply with nonpublic school accreditation requirements as set forth in § 22.1-19 and administered by the Virginia Council for Private Education or nonpublic schools that maintain an assessment system that annually measures scholarship students' progress in reading and math using a national norm-referenced achievement test, including but not limited to the Stanford Achievement Test, California Achievement Test, and Iowa Test of Basic Skills.
Eligible schools shall compile the results of any national norm-referenced achievement test for each of its students receiving tax-credit-derived scholarships and shall provide the respective parents or legal guardians of such students with a copy of the results on an annual basis, beginning with the first year of testing of the student. Such schools also shall annually provide to the Department of Education for each such student the achievement test results, beginning with the first year of testing of the student, and student information that would allow the Department to aggregate the achievement test results by grade level, gender, family income level, number of years of participation in the scholarship program, and race. Beginning with the third year of testing of each such student and test-related data collection, the Department of Education shall ensure that the achievement test results and associated learning gains are published on the Department of Education's website in accordance with such classifications and in an aggregate form as to prevent the identification of any student. Eligible schools shall annually provide to the Superintendent of Public Instruction graduation rates of its students participating in the scholarship program in a manner consistent with nationally recognized standards. In publishing and disseminating achievement test results and other information, the Superintendent of Public Instruction and the Department of Education shall ensure compliance with all student privacy laws.
E. The aggregate amount of scholarships provided to each student for any single school year by all eligible scholarship foundations from eligible donations shall not exceed the lesser of (i) the actual qualified educational expenses of the student or (ii) 100 percent of the per-pupil amount distributed to the local school division (in which the student resides) as the state's share of the standards of quality costs using the composite index of ability to pay as defined in the general appropriation act.
F. Scholarship foundations shall develop procedures for disbursing scholarships in quarterly or semester payments throughout the school year to ensure scholarships are portable.
G. Scholarship foundations that receive donations of
marketable securities for which tax credits were issued under this article
shall be required to sell such securities and convert the donation into cash
immediately, but in no case more than 14 21 days after receipt of
the donation.
H. Each scholarship foundation with total revenues (including
the value of all donations) (i) in excess of $100,000 for the foundation's most
recent fiscal year ended shall have an audit or review performed by an
independent certified public accountant of the foundation's donations received
in such year for which tax credits were issued under this article, or
(ii) of $100,000 or less for the foundation's most recent fiscal year
ended shall have a compilation performed by an independent certified public
accountant of the foundation's donations received in such year for which tax
credits were issued under this article. A summary report of the audit, review,
or compilation shall be made available to the public and the Department of
Education upon request. As an appendix to the report, the scholarship
foundation's board of directors shall certify (a) the total number and value of
donations per locality received during the foundation's most recent year ended;
(b) the total number and dollar amount of qualified educational expenses
scholarships disbursed during the foundation's most recent year ended to every
(1) student whose family's annual household income was not in excess of 300
percent of the current poverty guidelines or (2) eligible student with a
disability; and (c) the percentage of first-time recipients to whom qualified
educational expenses scholarships were disbursed in the foundation's most
recent year ended.
I. The Department of Education shall publish annually on its website a list of each scholarship foundation qualified under this article. Once a foundation has been qualified by the Department of Education, it shall remain qualified until the Department removes the foundation from its annual list. The Department of Education shall remove a foundation from the annual list if it no longer meets the requirements of this article. The Department of Education may periodically require a qualified foundation to submit updated or additional information for purposes of determining whether or not the foundation continues to meet the requirements of this article.
J. Actions of the Superintendent of Public Instruction or the Department of Education relating to the awarding of tax credits under this article and the qualification of scholarship foundations shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.). Decisions of the Superintendent of Public Instruction or the Department of Education shall be final and not subject to review or appeal.
Be it enacted by the General Assembly of Virginia:
1. That §§ 58.1-439.26 and 58.1-439.28 of the Code of Virginia are amended and reenacted as follows:
§ 58.1-439.26. Tax credit for donations to certain scholarship foundations.
A. Notwithstanding the provisions of § 30-19.1:11, for taxable years beginning on or after January 1, 2013, but before January 1, 2028, a person shall be eligible to earn a credit against any tax due under Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 65 percent of the value of the monetary or marketable securities donation made by the person to a scholarship foundation included on the list published annually by the Department of Education in accordance with the provisions of § 58.1-439.28.
No tax credit shall be allowed under this article if the value of the monetary or marketable securities donation made by an individual is less than $500. In addition, tax credits shall be issued only for the first $125,000 in value of donations made by the individual during the taxable year. The maximum aggregate donations of $125,000 for the taxable year for which tax credits may be issued and the minimum required donation of $500 shall apply on an individual basis. Such limitation on the maximum amount of tax credits issued to an individual shall not apply to credits issued to any business entity, including a sole proprietorship.
B. Tax credits shall be issued to persons making monetary or marketable securities donations to scholarship foundations by the Department of Education on a first-come, first-served basis in accordance with procedures established by the Department of Education under the following conditions:
1. The total amount of tax credits that may be issued each fiscal year under this article shall not exceed $25 million.
2. The amount of the credit shall not exceed the person's tax liability pursuant to Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26, as applicable, for the taxable year for which the credit is claimed. Any credit not usable for the taxable year for which first allowed may be carried over for credit against the taxes imposed upon the person pursuant to Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26, as applicable, in the next five succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner.
The amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
C. In a form approved by the Department of Education, the
person seeking to make a monetary or marketable securities donation to a
scholarship foundation or a scholarship foundation on behalf of such person
shall request preauthorization for a specified tax credit amount from the
Superintendent of Public Instruction. The Department of Education's
preauthorization notice shall accompany the monetary or marketable securities
donation from the person to the scholarship foundation, which shall, within
20 40 days, return the notice to the Department of Education
certifying the value and type of donation and date received. Upon receipt and
approval by the Department of Education of the preauthorization notice with
required supporting documentation and certification of the value and type of
the donation by the scholarship foundation, the Superintendent of Public
Instruction shall as soon as practicable, and in no case longer than 30 days,
issue a tax credit certificate to the person eligible for the tax credit. The
person shall attach the tax credit certificate to the applicable tax return
filed with the Department of Taxation or the State Corporation Commission, as
applicable. The Department of Education shall provide a copy of the tax credit
certificate to the scholarship foundation.
Preauthorization notices not acted upon by a donor within 180 days of issuance shall be void. No tax credit shall be approved by the Department of Education for activities that are a part of a person's normal course of business.
§ 58.1-439.28. Guidelines for scholarship foundations.
A. As a condition for qualification by the Department of
Education, a scholarship foundation, as defined in § 58.1-439.25 and included
on the list published annually by the Department of Education pursuant to this
section, shall disburse an amount at least equal to 90 percent of the value of
the donations it receives (for which tax credits were issued under this
article) during each 12-month period ending on June 30 by the immediately
following June 30 for qualified educational expenses through scholarships to
eligible students. Tax-credit-derived funds not used for such scholarships may
only be used for the administrative expenses of the scholarship foundation. Any
scholarship foundation that fails to disburse at least 90 percent of any
donated amount within the appropriate one-year period meet such
disbursal requirement shall, for the first offense, be required to pay a
civil penalty equal to 200 100 percent of the difference between
90 percent of the donated amount value of the tax-credit-derived
donations it received in the applicable 12-month period and the amount that
was actually disbursed. Such civil penalty shall be remitted by the scholarship
foundation to the Department of Education within 30 days after the end of the
one-year period and deposited to the general fund. For a second offense within
a five-year period, the scholarship foundation shall be removed from the annual
list published pursuant to this section and shall not be entitled to request
preauthorization for additional tax credits, nor shall it be entitled to
receive and administer additional tax-credit-derived funds for two years. After
two years, the scholarship foundation shall be eligible to reapply to be
included on the annual list to receive and administer tax-credit derived funds.
If a scholarship foundation is authorized to be added to the annual list after
such reapplication, the scholarship foundation shall not be considered to have
any previous offenses for purposes of this subsection. The required
disbursement under this section shall begin with donations received for the
period January 1, 2013, through June 30, 2014.
B. By September 30 of each year beginning in 2014 2016,
the scholarship foundation shall provide the following information to the
Department of Education: (i) the total number and value of contributions
donations received by the foundation in its most recent fiscal year
ended during the 12-month period ending on June 30 of the prior calendar
year for which tax credits were issued by the Superintendent of Public
Instruction, (ii) the dates when such contributions donations
were received, and (iii) the total number and dollar amount of qualified
educational expenses scholarships awarded from tax-credit-derived donations
and disbursed by the scholarship foundation during its most recent
fiscal year ended the 24-month period ending on June 30 of the current
calendar year. Any scholarship foundation that fails to provide this report
by September 30 shall, for the first offense, be required to pay a $1,000 civil
penalty. Such civil penalty shall be remitted by the scholarship foundation to
the Department of Education by November 1 of the same year and deposited to the
general fund. For a second offense within a five-year period, the scholarship
foundation shall be removed from the annual list published pursuant to this
section and shall not be entitled to request preauthorization for additional
tax credits, nor shall it be entitled to receive and administer additional
tax-credit-derived funds. After two years, the scholarship foundation shall be
eligible to reapply to be included on the annual list to receive and administer
tax-credit derived funds. If a scholarship foundation is authorized to be added
to the annual list after such reapplication, the scholarship foundation shall
not be considered to have any previous offenses for purposes of this
subsection.
C. In awarding scholarships from tax-credit-derived funds, the scholarship foundation shall (i) provide scholarships for qualified educational expenses only to students whose family's annual household income is not in excess of 300 percent of the current poverty guidelines or eligible students with a disability, (ii) not limit scholarships to students of one school, and (iii) comply with Title VI of the Civil Rights Act of 1964, as amended. Payment of scholarships from tax-credit-derived funds by the eligible scholarship foundation shall be by individual warrant or check made payable to and mailed to the eligible school that the student's parent or legal guardian indicates. In mailing such scholarship payments, the eligible scholarship foundation shall include a written notice to the eligible school that the source of the scholarship was donations made by persons receiving tax credits for the same pursuant to this article.
D. Scholarship foundations shall ensure that schools selected by students to which tax-credit-derived funds may be paid (i) are in compliance with the Commonwealth's and locality's health and safety laws and codes; (ii) hold a valid occupancy permit as required by the locality; (iii) comply with Title VI of the Civil Rights Act of 1964, as amended; and (iv) are nonpublic schools that comply with nonpublic school accreditation requirements as set forth in § 22.1-19 and administered by the Virginia Council for Private Education or nonpublic schools that maintain an assessment system that annually measures scholarship students' progress in reading and math using a national norm-referenced achievement test, including but not limited to the Stanford Achievement Test, California Achievement Test, and Iowa Test of Basic Skills.
Eligible schools shall compile the results of any national norm-referenced achievement test for each of its students receiving tax-credit-derived scholarships and shall provide the respective parents or legal guardians of such students with a copy of the results on an annual basis, beginning with the first year of testing of the student. Such schools also shall annually provide to the Department of Education for each such student the achievement test results, beginning with the first year of testing of the student, and student information that would allow the Department to aggregate the achievement test results by grade level, gender, family income level, number of years of participation in the scholarship program, and race. Beginning with the third year of testing of each such student and test-related data collection, the Department of Education shall ensure that the achievement test results and associated learning gains are published on the Department of Education's website in accordance with such classifications and in an aggregate form as to prevent the identification of any student. Eligible schools shall annually provide to the Superintendent of Public Instruction graduation rates of its students participating in the scholarship program in a manner consistent with nationally recognized standards. In publishing and disseminating achievement test results and other information, the Superintendent of Public Instruction and the Department of Education shall ensure compliance with all student privacy laws.
E. The aggregate amount of scholarships provided to each student for any single school year by all eligible scholarship foundations from eligible donations shall not exceed the lesser of (i) the actual qualified educational expenses of the student or (ii) 100 percent of the per-pupil amount distributed to the local school division (in which the student resides) as the state's share of the standards of quality costs using the composite index of ability to pay as defined in the general appropriation act.
F. Scholarship foundations shall develop procedures for disbursing scholarships in quarterly or semester payments throughout the school year to ensure scholarships are portable.
G. Scholarship foundations that receive donations of
marketable securities for which tax credits were issued under this article
shall be required to sell such securities and convert the donation into cash
immediately, but in no case more than 14 21 days after receipt of
the donation.
H. Each scholarship foundation with total revenues (including
the value of all donations) (i) in excess of $100,000 for the foundation's most
recent fiscal year ended shall have an audit or review performed by an
independent certified public accountant of the foundation's donations received
in such year for which tax credits were issued under this article, or
(ii) of $100,000 or less for the foundation's most recent fiscal year
ended shall have a compilation performed by an independent certified public
accountant of the foundation's donations received in such year for which tax
credits were issued under this article. A summary report of the audit, review,
or compilation shall be made available to the public and the Department of
Education upon request. As an appendix to the report, the scholarship
foundation's board of directors shall certify (a) the total number and value of
donations per locality received during the foundation's most recent year ended;
(b) the total number and dollar amount of qualified educational expenses
scholarships disbursed during the foundation's most recent year ended to every
(1) student whose family's annual household income was not in excess of 300
percent of the current poverty guidelines or (2) eligible student with a
disability; and (c) the percentage of first-time recipients to whom qualified
educational expenses scholarships were disbursed in the foundation's most
recent year ended.
I. The Department of Education shall publish annually on its website a list of each scholarship foundation qualified under this article. Once a foundation has been qualified by the Department of Education, it shall remain qualified until the Department removes the foundation from its annual list. The Department of Education shall remove a foundation from the annual list if it no longer meets the requirements of this article. The Department of Education may periodically require a qualified foundation to submit updated or additional information for purposes of determining whether or not the foundation continues to meet the requirements of this article.
J. Actions of the Superintendent of Public Instruction or the Department of Education relating to the awarding of tax credits under this article and the qualification of scholarship foundations shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.). Decisions of the Superintendent of Public Instruction or the Department of Education shall be final and not subject to review or appeal.
Be it enacted by the General Assembly of Virginia:
1. That §§ 58.1-439.26 and 58.1-439.28 of the Code of Virginia are amended and reenacted as follows:
§ 58.1-439.26. Tax credit for donations to certain scholarship foundations.
A. Notwithstanding the provisions of § 30-19.1:11, for taxable years beginning on or after January 1, 2013, but before January 1, 2028, a person shall be eligible to earn a credit against any tax due under Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 65 percent of the value of the monetary or marketable securities donation made by the person to a scholarship foundation included on the list published annually by the Department of Education in accordance with the provisions of § 58.1-439.28.
No tax credit shall be allowed under this article if the value of the monetary or marketable securities donation made by an individual is less than $500. In addition, tax credits shall be issued only for the first $125,000 in value of donations made by the individual during the taxable year. The maximum aggregate donations of $125,000 for the taxable year for which tax credits may be issued and the minimum required donation of $500 shall apply on an individual basis. Such limitation on the maximum amount of tax credits issued to an individual shall not apply to credits issued to any business entity, including a sole proprietorship.
B. Tax credits shall be issued to persons making monetary or marketable securities donations to scholarship foundations by the Department of Education on a first-come, first-served basis in accordance with procedures established by the Department of Education under the following conditions:
1. The total amount of tax credits that may be issued each fiscal year under this article shall not exceed $25 million.
2. The amount of the credit shall not exceed the person's tax liability pursuant to Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26, as applicable, for the taxable year for which the credit is claimed. Any credit not usable for the taxable year for which first allowed may be carried over for credit against the taxes imposed upon the person pursuant to Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26, as applicable, in the next five succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner.
The amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
C. In a form approved by the Department of Education, the
person seeking to make a monetary or marketable securities donation to a
scholarship foundation or a scholarship foundation on behalf of such person
shall request preauthorization for a specified tax credit amount from the
Superintendent of Public Instruction. The Department of Education's
preauthorization notice shall accompany the monetary or marketable securities
donation from the person to the scholarship foundation, which shall, within
20 40 days, return the notice to the Department of Education
certifying the value and type of donation and date received. Upon receipt and
approval by the Department of Education of the preauthorization notice with
required supporting documentation and certification of the value and type of
the donation by the scholarship foundation, the Superintendent of Public
Instruction shall as soon as practicable, and in no case longer than 30 days,
issue a tax credit certificate to the person eligible for the tax credit. The
person shall attach the tax credit certificate to the applicable tax return
filed with the Department of Taxation or the State Corporation Commission, as
applicable. The Department of Education shall provide a copy of the tax credit
certificate to the scholarship foundation.
Preauthorization notices not acted upon by a donor within 180 days of issuance shall be void. No tax credit shall be approved by the Department of Education for activities that are a part of a person's normal course of business.
§ 58.1-439.28. Guidelines for scholarship foundations.
A. As a condition for qualification by the Department of
Education, a scholarship foundation, as defined in § 58.1-439.25 and included
on the list published annually by the Department of Education pursuant to this
section, shall disburse an amount at least equal to 90 percent of the value of
the donations it receives (for which tax credits were issued under this
article) during each 12-month period ending on June 30 by the immediately
following June 30 for qualified educational expenses through scholarships to
eligible students. Tax-credit-derived funds not used for such scholarships may
only be used for the administrative expenses of the scholarship foundation. Any
scholarship foundation that fails to disburse at least 90 percent of any
donated amount within the appropriate one-year period meet such
disbursal requirement shall, for the first offense, be required to pay a
civil penalty equal to [ 200 100 ] percent of the difference
between 90 percent of the donated amount value of the
tax-credit-derived donations it received in the applicable 12-month period
and the amount that was actually disbursed. Such civil penalty shall be
remitted by the scholarship foundation to the Department of Education within 30
days after the end of the one-year period and deposited to the general fund.
For a second offense within a five-year period, the scholarship foundation
shall be removed from the annual list published pursuant to this section and
shall not be entitled to request preauthorization for additional tax credits,
nor shall it be entitled to receive and administer additional
tax-credit-derived funds for two years. After two years, the scholarship
foundation shall be eligible to reapply to be included on the annual list to
receive and administer tax-credit derived funds. If a scholarship foundation is
authorized to be added to the annual list after such reapplication, the
scholarship foundation shall not be considered to have any previous offenses
for purposes of this subsection. The required disbursement under this section
shall begin with donations received for the period January 1, 2013, through
June 30, 2014.
B. By September 30 of each year beginning in 2014
2016, the scholarship foundation shall provide the following information to
the Department of Education: (i) the total number and value of contributions
donations received by the foundation in its most recent fiscal year
ended during the 12-month period ending on June 30 of the prior calendar
year for which tax credits were issued by the Superintendent of Public
Instruction, (ii) the dates when such contributions donations
were received, and (iii) the total number and dollar amount of qualified
educational expenses scholarships awarded from tax-credit-derived donations
and disbursed by the scholarship foundation during its most recent
fiscal year ended the 24-month period ending on June 30 of the current
calendar year. Any scholarship foundation that fails to provide this report
by September 30 shall, for the first offense, be required to pay a $1,000 civil
penalty. Such civil penalty shall be remitted by the scholarship foundation to
the Department of Education by November 1 of the same year and deposited to the
general fund. For a second offense within a five-year period, the scholarship
foundation shall be removed from the annual list published pursuant to this
section and shall not be entitled to request preauthorization for additional
tax credits, nor shall it be entitled to receive and administer additional
tax-credit-derived funds. After two years, the scholarship foundation shall be
eligible to reapply to be included on the annual list to receive and administer
tax-credit derived funds. If a scholarship foundation is authorized to be added
to the annual list after such reapplication, the scholarship foundation shall
not be considered to have any previous offenses for purposes of this
subsection.
C. In awarding scholarships from tax-credit-derived funds, the scholarship foundation shall (i) provide scholarships for qualified educational expenses only to students whose family's annual household income is not in excess of 300 percent of the current poverty guidelines or eligible students with a disability, (ii) not limit scholarships to students of one school, and (iii) comply with Title VI of the Civil Rights Act of 1964, as amended. Payment of scholarships from tax-credit-derived funds by the eligible scholarship foundation shall be by individual warrant or check made payable to and mailed to the eligible school that the student's parent or legal guardian indicates. In mailing such scholarship payments, the eligible scholarship foundation shall include a written notice to the eligible school that the source of the scholarship was donations made by persons receiving tax credits for the same pursuant to this article.
D. Scholarship foundations shall ensure that schools selected by students to which tax-credit-derived funds may be paid (i) are in compliance with the Commonwealth's and locality's health and safety laws and codes; (ii) hold a valid occupancy permit as required by the locality; (iii) comply with Title VI of the Civil Rights Act of 1964, as amended; and (iv) are nonpublic schools that comply with nonpublic school accreditation requirements as set forth in § 22.1-19 and administered by the Virginia Council for Private Education or nonpublic schools that maintain an assessment system that annually measures scholarship students' progress in reading and math using a national norm-referenced achievement test, including but not limited to the Stanford Achievement Test, California Achievement Test, and Iowa Test of Basic Skills.
Eligible schools shall compile the results of any national norm-referenced achievement test for each of its students receiving tax-credit-derived scholarships and shall provide the respective parents or legal guardians of such students with a copy of the results on an annual basis, beginning with the first year of testing of the student. Such schools also shall annually provide to the Department of Education for each such student the achievement test results, beginning with the first year of testing of the student, and student information that would allow the Department to aggregate the achievement test results by grade level, gender, family income level, number of years of participation in the scholarship program, and race. Beginning with the third year of testing of each such student and test-related data collection, the Department of Education shall ensure that the achievement test results and associated learning gains are published on the Department of Education's website in accordance with such classifications and in an aggregate form as to prevent the identification of any student. Eligible schools shall annually provide to the Superintendent of Public Instruction graduation rates of its students participating in the scholarship program in a manner consistent with nationally recognized standards. In publishing and disseminating achievement test results and other information, the Superintendent of Public Instruction and the Department of Education shall ensure compliance with all student privacy laws.
E. The aggregate amount of scholarships provided to each student for any single school year by all eligible scholarship foundations from eligible donations shall not exceed the lesser of (i) the actual qualified educational expenses of the student or (ii) 100 percent of the per-pupil amount distributed to the local school division (in which the student resides) as the state's share of the standards of quality costs using the composite index of ability to pay as defined in the general appropriation act.
F. Scholarship foundations shall develop procedures for disbursing scholarships in quarterly or semester payments throughout the school year to ensure scholarships are portable.
G. Scholarship foundations that receive donations of
marketable securities for which tax credits were issued under this article
shall be required to sell such securities and convert the donation into cash
immediately, but in no case more than 14 21 days after receipt of
the donation.
H. Each scholarship foundation with total revenues (including
the value of all donations) (i) in excess of $100,000 for the foundation's most
recent fiscal year ended shall have an audit or review performed by an
independent certified public accountant of the foundation's donations received
in such year for which tax credits were issued under this article, or
(ii) of $100,000 or less for the foundation's most recent fiscal year
ended shall have a compilation performed by an independent certified public
accountant of the foundation's donations received in such year for which tax
credits were issued under this article. A summary report of the audit, review,
or compilation shall be made available to the public and the Department of
Education upon request. As an appendix to the report, the scholarship
foundation's board of directors shall certify (a) the total number and value of
donations per locality received during the foundation's most recent year ended;
(b) the total number and dollar amount of qualified educational expenses
scholarships disbursed during the foundation's most recent year ended to every
(1) student whose family's annual household income was not in excess of 300
percent of the current poverty guidelines or (2) eligible student with a
disability; and (c) the percentage of first-time recipients to whom qualified
educational expenses scholarships were disbursed in the foundation's most
recent year ended.
I. The Department of Education shall publish annually on its website a list of each scholarship foundation qualified under this article. Once a foundation has been qualified by the Department of Education, it shall remain qualified until the Department removes the foundation from its annual list. The Department of Education shall remove a foundation from the annual list if it no longer meets the requirements of this article. The Department of Education may periodically require a qualified foundation to submit updated or additional information for purposes of determining whether or not the foundation continues to meet the requirements of this article.
J. Actions of the Superintendent of Public Instruction or the Department of Education relating to the awarding of tax credits under this article and the qualification of scholarship foundations shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.). Decisions of the Superintendent of Public Instruction or the Department of Education shall be final and not subject to review or appeal.
HOUSE BILL NO. 1017
Be it enacted by the General Assembly of Virginia:
1. That §§ 58.1-439.26 and 58.1-439.28 of the Code of Virginia are amended and reenacted as follows:
§ 58.1-439.26. Tax credit for donations to certain scholarship foundations.
A. Notwithstanding the provisions of § 30-19.1:11, for taxable years beginning on or after January 1, 2013, but before January 1, 2028, a person shall be eligible to earn a credit against any tax due under Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 65 percent of the value of the monetary or marketable securities donation made by the person to a scholarship foundation included on the list published annually by the Department of Education in accordance with the provisions of § 58.1-439.28.
No tax credit shall be allowed under this article if the value of the monetary or marketable securities donation made by an individual is less than $500. In addition, tax credits shall be issued only for the first $125,000 in value of donations made by the individual during the taxable year. The maximum aggregate donations of $125,000 for the taxable year for which tax credits may be issued and the minimum required donation of $500 shall apply on an individual basis. Such limitation on the maximum amount of tax credits issued to an individual shall not apply to credits issued to any business entity, including a sole proprietorship.
B. Tax credits shall be issued to persons making monetary or marketable securities donations to scholarship foundations by the Department of Education on a first-come, first-served basis in accordance with procedures established by the Department of Education under the following conditions:
1. The total amount of tax credits that may be issued each fiscal year under this article shall not exceed $25 million.
2. The amount of the credit shall not exceed the person's tax liability pursuant to Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26, as applicable, for the taxable year for which the credit is claimed. Any credit not usable for the taxable year for which first allowed may be carried over for credit against the taxes imposed upon the person pursuant to Article 2 (§ 58.1-320 et seq.) or Article 10 (§ 58.1-400 et seq.), Chapter 12 (§ 58.1-1200 et seq.), Chapter 25 (§ 58.1-2500 et seq.), or Article 2 (§ 58.1-2620 et seq.) of Chapter 26, as applicable, in the next five succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner.
The amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
C. In a form approved by the Department of Education, the
person seeking to make a monetary or marketable securities donation to a
scholarship foundation or a scholarship foundation on behalf of such person
shall request preauthorization for a specified tax credit amount from the
Superintendent of Public Instruction. The Department of Education's
preauthorization notice shall accompany the monetary or marketable securities
donation from the person to the scholarship foundation, which shall, within 20 40
days, return the notice to the Department of Education certifying the value and
type of donation and date received. Upon receipt and approval by the Department
of Education of the preauthorization notice with required supporting
documentation and certification of the value and type of the donation by the
scholarship foundation, the Superintendent of Public Instruction shall as soon
as practicable, and in no case longer than 30 days, issue a tax credit
certificate to the person eligible for the tax credit. The person shall attach
the tax credit certificate to the applicable tax return filed with the
Department of Taxation or the State Corporation Commission, as applicable. The
Department of Education shall provide a copy of the tax credit certificate to
the scholarship foundation.
Preauthorization notices not acted upon by a donor within 180 days of issuance shall be void. No tax credit shall be approved by the Department of Education for activities that are a part of a person's normal course of business.
§ 58.1-439.28. Guidelines for scholarship foundations.
A. As a condition for qualification by the Department of
Education, a scholarship foundation, as defined in § 58.1-439.25 and included
on the list published annually by the Department of Education pursuant to this
section, shall disburse an amount at least equal to 90 percent of the value of
the donations it receives (for which tax credits were issued under this
article) during each 12-month period ending on June 30 by the immediately
following June 30 for qualified educational expenses through scholarships to
eligible students. Tax-credit-derived funds not used for such scholarships may
only be used for the administrative expenses of the scholarship foundation. Any
scholarship foundation that fails to disburse at least 90 percent
of any donated amount within the appropriate one-year period meet such disbursal requirement
shall, for the first offense, be required to pay a civil penalty equal to 200
percent of the difference between 90 percent of the donated
amount value of the tax-credit-derived
donations it received in the applicable
12-month period and the amount that was actually disbursed.
Such civil penalty shall be remitted by the scholarship foundation to the
Department of Education within 30 days after the end of the one-year period and
deposited to the general fund. For a second offense within a five-year period,
the scholarship foundation shall be removed from the annual list published
pursuant to this section and shall not be entitled to request preauthorization
for additional tax credits, nor shall it be entitled to receive and administer
additional tax-credit-derived funds for two years. After two years, the
scholarship foundation shall be eligible to reapply to be included on the
annual list to receive and administer tax-credit derived funds. If a
scholarship foundation is authorized to be added to the annual list after such
reapplication, the scholarship foundation shall not be considered to have any
previous offenses for purposes of this subsection. The required disbursement
under this section shall begin with donations received for the period January
1, 2013, through June 30, 2014.
B. By September 30 of each year beginning in 2014 2016,
the scholarship foundation shall provide the following information to the
Department of Education: (i) the total number and value of contributions donations received by the
foundation in its most recent fiscal year ended during the 12-month period ending on June 30 of
the prior calendar year for which tax credits were issued
by the Superintendent of Public Instruction, (ii) the dates when such contributions donations were received, and (iii) the total number and dollar amount of
qualified educational expenses scholarships awarded from
tax-credit-derived donations and disbursed by the scholarship foundation during its most recent fiscal year
ended the 24-month period ending on
June 30 of the current calendar year.
Any scholarship foundation that fails to provide this report by September 30
shall, for the first offense, be required to pay a $1,000 civil penalty. Such
civil penalty shall be remitted by the scholarship foundation to the Department
of Education by November 1 of the same year and deposited to the general fund.
For a second offense within a five-year period, the scholarship foundation
shall be removed from the annual list published pursuant to this section and
shall not be entitled to request preauthorization for additional tax credits,
nor shall it be entitled to receive and administer additional
tax-credit-derived funds. After two years, the scholarship foundation shall be
eligible to reapply to be included on the annual list to receive and administer
tax-credit derived funds. If a scholarship foundation is authorized to be added
to the annual list after such reapplication, the scholarship foundation shall
not be considered to have any previous offenses for purposes of this
subsection.
C. In awarding scholarships from tax-credit-derived funds, the scholarship foundation shall (i) provide scholarships for qualified educational expenses only to students whose family's annual household income is not in excess of 300 percent of the current poverty guidelines or eligible students with a disability, (ii) not limit scholarships to students of one school, and (iii) comply with Title VI of the Civil Rights Act of 1964, as amended. Payment of scholarships from tax-credit-derived funds by the eligible scholarship foundation shall be by individual warrant or check made payable to and mailed to the eligible school that the student's parent or legal guardian indicates. In mailing such scholarship payments, the eligible scholarship foundation shall include a written notice to the eligible school that the source of the scholarship was donations made by persons receiving tax credits for the same pursuant to this article.
D. Scholarship foundations shall ensure that schools selected by students to which tax-credit-derived funds may be paid (i) are in compliance with the Commonwealth's and locality's health and safety laws and codes; (ii) hold a valid occupancy permit as required by the locality; (iii) comply with Title VI of the Civil Rights Act of 1964, as amended; and (iv) are nonpublic schools that comply with nonpublic school accreditation requirements as set forth in § 22.1-19 and administered by the Virginia Council for Private Education or nonpublic schools that maintain an assessment system that annually measures scholarship students' progress in reading and math using a national norm-referenced achievement test, including but not limited to the Stanford Achievement Test, California Achievement Test, and Iowa Test of Basic Skills.
Eligible schools shall compile the results of any national norm-referenced achievement test for each of its students receiving tax-credit-derived scholarships and shall provide the respective parents or legal guardians of such students with a copy of the results on an annual basis, beginning with the first year of testing of the student. Such schools also shall annually provide to the Department of Education for each such student the achievement test results, beginning with the first year of testing of the student, and student information that would allow the Department to aggregate the achievement test results by grade level, gender, family income level, number of years of participation in the scholarship program, and race. Beginning with the third year of testing of each such student and test-related data collection, the Department of Education shall ensure that the achievement test results and associated learning gains are published on the Department of Education's website in accordance with such classifications and in an aggregate form as to prevent the identification of any student. Eligible schools shall annually provide to the Superintendent of Public Instruction graduation rates of its students participating in the scholarship program in a manner consistent with nationally recognized standards. In publishing and disseminating achievement test results and other information, the Superintendent of Public Instruction and the Department of Education shall ensure compliance with all student privacy laws.
E. The aggregate amount of scholarships provided to each student for any single school year by all eligible scholarship foundations from eligible donations shall not exceed the lesser of (i) the actual qualified educational expenses of the student or (ii) 100 percent of the per-pupil amount distributed to the local school division (in which the student resides) as the state's share of the standards of quality costs using the composite index of ability to pay as defined in the general appropriation act.
F. Scholarship foundations shall develop procedures for disbursing scholarships in quarterly or semester payments throughout the school year to ensure scholarships are portable.
G. Scholarship foundations that receive donations of
marketable securities for which tax credits were issued under this article
shall be required to sell such securities and convert the donation into cash
immediately, but in no case more than 14 21 days after receipt of the
donation.
H. Each scholarship foundation with total revenues (including
the value of all donations) (i) in excess of $100,000 for the foundation's most
recent fiscal year ended shall have
an audit or review performed by an independent certified public accountant of
the foundation's donations received in such year for which tax credits were
issued under this article, or
(ii) of $100,000 or less for the foundation's most recent fiscal
year ended shall have a compilation performed by an independent certified
public accountant of the foundation's donations received in such year for which
tax credits were issued under this article. A summary report of the audit,
review, or compilation shall be made available to the public and the Department
of Education upon request. As an appendix to the report,
the scholarship foundation's board of directors shall certify (a) the total
number and value of donations per locality received during the foundation's
most recent year ended; (b) the total number and dollar amount of qualified educational
expenses scholarships disbursed during the foundation's most recent year ended
to every (1) student whose family's annual household income was not in excess
of 300 percent of the current poverty guidelines or (2) eligible student with a
disability; and (c) the percentage of first-time recipients to whom qualified
educational expenses scholarships were disbursed in the foundation's most
recent year ended.
I. The Department of Education shall publish annually on its website a list of each scholarship foundation qualified under this article. Once a foundation has been qualified by the Department of Education, it shall remain qualified until the Department removes the foundation from its annual list. The Department of Education shall remove a foundation from the annual list if it no longer meets the requirements of this article. The Department of Education may periodically require a qualified foundation to submit updated or additional information for purposes of determining whether or not the foundation continues to meet the requirements of this article.
J. Actions of the Superintendent of Public Instruction or the Department of Education relating to the awarding of tax credits under this article and the qualification of scholarship foundations shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.). Decisions of the Superintendent of Public Instruction or the Department of Education shall be final and not subject to review or appeal.