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A BILL TO BE ENTITLED
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AN ACT
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relating to a franchise or insurance premium tax credit for |
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contributions made to certain educational assistance |
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organizations. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 171, Tax Code, is amended by adding |
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Subchapter K to read as follows: |
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SUBCHAPTER K. TAX CREDIT FOR CONTRIBUTIONS TO CERTAIN EDUCATIONAL |
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ASSISTANCE ORGANIZATIONS |
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Sec. 171.551. DEFINITION. In this subchapter, "educational |
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assistance organization" means an organization that: |
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(1) according to the organization's charter, has the |
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primary purpose of awarding scholarships to or paying educational |
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expenses for eligible students in: |
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(A) public elementary or secondary schools |
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located in this state; or |
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(B) nonpublic elementary or secondary schools |
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located in this state: |
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(i) that meet the requirements of Section |
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171.553; |
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(ii) at which a student may fulfill this |
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state's compulsory attendance requirements; and |
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(iii) that are not in violation of the |
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federal Civil Rights Act of 1964 (42 U.S.C. Section 2000a et seq.); |
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and |
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(2) uses its annual revenue for the purpose provided |
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by Subdivision (1). |
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Sec. 171.552. ELIGIBILITY REQUIREMENTS FOR CERTIFICATION |
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OF EDUCATIONAL ASSISTANCE ORGANIZATION. An organization may apply |
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to the comptroller for certification as a certified educational |
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assistance organization. To qualify for certification, the |
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organization: |
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(1) must: |
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(A) be exempt from federal tax under Section |
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501(a) of the Internal Revenue Code by being listed as an exempt |
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organization in Section 501(c)(3) of that code; |
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(B) be in good standing with the state; |
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(C) be located in the state; |
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(D) allocate at least 90 percent of its annual |
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revenue from contributions that are designated for scholarships or |
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educational expense assistance for eligible students under this |
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subchapter for student scholarships and assistance for educational |
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expenses, including tuition, transportation, textbooks, and other |
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supplies, and for other related educational expense assistance as |
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described by this section; |
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(E) award scholarships and assistance for |
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qualifying educational expenses to eligible students who |
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demonstrate the greatest financial and academic need; |
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(F) give each donor a receipt for money |
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contributed to the organization that includes the name of the |
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organization, the name of the donor, the amount of the |
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contribution, the information required by Section 171.556(c), and |
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any other information required by the comptroller; |
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(G) demonstrate experience and technical |
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expertise in: |
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(i) accepting, processing, and tracking |
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applications for scholarships or educational expense assistance; |
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and |
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(ii) awarding scholarships to students in |
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primary or secondary schools; |
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(H) agree to be independently audited on an |
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annual basis and file the audit with the comptroller; and |
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(I) disburse within two academic years of receipt |
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contributions received from and designated by taxable entities for |
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scholarships or educational expense assistance under this |
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subchapter; and |
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(2) may not: |
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(A) award all scholarships under this subchapter |
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to students who attend a particular school or pay educational |
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expenses incurred only at a particular school; |
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(B) provide to a student a scholarship in an |
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annual amount that exceeds the amounts provided under Section |
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171.557(a) unless the money used to provide the portion of the |
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scholarship in excess of that amount was contributed by a person |
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other than an entity that notifies the organization under Section |
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171.556(c) that the entity may apply for a tax credit for the |
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contribution; and |
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(C) provide to a student educational expense |
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assistance in excess of the amount provided under Section |
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171.557(b) per academic year, including assistance for: |
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(i) facility fees; |
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(ii) textbooks; |
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(iii) school supplies; |
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(iv) tutoring; |
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(v) academic after-school programs; |
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(vi) school or lab fees; |
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(vii) before-school or after-school child |
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care; and |
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(viii) transportation expenses, including |
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the cost to transfer from one public school to another. |
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Sec. 171.553. NONPUBLIC SCHOOL REQUIREMENTS. A certified |
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educational assistance organization may not award scholarships to |
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or pay educational expenses for eligible students enrolled in |
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nonpublic schools unless the nonpublic school executes a notarized |
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affidavit, with supporting documentation, concerning the school's |
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qualification for scholarships and educational expense assistance |
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for eligible students who receive assistance from a certified |
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educational assistance organization, including evidence of: |
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(1) accreditation or of actively being in the process |
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of accreditation by the Texas Education Agency or by an |
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organization recognized by the Texas Private School Accreditation |
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Commission; |
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(2) annual administration of a nationally |
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norm-referenced assessment instrument or the appropriate |
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assessment instrument required under Section 39.023, Education |
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Code; |
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(3) a valid certificate of occupancy; and |
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(4) policy statements regarding: |
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(A) admissions; |
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(B) curriculum; |
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(C) safety; |
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(D) food service inspection; and |
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(E) student to teacher ratios. |
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Sec. 171.554. ELIGIBILITY. A taxable entity is eligible |
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for a credit against the tax imposed under this chapter in the |
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amount and under the conditions and limitations provided by this |
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subchapter. |
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Sec. 171.555. ELIGIBILITY OF STUDENTS; INCLUSION IN |
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CALCULATION OF EQUALIZED WEALTH LEVEL. (a) To qualify for |
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assistance from a certified educational assistance organization |
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under this subchapter: |
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(1) a student: |
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(A) must: |
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(i) be in foster care; |
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(ii) be in institutional care; or |
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(iii) have a household income not greater |
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than 200 percent of the income guidelines necessary to qualify for |
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the national free or reduced-price lunch program established under |
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42 U.S.C. Section 1751 et seq.; and |
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(B) must: |
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(i) have been enrolled in a public school |
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during the preceding school year; |
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(ii) be starting school in the state for the |
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first time; |
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(iii) be the sibling of a student who is |
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eligible; or |
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(iv) if the person attends a nonpublic |
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school, qualify as a student who is not counted toward a public |
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school's average daily attendance during the year in which the |
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student receives the scholarship or educational expense assistance |
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to attend the school, except as provided by Subsection (b); or |
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(2) a student must have previously qualified under |
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Subdivision (1). |
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(b) A student who receives a scholarship under this |
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subchapter is included in the weighted average daily attendance of |
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the school district the student would otherwise attend for purposes |
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of determining the district's equalized wealth level under Chapter |
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41, Education Code. |
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Sec. 171.556. CREDIT FOR CONTRIBUTIONS. (a) A taxable |
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entity may claim a credit under this subchapter only for money |
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contributed to a certified educational assistance organization and |
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designated for scholarships or educational expense assistance for |
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eligible students. |
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(b) A taxable entity may not claim a credit under this |
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subchapter for a contribution made to a certified educational |
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assistance organization if: |
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(1) the taxable entity requires that the contribution |
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benefit a particular person or school; or |
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(2) the contribution is designated to provide a |
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scholarship or educational expense assistance for a taxable entity |
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employee or for a spouse or dependent of a taxable entity employee. |
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(c) An entity shall notify a certified educational |
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assistance organization in writing when the entity makes a |
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contribution if the entity may apply for a tax credit under this |
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subchapter or Chapter 230, Insurance Code, for the contribution. |
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An entity may not claim a credit for the contribution unless the |
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entity provides the notification at the time the contribution is |
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made. The certified educational assistance organization shall |
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indicate on the receipt provided under Section 171.552(1)(F) that |
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the entity made the notification under this subsection. |
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Sec. 171.557. LIMIT ON AMOUNT OF SCHOLARSHIP OR EDUCATIONAL |
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EXPENSE ASSISTANCE. (a) The maximum scholarship amount a |
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certified educational assistance organization may award to a |
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student under this subchapter using money contributed by an entity |
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that notifies the organization under Section 171.556(c) that the |
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entity may apply for a tax credit for the contribution may not |
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exceed 60 percent of the amount of funding equal to the statewide |
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average amount to which a school district would be entitled under |
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the Foundation School Program under Chapter 42, Education Code, for |
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a student in average daily attendance. |
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(b) The maximum educational expense assistance a certified |
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educational assistance organization may award to a student under |
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this subchapter may not exceed $500 for the 2016 state fiscal year, |
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increased by five percent each subsequent year. |
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Sec. 171.558. AMOUNTS; LIMITATION ON TOTAL CREDITS. (a) |
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Subject to Subsections (b) and (c), the amount of a taxable entity's |
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annual credit is equal to the lesser of the amount of the qualifying |
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contributions made by the taxable entity or 50 percent of the |
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taxable entity's tax liability under this chapter. |
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(b) For the 2016 state fiscal year, the total amount of tax |
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credits that may be claimed by all entities under this subchapter |
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and Chapter 230, Insurance Code, may not exceed $65 million. For |
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each subsequent state fiscal year, the total amount of tax credits |
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that may be claimed is an amount equal to 105 percent of the total |
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amount of tax credits that may be claimed in the previous state |
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fiscal year. |
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(c) The comptroller by rule shall prescribe procedures by |
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which the comptroller may allocate credits under this subchapter. |
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The procedures must provide that credits are allocated on a |
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first-come, first-served basis, based on the date the contribution |
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was initially made. |
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(d) The comptroller may require a taxable entity to notify |
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the comptroller of the amount the taxable entity intends or expects |
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to claim under this subchapter before the beginning of a state |
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fiscal year or at any other time required by the comptroller. |
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Sec. 171.559. APPLICATION FOR CREDIT. (a) A taxable entity |
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must apply for a credit under this subchapter on or with the tax |
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report for the period for which the credit is claimed. |
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(b) The comptroller shall adopt a form for the application |
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for the credit. A taxable entity must use this form in applying for |
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the credit and submit with the application the receipt issued under |
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Section 171.552(1)(F), including the information required by |
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Section 171.556(c). |
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Sec. 171.560. RULES; PROCEDURES. (a) The comptroller |
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shall adopt rules and procedures to implement, administer, and |
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enforce this subchapter. |
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(b) A rule adopted under Subsection (a) is binding on any |
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state or local governmental entity, including a political |
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subdivision, as necessary to implement, administer, and enforce |
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this subchapter. |
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Sec. 171.561. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable |
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entity may not convey, assign, or transfer the credit allowed under |
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this subchapter to another taxable entity unless all assets of the |
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taxable entity are conveyed, assigned, or transferred in the same |
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transaction. |
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Sec. 171.562. REVOCATION. (a) The comptroller shall |
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revoke a certification provided under Section 171.552 if the |
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comptroller finds that a certified educational assistance |
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organization: |
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(1) is no longer eligible under Section 171.552; or |
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(2) intentionally and substantially violates this |
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subchapter. |
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(b) Revocation of a certification under this section does |
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not affect the validity of a tax credit relating to a contribution |
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made before the date of revocation. |
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SECTION 2. Subtitle B, Title 3, Insurance Code, is amended |
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by adding Chapter 230 to read as follows: |
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CHAPTER 230. CREDIT AGAINST PREMIUM TAXES |
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FOR CERTAIN CONTRIBUTIONS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 230.001. DEFINITIONS. In this chapter: |
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(1) "Educational assistance organization" has the |
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meaning assigned by Section 171.551, Tax Code. |
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(2) "State premium tax liability" means any liability |
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incurred by an entity under Chapters 221 through 226. |
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SUBCHAPTER B. CREDIT |
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Sec. 230.051. CREDIT. (a) An entity is eligible for a |
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credit against the entity's state premium tax liability in the |
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amount and under the conditions and limitations provided by this |
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chapter. |
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(b) The amount of the credit is equal to the lesser of the |
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amount of contributions made to a certified educational assistance |
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organization or 50 percent of the entity's state premium tax |
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liability if the contributions and the organizations that received |
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the contributions meet the requirements prescribed by Subchapter K, |
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Chapter 171, Tax Code. |
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Sec. 230.052. LIMITATION. (a) Subject to Subsection (c), |
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the total credit claimed under this chapter for a taxable year may |
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not exceed the lesser of the amount determined under Subsection (b) |
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or 50 percent of the amount of the entity's state premium tax |
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liability for the taxable year after any other applicable credits. |
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(b) For the 2016 state fiscal year, the total amount of tax |
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credits that may be claimed under this chapter and Subchapter K, |
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Chapter 171, Tax Code, may not exceed $65 million. For each |
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subsequent state fiscal year, the total amount of tax credits that |
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may be claimed is an amount equal to 105 percent of the total amount |
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of tax credits that may be claimed in the previous state fiscal |
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year. |
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(c) The comptroller by rule shall prescribe procedures by |
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which the comptroller may allocate credits under this chapter. The |
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procedures must provide that credits are allocated on a first-come, |
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first-served basis, based on the date the contribution was |
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initially made. |
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(d) The comptroller may require an entity to notify the |
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comptroller of the amount the entity intends or expects to claim |
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under this chapter before the beginning of a state fiscal year or at |
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any other time required by the comptroller. |
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Sec. 230.053. APPLICATION FOR CREDIT. (a) An entity must |
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apply for a credit under this chapter on or with the tax return for |
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the taxable year for which the credit is claimed and submit with the |
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application the receipt issued under Section 171.552(1)(F), Tax |
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Code, including the information required by Section 171.556(c), Tax |
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Code. |
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(b) The comptroller shall adopt a form for the application |
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for the credit. An entity must use this form in applying for the |
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credit. |
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Sec. 230.054. RULES; PROCEDURES. (a) The comptroller |
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shall adopt rules and procedures to implement, administer, and |
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enforce this chapter. |
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(b) A rule adopted under Subsection (a) is binding on any |
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state or local governmental entity, including a political |
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subdivision, as necessary to implement, administer, and enforce |
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this chapter. |
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Sec. 230.055. ASSIGNMENT PROHIBITED; EXCEPTION. An entity |
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may not convey, assign, or transfer the credit allowed under this |
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chapter to another entity unless all of the assets of the entity are |
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conveyed, assigned, or transferred in the same transaction. |
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SECTION 3. (a) The constitutionality and other validity |
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under the state or federal constitution of all or any part of |
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Subchapter K, Chapter 171, Tax Code, or Chapter 230, Insurance |
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Code, as added by this Act, may be determined in an action for |
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declaratory judgment in a district court in Travis County under |
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Chapter 37, Civil Practice and Remedies Code. |
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(b) An appeal of a declaratory judgment or order, however |
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characterized, of a district court, including an appeal of the |
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judgment of an appellate court, holding or otherwise determining |
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that all or any part of Subchapter K, Chapter 171, Tax Code, or |
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Chapter 230, Insurance Code, as added by this Act, is |
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constitutional or unconstitutional, or otherwise valid or invalid, |
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under the state or federal constitution is an accelerated appeal. |
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(c) If the judgment or order is interlocutory, an |
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interlocutory appeal may be taken from the judgment or order and is |
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an accelerated appeal. |
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(d) A district court in Travis County may grant or deny a |
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temporary or otherwise interlocutory injunction or a permanent |
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injunction on the grounds of the constitutionality or |
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unconstitutionality, or other validity or invalidity, under the |
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state or federal constitution of all or any part of Subchapter K, |
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Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by |
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this Act. |
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(e) There is a direct appeal to the supreme court from an |
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order, however characterized, of a trial court granting or denying |
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a temporary or otherwise interlocutory injunction or a permanent |
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injunction on the grounds of the constitutionality or |
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unconstitutionality, or other validity or invalidity, under the |
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state or federal constitution of all or any part of Subchapter K, |
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Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by |
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this Act. |
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(f) The direct appeal is an accelerated appeal. |
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(g) This section exercises the authority granted by Section |
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3-b, Article V, Texas Constitution. |
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(h) The filing of a direct appeal under this section will |
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automatically stay any temporary or otherwise interlocutory |
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injunction or permanent injunction granted in accordance with this |
|
section pending final determination by the supreme court, unless |
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the supreme court makes specific findings that the applicant |
|
seeking such injunctive relief has pleaded and proved that: |
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(1) the applicant has a probable right to the relief it |
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seeks on final hearing; and |
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(2) the applicant will suffer a probable injury that |
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is imminent and irreparable, and that the applicant has no other |
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adequate legal remedy. |
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(i) An appeal under this section, including an |
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interlocutory, accelerated, or direct appeal, is governed, as |
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applicable, by the Texas Rules of Appellate Procedure, including |
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Rules 25.1(d)(6), 26.1(b), 28.1, 28.3, 32.1(g), 37.3(a)(1), |
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38.6(a) and (b), 40.1(b), and 49.4. |
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SECTION 4. A credit may be claimed under Subchapter K, |
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Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by |
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this Act, only for a contribution made on or after the effective |
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date of this Act. |
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SECTION 5. Not later than February 15, 2016, the |
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comptroller of public accounts shall adopt rules as provided by |
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Section 171.560(a), Tax Code, and Section 230.054(a), Insurance |
|
Code, as added by this Act. |
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SECTION 6. This Act takes effect January 1, 2016. |