By Krusee H.B. No. 3645
76R3647 CBH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a franchise tax credit for certain contributions to
1-3 certain nonprofit scholarship funding organizations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 171, Tax Code, is amended by adding
1-6 Subchapter N to read as follows:
1-7 SUBCHAPTER N. TAX CREDIT FOR CERTAIN CONTRIBUTIONS TO CERTAIN
1-8 NONPROFIT SCHOLARSHIP FUNDING ORGANIZATIONS
1-9 Sec. 171.701. DEFINITIONS. In this subchapter:
1-10 (1) "Commissioner" means the commissioner of
1-11 education.
1-12 (2) "Educationally disadvantaged student" means a
1-13 student:
1-14 (A) enrolled or eligible for enrollment in the
1-15 national free or reduced-price lunch program established under 42
1-16 U.S.C. Section 1751 et seq.;
1-17 (B) assigned to attend a public school campus
1-18 identified as low-performing by the commissioner under Subchapter
1-19 D, Chapter 39, Education Code; or
1-20 (C) who is at risk of dropping out of school as
1-21 defined by Section 29.081, Education Code.
1-22 (3) "Eligible nonpublic school" means a nonpublic
1-23 primary or secondary school located in this state that receives a
1-24 determination of eligibility from the commissioner in accordance
2-1 with Section 171.705.
2-2 (4) "Nonprofit scholarship funding organization" means
2-3 a charitable organization that awards scholarships for students to
2-4 attend nonpublic schools and is exempt from federal tax under
2-5 Section 501(a) of the Internal Revenue Code by being listed as an
2-6 exempt organization in Section 501(c)(3) of the code.
2-7 Sec. 171.702. CREDIT. A corporation that meets the
2-8 eligibility requirement of this subchapter is entitled to a credit
2-9 in the amount allowed by this subchapter against the tax imposed by
2-10 this chapter.
2-11 Sec. 171.703. CREDIT FOR CERTAIN CONTRIBUTIONS TO NONPROFIT
2-12 SCHOLARSHIP FUNDING ORGANIZATION. A corporation is entitled to a
2-13 credit under this subchapter for the amount of money the
2-14 corporation contributes to a nonprofit scholarship funding
2-15 organization only if the commissioner certifies that:
2-16 (1) the nonprofit scholarship funding organization is
2-17 eligible under Section 171.704 to award scholarships for which a
2-18 corporation may claim a credit under this subchapter;
2-19 (2) all of the contribution is used to provide one or
2-20 more scholarships payable toward the nonpublic school tuition costs
2-21 of educationally disadvantaged students who:
2-22 (A) were enrolled in a public school for the
2-23 preceding school year; or
2-24 (B) are entitled to be admitted into public
2-25 school for the first time under Section 25.001(b), Education Code;
2-26 and
2-27 (3) each educationally disadvantaged student who
3-1 receives a scholarship actually enrolls in an eligible nonpublic
3-2 school.
3-3 Sec. 171.704. ELIGIBILITY REQUIREMENTS FOR NONPROFIT
3-4 SCHOLARSHIP FUNDING ORGANIZATION. (a) A nonprofit scholarship
3-5 funding organization may apply to the commissioner for
3-6 certification of eligibility to award scholarships for which a
3-7 corporation may claim a credit under this subchapter. The amount
3-8 of a scholarship may not exceed $5,000.
3-9 (b) The commissioner may certify a nonprofit scholarship
3-10 funding organization only if the organization agrees to:
3-11 (1) award scholarships to which this subchapter
3-12 applies using a random selection process without regard to a
3-13 student's race, academic achievement, or athletic ability;
3-14 (2) file with the commissioner and as required by the
3-15 commissioner reports relating to the scholarships to which this
3-16 subchapter applies that include, at a minimum, the name of each
3-17 student receiving a scholarship awarded by the organization, the
3-18 amount awarded, and the school the student is attending; and
3-19 (3) adopt accountability measures approved by the
3-20 commissioner to ensure the proper expenditure of scholarship funds.
3-21 (c) The commissioner may revoke a certification if the
3-22 commissioner finds that a nonprofit scholarship organization has
3-23 violated the agreement made under this section. Revocation of a
3-24 certification under this subsection does not affect the validity of
3-25 a tax credit relating to a scholarship awarded before the date of
3-26 revocation.
3-27 Sec. 171.705. ELIGIBILITY REQUIREMENTS FOR NONPUBLIC SCHOOL.
4-1 (a) A nonpublic school may apply to the commissioner for a
4-2 determination of eligibility to accept students whose tuition costs
4-3 are paid by scholarships for which a corporation may claim a credit
4-4 under this subchapter.
4-5 (b) The commissioner may determine that a nonpublic school
4-6 is eligible only if the school agrees to:
4-7 (1) accept or reject a student receiving a scholarship
4-8 subject to this subchapter using criteria that do not discriminate
4-9 on the basis of the student's race, academic achievement, or
4-10 athletic ability;
4-11 (2) administer or permit the public school to which
4-12 the student would otherwise be assigned to administer to the
4-13 student each assessment instrument required under Subchapter B,
4-14 Chapter 39, Education Code, or another assessment instrument
4-15 approved by the commissioner;
4-16 (3) report to the commissioner the results of the
4-17 assessment instruments; and
4-18 (4) provide information necessary for the school to
4-19 participate in the Public Education Information Management System
4-20 (PEIMS) to the extent necessary to provide relevant information
4-21 relating to the scholarship student as determined by the
4-22 commissioner.
4-23 (c) In addition to the requirements prescribed by Subsection
4-24 (b), a nonpublic school must be accredited by an accrediting
4-25 association recognized by the commissioner or receive a waiver from
4-26 accreditation from the commissioner for good cause.
4-27 (d) To ensure the security of the assessment instruments
5-1 specified by Subsection (b) and the validity of the results of
5-2 those assessment instruments, the commissioner by rule shall adopt
5-3 procedures for the administration of those assessment instruments
5-4 in eligible nonpublic schools.
5-5 (e) The commissioner may revoke a determination of
5-6 eligibility under this section if the commissioner finds that a
5-7 nonpublic school has violated this section or a rule adopted or
5-8 agreement made under this section. Revocation of a determination
5-9 of eligibility under this subsection does not affect the validity
5-10 of a tax credit relating to a scholarship awarded before the date
5-11 of revocation.
5-12 Sec. 171.706. APPLICATION FOR CREDIT. (a) A corporation
5-13 must apply for a credit under this subchapter on or with the tax
5-14 report for the period for which the credit is claimed.
5-15 (b) The comptroller shall prescribe the form and manner of
5-16 proof required to obtain the credit authorized by this subchapter.
5-17 Sec. 171.707. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. (a)
5-18 A corporation may claim a credit under this subchapter for a
5-19 contribution during an accounting period only against the tax owed
5-20 for the corresponding privilege period.
5-21 (b) A corporation may not claim a credit in an amount that
5-22 exceeds the amount of the tax due of that report. A credit allowed
5-23 under this subchapter may not be carried forward or backward.
5-24 Sec. 171.708. TRANSFER OF CREDIT. A corporation may not
5-25 convey, assign, or transfer the credit authorized by this
5-26 subchapter to another entity unless all of the assets of the
5-27 corporation are conveyed, assigned, or transferred in the same
6-1 transaction.
6-2 SECTION 2. A corporation may claim the credit under
6-3 Subchapter N, Chapter 171, Tax Code, as added by this Act, only on
6-4 a franchise tax report due under Chapter 171, Tax Code, on or after
6-5 the effective date of this Act.
6-6 SECTION 3. This Act takes effect January 1, 2000.
6-7 SECTION 4. The importance of this legislation and the
6-8 crowded condition of the calendars in both houses create an
6-9 emergency and an imperative public necessity that the
6-10 constitutional rule requiring bills to be read on three several
6-11 days in each house be suspended, and this rule is hereby suspended.