82R8400 JE-D
 
  By: Madden H.B. No. 2353
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a franchise or insurance premium tax credit for
  contributions made to certain educational assistance
  organizations.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 171, Tax Code, is amended by adding
  Subchapter K to read as follows:
  SUBCHAPTER K. TAX CREDIT FOR CONTRIBUTIONS TO CERTAIN EDUCATIONAL
  ASSISTANCE ORGANIZATIONS
         Sec. 171.601.  DEFINITION.  In this subchapter, "educational
  assistance organization" means an organization that:
               (1)  according to the organization's charter, has the
  primary purpose of awarding scholarships to or paying educational
  expenses for eligible students in:
                     (A)  public elementary or secondary schools
  located in this state; or
                     (B)  nonpublic elementary or secondary schools
  located in this state:
                           (i)  that meet the requirements of Section
  171.603;
                           (ii)  at which a student may fulfill this
  state's compulsory attendance requirements; and
                           (iii)  that are not in violation of the
  federal Civil Rights Act of 1964 (42 U.S.C. Section 2000a et seq.);
  and
               (2)  uses its annual revenue for the purpose provided
  by Subdivision (1).
         Sec. 171.602.  ELIGIBILITY REQUIREMENTS FOR CERTIFICATION
  OF EDUCATIONAL ASSISTANCE ORGANIZATION. An organization may apply
  to the comptroller for certification as a certified educational
  assistance organization.  To qualify for certification, the
  organization:
               (1)  must:
                     (A)  be exempt from federal tax under Section
  501(a) of the Internal Revenue Code by being listed as an exempt
  organization in Section 501(c)(3) of that code;
                     (B)  be in good standing with the state;
                     (C)  be located in the state;
                     (D)  allocate at least 90 percent of its annual
  revenue from contributions that are designated for scholarships or
  educational expense assistance for eligible students under this
  subchapter for student scholarships and assistance for educational
  expenses, including tuition, transportation, textbooks, and other
  supplies, and for other related educational expense assistance as
  described by this section;
                     (E)  award scholarships and assistance for
  qualifying educational expenses to eligible students who
  demonstrate the greatest financial and academic need;
                     (F)  give the taxable entity a receipt for money
  contributed to the organization that includes the name of the
  organization, the name of the taxable entity, the amount of the
  contribution, and any other information required by the
  comptroller;
                     (G)  demonstrate, within the previous five-year
  period, the experience and expertise of awarding scholarships to
  students in primary and secondary schools;
                     (H)  agree to be independently audited on an
  annual basis and file the audit with the comptroller; and
                     (I)  disburse contributions received within two
  academic years of receipt; and
               (2)  may not:
                     (A)  allocate each academic year more than 25
  percent of its scholarship or educational expense assistance funds
  to students who are not counted toward a public school's average
  daily attendance during the year in which the student receives the
  scholarship or educational expense assistance;
                     (B)  award all scholarships under this subchapter
  to students who attend a particular school or pay educational
  expenses incurred only at a particular school;
                     (C)  provide to a student a scholarship in an
  annual amount that exceeds the amounts provided under Section
  171.607(a); and
                     (D)  provide to a student educational expense
  assistance in excess of the amount provided under Section
  171.607(b) per academic year, including assistance for:
                           (i)  facility fees;
                           (ii)  textbooks;
                           (iii)  school supplies;
                           (iv)  tutoring;
                           (v)  academic after-school programs;
                           (vi)  school or lab fees;
                           (vii)  before-school or after-school child
  care; and
                           (viii)  transportation expenses, including
  the cost to transfer from one public school to another.
         Sec. 171.603.  NONPUBLIC SCHOOL REQUIREMENTS. A certified
  educational assistance organization may not award scholarships to
  or pay educational expenses for eligible students enrolled in
  nonpublic schools unless the nonpublic school executes a notarized
  affidavit, with supporting documentation, concerning the school's
  qualification for scholarships and educational expense assistance
  for eligible students who receive assistance from a certified
  educational assistance organization, including evidence of:
               (1)  accreditation or of actively being in the process
  of accreditation by the Texas Education Agency or by a recognized
  accrediting agency;
               (2)  annual administration of a nationally
  norm-referenced assessment instrument or the appropriate
  assessment instrument required under Section 39.023, Education
  Code;
               (3)  valid certificate of occupancy; and
               (4)  policy statements regarding:
                     (A)  admissions;
                     (B)  curriculum;
                     (C)  safety;
                     (D)  food service inspection; and
                     (E)  student to teacher ratios.
         Sec. 171.604.  ELIGIBILITY.  A taxable entity is eligible
  for a credit against the tax imposed under this chapter in the
  amount and under the conditions and limitations provided by this
  subchapter.
         Sec. 171.605.  ELIGIBILITY OF STUDENTS. To qualify for
  assistance from a certified educational assistance organization
  under this subchapter:
               (1)  a student:
                     (A)  must:
                           (i)  be in foster care;
                           (ii)  be in institutional care; or
                           (iii)  reside in a county with a population
  of 750,000 or more and have a household income not greater than 200
  percent of the income guidelines necessary to qualify for the
  national free or reduced-price lunch program established under 42
  U.S.C. Section 1751 et seq.; and
                     (B)  must:
                           (i)  have been enrolled in a public school
  during the preceding school year;
                           (ii)  be starting school in the state for the
  first time;
                           (iii)  be the sibling of a student who is
  eligible; or
                           (iv)  qualify as a student who is not counted
  toward a public school's average daily attendance during the year
  in which the student receives the scholarship or educational
  expense assistance; or
               (2)  a student must have previously qualified under
  Subdivision (1).
         Sec. 171.606.  CREDIT FOR CONTRIBUTIONS.  (a) A taxable
  entity may claim a credit under this subchapter only for money
  contributed to a certified educational assistance organization and
  designated for scholarships or educational expense assistance for
  eligible students.
         (b)  A taxable entity may not claim a credit under this
  subchapter for a contribution made to a certified educational
  assistance organization if:
               (1)  the taxable entity requires that the contribution
  benefit a particular person or school; or
               (2)  the contribution is designated to provide a
  scholarship or educational expense assistance for a taxable entity
  employee or for a spouse or dependent of a taxable entity employee.
         Sec. 171.607.  LIMIT ON AMOUNT OF SCHOLARSHIP OR EDUCATIONAL
  EXPENSE ASSISTANCE. (a) The maximum scholarship amount a
  certified educational assistance organization may award under this
  subchapter may not exceed:
               (1)  $5,500 for a student in kindergarten through grade
  8 for the 2012 state fiscal year, increased by 3.5 percent each
  subsequent year; and
               (2)  $7,500 for a student in grades 9 through 12 for the
  2012 state fiscal year, increased by 3.5 percent each subsequent
  year.
         (b)  The maximum educational expense assistance a certified
  educational assistance organization may award under this
  subchapter may not exceed $500 for a student for the 2012 state
  fiscal year, increased by five percent each subsequent year.
         Sec. 171.608.  AMOUNTS; LIMITATION ON TOTAL CREDITS.  (a)
  Subject to Subsections (b) and (c), the amount of a taxable entity's
  annual credit is equal to the lesser of the amount of the qualifying
  contributions made by the taxable entity or 50 percent of the
  taxable entity's tax liability under this chapter.
         (b)  For the 2012 state fiscal year, the total amount of tax
  credits that may be claimed by all taxable entities under this
  subchapter and Chapter 230, Insurance Code, may not exceed $65
  million. For each subsequent state fiscal year, the total amount of
  tax credits that may be claimed is an amount equal to 105 percent of
  the total amount of tax credits that may be claimed in the previous
  state fiscal year.
         (c)  The comptroller by rule shall prescribe procedures by
  which the comptroller may allocate credits under this subchapter.  
  The procedures must provide that credits are allocated on a
  "first-come, first-served" basis, based on the date the
  contribution was initially made.
         (d)  The comptroller may require an entity to notify the
  comptroller of the amount the entity intends or expects to claim
  under this subchapter before the beginning of a state fiscal year or
  at any other time required by the comptroller.
         Sec. 171.609.  APPLICATION FOR CREDIT.  (a)  A taxable entity
  must apply for a credit under this subchapter on or with the tax
  report for the period for which the credit is claimed.
         (b)  The comptroller shall adopt a form for the application
  for the credit. A taxable entity must use this form in applying for
  the credit.
         Sec. 171.610.  RULES; PROCEDURES. (a) The comptroller
  shall adopt rules and procedures to implement, administer, and
  enforce this subchapter.
         (b)  A rule adopted under Subsection (a) is binding on any
  state or local governmental entity, including a political
  subdivision, as necessary to implement, administer, and enforce
  this subchapter.
         Sec. 171.611.  ASSIGNMENT PROHIBITED; EXCEPTION. A taxable
  entity may not convey, assign, or transfer the credit allowed under
  this subchapter to another taxable entity unless all assets of the
  taxable entity are conveyed, assigned, or transferred in the same
  transaction.
         Sec. 171.612.  REVOCATION.  (a)  The comptroller shall
  revoke a certification provided under Section 171.602 if the
  comptroller finds that a certified educational assistance
  organization:
               (1)  is no longer eligible under Section 171.602; or
               (2)  intentionally and substantially violates this
  subchapter.
         (b)  Revocation of a certification under this section does
  not affect the validity of a tax credit relating to a contribution
  made before the date of revocation.
         SECTION 2.  Subtitle B, Title 3, Insurance Code, is amended
  by adding Chapter 230 to read as follows:
  CHAPTER 230.  CREDIT AGAINST PREMIUM TAXES
  FOR CERTAIN CONTRIBUTIONS
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 230.001.  DEFINITIONS.  In this chapter:
               (1)  "Educational assistance organization" has the
  meaning assigned by Section 171.601, Tax Code.
               (2)  "State premium tax liability" means any liability
  incurred by an entity under Chapters 221 through 226.
  [Sections 230.002-230.050 reserved for expansion]
  SUBCHAPTER B.  CREDIT
         Sec. 230.051.  CREDIT.  (a)  An entity is eligible for a
  credit against the entity's state premium tax liability in the
  amount and under the conditions and limitations provided by this
  chapter.
         (b)  The amount of the credit is equal to the lesser of the
  amount of contributions made to a certified educational assistance
  organization or 50 percent of the entity's state premium tax
  liability if the contributions and the organizations that received
  the contributions meet the requirements prescribed by Subchapter K,
  Chapter 171, Tax Code.
         Sec. 230.052.  LIMITATION.  (a)  Subject to Subsection (c),
  the total credit claimed under this chapter for a taxable year may
  not exceed the lesser of the amount determined under Subsection (b)
  or 50 percent of the amount of the entity's state premium tax
  liability for the taxable year after any other applicable credits.
         (b)  For the 2012 state fiscal year, the total amount of tax
  credits that may be claimed under this chapter and Subchapter K,
  Chapter 171, Tax Code, may not exceed $65 million. For each
  subsequent state fiscal year, the total amount of tax credits that
  may be claimed is an amount equal to 105 percent of the total amount
  of tax credits that may be claimed in the previous state fiscal
  year.
         (c)  The comptroller by rule shall prescribe procedures by
  which the comptroller may allocate credits under this chapter. The
  procedures must provide that credits are allocated on a
  "first-come, first-served" basis, based on the date the
  contribution was initially made.
         (d)  The comptroller may require an entity to notify the
  comptroller of the amount the entity intends or expects to claim
  under this chapter before the beginning of a state fiscal year or at
  any other time required by the comptroller.
         Sec. 230.053.  APPLICATION FOR CREDIT.  (a)  An entity must
  apply for a credit under this chapter on or with the tax return for
  the taxable year for which the credit is claimed.
         (b)  The comptroller shall adopt a form for the application
  for the credit. An entity must use this form in applying for the
  credit.
         Sec. 230.054.  RULES; PROCEDURES. (a) The comptroller
  shall adopt rules and procedures to implement, administer, and
  enforce this chapter.
         (b)  A rule adopted under Subsection (a) is binding on any
  state or local governmental entity, including a political
  subdivision, as necessary to implement, administer, and enforce
  this chapter.
         Sec. 230.055.  ASSIGNMENT PROHIBITED; EXCEPTION. An entity
  may not convey, assign, or transfer the credit allowed under this
  chapter to another entity unless all of the assets of the entity are
  conveyed, assigned, or transferred in the same transaction.
         SECTION 3.  (a)  The constitutionality and other validity
  under the state or federal constitution of all or any part of
  Subchapter K, Chapter 171, Tax Code, or Chapter 230, Insurance
  Code, as added by this Act, may be determined in an action for
  declaratory judgment in a district court in Travis County under
  Chapter 37, Civil Practice and Remedies Code.
         (b)  An appeal of a declaratory judgment or order, however
  characterized, of a district court, including an appeal of the
  judgment of an appellate court, holding or otherwise determining
  that all or any part of Subchapter K, Chapter 171, Tax Code, or
  Chapter 230, Insurance Code, as added by this Act, is
  constitutional or unconstitutional, or otherwise valid or invalid,
  under the state or federal constitution is an accelerated appeal.
         (c)  If the judgment or order is interlocutory, an
  interlocutory appeal may be taken from the judgment or order and is
  an accelerated appeal.
         (d)  A district court in Travis County may grant or deny a
  temporary or otherwise interlocutory injunction or a permanent
  injunction on the grounds of the constitutionality or
  unconstitutionality, or other validity or invalidity, under the
  state or federal constitution of all or any part of Subchapter K,
  Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by
  this Act.
         (e)  There is a direct appeal to the supreme court from an
  order, however characterized, of a trial court granting or denying
  a temporary or otherwise interlocutory injunction or a permanent
  injunction on the grounds of the constitutionality or
  unconstitutionality, or other validity or invalidity, under the
  state or federal constitution of all or any part of Subchapter K,
  Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by
  this Act.
         (f)  The direct appeal is an accelerated appeal.
         (g)  This section exercises the authority granted by Section
  3-b, Article V, Texas Constitution.
         (h)  The filing of a direct appeal under this section will
  automatically stay any temporary or otherwise interlocutory
  injunction or permanent injunction granted in accordance with this
  section pending final determination by the supreme court, unless
  the supreme court makes specific findings that the applicant
  seeking such injunctive relief has pleaded and proved that:
               (1)  the applicant has a probable right to the relief it
  seeks on final hearing; and
               (2)  the applicant will suffer a probable injury that
  is imminent and irreparable, and that the applicant has no other
  adequate legal remedy.
         (i)  An appeal under this section, including an
  interlocutory, accelerated, or direct appeal, is governed, as
  applicable, by the Texas Rules of Appellate Procedure, including
  Rules 25.1(d)(6), 26.1(b), 28.1, 28.3, 32.1(g), 37.3(a)(1),
  38.6(a) and (b), 40.1(b), and 49.4.
         SECTION 4.  A credit may be claimed under Subchapter K,
  Chapter 171, Tax Code, or Chapter 230, Insurance Code, as added by
  this Act, only for an expenditure made on or after the effective
  date of this Act.
         SECTION 5.  This Act takes effect January 1, 2012.