83R593 BEF-D
 
  By: Paxton S.B. No. 1015
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a franchise tax or insurance premium tax credit for
  contributions made to certain certified nonprofit 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 L to read as follows:
  SUBCHAPTER L. TAX CREDIT FOR CONTRIBUTIONS TO CERTAIN NONPROFIT
  EDUCATIONAL ASSISTANCE ORGANIZATIONS
         Sec. 171.601.  DEFINITIONS. In this subchapter:
               (1)  "Educational expenses" means expenses for student
  tuition, fees, transportation costs, textbooks, school supplies,
  and tutoring related to:
                     (A)  a course at a public school or charter school
  that is part of the required curriculum under Section 28.002,
  Education Code, or a course that is the equivalent at a qualified
  nonpublic school;
                     (B)  a high school equivalency certificate; or
                     (C)  an apprenticeship training program under
  Chapter 133, Education Code.
               (2)  "Eligible student" means a student who is a
  resident of this state and has not been issued a high school diploma
  or a high school equivalency certificate. For purposes of this
  subchapter, a student who attends a juvenile justice alternative
  education program under Section 37.011, Education Code, is not an
  eligible student.
               (3)  "Qualified nonpublic school" means a nonpublic
  primary or secondary school located in this state that is
  accredited or actively in the process of accreditation by a state,
  regional, or national organization that is recognized by the Texas
  Private School Accreditation Commission.
         Sec. 171.602.  ELIGIBILITY AND AMOUNT OF CREDIT. (a)  Except
  as otherwise provided by this subchapter, a taxable entity that
  makes a contribution of $500 or more to a certified nonprofit
  educational assistance organization may claim a credit against the
  tax imposed under this chapter in the amount and under the
  conditions and limitations provided by this subchapter.
         (b)  Subject to Section 171.607, the amount of the credit
  that may be claimed on a report is equal to the lesser of 100 percent
  of total contributions made to a certified nonprofit educational
  assistance organization during the calendar year that contains the
  end of the accounting period on which the report is based or 75
  percent of the taxable entity's tax liability under this chapter.
         (c)  If a taxable entity is eligible for a credit that
  exceeds the limitation prescribed by Subsection (b) or Section
  171.607, the taxable entity may carry the unused credit forward for
  not more than two consecutive reports.
         (d)  A taxable entity may not claim a credit under this
  subchapter for a contribution made to a certified nonprofit
  educational assistance organization if the taxable entity requires
  that the contribution benefit a particular student or school.
         Sec. 171.603.  ELIGIBILITY REQUIREMENTS FOR CERTIFICATION
  OF NONPROFIT EDUCATIONAL ASSISTANCE ORGANIZATION. (a) An
  organization may apply to the comptroller for certification as a
  certified nonprofit educational assistance organization.  To
  qualify for certification, the organization:
               (1)  must be exempt from federal tax under Section
  501(a) of the Internal Revenue Code of 1986 by being listed as an
  exempt organization in Section 501(c)(3) of that code and meeting
  all other applicable requirements for that exemption;
               (2)  must be in good standing with the state;
               (3)  must agree to allocate at least 90 percent of its
  annual revenue from contributions received from taxable entities to
  provide scholarships to eligible students for educational
  expenses;
               (4)  must agree not to award 100 percent of the
  scholarships described by Subdivision (3) to students who attend a
  particular school or to pay educational expenses incurred only at a
  particular school;
               (5)  must agree not to award or decline to award a
  scholarship described by Subdivision (3) on the basis of a
  student's race, color, ethnicity, gender, or national origin;
               (6)  must agree to deposit contributions from taxable
  entities that are allocated for scholarships described by
  Subdivision (3) in a bank account separate from any other account
  the organization may have;
               (7)  must agree not to award a scholarship described by
  Subdivision (3) in an amount that exceeds the amount prescribed by
  Section 171.606;
               (8)  must agree not to award a scholarship described by
  Subdivision (3) based solely on a student's athletic ability or
  potential; and
               (9)  must not be owned or operated by a person who has
  during the previous seven state fiscal years filed for bankruptcy.
         (b)  For purposes of Subsection (a)(9), a person is
  considered to operate an organization if the person has the ability
  to directly influence or direct the management, expenditures, or
  policies of the organization.
         (c)  The comptroller may certify an organization as a
  certified nonprofit educational assistance organization only if
  the organization qualifies under Subsection (a) and also agrees to:
               (1)  notify the comptroller of the organization's
  intent to provide scholarships described by Subsection (a)(3);
               (2)  submit an annual information report as provided by
  Section 171.605;
               (3)  cooperate with the comptroller when conducting a
  criminal background check on the owner or operator of the
  organization;
               (4)  comply with the other requirements of this
  subchapter, including Sections 171.604(d) and (f) and 171.606; and
               (5)  pay the comptroller the amount of any revenue that
  is not awarded as required by Section 171.604.
         Sec. 171.604.  AWARD OF SCHOLARSHIPS. (a) Except as
  provided by Subsection (b), a certified nonprofit educational
  assistance organization shall award all revenue from a contribution
  from a taxable entity allocated to provide scholarships to eligible
  students for educational expenses not later than the first
  anniversary of the date the contribution was made.
         (b)  A certified nonprofit educational assistance
  organization may carry forward not more than 10 percent of the
  revenue described by Subsection (a) for an additional year, but
  shall award that revenue not later than the second anniversary of
  the date the contribution was made.
         (c)  If a certified nonprofit educational assistance
  organization does not award revenue described by Subsection (a) as
  required by Subsections (a) and (b), the organization shall pay the
  comptroller an amount equal to the amount of revenue not awarded as
  required by those subsections not later than the 30th day after the
  last day the revenue was required to be awarded.
         (d)  A certified nonprofit educational assistance
  organization must award at least 25 percent of its annual revenue
  used to provide scholarships to students described by Subsection
  (e), unless the pool of eligible students who apply for a
  scholarship is insufficient to meet the requirement.
         (e)  A scholarship provided to satisfy the requirement of
  Subsection (d) must be provided to a student who:
               (1)  is educationally disadvantaged, as defined by
  Section 5.001, Education Code; and
               (2)  attends school in a public school district or at a
  campus that was assigned a performance rating that reflects
  unacceptable performance in the most recent performance ratings
  released under Section 39.054, Education Code.
         (f)  A certified nonprofit educational assistance
  organization may not award a scholarship to a student to attend a
  qualified nonpublic school unless the organization first obtains
  the written consent of the student's parent or legal guardian.
         Sec. 171.605.  ANNUAL REPORT. (a) Not later than June 30 of
  each year, each certified nonprofit educational assistance
  organization shall report to the Texas Education Agency:
               (1)  the name and address of the organization;
               (2)  the total number and dollar amount of
  contributions from taxable entities received by the organization
  under this subchapter and Chapter 230, Insurance Code, since the
  previous report was submitted;
               (3)  the total number and dollar amount of scholarships
  awarded by the organization under this subchapter and Chapter 230,
  Insurance Code, since the previous report was submitted;
               (4)  the percentage of the organization's revenue from
  contributions used to award scholarships under this subchapter and
  Chapter 230, Insurance Code, since the previous report was
  submitted;
               (5)  the name and address of each school attended by an
  eligible student who was awarded a scholarship by the organization
  under this subchapter and Chapter 230, Insurance Code, since the
  previous report was submitted;
               (6)  the total number and dollar amount of scholarships
  awarded to eligible students by the organization under this
  subchapter and Chapter 230, Insurance Code, per school since the
  previous report was submitted; and
               (7)  any other information the Texas Education Agency
  or the comptroller requires.
         (b)  The report must:
               (1)  comply with generally accepted accounting
  principles; and
               (2)  be certified as free of material misstatements by
  a certified public accountant.
         (c)  The Texas Education Agency shall post on its website for
  at least three years each report submitted under this section.
         (d)  The Texas Education Agency, after consulting with the
  comptroller, may adopt rules and forms to implement this section.
         Sec. 171.606.  SCHOLARSHIP LIMIT AMOUNT.  (a)  Subject to
  Subsection (b), the maximum scholarship amount a certified
  nonprofit educational assistance organization may award under this
  subchapter may not exceed 75 percent of the amount of funding equal
  to the statewide average amount to which a school district would be
  entitled under the Foundation School Program under Chapter 42,
  Education Code, for a student in average daily attendance.
         (b)  A certified nonprofit educational assistance
  organization may award not more than $500 per school year to an
  eligible student who elects to use the scholarship to pay only the
  cost of:
               (1)  transportation to attend a public school or
  charter school located outside the school district in which the
  student resides; or
               (2)  textbooks, school supplies, or tutoring related to
  a course at a public school or charter school.
         Sec. 171.607.  TOTAL AMOUNT OF CREDITS THAT MAY BE CLAIMED.
  (a)  For contributions made during 2014, the total amount of tax
  credits that may be claimed by all taxable entities under this
  subchapter may not exceed $100 million.  For contributions made
  during 2015 and subsequent years, the total amount of tax credits
  that may be claimed by all taxable entities under this subchapter is
  equal to:
               (1)  100 percent of the maximum amount of tax credits
  that could have been claimed by all taxable entities under this
  subchapter for contributions made during the preceding year if the
  total amount of tax credits actually claimed by taxable entities
  under this subchapter for contributions made during the preceding
  year was less than 90 percent of the maximum amount that could have
  been claimed; and
               (2)  110 percent of the maximum amount of tax credits
  that could have been claimed by all taxable entities under this
  subchapter for contributions made during the preceding year if the
  total amount of tax credits actually claimed by taxable entities
  under this subchapter for contributions made during the preceding
  year was equal to or greater than 90 percent of the maximum amount
  that could have been claimed.
         (b)  The comptroller shall publish on the comptroller's
  website the total amount of tax credits available under this
  subchapter for each 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.
         Sec. 171.608.  IDENTIFICATION OF CERTIFIED NONPROFIT
  EDUCATIONAL ASSISTANCE ORGANIZATION.  The comptroller shall
  establish a procedure by which a taxable entity can:
               (1)  determine whether an organization is a certified
  nonprofit educational assistance organization; and
               (2)  claim a credit under this subchapter.
         Sec. 171.609.  NATURE OF FUNDING. The funding authorized by
  this subchapter or Chapter 230, Insurance Code, is private,
  voluntary, nongovernmental funding. The provision of assistance by
  a certified nonprofit educational assistance organization is not an
  appropriation of public money or the provision of public assistance
  to any school.
         Sec. 171.610.  APPLICATION FOR CREDIT. 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.
         Sec. 171.611.  RULES; PROCEDURES; FORMS. The comptroller
  shall adopt rules, procedures, and forms to administer this
  subchapter.
         Sec. 171.612.  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. 171.613.  REVOCATION.  (a)  The comptroller shall
  revoke a certification provided under Section 171.603 if the
  comptroller finds that a certified nonprofit educational
  assistance organization:
               (1)  is no longer eligible under Section 171.603(a);
               (2)  intentionally and substantially violated an
  agreement made under Section 171.603; or
               (3)  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.  TAX CREDIT AGAINST PREMIUM TAXES FOR CERTAIN
  CONTRIBUTIONS
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 230.001.  DEFINITIONS.  In this chapter:
               (1)  "Certified nonprofit educational assistance
  organization" means an organization certified by the comptroller
  under Section 171.603, Tax Code.
               (2)  "State premium tax liability" means any liability
  incurred by an entity under Chapters 221 through 224.
         Sec. 230.002.  AWARD OF SCHOLARSHIPS.  A certified nonprofit
  educational assistance organization shall comply with any
  requirement prescribed by Subchapter L, Chapter 171, Tax Code, in
  relation to awarding scholarships under that subchapter.
  [Sections 230.003-230.050 reserved for expansion]
  SUBCHAPTER B.  CREDIT
         Sec. 230.051.  ELIGIBILITY AND AMOUNT OF CREDIT.  (a) An
  entity that makes a contribution of $500 or more to a certified
  nonprofit educational assistance organization may claim a credit
  against the entity's state premium tax liability in the amount and
  under the conditions and limitations provided by this chapter.
         (b)  Subject to Section 230.052, the amount of the credit
  that may be claimed on a report is equal to the lesser of 100 percent
  of total contributions made to a certified nonprofit educational
  assistance organization during the year or 75 percent of the
  entity's state premium tax liability if the contribution and the
  organization that received the contribution meet the requirements
  prescribed by Subchapter L, Chapter 171, Tax Code.
         (c)  If an entity is eligible for a credit that exceeds the
  limitation prescribed by Subsection (b) or Section 230.052, the
  entity may carry the unused credit forward for not more than two
  years following the year in which the contribution was made.
         (d)  An entity may not claim a credit under this chapter for a
  contribution made to a certified nonprofit educational assistance
  organization if the entity requires that the contribution benefit a
  particular student or school.
         Sec. 230.052.  TOTAL AMOUNT OF CREDITS THAT MAY BE CLAIMED.
  (a)  For contributions made during 2014, the total amount of tax
  credits that may be claimed by all entities under this chapter may
  not exceed $25 million.  For contributions made during 2015 and
  subsequent years, the total amount of tax credits that may be
  claimed by all entities under this chapter is equal to:
               (1)  100 percent of the maximum amount of tax credits
  that could have been claimed by all entities under this chapter for
  contributions made during the preceding year if the total amount of
  tax credits actually claimed by entities under this chapter for
  contributions made during the preceding year was less than 90
  percent of the maximum amount that could have been claimed; and
               (2)  110 percent of the maximum amount of tax credits
  that could have been claimed by all entities under this chapter for
  contributions made during the preceding year if the total amount of
  tax credits actually claimed by entities under this chapter for
  contributions made during the preceding year was equal to or
  greater than 90 percent of the maximum amount that could have been
  claimed.
         (b)  The comptroller shall publish on the comptroller's
  website the total amount of tax credits available under this
  chapter for each 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.
         Sec. 230.053.  APPLICATION FOR CREDIT. An entity must apply
  for a credit under this chapter on or with a tax report for which the
  credit is claimed.
         Sec. 230.054.  RULES; PROCEDURES; FORMS. The comptroller
  shall adopt rules, procedures, and forms to administer 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 assets of the entity are
  conveyed, assigned, or transferred in the same transaction.
         SECTION 3.  A taxable entity may claim a credit under
  Subchapter L, Chapter 171, Tax Code, as added by this Act, or
  Chapter 230, Insurance Code, as added by this Act, only for a
  contribution made on or after January 1, 2014, and only in relation
  to taxes due on or after January 1, 2014.
         SECTION 4.  (a) Except as provided by Subsection (b) of this
  section, this Act takes effect January 1, 2014.
         (b)  Section 171.611, Tax Code, as added by this Act, and
  Section 230.054, Insurance Code, as added by this Act, take effect
  September 1, 2013.