ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature

First Regular Session

HB 2014: STOs; scholarships; corporate tax credits

Sponsor: Representative Livingston, LD 28

Committee on Ways & Means

Overview

Increases the aggregate corporate tax credit dollar amount and expands tax policy regarding school tuition organizations' scholarships and grants.

History

Corporations and other taxpayers can receive tax credits by making financial contributions to school tuition organizations (STO). STO's are nonprofit organizations that are exempt from federal taxation. However, STO's must allocate at least 90% of received contributions for educational scholarships or tuition grants for non-governmental or secondary schools.

Current legislation restricts the aggregate dollar amount of tax credits allowed in each year to $6,000,000. (A.R.S. § 43-1184) The Department of Revenue (DOR) is responsible for preapproving tax credits and distributing them on a first-come, first-served basis. Before making a contribution to a STO, the taxpayer must notify the STO of the total amount of contributions the taxpayer intends to make. Prior to accepting the contribution, the STO must request preapproval from the DOR for the intended contribution amount. The DOR must preapprove or deny the request within twenty days. In order for a taxpayer to receive tax credit for their contribution, the taxpayer must make their contribution within twenty days of receiving notice from the STO that the requested amount was preapproved.

Qualified school means a preschool that offers services to students with disabilities and nongovernmental primary school or secondary school. Qualified school does not include a charter school or programs operated by a charter school.

Qualified student means a student who has been either placed in foster care pursuant to title 8, chapter 4 at any time before the student graduates from high school or obtains a general equivalency diploma. Or identified as having a disability under section 504 of the rehabilitation act. Or identified by a school district as a child with a disability as defined in A.R.S. § 15-761 or a child with a disability who is eligible to receive services from a school district under A.R.S. § 15-763.

Provisions

1. Increases the aggregate dollar amount of tax credits allowed in each fiscal year. (Sec. 1)

a) For fiscal year 2021-2022, $6,000,000;

b) For fiscal year 2022-2023, $10,000,000;

c) For fiscal year 2023-2024, $15,000,000; ad

d) For fiscal year 2024-2025 and each fiscal year thereafter, $20,000,000.

2. Defines inclusions within education scholarship and tuition. (Sec. 2, Sec. 5)

3. Strikes the requirement that school tuition organizations provide educational scholarships or tuition grants to students enrolled in full time governmental schools or preschool programs that offer disability services. (Sec. 3, Sec. 6)

4. Adds that the amount of low-income educational scholarships or tuition grants cannot exceed the amount of state aid for the student beginning in 2023 and each year afterwards. (Sec. 3)

5. Strikes the requirement that the educational scholarship or grant amount for displaced students and students with disabilities does not exceed the cost of tuition to attend the qualifying school. (Sec. 4)

6. Clarifies that if an educational scholarship or tuition grant exceeds the qualified school's cost of tuition, the excess amount will be returned to the school tuition organization that made the educational scholarship or tuition grant. (Sec. 6)

7. Makes technical changes. (Sec. 2, Sec. 3, Sec. 4, Sec. 5)

8. Makes conforming changes. (Sec. 2, Sec. 3, Sec. 5)

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