96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3744

 

Introduced 2/11/2010, by Sen. Kimberly A. Lightford

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/219 new

    Amends the Illinois Income Tax Act. Creates a credit for businesses that make contributions to (i) educational improvement organizations, (ii) qualified scholarship organizations, or (iii) qualified pre-kindergarten scholarship organizations. Sets forth the amount of the credit. Provides that educational improvement organizations, scholarship organizations, and qualified pre-kindergarten scholarship organizations must submit certain information to the Department of Commerce and Economic Opportunity. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1     AN ACT concerning revenue.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Income Tax Act is amended by adding
5 Section 219 as follows:
 
6     (35 ILCS 5/219 new)
7     Sec. 219. Credit for contributions to educational
8 improvement organizations and scholarship organizations.
9     (a) For taxable years beginning on or after January 1,
10 2011, each business that, during the taxable year, makes a
11 contribution to (i) an educational improvement organization or
12 (ii) a qualified scholarship organization is entitled to a
13 credit against the tax imposed under subsections (a) and (b) of
14 Section 201 in an amount equal to 75% of the amount
15 contributed. However, if the business provides a written
16 commitment to the Department that it will provide an equal
17 contribution in the next taxable year, and such a contribution
18 is made, then the business is entitled to a credit in both
19 taxable years in an amount equal to 90% of the amount
20 contributed during the taxable year. The written commitment
21 must be made in the form and manner prescribed by the
22 Department. A credit awarded under this subsection (a) may not
23 exceed $300,000 per taxable year.

 

 

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1     (b) In addition, each business that, during the taxable
2 year, makes a contribution to a qualified pre-kindergarten
3 scholarship organization is entitled to a credit against the
4 tax imposed under subsections (a) and (b) of Section 201 in an
5 amount equal to (i) 100% of the first $10,000 contributed by
6 the business during the taxable year, and (ii) 90% of any
7 additional amounts contributed by the business during the
8 taxable year. A credit awarded under this subsection (b) may
9 not exceed $150,000 per taxable year.
10     (c) For the purposes of this Section:
11         "Department" means the Department of Commerce and
12     Economic Opportunity.
13         "Educational improvement organization" means a
14     non-profit entity that (i) is exempt from taxation under
15     Section 501(c)(3) of the Internal Revenue Code of 1986 and
16     (ii) contributes at least 80% of its annual receipts as
17     grants to a public school for innovative educational
18     programs.
19         "Eligible pre-kindergarten student" means a student,
20     including an eligible student with a disability, who is
21     enrolled in a pre-kindergarten program and is a member of a
22     household with a household income of no more than the
23     maximum annual household income.
24         "Eligible student" means a school-age student,
25     including an eligible student with a disability, who is a
26     resident of the State of Illinois, who is enrolled in a

 

 

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1     school and is a member of a household with a household
2     income of no more than the maximum annual household income.
3         "Eligible student with a disability" means a
4     pre-kindergarten student or a school-age student who meets
5     all of the following: (i) is either enrolled in a special
6     education school or otherwise meets the definition of
7     "children with disabilities," as defined in Section
8     14-1.02 of the School Code; (ii) needs special education
9     and related services; (iii) is enrolled in a
10     pre-kindergarten program or in a school; and (iv) is a
11     member of a household with a household income of not more
12     than the maximum annual household income.
13         "Household" means a household in which one or more
14     eligible students resides with a spouse, parent,
15     grandparent, sibling, or legal guardian.
16         "Household income" means all moneys or property
17     received of whatever nature and from whatever source
18     derived. The term does not include the following: (i)
19     periodic payments for sickness and disability other than
20     regular wages received during a period of sickness or
21     disability; (ii) disability, retirement, or other payments
22     arising under workers' compensation Acts, occupational
23     disease Acts, and similar legislation by any unit of
24     government; (iii) payments commonly recognized as old-age
25     or retirement benefits paid to persons retired from service
26     after reaching a specific age or after a stated period of

 

 

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1     employment; (iv) payments commonly known as public
2     assistance or unemployment compensation payments by a
3     governmental agency; (v) payments to reimburse actual
4     expenses; (vi) payments made by employers or labor unions
5     for programs covering hospitalization, sickness,
6     disability or death, supplemental unemployment benefits,
7     strike benefits, social security and retirement; and (vii)
8     compensation received by United States servicemen serving
9     in a combat zone.
10         "Innovative educational program" means an advanced
11     academic or similar program that is not part of the regular
12     academic program of a public school, but that enhances the
13     curriculum or academic program of the public school or
14     provides pre-kindergarten programs to public school
15     students.
16         "Maximum annual household income" means (i) 200% of the
17     federal poverty level, as that level is calculated for a
18     family of 4, or (ii) with respect to a household with an
19     eligible student with a disability, the maximum household
20     income calculated under item (i) multiplied by (A) 1.5 or
21     (B) 3.0 if the household has at least one eligible student
22     with a disability who is enrolled in a special education
23     school.
24         "Pre-kindergarten program" means a program of
25     instruction for 3-year-old or 4-year-old students that
26     utilizes a curriculum aligned with the curriculum of the

 

 

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1     school with which it is affiliated and which provides one
2     of the following: (i) a minimum of 2 hours of instructional
3     and developmental activities per day at least 60 days per
4     school year or (ii) a minimum of 2 hours of instructional
5     and developmental activities per day at least 20 days over
6     the summer recess.
7         "Pre-kindergarten scholarship organization" means a
8     nonprofit entity which: (i) either is exempt from taxation
9     under Section 501(c)(3) of the Internal Revenue Code of
10     1986 or is operated as a separate segregated fund by a
11     qualified scholarship organization and (ii) contributes at
12     least 80% of its annual cash receipts to a pre-kindergarten
13     scholarship program by expending those funds for
14     distribution during the then current fiscal year of the
15     organization or during the next succeeding fiscal year of
16     the organization.
17         "Pre-kindergarten scholarship program" means a program
18     to provide tuition to eligible pre-kindergarten students
19     to attend a pre-kindergarten program operated by or in
20     conjunction with a school located in this State and that
21     includes an application and review process for the purpose
22     of making awards to eligible pre-kindergarten students and
23     awards scholarships to eligible pre-kindergarten students
24     without limiting availability to only students of one
25     school.
26         "Qualified scholarship organization" means a

 

 

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1     non-profit entity that (i) is exempt from taxation under
2     Section 501(c)(3) of the Internal Revenue Code of 1986 and
3     (ii) contributes at least 80% of its annual receipts to a
4     scholarship program.
5         "Scholarship program" means a program to provide
6     tuition to eligible students to attend a public or
7     non-public pre-kindergarten, kindergarten, elementary, or
8     secondary school in the State. A scholarship program must
9     include an application and review process for the purpose
10     of making awards to eligible students. The award of
11     scholarships to eligible students shall be made without
12     limiting availability to only students of one school.
13         "School" means a public or nonpublic pre-kindergarten,
14     kindergarten, elementary school, or secondary school and
15     attendance at which satisfies requirements of Section 26-1
16     of the School Code and which meets the applicable
17     requirements of Title VI of the Civil Rights Act of 1964.
18         "School age" means children from the earliest
19     admission age to a school's pre-kindergarten or
20     kindergarten program or, when no pre-kindergarten or
21     kindergarten program is provided, the school's earliest
22     admission age for beginners, until the end of the school
23     year in which the student attains 21 years of age or
24     graduation from high school, whichever occurs first.
25         "Special education school" means a school or program
26     within a school that is designated specifically and

 

 

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1     exclusively for students with disabilities as defined by
2     Section 14-1.02 of the School Code and meets at least one
3     of the following criteria: (i) the program is a non-public
4     program approved under Section 14-7.02 of the School Code;
5     (ii) is accredited by the State Board of Education; (iii)
6     is a school for the blind or deaf receiving State funding;
7     (iv) is operated by or under the authority of a bona fide
8     religious institution or by the State of Illinois or any
9     political subdivision thereof; or (v) is a facility created
10     under a special education joint agreement under Section
11     10-22.31 of the School Code.
12     (d) In order to qualify under this Section, a scholarship
13 organization, a pre-kindergarten scholarship organization, or
14 an educational improvement organization must submit
15 information to the Department that enables the Department to
16 confirm that the organization is exempt from taxation under
17 section 501(c)(3) of the Internal Revenue Code of 1986. A
18 scholarship organization or pre-kindergarten scholarship
19 organization must certify to the Department that the
20 organization is eligible to participate in the program
21 established under this Section and must agree to annually
22 report the following information to the Department by December
23 1, 2011 and September 1 of each year thereafter:
24         (1) the number of scholarships awarded during the
25     immediately preceding school year to eligible
26     pre-kindergarten students;

 

 

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1         (2) the total and average amounts of the scholarships
2     awarded during the immediately preceding school year to
3     eligible pre-kindergarten students;
4         (3) the number of scholarships awarded during the
5     immediately preceding school year to eligible students in
6     grades kindergarten through 8;
7         (4) the total and average amounts of the scholarships
8     awarded during the immediately preceding school year to
9     eligible students in grades kindergarten through 8;
10         (5) the number of scholarships awarded during the
11     immediately preceding school year to eligible students in
12     grades 9 through 12;
13         (6) the total and average amounts of the scholarships
14     awarded during the immediately preceding school year to
15     eligible students in grades 9 through 12; and
16         (7) if the scholarship organization or
17     pre-kindergarten scholarship organization collects
18     information on a county-by-county basis, the total number
19     and the total amount of scholarships awarded during the
20     immediately preceding school year to residents of each
21     county in which the scholarship organization or
22     pre-kindergarten scholarship organization awarded
23     scholarships.
24     The information required under items (1) through (7) of
25 this subsection shall be submitted on a form provided by the
26 Department. No later than September 1, 2011 and May 1 of each

 

 

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1 year thereafter, the Department shall annually distribute such
2 sample forms, together with the forms on which the reports are
3 required to be made, to each listed scholarship organization
4 and pre-kindergarten scholarship organization. The Department
5 may not require any other information to be provided by
6 scholarship organizations or pre-kindergarten scholarship
7 organizations, except as expressly authorized in this Section.
8     (e) An application submitted by an educational improvement
9 organization must describe its proposed innovative educational
10 program or programs in the form and manner prescribed by the
11 Department. The Department shall consult with the State Board
12 of Education as necessary. The Department shall review and
13 approve or disapprove the application. In order to be eligible
14 to participate in the program established under this Section,
15 an educational improvement organization must agree to annually
16 report the following information to the department by December
17 1, 2011 and September 1 of each year thereafter:
18         (1) the name of the innovative educational program or
19     programs and the total amount of the grant or grants made
20     to those programs during the immediately preceding school
21     year;
22         (2) a description of how each grant was utilized during
23     the immediately preceding school year and a description of
24     any demonstrated or expected innovative educational
25     improvements;
26         (3) the names of the public schools and school

 

 

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1     districts where innovative educational programs that
2     received grants during the immediately preceding school
3     year were implemented; and
4         (4) if the educational improvement organization
5     collects information on a county-by-county basis, the
6     total number and the total amount of grants made during the
7     immediately preceding school year for programs at public
8     schools in each county in which the educational improvement
9     organization made grants.
10     The information required under items (1) through (4) of
11 this subsection shall be submitted on a form provided by the
12 Department. No later than September 1, 2011 and May 1 of each
13 year thereafter, the Department shall annually distribute such
14 sample forms, together with the forms on which the reports are
15 required to be made, to each listed educational improvement
16 organization. The Department may not require any other
17 information to be provided by educational improvement
18 organizations, except as expressly authorized in this Section.
19     (f) The Department shall notify the scholarship
20 organization, pre-kindergarten scholarship organization, or
21 educational improvement organization that the organization
22 meets the requirements of this Section for that fiscal year no
23 later than 60 days after the organization has submitted the
24 information required under this Section. The Department shall
25 annually publish in the Illinois Register a list of each
26 scholarship organization, pre-kindergarten scholarship

 

 

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1 organization, or educational improvement organization
2 qualified. The list shall also be posted and updated as
3 necessary on the publicly accessible internet website of the
4 Department.
5     (g) A taxpayer shall apply to the Department for a tax
6 credit under this Section. The taxpayer shall receive a tax
7 credit under this Section if the scholarship organization,
8 pre-kindergarten scholarship organization, or educational
9 improvement organization that receives the contribution
10 appears on the list established under subsection (f). Tax
11 credits under this Section shall be awarded by the Department
12 on a first-come, first-served basis within the limitation
13 established under subsection (h) of this Section. A
14 contribution by a business to a scholarship organization,
15 pre-kindergarten scholarship organization or educational
16 improvement organization shall be made no later than 60 days
17 following the approval of the application.
18     (h) The total aggregate amount of all tax credits approved
19 under this Section shall not exceed $10,000,000 in a fiscal
20 year. The total aggregate amount of all tax credits approved
21 under this Section for contributions from business firms to
22 scholarship organizations shall not exceed $7,000,000. The
23 total aggregate amount of all tax credits approved under this
24 Section for contributions from business firms to educational
25 improvement organizations shall not exceed $2,000,000. The
26 total aggregate amount of all tax credits approved under this

 

 

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1 Section for contributions from business firms to
2 pre-kindergarten scholarship programs shall not exceed
3 $1,000,000 in a fiscal year. No tax credit shall be approved
4 under this Section for activities that are a part of the
5 taxpayer's normal course of business.
6     (i) For partners, shareholders of Subchapter S
7 corporations, and owners of limited liability companies, if the
8 liability company is treated as a partnership for purposes of
9 federal and State income taxation, there is allowed a credit
10 under this Section to be determined in accordance with the
11 determination of income and distributive share of income under
12 Sections 702 and 704 and Subchapter S of the Internal Revenue
13 Code.
14     (j) A credit awarded under this Section may not reduce the
15 taxpayer's liability to less than zero.
16     (k) The Department shall provide a list of all scholarship
17 organizations, pre-kindergarten scholarship organizations and
18 educational improvement organizations receiving contributions
19 from business firms granted a tax credit under this article to
20 the General Assembly by June 30th of each year. The Department
21 in consultation with the State Board of Education shall develop
22 guidelines to determine the eligibility of an innovative
23 educational program.
24     (f) This Section is exempt from the provisions of Section
25 250.
 
26     Section 99. Effective date. This Act takes effect upon

 

 

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1 becoming law.