SB2245sam001 97TH GENERAL ASSEMBLY

Sen. Chris Lauzen

Filed: 3/11/2011

09700SB2245sam001 LRB097 10363 HLH 51445 a

AMENDMENT TO SENATE BILL 2245

AMENDMENT NO. ______. Amend Senate Bill 2245 by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Income Tax Act is amended by adding Section 221 as follows:

(35 ILCS 5/221 new)

Sec. 221. Educational Improvement Tax Credit.

(a) The General Assembly finds and declares that the Constitution of the State of Illinois provides that a "fundamental goal of the People of the State is the educational development of all persons to the limits of their capacities", and that the educational development of every school student serves the public purposes of the State. In order to enable Illinois students to develop "to the limits of their capacities", all students must have access to expanded educational opportunities. This Section is in the public interest, for the public benefit, and serves a secular purpose.

(b) An educational improvement tax credit program is hereby established to enhance the educational opportunities available to all students in this State.

For tax years beginning after December 31, 2011, a taxpayer shall be allowed a credit, not in excess of $100,000, against the tax imposed by subsections (a) and (b) of Section 201 of this Act for contributions to a qualified student assistance organization in the taxable year in which the contribution is made. The credit shall not exceed 90% of each dollar contributed during the taxable year by the taxpayer. For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this Section to be determined in accordance with the determination of income and distributive share of income under Section 702 and 704 and Subchapter S of the Internal Revenue Code.

In no event may any credit be claimed for amounts deducted pursuant to Section 170 of the Internal Revenue Code in arriving at taxable income.

(c) For purposes of this Section:

"Contribution" means a donation of cash.

"Qualified student assistance organization" means a nonprofit entity that:

(1) is exempt from federal taxation under Section 501(c)(3) of the Internal Revenue Code of 1986 and any similar provision of a later compilation; and

(2) contributes at least 90% of its annual receipts, as required by the by-laws of the organization and as documented by the nonprofit organizations annual AG990-IL Charitable Organization Annual Report, or, if the organization is exempt from filing such a report, by a report containing identical information to that contained in the AG990-IL and certified by the President and Treasurer of the organization, or alternatively, two trustees of the organization, either to scholarships for qualifying students at a school or to enhance educational options for qualifying students by providing qualifying students access to secular, neutral, non-ideological programs, or activities outside the curriculum or academic program of a school, as long as the program or activities meet the requirements set forth in rules promulgated by the Illinois State Board of Education. An entity that has been in existence less than 2 years prior to the filing of an application under subsection (f) of this Section shall meet the requirements of this subsection if its charter, bylaws or other governing instrument requires that it contribute 90% of its annual receipts for the purposes described in this subsection.

"Qualifying student" means an individual who:

(1) is a resident of the State of Illinois;

(2) is under the age of 21 during the calendar year for which a credit is sought;

(3) during the calendar year for which a credit is sought is a full-time pupil enrolled in a kindergarten through 12th grade education program at any school, as defined in this subsection (c); and

(4) is a child of a parent or parents, or is under the legal guardianship of an individual or individuals, with a base income of not more than $50,000 and resides in the household with those parents or guardians, provided that if there is more than one dependent member of the household under the age of 21, counting the qualifying student, then this annual income requirement shall be increased by $10,000 for each dependent member of the household under the age of 21 in excess of the one qualifying student. Qualified student assistant organizations shall be responsible for determining whether a student is a qualifying student, pursuant to rules adopted by the Illinois State Board of Education.

"School" means any public or State-recognized non-public elementary or secondary school in Illinois that is in compliance with Title VI of the Civil Rights Act of 1964 and attendance at which satisfies the requirements of Section 26-1 of the School Code.

(d) No tax credit established by this Section is allowed if the taxpayer designates a contribution to a student assistance organization for the direct benefit of any particular qualifying student.

(e) Qualified student assistance organizations shall provide scholarships or funding for enhanced educational options without limiting availability to only students of one school.

(f) A tax credit granted under this Section that is not used in the taxable year in which the contribution was made shall not be carried forward or carried back and is not refundable or transferable.

(g) A taxpayer must apply annually to the Department and receive approval for a tax credit under this Section prior to making a contribution to a student assistance organization. Applicants must be submitted to the Department no later than March 31 each year for contributions to be made for tax years ending on or after July 1 of that same year. On May 1 of each year, the Department shall, on a random basis, select applications until the total aggregate amount of all requested tax credits equals the maximum provided for in subsection (h). The Department shall adopt rules pursuant to the requirements of the Illinois Administrative Procedure Act that set forth the information the Department can require on the tax credit application and the manner in which the tax credit lottery is to be conducted.

(h) The total aggregate amount of all approved tax credits shall not exceed $30,000,000 in any State fiscal year.

(i) The Department shall adopt rules consistent with this Section for the administration of the educational improvement tax credit program.

(j) A scholarship received by a qualifying student shall not be considered to be taxable income.

(k) This Section is exempt from the provisions of Section 250.

Section 99. Effective date. This Act takes effect upon becoming law.".