BILL NUMBER: AB 279	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 18, 2009

INTRODUCED BY   Assembly Member Duvall

                        FEBRUARY 12, 2009

   An act to add Sections 17053.99 and 23699 to the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 279, as amended, Duvall.  Taxes: credits  
Income taxes: credit  : Great Schools Tax Credit Act.
   The Personal Income Tax Law and the Corporation Tax Law authorize
various credits against the taxes imposed by those laws.
   This bill would, for each taxable year beginning on or after
January 1, 2010, allow a credit in an amount equal to the total
contributions made to a scholarship granting organization, as
defined, by a qualified taxpayer  , as defined,  during the
taxable year, not to exceed a specified amount. This bill would
impose specified duties on the Franchise Tax Board in administering
the credits.
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  This act shall be known and may be cited as the Great
Schools Tax Credit Act.
  SEC. 2.  Section 17053.99 is added to the Revenue and Taxation
Code, to read:
   17053.99.  (a) For each taxable year beginning on or after January
1, 2010, there shall be allowed to a qualified taxpayer as a credit
against the "net tax," as defined in Section 17039, an amount equal
to the total contributions made to a scholarship granting
organization during the taxable year for which the credit is claimed,
not to exceed 50 percent of the qualified taxpayer's "net tax" for
the taxable year.
   (b) For purposes of this section:
   (1) "Educational scholarship" means a grant made to an eligible
student to cover all or part of the tuition and fees, including
transportation to a qualified school outside of the eligible student'
s resident school district, at either a public or nonpublic qualified
school.
   (2) (A) "Eligible student" means either of the following:
   (i) A student who is a member of a household whose total annual
income during the calendar year before he or she receives an
educational scholarship from a scholarship granting organization does
not exceed an amount equal to two and one-half times the income
standard used to qualify for a free or reduced lunch price under the
Richard B. Russell National School Lunch Act (42 U.S.C. Sec. 1751 et
seq.), who was eligible to attend a public school in the semester
preceding receipt of the educational scholarship or is attending
school in California for the first time, and who resides in
California while receiving the educational scholarship.
   (ii) A student who qualifies for free or reduced price lunch under
the Richard B. Russell National School Lunch Act (42 U.S.C. Sec.
1751 et seq.).
   (B) A student remains an "eligible student" under this section
until he or she graduates high school or reaches 21 years of age,
regardless of household income.
   (3) "Parent" means a parent, a legal guardian, a conservator, a
person acting as a parent of a child, or any other person with legal
authority to act on behalf of the child.
   (4) "Qualified school" means a public elementary or secondary
school located in California that is outside of the eligible student'
s resident school district or a nonpublic elementary or secondary
school in California that complies with the requirements of this
section. A qualified school shall comply with all state laws that
apply to nonpublic schools regarding criminal background checks for
employees and exclude from employment any person not permitted by
state law to work in a nonpublic school.
   (5) "Qualified taxpayer" means a taxpayer who files an income tax
return in this state and is not claimed as a dependent for income tax
purposes by any other taxpayer.
   (6) "Scholarship granting organization" means an organization that
complies with the requirements of this section and provides
educational scholarships to eligible students attending qualified
schools of their  parents   parent's 
choice.
   (c) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and the three succeeding years if necessary,
until the credit is exhausted.
   (d) No credit shall be allowed pursuant to this section unless the
scholarship granting organization does all of the following:
   (1) Notifies the Franchise Tax Board of its intent to provide
educational scholarships to eligible students attending qualified
schools.
   (2) Provides the Franchise Tax Board with the Internal Revenue
Service's Letter of Determination of tax-exempt status  under
  as an organization described in  Section 501(c)
(3) of the Internal Revenue Code.
   (3) Provides the qualified taxpayer with a Franchise Tax
Board-approved receipt substantiating the contribution made by the
qualified taxpayer to the scholarship granting organization.
   (4) Ensures that at least 90 percent of its revenue from donations
is expended on educational scholarships.
   (5) Spends a portion of expenditures each year on educational
scholarships for students eligible under clause (ii) of subparagraph
(A) of paragraph (2) of subdivision (b) equal to the percentage of
low-income eligible students in the county where the scholarship
granting organization expends the majority of its educational
scholarships. 
   (6) Ensures that at least ____% of first time recipients of
educational scholarships were not continuously enrolled in a
nonpublic school during the previous year.  
   (7) 
    (6)  Distributes periodic educational scholarship
payments as checks made out to an eligible student's parent and
mailed to the qualified school where the qualified student is
enrolled. The check shall be endorsed by the parent  or
guardian  prior to deposit. 
   (8) 
    (7)  Cooperates with the Franchise Tax Board, or its
designee, in conducting criminal background checks of all of its
employees and board members and excludes from employment or
governance any individual who might reasonably pose a risk to the
appropriate use of contributed funds. 
   (9) 
    (8)  Ensures that educational scholarships are portable
during the school year and may be used at any qualified school that
accepts the eligible student according to a parent's wishes. If an
eligible student moves to a new qualified school during a school
year, the educational scholarship may be prorated. 
   (10) 
    (9)  (A) Demonstrates its financial accountability to
the Franchise Tax Board by submitting a financial information report,
conducted by a certified public accountant, that complies with
uniform financial accounting standards and is certified by an auditor
as free of material misstatements.
   (B) If the scholarship granting organization receives donations of
fifty thousand dollars ($50,000) or more during the school year, the
scholarship granting organization shall demonstrate its financial
accountability by either of the following:
   (i) Filing a surety bond with Franchise Tax Board, payable to the
State of California, in an amount equal to the aggregate amount of
contributions expected to be received during the school year.
   (ii) Filing financial information prior to the school year with
Franchise Tax Board that demonstrates the financial viability of the
scholarship granting organization. 
   (11) 
    (10)  Ensures that educational scholarships are not
provided to eligible students to attend a qualified school with paid
staff or board members, or relatives thereof, in common with the
scholarship granting organization.
   (e) No credit shall be allowed pursuant to this section unless a
qualified school that accepts educational scholarships from a
scholarship granting organization does all of the following:
   (1) Complies with all health and safety laws or codes that apply
to nonpublic schools.
   (2) Obtains a valid occupancy permit for its grounds if required
by its municipality.
   (3) Certifies that it will not discriminate in  its
admissions on the basis of race, color, national origin, religion, or
disability.   accordance with Section 1981 of Title 42
of the United States Code. 
   (4) Provides academic accountability to  parents 
 the parent  of eligible students who receive educational
scholarships by regularly report to the parent on the student's
progress.
   (f) On or before June 1 of each calendar year, a scholarship
granting organization shall report to the Franchise Tax Board the
following information prepared by a certified public accountant
regarding the previous calendar year's educational scholarships:
   (1) The name and address of the scholarship granting organization.

   (2) The total number and dollar amount of contributions received
during the previous calendar year.
   (3) The total number and dollar amount of educational scholarships
awarded during the previous calendar year, the total number and
total dollar amount of educational scholarships awarded during the
previous year to eligible students qualifying for the federal free
and reduced price lunch program, and the percentage of first-time
recipients of educational scholarships who were continuously enrolled
in a public school during the previous year.
   (g) For purposes of this section, the Franchise Tax Board shall do
all of the following:
   (1) Promulgate any rules and regulations necessary to implement
this section.
   (2) Provide a standardized format for a receipt to be issued by a
scholarship granting organization to a qualified taxpayer to indicate
the value of a received contribution. The Franchise Tax Board shall
require a qualified taxpayer to provide a copy of this receipt when
claiming a credit under this section.
   (3) Provide a standardized format for scholarship granting
organizations to report the information required by paragraph
 (11)   (10)  of subdivision (d).
   (4) Conduct either a financial review or audit of a scholarship
granting organization if in possession of evidence of fraud.
   (5) (A) Bar a scholarship granting organization from 
participating in the program   being a scholarship
granting organization, as defined by this section,  if the
Franchise Tax Board establishes that the scholarship granting
organization has intentionally and substantially failed to comply
with the requirements of this section.
   (B) If the Franchise Tax Board bars a scholarship granting
organization, it shall notify any affected eligible students and
 their parents   his or her parent  of this
decision as soon as possible.
   (C) Allow a qualified taxpayer to divert a prorated share of state
income tax withholdings to a scholarship granting organization of
the qualified taxpayer's choice, up to the maximum credit allowed by
law, including carryover credits. The Franchise Tax Board shall
promulgate rules and regulation necessary to implement this
subparagraph.
  SEC. 3.  Section 23699 is added to the Revenue and Taxation Code,
to read:
   23699.  (a) For each taxable year beginning on or after January 1,
2010, there shall be allowed to a qualified taxpayer as a credit
against the "tax," as defined in Section 23036, an amount equal to
the total contributions made to a scholarship granting organization
during the taxable year for which the credit is claimed, not to
exceed 50 percent of the qualified taxpayer's "tax" for the taxable
year.
   (b) For purposes of this section:
   (1) "Educational scholarship" means a grant made to an eligible
student to cover all or part of the tuition and fees, including
transportation to a qualified school outside of the eligible student'
s resident school district, at either a public or nonpublic qualified
school.
   (2) (A) "Eligible student" means either of the following:
   (i) A student who is a member of a household whose total annual
income during the calendar year before he or she receives an
educational scholarship from a scholarship granting organization does
not exceed an amount equal to two and one-half times the income
standard used to qualify for a free or reduced lunch price under the
Richard B. Russell National School Lunch Act (42 U.S.C. Sec. 1751 et
seq.), who was eligible to attend a public school in the semester
preceding receipt of the educational scholarship or is attending
school in California for the first time, and who resides in
California while receiving the educational scholarship.
   (ii) A student who qualifies for free or reduced price lunch under
the Richard B. Russell National School Lunch Act (42 U.S.C. Sec.
1751 et seq.).
   (B) A student remains an eligible student under this section until
he or she graduates high school or reaches 21 years of age,
regardless of household income.
   (3) "Parent" means a parent, a legal guardian, a conservator, a
person acting as a parent of a child, or any other person with legal
authority to act on behalf of the child.
   (4) "Qualified school" means a public elementary or secondary
school located in California that is outside of the eligible student'
s resident school district or a nonpublic elementary or secondary
school in California that complies with the requirements of this
section. A qualified school shall comply with all state laws that
apply to nonpublic schools regarding criminal background checks for
employees and exclude from employment any person not permitted by
state law to work in a nonpublic school.
   (5) "Qualified taxpayer" means a taxpayer who files an income tax
return in this state and is not claimed as a dependent for income tax
purposes by any other taxpayer.
   (6) "Scholarship granting organization" means an organization that
complies with the requirements of this section and provides
educational scholarships to eligible students attending qualified
schools of their  parents   parent's 
choice.
   (c) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" in the
following year, and the three succeeding years if necessary, until
the credit is exhausted.
   (d) No credit shall be allowed pursuant to this section unless the
scholarship granting organization does all of the following:
   (1) Notifies the Franchise Tax Board of its intent to provide
educational scholarships to eligible students attending qualified
schools.
   (2) Provides the Franchise Tax Board with the Internal Revenue
Service's Letter of Determination of tax-exempt status  under
  as an organization described in  Section 501(c)
(3) of the Internal Revenue Code.
   (3) Provides the qualified taxpayer with an Franchise Tax
Board-approved receipt substantiating the contribution made by the
qualified taxpayer to the scholarship granting organization.
   (4) Ensures that at least 90 percent of its revenue from donations
is expended on educational scholarships.
   (5) Spends a portion of expenditures each year on educational
scholarships for students eligible under clause (ii) of subparagraph
(A) of paragraph (2) of subdivision (b) equal to the percentage of
low-income eligible students in the county where the scholarship
granting organization expends the majority of its educational
scholarships. 
   (6) Ensures that at least ____% of first time recipients of
educational scholarships were not continuously enrolled in a
nonpublic school during the previous year.  
   (7) 
    (6)  Distributes periodic educational scholarship
payments as checks made out to an eligible student's parent and
mailed to the qualified school where the qualified student is
enrolled. The check shall be endorsed by the parent  or
guardian  prior to deposit. 
   (8) 
    (7)  Cooperates with the Franchise Tax Board, or its
designee, in conducting criminal background checks of all of its
employees and board members and excludes from employment or
governance any individual who might reasonably pose a risk to the
appropriate use of contributed funds. 
   (9) 
    (8)  Ensures that educational scholarships are portable
during the school year and may be used at any qualified school that
accepts the eligible student according to a parent's wishes. If an
eligible student moves to a new qualified school during a school
year, the educational scholarship may be prorated. 
   (10) 
    (9)  (A) Demonstrates its financial accountability to
the Franchise Tax Board by submitting a financial information report,
conducted by a certified public accountant, that complies with
uniform financial accounting standards and is certified by an auditor
as free of material misstatements.
   (B) If the scholarship granting organization receives donations of
fifty thousand dollars ($50,000) or more during the school year, the
scholarship granting organization shall demonstrate its financial
accountability by either of the following:
   (i) Filing a surety bond with Franchise Tax Board, payable to the
State of California, in an amount equal to the aggregate amount of
contributions expected to be received during the school year.
   (ii) Filing financial information prior to the school year with
Franchise Tax Board that demonstrates the financial viability of the
scholarship granting organization. 
   (11) 
    (10)  Ensures that educational scholarships are not
provided to eligible students to attend a qualified school with paid
staff or board members, or relatives thereof, in common with the
scholarship granting organization.
   (e) No credit shall be allowed pursuant to this section unless a
qualified school that accepts educational scholarships from a
scholarship granting organization does all of the following:
   (1) Complies with all health and safety laws or codes that apply
to nonpublic schools.
   (2) Obtains a valid occupancy permit for its grounds if required
by its municipality.
   (3) Certifies that it will not discriminate in  its
admissions on the basis of race, color, national origin, religion, or
disability.   accordance with Section 1981 of Title 42
of the United States Code. 
   (4) Provides academic accountability to parents of eligible
students who receive educational scholarships by regularly report to
the parent on the student's progress.
   (f) On or before June 1 of each calendar year, a scholarship
granting organization shall report to the Franchise Tax Board the
following information prepared by a certified public accountant
regarding the previous calendar year's educational scholarships:
   (1) The name and address of the scholarship granting organization.

   (2) The total number and dollar amount of contributions received
during the previous calendar year.
   (3) The total number and dollar amount of educational scholarships
awarded during the previous calendar year, the total number and
total dollar amount of educational scholarships awarded during the
previous year to eligible students qualifying for the federal free
and reduced price lunch program, and the percentage of first-time
recipients of educational scholarships who were continuously enrolled
in a public school during the previous year.
   (g) For purposes of this section, the Franchise Tax Board shall do
all of the following:
   (1) Promulgate any rules and regulations necessary to implement
this section.
   (2) Provide a standardized format for a receipt to be issued by a
scholarship granting organization to a qualified taxpayer to indicate
the value of a received contribution. The Franchise Tax Board shall
require a qualified taxpayer to provide a copy of this receipt when
claiming a credit under this section.
   (3) Provide a standardized format for scholarship granting
organizations to report the information required by paragraph
 (11)   (10)  of subdivision (d).
   (4) Conduct either a financial review or audit of a scholarship
granting organization if in possession of evidence of fraud.
   (5) (A) Bar a scholarship granting organization from 
participating in the program   being a scholarship
granting organization, as defined by this section,  if the
Franchise Tax Board establishes that the scholarship granting
organization has intentionally and substantially failed to comply
with the requirements of this section.
   (B) If the Franchise Tax Board bars a scholarship granting
organization, it shall notify any affected eligible  students
and their parents   student and his or her parent 
of this decision as soon as possible.
   (C) Allow a qualified taxpayer to divert a prorated share of state
income tax withholdings to a scholarship granting organization of
the qualified taxpayer's choice, up to the maximum credit allowed by
law, including carryover credits. The Franchise Tax Board shall
promulgate rules and regulation necessary to implement this
subparagraph.
  SEC. 4.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.