BILL NUMBER: AB 2421 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 1, 2014
INTRODUCED BY Assembly Member Nestande
( Coauthor: Assembly Member
Allen )
FEBRUARY 21, 2014
An act relating to taxation. An act to add
and repeal Section 23692 of the Revenue and Taxation Code, relating
to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 2421, as amended, Nestande. Corporation taxes: credit:
education scholarship organizations. Corporation Tax
Law: credits: Foster Youth Opportunities Investment Act.
The Corporation Tax Law allows various credits against the tax
imposed by that law.
This bill, for taxable years beginning on or after January 1,
2015, and before January 1, 2020, would allow a credit against the
tax imposed under that law for 50% of monetary contributions to
nonprofit education scholarship organizations, as defined, to fund
qualified scholarships for specified pupils to attend private
schools, as defined, or for transportation costs to attend private,
public, or charter schools. The bill would provide that the credit
would not exceed $200,000 per taxpayer, that the credit would be
awarded on a first-come, first-serve basis, and that the credit would
have an aggregate cap of $50,000,000 for each calendar year. The
bill would require the Franchise Tax Board and the State Department
of Education to administer the credit, as specified.
This bill would take effect immediately as a tax levy.
The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws.
This bill would state that it is the intent of the Legislature to
enact legislation that would allow a credit against the tax imposed
by the Corporation Tax Law in the amount of 50% of a charitable
contribution to a nonprofit education scholarship organization that
provides tuition and transportation fee assistance for students with
special learning needs, foster youth, and children from low-income
families, who attend public, charter, or private schools. It is the
intent of the Legislature that the credit shall not exceed $200,000
per taxpayer, that the credit be awarded on a first-come, first-serve
basis, and that the credit have an aggregate cap of $50,000,000.
Vote: majority. Appropriation: no. Fiscal committee: no
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 Foster Youth Opportunities Investment Act.
SEC. 2. The Legislature finds and declares the
following:
(a) Providing tax incentives to encourage private investments for
the common good is sound public policy.
(b) Expanding educational opportunities and improving the quality
of, and access to, educational services within the state are valid
public purposes that the Legislature may promote using its sovereign
power to determine tax policy.
(c) Creative tax policy can inspire greater charitable
contributions and public-private partnerships that ensure additional
resources for the education of all children in California.
(d) Encouraging voluntary support for education, without prejudice
for or against any state-sanctioned educational enterprise promotes
the state's interest and common good in providing the highest quality
education to all children in the state.
(e) At a time when fiscal realities challenging California school
communities demand innovative ways to deliver vital education
services to public and private pupils in kindergarten and grades 1 to
12, inclusive, charitable giving for educational purposes should be
stimulated.
(f) California benefits from ensuring the accessibility and
viability of strong public, as well as, private school options in
educating students, especially for those with the greatest needs: our
foster youth.
SEC. 3. Section 23692 is added to the
Revenue and Taxation Code , to read:
23692. (a) For each taxable year beginning on or after January 1,
2015, and before January 1, 2020, there shall be allowed as a credit
against the "tax," as defined in Section 23036, an amount equal to
50 percent of the monetary contribution provided by a taxpayer to a
nonprofit education scholarship organization to fund qualified K-12
education scholarships for a specified pupil to attend private school
or to fund partial or full payments of fees associated with the
general costs of transportation to attend a private, public, or
charter school.
(b) For purposes of this section:
(1) "Education scholarship organization (ESO)" means a charitable
institution in this state that meets the following:
(A) Is organized and operated with the primary purpose of
providing qualified K-12 education scholarships to pupils attending a
private school in California.
(B) (i) Allocates at least 80 percent of contributions for which a
credit is claimed for qualified K-12 education scholarships for ESOs
with three or more years of audits.
(ii) Allocates at least 90 percent of contributions for which a
credit is claimed for qualified K-12 education scholarships for ESOs
with less than three years of audits.
(C) Makes qualified K-12 education scholarships available for
pupils from more than one school.
(D) Retains data on the progress of the pupils participating in
qualified K-12 education scholarships on nationally available
norm-referenced tests to evaluate the program's efficacy.
(E) Submits to the Franchise Tax Board financial and compliance
audit reports performed by a certified public accountant.
(F) Submits to the State Department of Education quarterly reports
on the number of qualified K-12 education scholarship recipients and
the schools that the recipients attend.
(G) Applies to participate in this credit program with the
Franchise Tax Board.
(2) "Nonprofit" means an organization that meets all of the
following requirements:
(A) Is formed as any of the following:
(i) A nonprofit public benefit corporation described in Part 2
(commencing with Section 5110) of Division 2 of Title 1 of the
Corporations Code.
(ii) A nonprofit religious corporation described in Part 4
(commencing with Section 9110) of Division 2 of Title 1 of the
Corporations Code.
(iii) Any other charitable corporation, as defined by Section
12582.1 of the Government Code.
(iv) A duly authorized foreign nonprofit corporation that has
complied with the registration requirements under Section 6910 of,
and Chapter 21 (commencing with Section 2100) of Division 1 of Title
1 of, the Corporations Code.
(B) An organization exempt from federal income tax as an
organization described in Section 501(c)(3) of the Internal Revenue
Code.
(3) "Qualified K-12 education scholarship" means either of the
following:
(A) An award of tuition assistance amounting to at least 65
percent of the basic state per-pupil funding, or a private school's
actual tuition and fees, whichever is less, that meets all of the
following requirements:
(i) An initial K-12 education scholarship shall be awarded to a
specified pupil in kindergarten through grade 12.
(ii) May be renewed at the request of the specified pupil for each
school year until graduation from high school.
(iii) Shall be portable and follow the specified pupil from one
school to another.
(iv) Shall be provided to a private school of the specified pupil'
s choosing under the following conditions:
(I) Each ESO shall establish criteria for granting scholarships
that meet the requirements of this section.
(II) The pupil receiving the assistance shall remain a specified
pupil.
(III) The specified pupil shall attend a private school.
(IV) The specified pupil shall remain enrolled and in attendance
at the private school throughout the school year unless excused by
the applicable program for illness or other good cause.
(V) The specified pupil and a parent or legal guardian of the
specified pupil shall comply with all applicable policies of the
private school.
(VI) A parent or legal guardian of the specified pupil shall
ensure that the pupil has reliable transportation to and from the
applicable program.
(B) Financial assistance for a specified pupil to partially or
fully pay for the fees associated with the general costs of
transportation to attend a private, public, or charter school.
(C) Financial assistance for a specified pupil to attend college
courses after graduation from high school provided by any public or
independent college where the specified pupil has been admitted to
attend.
(4) "Specified pupil" means a minor who has applied for a K-12
education scholarship and is a pupil within foster care who has been
placed in a foster care system within the State of California at any
time prior to graduating high school.
(A) A specified pupil is not required to be previously enrolled in
a public school or charter school to participate.
(B) A specified pupil remains eligible for a scholarship until he
or she graduates from high school or leaves the foster care program.
(5) "Private school" means a person, firm, association,
partnership, or corporation offering or conducting private school
instruction in the State of California on the elementary or high
school level, that meets all of the following requirements:
(A) Is accredited by the Western Association of Schools and
Colleges or an affiliated organization.
(B) Has filed a current private school affidavit with the State
Department of Education in accordance with Section 33190 of the
Education Code.
(C) Complies with applicable provisions of the Health and Safety
Code.
(D) Complies with applicable provisions of the Fair Employment and
Housing Act (Part 2.8 (commencing with Section 12900) of Division 3
of Title 2 of the Government Code).
(E) Utilizes background checks in connection with hiring all
school employees, consistent with the standards set forth in
subdivision (a) of Section 44237 of the Education Code.
(F) Requires a specified pupil to take a nationally available
norm-referenced test.
(G) Has obtained, if it has been in operation for less than three
years, a surety bond or letter of credit in an amount equal to the
value of the education scholarship payments for one quarter.
(c) The amount of the credit shall not exceed two hundred thousand
dollars ($200,000) per taxpayer, per taxable year.
(d) The taxpayer shall receive a certification by the Franchise
Tax Board upon a determination that the contribution meets the
requirements of this section and shall apply with the Franchise Tax
Board to receive a credit.
(e) 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 succeeding five years if necessary, until the
credit is exhausted.
(f) This credit shall be in lieu of any other credit or deduction
that the taxpayer may otherwise claim pursuant to this part with
respect to a monetary contribution described in subdivision (a).
(g) This credit shall be claimed on a timely filed original
return.
(h) (1) The aggregate amount of credits allowed under this section
shall not exceed fifty million dollars ($50,000,000) for each
calendar year.
(2) The allocation of credits shall be on a first-come,
first-serve basis.
(3) The Legislature may increase the amount in paragraph (1).
(i) The Franchise Tax Board and the State Department of Education
shall administer this credit.
(1) The Franchise Tax Board shall perform all of the following:
(A) Promulgate rules and regulations as necessary or appropriate
to implement this credit.
(B) Establish application forms and procedures.
(C) Track credits claimed.
(D) Post aggregate totals of the credits claimed on the Internet
Web site of the Franchise Tax Board.
(E) Determine when the aggregate total of the credits reaches
fifty million dollars ($50,000,000) for a calender year.
(F) Certify that the contributions meet the requirements of this
section needed to receive a credit.
(2) The State Department of Education shall do the following:
(A) Adopt rules necessary to determine whether the following meet
the requirements of this section:
(i) An ESO.
(ii) A contribution.
(B) Submit a list of eligible ESOs that comply with the
requirements of this section to the Franchise Tax Board annually by
March 15.
(j) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to the
guidelines or regulations adopted pursuant to this section.
(k) This section shall remain in effect only until December 1,
2020, and as of that date is repealed.
SEC. 4. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SECTION 1. It is the intent of the Legislature
to enact legislation that would allow a credit against the tax
imposed by the Corporation Tax Law in the amount of 50 percent of a
charitable contribution to a nonprofit education scholarship
organization that provides tuition and transportation fee assistance
for students with special learning needs, foster youth, and children
from low-income families, who attend public, charter, or private
schools. It is the intent of the Legislature that the credit shall
not exceed $200,000 per taxpayer, that the credit be awarded on a
first-come, first-serve basis, and that the credit have an aggregate
cap of $50,000,000.