2013 Regular Session
To: Education; Finance
By: Senator(s) Collins
AN ACT TO CREATE THE LOW-INCOME STUDENT SCHOLARSHIP TAX CREDIT ACT; TO DEFINE CERTAIN TERMS USED HEREIN; TO PROVIDE THAT QUALIFYING STUDENTS SHALL BE ELIGIBLE TO USE A TAX CREDIT SCHOLARSHIP FROM CERTAIN SCHOLARSHIP ORGANIZATIONS TO COVER ELIGIBLE EDUCATIONAL EXPENSES; TO PROVIDE FOR A CORPORATE TAX CREDIT NOT TO EXCEED 75% OF THE TAXPAYERS TAX LIABILITY FOR CONTRIBUTIONS TO CERTAIN SCHOLARSHIP ORGANIZATIONS; TO STIPULATE THE REQUIREMENTS FOR NONPUBLIC SCHOOLS ACCEPTING STUDENTS FOR ENROLLMENT WHO RECEIVE SCHOLARSHIPS UNDER THE PROVISIONS OF THIS ACT; TO PRESCRIBE THE REQUIREMENTS FOR SCHOLARSHIP ORGANIZATIONS ADMINISTERING TAX CREDIT SCHOLARSHIPS; TO ALLOW UNUSED CREDITS TO BE CARRIED FORWARD FOR FIVE YEARS; TO REQUIRE THE DEPARTMENT OF REVENUE TO PROVIDE AN ANNUAL LEGISLATIVE REPORT ON THE TAX CREDITS ALLOWED UNDER THIS ACT; TO ALLOW PARENTS TO REQUEST AN ASSESSMENT OF EDUCATIONAL PROGRESS OF STUDENTS ENROLLED; TO PRESCRIBE THE POWERS AND DUTIES OF THE DEPARTMENT OF REVENUE WITH REGARD TO THE ADMINISTRATION OF THIS ACT; TO PROVIDE THAT NONPUBLIC SCHOOLS WHICH ADMIT STUDENTS RECEIVING TAX CREDIT SCHOLARSHIPS ARE NOT AGENTS OF THE STATE OR FEDERAL GOVERNMENT; TO PROVIDE THAT THE PROVISIONS OF THIS ACT SHALL BE SEVERABLE IF ONE OR MORE PROVISION IS DEEMED UNCONSTITUTIONAL; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. This act shall be known and may be cited as the "Low-Income Student Scholarship Tax Credit Act."
SECTION 2. As used in this act, the following terms shall have the meanings herein ascribed unless the context clearly indicates otherwise:
(a) "Department" means the Department of Revenue.
(b) "Nonpublic school" means a school, other than a public school, at which the compulsory attendance requirements of the relevant sections in the state code may be met and that does not discriminate based on the grounds of race, color, or national origin.
(c) "Owner or operator" means an owner, president, officer, or director of an eligible nonprofit scholarship funding organization or a person with equivalent decision-making authority over an eligible nonprofit scholarship funding organization.
(d) "Parent" means the natural or adoptive parent or legal guardian of a child, including a foster care parent.
(e) "Public school" means a public school in the state as defined in Section 37-13-91 of the state code.
(f) "Qualifying student" means a student who is a legal resident of Mississippi, no younger than five (5) years of age and no older than twenty (20) years of age. Once approved as a qualifying student, the student will remain qualified until the student has obtained a high school diploma or its equivalent, or reached twenty (20) years of age.
(g) "Receipt" means a document developed by the Department of Revenue that is issued by the receiving school to the organization which makes payment for education expenses on behalf of a qualifying student and that contains, at a minimum:
(i) The name and address of the school if a school is attended;
(ii) The name, social security number and address of the qualifying student for whom the expense has been paid;
(iii) The name of the payer and the date and amount of the expense paid; and
(iv) Receipts for all specific, reimbursed educational expenses.
(h) "Receiving school" means a nonpublic school which the qualifying student seeks to attend.
(i) "Resident public school district" means the public school district in which a student resides.
(j) "Release of information form" means a document developed by a receiving school, signed by the parent or guardian of a qualifying student, and which acknowledges the consent of the parent or guardian to the release of information contained in the receipt.
(k) "Scholarship receipt" means a document developed by the Department of Revenue and issued by the scholarship organization to a corporation or a person that makes a contribution to a scholarship organization.
(l) "State" means the State of Mississippi.
(m) "Scholarship organization" means a charitable organization incorporated or qualified to do business in this State that:
(i) Is exempt from federal income taxation pursuant to Section 501(c)(3) of the Internal Revenue Code;
(ii) Complies with the applicable state and federal antidiscrimination provisions; and
(iii) Is registered with the Office of the Secretary of State.
(n) "Education Expenses" means expenses incurred by or on behalf of a qualifying student, including, but not limited to, school supplies, textbooks, fees, tuition for attending a nonpublic school, uniforms, educational software, tutoring services, online learning services and similar educational expenses. Education expenses shall not include fees or expenses related to athletic programs or transportation expenses.
SECTION 3. (1) A qualifying student is eligible to utilize a tax credit scholarship from a scholarship organization to cover eligible educational expenses provided that the student is not enrolled in a public school at the time the education expenses are incurred.
(a) The student is a member of a household whose total annual income the year before he or she receives a scholarship under this program does not exceed an amount equal to two and one-half (2-1/2) times the income standard used to qualify for a reduced price lunch under the national free or reduced price lunch program established under 42 USCS Section 1751 et seq. Once a student receives a scholarship under this program, the student will remain eligible regardless of household income until the student graduates from high school or reaches twenty (20) years of age; or
(b) The student is a sibling of a student who is already receiving a tax credit scholarship from a scholarship organization; or
(c) The student is in foster care; or
(d) The student requires, or if he were to attend a public school, would require an individualized education plan or a 504 accommodation plan; or
(e) The student is the dependent of a veteran or active military personnel.
(2) For each scholarship organization, the value of a tax credit scholarship given to a student may not exceed:
(a) In the first year of the program, eighty percent (80%) of state per pupil funding, defined as all funds derived from state revenue sources for any public K-12 educational purpose divided by average daily attendance for the state.
(b) In the second year and each year thereafter, the amount shall be equal to the amount established in the first program year, adjusted annually for inflation according to the federal Consumer Price Index, for each qualifying student who meets the criteria provided in subsection (1) of this section.
(3) Education expenses paid for using a tax credit scholarship from a scholarship organization may not be claimed as a credit against the scholarship recipient's personal income tax liability, except as provided in Section 4(2) of this act.
SECTION 4. (1) A corporation may claim a credit up to seventy-five percent (75%) of the taxpayer's tax liability for a contribution made to a scholarship organization.
(2) A person who files a state income tax return and who is not a dependent of another taxpayer may claim a credit up to seventy-five percent (75%) of the taxpayer's state income tax liability for a contribution made to a scholarship organization or for itemized and documented educational expenses made on behalf of a dependent qualifying student for whom the taxpayer is the parent.
(3) A corporate tax credit may not be claimed without a scholarship receipt from a scholarship organization.
(4) A taxpayer can assign his contribution to specific students in an amount no greater than the average value of a tax credit scholarship for the scholarship organization as established according to Section 3(2) of this act.
SECTION 5. A nonpublic school, excepting any home school, that accepts students pursuant to this act shall:
(a) Be included on a list of eligible schools published by the Department of Revenue;
(b) Comply with state and federal antidiscrimination laws;
(c) Meet state and local health and safety laws and codes;
(d) Conduct criminal background checks on employees and then exclude from employment any people not permitted by state law to work in a nonpublic school;
(e) Comply with state statutes relating to nonpublic education;
(f) Accept tax credit scholarship students on the basis of the admissions criteria of the school within the school's capacity to accept additional students.
SECTION 6. A scholarship organization shall:
(a) Provide scholarships, from eligible contributions, to qualifying students to defray education expenses;
(b) Not have an owner or operator who also owns or operates a nonpublic school that participates in the tax credit scholarship program;
(c) Not have an owner or operator who in the last seven (7) years has filed for personal bankruptcy or corporate bankruptcy in a corporation of which he or she owned more than twenty percent (20%);
(d) Not restrict or reserve scholarships for use at a single nonpublic school or provide scholarships to a child of an owner or operator of a nonpublic school;
(e) Verify the eligibility through transcripts and attendance records of a qualifying student who applies for a tax credit scholarship;
(f) Limit administrative expenses to what is reasonable and necessary, as determined by the Office of the Secretary of State, for the organization's management and distribution of eligible contributions pursuant to this section;
(g) Expend net eligible contributions remaining after reasonable and necessary administrative expenses are expended for annual or partial-year scholarships during the state fiscal year in which these contributions are collected. No more than ten percent (10%) of these net eligible contributions remaining after administrative expenses during the state fiscal year in which such contributions are collected may be carried forward to the following state fiscal year. Any amounts carried forward must be expended for annual or partial-year scholarships in the following state fiscal year. Net eligible contributions remaining on June 13 of each year that are in excess of the ten percent (10%) that must be carried forward must be returned to the State Treasury for deposit in the General Revenue Fund;
(h) Maintain separate accounts for scholarship funds, operating funds, funds given as donation tax credits and funds given as standard charitable donations;
(i) Provide to the Department of Revenue an annual financial and compliance report of its accounts and records. It also must include a report on financial statements presented in accordance with generally accepted accounting principles provided by the American Institute of Certified Public Accountants for nonprofit organizations and a determination of compliance with statutory eligibility and expenditure requirements provided in this section. Reports must be provided to the Department of Revenue within one hundred eighty (180) days after completion of the eligible nonprofit scholarship funding organization's fiscal year; and
(j) Submit to the department a quarterly report that includes the number and dollar amount of contributions to the scholarship organization; the number and dollar amount of tax credit scholarships, including the average amount of each scholarship; and the number of applicants for tax credit scholarships, including the number turned down for a scholarship and the reasons for rejection.
SECTION 7. (1) Taxpayers may claim tax credits only for contributions actually made to a scholarship organization or for education expenses actually incurred by the taxpayer.
(2) On a form prescribed by the department, taxpayers will provide a detailed listing of educational expenses against which a credit is claimed. They will attach to the form all receipts necessary to document these expenses.
(3) A taxpayer may carry forward unused credits for five (5) years.
SECTION 8. The Mississippi Department of Revenue shall:
(a) Develop, and annually verify and update, by March 15, a list of eligible nonprofit scholarship funding organizations that meet the requirements of Section 6 of this act. The department shall post this list on the department's Internet website and update the list at least quarterly;
(b) Notify an eligible nonprofit scholarship organization of any of the organization's identified students who are receiving tax credit scholarships from other eligible nonprofit scholarship organizations;
(c) Establish a process by which individuals may notify the Department of Revenue of any violation by a parent or nonpublic school of state laws relating to program participation. The Department of Revenue shall conduct an inquiry of any written complaint of a violation of this section, or make a referral to the appropriate agency for an investigation, if the complaint is signed by the complainant and is legally sufficient. A complaint is legally sufficient if it provides facts that show that a violation of this section or any rule adopted by the Department of Revenue is likely to have occurred. In order to determine legal sufficiency, the Department of Revenue may require supporting information or documentation from the complainant; and
(d) Require quarterly reports by an eligible nonprofit scholarship organization regarding the number of students participating in the scholarship program; and the nonpublic schools at which the students are enrolled.
SECTION 9. The Department of Revenue shall annually report to the Legislature, as well as the public at large, the following information:
(a) The number of corporate taxpayers claiming the tax credit specified in Section 4(1) of this act and the average total dollar amount claimed;
(b) The number of individual taxpayers claiming the respective individual income tax credits specified in Section 4(2) of this act and the average and total dollar amount claimed for each credit;
(c) The number of schools accepting tax credit scholarship students;
(d) The number of scholarship organizations;
(e) The number and dollar amount of contributions to scholarship organizations;
(f) The number and dollar amount of tax credit scholarships, including the average amount of each scholarship; and
(g) The number of applicants for tax credit scholarships, including the number turned down for a scholarship and the reasons for rejection.
SECTION 10. (1) To ensure that schools provide academic accountability to parents of enrolled students and supporting scholarship organizations, receiving schools annually shall make available to parents and supporting scholarship organizations an assessment of educational progress. This provision shall not be construed to require any particular means or method of assessing educational progress on the part of education service providers, except as provided in this section.
(2) Upon request by the student's parents, a receiving school shall administer nationally recognized norm-referenced tests that measure learning gains in math and language arts in grades that require testing under the state's accountability testing laws for public schools, provided that:
(a) The costs of the testing requirements shall be covered by the tax credit scholarships distributed by the scholarship organizations; and
(b) The results of the tests shall be provided to the parents of each student tested.
(3) At its discretion, a receiving school may administer the state assessment tests instead of nationally recognized norm-referenced tests.
SECTION 11. The provisions of this act regarding nonpublic schools and their relation to student scholarship organizations apply only to nonpublic schools that choose to accept tax credit scholarship students.
SECTION 12. (1) A receiving nonpublic school that accepts students benefiting from scholarships, grants or tax credits is not an agent or arm of the state or federal government and participating, nonpublic schools shall possess the freedom to provide for the educational needs of their students without governmental control.
(2) Except as provided by this act, the Department of Education, Department of Revenue or any other state agency may not regulate the educational program of a receiving nonpublic school that accepts tax credit scholarship students pursuant to this act.
SECTION 13. If any provision of this law or its application is held invalid, the invalidity does not affect other provisions or applications of this law which can be given effect without the invalid provision or application and to this end the provisions of this law are severable.
SECTION 14. This act shall take effect and be in force from and after July 1, 2013.