hb-311

H0311aa.............................................by REVENUE AND TAXATION
INCOME TAX CREDITS - Adds to existing law to provide an income tax credit
for qualifying donations made to qualifying students in support of the
education of a student who is educated outside the public school system.

02/21    House intro - 1st rdg - to printing
02/22    Rpt prt - to Rev/Tax
03/08    Rpt out - to Gen Ord
03/12    Rpt out amen - to engros
03/13    Rpt engros - 1st rdg - to 2nd rdg as amen
03/14    2nd rdg - to 3rd rdg as amen
    3rd rdg as amen - PASSED - 36-32-2
      AYES -- Barraclough, Barrett, Bedke, Bell, Bradford, Callister,
      Campbell, Clark, Collins, Crow, Denney, Ellis, Eskridge, Field(20),
      Gould, Hadley, Hammond, Harwood, Hornbeck, Kendell, Langford,
      Loertscher, Mader, McKague, Moyle, Pearce, Pischner, Roberts, Sali,
      Stevenson, Swan(Block), Tilman, Wheeler, Wood, Young, Mr. Speaker
      NAYS -- Bieter, Black, Boe, Bolz, Bruneel, Chase, Cuddy, Deal,
      Ellsworth, Field(13), Gagner, Henbest, Higgins, Jaquet, Jones,
      Kellogg, Lake, Marley, Meyer, Montgomery, Mortensen, Moss, Pomeroy,
      Raybould, Ridinger, Robison, Sellman, Shepherd, Smith, Smylie, Stone,
      Trail
      Absent and excused -- Kunz, Schaefer
    Floor Sponsor -- Barrett
    Title apvd - to Senate
03/15    Senate intro - 1st rdg - to Educ

Bill Text

||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-sixth Legislature                  First Regular Session - 2001

                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 311

                             BY REVENUE AND TAXATION COMMITTEE

1                                        AN ACT
2    RELATING TO INCOME TAX CREDITS; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY
3        THE ADDITION OF A NEW SECTION 63-3029M, IDAHO CODE, TO PROVIDE TAX CREDIT
4        FOR QUALIFYING DONATIONS MADE TO QUALIFYING STUDENTS IN SUPPORT OF THE
5        EDUCATION OF THE STUDENT WHO IS EDUCATED OUTSIDE THE PUBLIC SCHOOL SYSTEM;
6        AND PROVIDING AN EFFECTIVE DATE.

7    Be It Enacted by the Legislature of the State of Idaho:

8        SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is
9    hereby amended by the addition thereto of a NEW SECTION, to be known and des-
10    ignated as Section 63-3029M, Idaho Code, and to read as follows:

11        63-3029M. SCHOOL CHOICE TAX CREDIT. (1) The following definitions shall
12    apply to this section:
13        (a) "Qualified donation," hereinafter referred to as donation, means a
14        donation which is in compliance with the terms and conditions of this sec-
15        tion.
16        (b) "Qualified donor," which may hereinafter also be referred to as
17        donor, means any person who or qualified entity which:
18             (i) Is qualified to file an Idaho full-year resident tax return; and
19             (ii) Either makes a qualified donation to the qualified parent or
20             qualified guardian of a qualifying student, or is a qualified parent
21             or qualified legal guardian who expends funds directly on the educa-
22             tion of the qualifying student.
23        (c) "Qualified entity," which may hereinafter also be referred to as
24        entity, means a corporation or a limited liability company which elects to
25        be taxed as a corporation.
26        (d) "Qualified parent" or "qualified legal guardian," which may hereinaf-
27        ter also be referred to as parent or legal guardian, means the parent or
28        legal guardian of a qualifying student, which parent or legal guardian:
29             (i) Had the actual physical custody of the qualifying student for at
30             least six (6) months of the specific year in question; and
31             (ii) Resided in the state of Idaho for at least ten (10) months of
32             the particular year and was qualified to file an Idaho full-year res-
33             ident tax return for such year.
34        (e) "Qualifying student," which may hereinafter also be referred to as
35        student, as to any specific year, means a child who:
36             (i)   Has attained, on or before January 1 of such year, the age of
37             seven (7) years of age or more, but has not attained, on or before
38             December 31 of such year, nineteen (19) years of age; and
39             (ii) During said specific year has not been enrolled in a public
40             school within the state of Idaho for more than a total, during such
41             year, of thirty (30) school days; and
42             (iii) Is in compliance with all applicable laws relating to the edu-
43             cation of such child, including, if applicable, the compulsory school

                                           2

1             attendance requirements of section 9, article IX, of the constitution
2             of the state of Idaho, and of section 33-202, Idaho Code; and
3             (iv) Has a qualified legal guardian or qualified parent.
4        (f) "Year" means a calendar year unless otherwise clear from the context
5        of the term.
6        (2) The purpose of this section is to relieve the financial and enroll-
7    ment pressures within the Idaho public school system by allowing any donor to
8    receive a credit against taxes due to the state of Idaho when the donor
9    donates money directly to a parent or legal guardian of a student, or makes
10    expenditures as a parent or legal guardian of a student, for the education of
11    such student.
12        (3) It is the responsibility of the parent or legal guardian of a student
13    to maintain accurate records of the financial support received for each stu-
14    dent for which the parent or legal guardian has received one (1) or more dona-
15    tions. The parent or legal guardian shall not accept donations for a student
16    in excess of fifty percent (50%) of the previous year's total expenditures per
17    full-term average daily attendance as determined by the department of educa-
18    tion, unless the student is a special needs student, in which case the parent
19    or legal guardian shall not accept donations for such special needs student in
20    excess of sixty-five percent (65%) of the previous year's total expenditures
21    per full-term average daily attendance as determined by the department of edu-
22    cation.
23        (4) A form prescribed by the state tax commission shall be furnished by
24    the parent or legal guardian to each donor for each student for whom a dona-
25    tion was made in a tax year, by not later than January 30 of the year follow-
26    ing the tax year in which the donation was made. The parent or legal guardian
27    shall also file such form with the parent or legal guardian's Idaho tax return
28    for the tax year in which any funds were expended by the parent or legal
29    guardian for the education of the student. The form shall contain at least the
30    following information:
31        (a) The name, address, social security number and amount of donations by
32        each donor; and
33        (b) The name, address and age on January 1 and December 31 of the tax
34        year in question, and social security number of the student; and
35        (c) The name, address and social security number of the parent or legal
36        guardian of the student; and
37        (d) A certification that the student was in fact a qualified student for
38        the tax year in question and that the donations were actually used for the
39        education of the student, and a statement of the basis by which the stu-
40        dent was in fact a qualified student for the tax year in question.
41    The donor shall file a copy of each such form with the Idaho tax return of the
42    donor for the year in which the donation was made.
43        (5) For taxable years commencing on and after January 1, 2002, there
44    shall be allowed, at the election of the taxpayer and subject to the limita-
45    tions provided herein, a credit against the income tax imposed by the provi-
46    sions of this chapter for donations made to or by a parent or legal guardian
47    in support of a student, as follows:
48        (a) For individual tax returns, at the election of the taxpayer, either:
49             (i) A credit equal to the donation, not to exceed the lesser of one
50             thousand dollars ($1,000) or forty percent (40%) of the tax liability
51             for the taxable year; or
52             (ii) A credit equal to the donation but not to exceed twelve and one-
53             half percent (12.5%) of the tax liability for the taxable year.
54        (b) For corporate or entity tax returns, at the election of such tax-
55        payer, either:

                                           3

1             (i) A credit equal to the total donations by the corporation or
2             entity for the tax year, but not to exceed the lesser of ten thousand
3             dollars ($10,000) or forty percent (40%) of the tax liability for the
4             taxable year of the corporation or entity; or
5             (ii) A credit equal to the total donations by the corporation or
6             entity for the tax year, but not to exceed twelve and one-half per-
7             cent (12.5%) of the tax liability of the corporation or entity for
8             the taxable year.
9        (6) The students who may receive donations and on whom the tax credit may
10    be claimed in tax year 2002 shall be limited to one (1) age group of students,
11    and one (1) additional age group shall be added in each succeeding year until
12    the year 2013, at which time all students are eligible for donations as fol-
13    lows:
14        (a) For tax year 2002, the credit may be claimed only on qualifying stu-
15        dents who attained eighteen (18) years of age in 2002.
16        (b) For tax year 2003, the credit may be claimed on qualifying students
17        who attained seventeen (17) years of age in 2003 or eighteen (18) years of
18        age in 2002 or 2003.
19        (c) For tax year 2004, and each succeeding year thereafter through tax
20        year 2012, the credit may be claimed for all age groups included in the
21        preceding years who are still qualifying students, adding for the current
22        year the next lower age group immediately preceding the last qualifying
23        age group from the prior year.
24        (d) For tax year 2013, and each tax year thereafter, the credit allowed
25        in this section shall be allowed on all qualifying students.
26        (7) In the event that the alleged student was in fact not a qualified
27    student for the year in question, the liability for recapture of the improp-
28    erly taken credit shall attach to the parent or legal guardian of the alleged
29    student for whom the credit was taken; provided however, that if the donor had
30    actual knowledge of the failure of the alleged student to be a qualifying stu-
31    dent at the time the donor filed the Idaho tax return in which the credit was
32    taken, the qualified donor shall also be liable for the recapture.
33        (8) As an inducement to relieve the financial and enrollment pressure in
34    public schools, a public school district may make a donation to an enrolled
35    child's parents or legal guardian to transfer the child to a private or home
36    school or to otherwise become a qualifying student. The amount which a school
37    district may donate shall not exceed fifty percent (50%) of the previous
38    year's total expenditures per full-term average daily attendance as determined
39    by the department of education, unless the enrolled child is a special needs
40    child, in which case the amount donated may not exceed sixty-five percent
41    (65%) of the previous year's total expenditures per full-term average daily
42    attendance as determined by the department of education.
43        (9) The state tax commission shall provide forms for computing the tax
44    credit and for the statement described in subsection (4) of this section. The
45    form for computation of the tax credit shall include the name, address, pri-
46    vate school attended or affidavit of home study, and social security number of
47    the student. The form shall also include the name, address and social security
48    number of the parent or guardian of the student.
49        (10) No parent or legal guardian of a home-schooled child and no educa-
50    tional institution shall, on account of educating a child on whom a tax credit
51    is claimed under the provisions of this section, be considered a recipient of
52    governmental financial assistance for the purpose of imposing any rule, guide-
53    line, order, requirement or regulation upon such parent, guardian, home school
54    or educational institution, or for any other purpose.
55        (11) The state tax commission shall compile a report each year which

                                           4

1    includes the number of returns on which this credit was taken, the total
2    amount of tax credited, and the number of students on whom the credit was
3    taken, and shall make said report available to the general public.

4        SECTION 2. This act shall be in full force and effect on and after Janu-
5    ary 1, 2002.

Amendment

||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-sixth Legislature                  First Regular Session - 2001

                                                     Moved by    Wood

                                                     Seconded by Wheeler

                              IN THE HOUSE OF REPRESENTATIVES
                              HOUSE AMENDMENT TO H.B. NO. 311

1                               AMENDMENTS TO SECTION 1
2        On page 1 of the printed bill, in line 39, following "been" insert: "home
3    schooled or"; on page 2, in line 11, delete "such" and insert: "a qualifying";
4    on page 3, in line 35, delete "or home"; in line 46, delete "or affidavit of
5    home study"; in line 49, delete "home-schooled child" and insert: "qualifying
6    student"; and in line 53, delete ", home school".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)

||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-sixth Legislature                  First Regular Session - 2001

                              IN THE HOUSE OF REPRESENTATIVES

                               HOUSE BILL NO. 311, As Amended

                             BY REVENUE AND TAXATION COMMITTEE

1                                        AN ACT
2    RELATING TO INCOME TAX CREDITS; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY
3        THE ADDITION OF A NEW SECTION 63-3029M, IDAHO CODE, TO PROVIDE TAX CREDIT
4        FOR QUALIFYING DONATIONS MADE TO QUALIFYING STUDENTS IN SUPPORT OF THE
5        EDUCATION OF THE STUDENT WHO IS EDUCATED OUTSIDE THE PUBLIC SCHOOL SYSTEM;
6        AND PROVIDING AN EFFECTIVE DATE.

7    Be It Enacted by the Legislature of the State of Idaho:

8        SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is
9    hereby amended by the addition thereto of a NEW SECTION, to be known and des-
10    ignated as Section 63-3029M, Idaho Code, and to read as follows:

11        63-3029M. SCHOOL CHOICE TAX CREDIT. (1) The following definitions shall
12    apply to this section:
13        (a) "Qualified donation," hereinafter referred to as donation, means a
14        donation which is in compliance with the terms and conditions of this sec-
15        tion.
16        (b) "Qualified donor," which may hereinafter also be referred to as
17        donor, means any person who or qualified entity which:
18             (i) Is qualified to file an Idaho full-year resident tax return; and
19             (ii) Either makes a qualified donation to the qualified parent or
20             qualified guardian of a qualifying student, or is a qualified parent
21             or qualified legal guardian who expends funds directly on the educa-
22             tion of the qualifying student.
23        (c) "Qualified entity," which may hereinafter also be referred to as
24        entity, means a corporation or a limited liability company which elects to
25        be taxed as a corporation.
26        (d) "Qualified parent" or "qualified legal guardian," which may hereinaf-
27        ter also be referred to as parent or legal guardian, means the parent or
28        legal guardian of a qualifying student, which parent or legal guardian:
29             (i) Had the actual physical custody of the qualifying student for at
30             least six (6) months of the specific year in question; and
31             (ii) Resided in the state of Idaho for at least ten (10) months of
32             the particular year and was qualified to file an Idaho full-year res-
33             ident tax return for such year.
34        (e) "Qualifying student," which may hereinafter also be referred to as
35        student, as to any specific year, means a child who:
36             (i)   Has attained, on or before January 1 of such year, the age of
37             seven (7) years of age or more, but has not attained, on or before
38             December 31 of such year, nineteen (19) years of age; and
39             (ii) During said specific year has not been home schooled or
40             enrolled in a public school within the state of Idaho for more than a
41             total, during such year, of thirty (30) school days; and
42             (iii) Is in compliance with all applicable laws relating to the edu-
43             cation of such child, including, if applicable, the compulsory school

                                           2

1             attendance requirements of section 9, article IX, of the constitution
2             of the state of Idaho, and of section 33-202, Idaho Code; and
3             (iv) Has a qualified legal guardian or qualified parent.
4        (f) "Year" means a calendar year unless otherwise clear from the context
5        of the term.
6        (2) The purpose of this section is to relieve the financial and enroll-
7    ment pressures within the Idaho public school system by allowing any donor to
8    receive a credit against taxes due to the state of Idaho when the donor
9    donates money directly to a parent or legal guardian of a student, or makes
10    expenditures as a parent or legal guardian of a student, for the education of
11    a qualifying student.
12        (3) It is the responsibility of the parent or legal guardian of a student
13    to maintain accurate records of the financial support received for each stu-
14    dent for which the parent or legal guardian has received one (1) or more dona-
15    tions. The parent or legal guardian shall not accept donations for a student
16    in excess of fifty percent (50%) of the previous year's total expenditures per
17    full-term average daily attendance as determined by the department of educa-
18    tion, unless the student is a special needs student, in which case the parent
19    or legal guardian shall not accept donations for such special needs student in
20    excess of sixty-five percent (65%) of the previous year's total expenditures
21    per full-term average daily attendance as determined by the department of edu-
22    cation.
23        (4) A form prescribed by the state tax commission shall be furnished by
24    the parent or legal guardian to each donor for each student for whom a dona-
25    tion was made in a tax year, by not later than January 30 of the year follow-
26    ing the tax year in which the donation was made. The parent or legal guardian
27    shall also file such form with the parent or legal guardian's Idaho tax return
28    for the tax year in which any funds were expended by the parent or legal
29    guardian for the education of the student. The form shall contain at least the
30    following information:
31        (a) The name, address, social security number and amount of donations by
32        each donor; and
33        (b) The name, address and age on January 1 and December 31 of the tax
34        year in question, and social security number of the student; and
35        (c) The name, address and social security number of the parent or legal
36        guardian of the student; and
37        (d) A certification that the student was in fact a qualified student for
38        the tax year in question and that the donations were actually used for the
39        education of the student, and a statement of the basis by which the stu-
40        dent was in fact a qualified student for the tax year in question.
41    The donor shall file a copy of each such form with the Idaho tax return of the
42    donor for the year in which the donation was made.
43        (5) For taxable years commencing on and after January 1, 2002, there
44    shall be allowed, at the election of the taxpayer and subject to the limita-
45    tions provided herein, a credit against the income tax imposed by the provi-
46    sions of this chapter for donations made to or by a parent or legal guardian
47    in support of a student, as follows:
48        (a) For individual tax returns, at the election of the taxpayer, either:
49             (i) A credit equal to the donation, not to exceed the lesser of one
50             thousand dollars ($1,000) or forty percent (40%) of the tax liability
51             for the taxable year; or
52             (ii) A credit equal to the donation but not to exceed twelve and one-
53             half percent (12.5%) of the tax liability for the taxable year.
54        (b) For corporate or entity tax returns, at the election of such tax-
55        payer, either:

                                           3

1             (i) A credit equal to the total donations by the corporation or
2             entity for the tax year, but not to exceed the lesser of ten thousand
3             dollars ($10,000) or forty percent (40%) of the tax liability for the
4             taxable year of the corporation or entity; or
5             (ii) A credit equal to the total donations by the corporation or
6             entity for the tax year, but not to exceed twelve and one-half per-
7             cent (12.5%) of the tax liability of the corporation or entity for
8             the taxable year.
9        (6) The students who may receive donations and on whom the tax credit may
10    be claimed in tax year 2002 shall be limited to one (1) age group of students,
11    and one (1) additional age group shall be added in each succeeding year until
12    the year 2013, at which time all students are eligible for donations as fol-
13    lows:
14        (a) For tax year 2002, the credit may be claimed only on qualifying stu-
15        dents who attained eighteen (18) years of age in 2002.
16        (b) For tax year 2003, the credit may be claimed on qualifying students
17        who attained seventeen (17) years of age in 2003 or eighteen (18) years of
18        age in 2002 or 2003.
19        (c) For tax year 2004, and each succeeding year thereafter through tax
20        year 2012, the credit may be claimed for all age groups included in the
21        preceding years who are still qualifying students, adding for the current
22        year the next lower age group immediately preceding the last qualifying
23        age group from the prior year.
24        (d) For tax year 2013, and each tax year thereafter, the credit allowed
25        in this section shall be allowed on all qualifying students.
26        (7) In the event that the alleged student was in fact not a qualified
27    student for the year in question, the liability for recapture of the improp-
28    erly taken credit shall attach to the parent or legal guardian of the alleged
29    student for whom the credit was taken; provided however, that if the donor had
30    actual knowledge of the failure of the alleged student to be a qualifying stu-
31    dent at the time the donor filed the Idaho tax return in which the credit was
32    taken, the qualified donor shall also be liable for the recapture.
33        (8) As an inducement to relieve the financial and enrollment pressure in
34    public schools, a public school district may make a donation to an enrolled
35    child's parents or legal guardian to transfer the child to a private school or
36    to otherwise become a qualifying student. The amount which a school district
37    may donate shall not exceed fifty percent (50%) of the previous year's total
38    expenditures per full-term average daily attendance as determined by the
39    department of education, unless the enrolled child is a special needs child,
40    in which case the amount donated may not exceed sixty-five percent (65%) of
41    the previous year's total expenditures per full-term average daily attendance
42    as determined by the department of education.
43        (9) The state tax commission shall provide forms for computing the tax
44    credit and for the statement described in subsection (4) of this section. The
45    form for computation of the tax credit shall include the name, address, pri-
46    vate school attended, and social security number of the student. The form
47    shall also include the name, address and social security number of the parent
48    or guardian of the student.
49        (10) No parent or legal guardian of a qualifying student and no educa-
50    tional institution shall, on account of educating a child on whom a tax credit
51    is claimed under the provisions of this section, be considered a recipient of
52    governmental financial assistance for the purpose of imposing any rule, guide-
53    line, order, requirement or regulation upon such parent, guardian or educa-
54    tional institution, or for any other purpose.
55        (11) The state tax commission shall compile a report each year which

                                           4

1    includes the number of returns on which this credit was taken, the total
2    amount of tax credited, and the number of students on whom the credit was
3    taken, and shall make said report available to the general public.

4        SECTION 2. This act shall be in full force and effect on and after Janu-
5    ary 1, 2002.

Statement of Purpose / Fiscal Impact

                    STATEMENT OF PURPOSE

                          RS 11146

This legislation creates a pilot program designed to relieve
the financial and enrollment pressures within the Idaho Public
School System. It allows any qualified individual(s) or business
entities who pay state income tax or state corporate income tax
to take a tax credit when they directly donate money for an
eligible child who is not enrolled in a public school.
The pilot program is phased in over 12 years beginning in
2002 with students who are 18 years of age. Then in 2003,
students who are 17 and 18 years of age become eligible.., and so
on until 2013 when all eligible students may receive qualified
donations.
   This legislation caps donations to be collected by the
parent or legal guardian at 50% of the previous years ADA as
determined by the Department of Education plus provides a cap on
the amount a qualified donor may donate.
   Qualified individuals and businesses have a choice on their
donation caps. They can select a fixed monetary cap or a
percentage schedule. In no case, can the donations exceed 40% of
the donor’s overall state income tax liability.
   To insure constitutionality, this bill was fashioned using
the Idaho Attorney General’s opinion 97-2. Donations flow to the
child’s qualified parent(s) or legal guardian, not to the private
school. Further, this is tax legislation and will be enforced by
the Idaho State Tax Commission.
   There are provisions that account for movement in and out of
public schools; also, for movement when students migrate in and
out of state.
                        FISCAL IMPACT

The total number of private and home schooled students,
according to the Department of Education for 2001, is
approximately 13,382 of which 5.2% are 18 years of age equaling
707 total eligible for the first year of the pilot program. 50%
of the previous years ADA is estimated at $2,527, making the 2002
fiscal impact $1.78 million.
In 2003, the estimated number of eligible 17 and 18 year old
students will be 1484 and the credit will be approximately $2,628
making the fiscal impact $3.9 million.

Contact
Name:   Representative Lenore Barrett, Senator Jerry Thorne
Phone: 322-1000
        Representative Lawrence Denney
        Henry Kulczyk

STATEMENT OF PURPOSE/FISCAL NOTE H 311