Establishes an education investment tax credit

Summary of specific provisions

Section 3 amends section 606 of the tax law for the purposes of receiving voluntary cash contribution by defining "public education entity"; as any public school district; an individual public school, including a charter school; a nonprofit organization for the purpose of providing programming for performing arts, visual arts, civic instruction, pre- kindergarten instruction, or any other educational purpose within such schools; a nonprofit organization that allows donors to choose school projects for charitable support that are identified by teachers or other school personnel; and the university of the state of New York research fund.

"Local education fund" is defined as a charitable organization in this state that is exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code and is established for the explicit purpose of supporting at least one public school, including a charter school, or a specific public school district.

"Educational scholarship organization" is defined as a charitable organization in this state that is exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code, that allocates at least ninety percent of its donations for educational scholarships.

Section 3 limits the amount of the tax credit to seventy-five percent of the taxpayer's tax liability, and also provides for a tax credit for up to $75 for the purchase of instructional materials and classroom supplies for schools by school personnel, or for non-public home-based instruction.

Section 4 amends section 210 of the tax law by defining for the purposes of receiving voluntary cash contributions, "public education entity", "local education fund", and "educational scholarship organization".

Section 5 requires approval of tax credits on a first-come, first-served basis and provides that no taxpayer may apply for a

credit in excess of 5% of $125 million for tax year 2013, and in excess of 5% of $150 million for tax years thereafter.

Further, section 5 disallows the portion of the credit equal to the amount saved from the federal tax liability given a taxpayer's donation to an IRS recognized 501(c)(3) charitable organization.

Section 5 also provides that fifty percent of the available credits be afforded to taxpayers donating to public education entities, local education funds, and for the purchase by school personnel for classroom instructional material and supplies, and that fifty percent be afforded to educational scholarship organizations and for home-based instructional materials.

Section 6 imposes reporting requirements of the tax credits from the department of taxation and finance to the governor, temporary president of the senate, speaker of the assembly, and chairs of the senate finance, and assembly ways and means committees.

Section 7 restricts the commissioners of education and taxation & finance from imposing additional regulations on educational programs in receipt of funding from educational scholarship organizations.

Section 8 provides that this act shall take effect immediately.

Justification

At a time when the state is considering ways of reducing the tax burden for New York State residents and educators are seeking an expansion of financial resources, charitable giving for educational purposes should be stimulated. permitting public education entities such as school districts and individual public schools, including charter schools, and non-profits that promote the arts, civics, and pre-k instruction, to accept and receive voluntary cash contributions will lessen the need for additional tax revenue, encouraging voluntary support for education without prejudice for or against any state-sponsored educational enterprise. The bill promotes the state's interest in providing the highest quality education to all children in the state. The tax credit does not constitute public aid to non-public sectarian institutions. Permitting school personnel to claim a credit for the purchase of classroom instructional materials and supplies will insure a wider availability of such materials and supplies for all students.

Prior legislative history

2012: A.5081 Referred to Ways and Means, S.2732 Referred to Investigations & Government Operations 2011: Died in Assembly, Passed Senate 2009-10: Similar to A.10862 - Died in Ways and Means Similar to S.5146 - Died in Finance

Fiscal implications

The Department of Taxation & Finance has yet to project a first-year revenue reduction. However, the total tax credit available is capped at $250 million for the 2013 tax year. The total available credit increases to $300 million in 2014 tax year, and annually thereafter.

Effective date

This act shall take effect immediately.