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Legislation proposes a federal corporate tax credit for contributions to
scholarship and educational improvement organizations.
A newly introduced bill authored by Pennsylvania Senator Rick Santorum proposes to establish a federal corporate tax credit for contributions to non-profit education organizations serving both public and private schools.
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The bill, whose official title is "America's Communities Leveraging Assets for Students and Schools Act of 2006," or "America's CLASS Act," for short, would provide a tax credit equal to 50% of a donation to a qualifying organization, to a maximum credit of $75,000 in any single tax year, per corporation. The minimum contribution for purposes of receiving the proposed credit is $5,000.
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The bill describes a "Non-Profit Scholarship Organization" as an organization that:
- Is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Service Code; and
- Allocates not less than 80 percent of its gross annual receipts to provide scholarships to individuals to attend the school of the individual's choice.
The bill describes an "Education Improvement Organization" as an organization that:
- Is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Service Code; and
- Allocates not less than 80 percent of its gross annual receipts to provide funds for innovative programs in public schools.
Corporations opting to exercise the credit under terms of the proposed bill would not be allowed to exercise a charitable deduction for the same donation.
The proposed legislation contains no means testing, or other criteria used to designate eligibility for receipt of scholarships funded by donations to non-profit scholarship organizations; neither does the bill prohibit scholarship organizations from establishing these, or other criteria governing the award of funds.
View/Download a copy of the bill's text.
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