First Regular Session Sixty-seventh General Assembly STATE OF COLORADO INTRODUCED LLS NO. 09-0681.01 Esther van Mourik HOUSE BILL 09-1195 HOUSE SPONSORSHIP Lambert, May SENATE SPONSORSHIP Brophy, Lundberg, Harvey, King K., Renfroe, Spence House Committees Senate Committees Education Finance A BILL FOR AN ACT Concerning the creation of an income tax credit for private school tuition. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Establishes a private school tuition income tax credit. Allows any private school to issue credit certificates to taxpayers that apply and meet certain qualifications. Allows the credit to be carried forward for a specified time but not refunded. Specifies the amount of the credit. Grants the department of revenue rule-making authority. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Short title. This act shall be known and may be cited as the "Quality Education and Budget Reduction Act". SECTION 2. Part 5 of article 22 of title 39, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 39-22-531. Private school tuition income tax credit - rules - definitions. (1) As used in this section, unless the context otherwise requires: (a) "Credit certificate" means a statement issued by a private school certifying that a child enrolled in the private school is a qualified child as defined in paragraph (d) of this subsection (1) and that the taxpayer is entitled to an income tax credit as specified in this section. (b) "Department" means the department of revenue. (c) "Private school" shall have the same meaning as set forth in section 22-30.5-103 (6.5), C.R.S. (d) "Qualified child" means a child enrolled on a full-time basis in a public school in the state or any child entering kindergarten but shall not include any child currently enrolled in any private school or home-schooled in the state prior to the effective date of this section. (e) "State average per pupil revenue" shall have the same meaning as set forth in section 22-54-129 (1) (e), C.R.S. (f) "Taxpayer" means a resident individual or a domestic or foreign corporation subject to the provisions of part 3 of this article, a partnership, S corporation, or other similar pass-through entity, estate, or trust, and a partner, member, and subchapter S shareholder of such pass-through entity. (2) (a) For income tax years commencing on or after January 1, 2009, a private school shall issue a credit certificate to any taxpayer that enrolls a dependent qualified child in the private school or that offers a scholarship to a qualified child for enrollment in the private school. The credit certificate shall allow the taxpayer to claim an income tax credit with respect to the income taxes imposed by this article. (b) A private school shall issue any credit certificates pursuant to paragraph (a) of this subsection (2) upon application for a credit by a taxpayer. (c) (I) The amount of the credit authorized in this section shall equal the scholarship offered to a qualified child or fifty percent of the previous year's state average per pupil revenue, whichever is less. (II) The state average per pupil revenue shall be provided to the department by the department of education within thirty days after the effective date of this section and every January 15 thereafter. (d) The credit certificate shall be submitted by the taxpayer to the department with the taxpayer's income tax return for that tax year. (3) If the credit allowed under this section exceeds the income taxes otherwise due on the taxpayer's income, the amount of the credit not used as an offset against income taxes may be carried forward as a tax credit against subsequent years' income tax liability for a period not exceeding three years and shall be applied first to the earliest years possible. Any credit remaining after said period shall not be refunded or credited to the taxpayer. (4) If a taxpayer receiving a credit allowed in this section is a partnership, limited liability company, S corporation, or similar pass-through entity, the taxpayer may allocate the credit among its partners, shareholders, members, or other constituent taxpayers in any manner agreed to by the partners, shareholders, members, or other constituent taxpayers. The taxpayer shall certify to the department the amount of the credit allocated to each partner, shareholder, member, or other constituent taxpayer. Each partner, shareholder, member, or other constituent taxpayer shall be allowed to claim the amount subject to any restrictions set forth in this section. (5) No later than December 15, 2009, and no later than December 15 of each year thereafter, each private school that issues a credit certificate shall provide the department with an electronic report of any credit certificate issued for that income tax year that includes the following information: (a) The taxpayer's name; (b) The taxpayer's Colorado account number or social security number; and (c) Any associated taxpayers' names and Colorado account numbers or social security numbers if the credit allowed in this section is allocated from a pass-through entity pursuant to subsection (4) of this section. (6) The executive director of the department may promulgate rules as may be necessary to administer and enforce any provision of this section. The rules shall be promulgated in accordance with article 4 of title 24, C.R.S. (7) Any taxpayer that offsets a tax deficiency with a credit authorized in this section that is disallowed pursuant to this section shall be liable for such tax deficiency, interest, and penalties as may be specified in this article or otherwise provided by law. SECTION 3. Act subject to petition - effective date. This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1 (3) of the state constitution, (August 4, 2009, if adjournment sine die is on May 6, 2009); except that, if a referendum petition is filed against this act or an item, section, or part of this act within such period, then the act, item, section, or part, if approved by the people, shall take effect on the date of the official declaration of the vote thereon by proclamation of the governor.