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Second Regular Session
Sixty-first General Assembly
LLS NO. 980075.01 MKH
HOUSE BILL 981185
STATE OF COLORADO
BY REPRESENTATIVES Pfiffner, Dean, Lamborn, May, Epps, Agler, K. Alexander, Allen, Arrington, C. Berry, Musgrave, Paschall, Salaz, Sinclair, and T. Williams;
also SENATORS Arnold and B. Alexander.
A BILL FOR AN ACT
CONCERNING THE CREATION OF EDUCATIONAL INCOME TAX
(Note: This summary applies to this bill as introduced
and does not necessarily reflect any amendments that may be subsequently
Establishes a nonrefundable income tax credit for persons who give voluntary cash contributions to a school tuition organization, who pay fees to a public school located in this state to support extracurricular activities, or who spend money to purchase instructional materials for nonpublic homebased educational programs. Disallows the credit for donations to a school tuition organization if the person is an individual and his or her dependents directly benefit from the donation.
Defines a "school tuition organization"
as a charitable organization in this state that is exempt from
federal taxation and that allocates a certain percentage of its
annual revenue for educational scholarships or tuition grants
to children allowing them to attend a nongovernmental primary
or secondary school in this state that does not discriminate on
the basis of race, color, handicap, familial status, or national
origin. Requires a school tuition organization to provide scholarships
or grants to more than one such school in this state.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. Part 1 of article 22 of title 39, Colorado Revised Statutes, is amended BY THE ADDITION OF THE FOLLOWING NEW SECTIONS to read:
3922121. Income tax credit for voluntary contributions to school tuition organizations legislative declaration. (1) THE GENERAL ASSEMBLY HEREBY FINDS AND DECLARES THAT:
(a) CHILDREN SHOULD BE AFFORDED OTHER EDUCATIONAL CHOICES IN ADDITION TO THE PUBLIC SCHOOLS IN THEIR DISTRICTS OF RESIDENCE;
(b) TUITION SCHOLARSHIPS PROVIDED BY SCHOOL TUITION ORGANIZATIONS WILL HELP RELIEVE THE FINANCIAL BURDEN ON PUBLIC SCHOOLS BY REDUCING THE PUBLIC SCHOOL STUDENT POPULATION;
(c) ENCOURAGING WHOLESOME COMPETITION BETWEEN PUBLIC AND PRIVATE SCHOOLS WILL PROMOTE THE STATE'S INTEREST IN PROVIDING THE HIGHEST QUALITY EDUCATION TO ALL CHILDREN IN THE STATE;
(d) THE TAX CREDIT PROVIDED IN THIS SECTION IS MERELY ONE OF MANY CREDITS AVAILABLE TO COLORADO TAXPAYERS; AND
(e) THE INTENDED BENEFICIARIES OF THE TAX CREDIT PROVIDED IN THIS SECTION ARE THE STUDENTS WHO FURTHER THEIR EDUCATIONS USING TUITION SCHOLARSHIPS FROM SCHOOL TUITION ORGANIZATIONS; THEREFORE, THE TAX CREDIT DOES NOT CONSTITUTE PUBLIC AID TO A NONPUBLIC SECTARIAN INSTITUTION OR OTHERWISE SUPPORT RELIGION.
(2) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY 1, 1998, ANY PERSON, AS DEFINED IN SECTION 3921101 (3), WHO MAKES VOLUNTARY CASH CONTRIBUTIONS DURING THE TAXABLE YEAR TO A SCHOOL TUITION ORGANIZATION, AS DEFINED IN PARAGRAPH (b) OF SUBSECTION (3) OF THIS SECTION, SHALL BE ALLOWED A CREDIT AGAINST THE INCOME TAX IMPOSED BY THIS ARTICLE. THE CREDIT ALLOWED PURSUANT TO THIS SUBSECTION (2) SHALL NOT EXCEED FIVE HUNDRED DOLLARS IN ANY TAXABLE YEAR FOR PERSONS WHO FILE A SINGLE RETURN FOR THE TAXABLE YEAR. THE FIVEHUNDREDDOLLAR LIMITATION ALSO APPLIES TO PERSONS WHO ARE INDIVIDUALS WHO ELECT TO FILE A JOINT RETURN FOR THE TAXABLE YEAR. A HUSBAND AND WIFE WHO FILE SEPARATE RETURNS FOR A TAXABLE YEAR IN WHICH THEY COULD HAVE FILED A JOINT RETURN MAY EACH CLAIM ONLY ONEHALF OF THE TAX CREDIT THAT WOULD HAVE BEEN ALLOWED FOR A JOINT RETURN.
(3) FOR PURPOSES OF THIS SECTION:
(a) "QUALIFIED SCHOOL" MEANS A NONGOVERNMENTAL PRIMARY OR SECONDARY SCHOOL IN THIS STATE THAT DOES NOT DISCRIMINATE ON THE BASIS OF RACE, COLOR, HANDICAP, FAMILIAL STATUS, OR NATIONAL ORIGIN AND THAT SATISFIES THE REQUIREMENTS PRESCRIBED BY LAW FOR PRIVATE SCHOOLS IN THIS STATE.
(b) "SCHOOL TUITION ORGANIZATION" MEANS A CHARITABLE ORGANIZATION IN THIS STATE THAT:
(I) IS EXEMPT FROM FEDERAL TAXATION UNDER SECTION 501 (c) (3) OF THE INTERNAL REVENUE CODE; AND
(II) ALLOCATES AT LEAST NINETY PERCENT OF ITS ANNUAL REVENUE FOR EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS TO CHILDREN ALLOWING THEM TO ATTEND ANY QUALIFIED SCHOOL; AND
(III) MAKES EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS AVAILABLE TO CHILDREN ATTENDING MORE THAN ONE QUALIFIED SCHOOL.
(4) IF THE CREDIT ALLOWED UNDER SUBSECTION (2) OF THIS SECTION EXCEEDS THE INCOME TAXES DUE ON THE PERSON'S INCOME, THE AMOUNT OF THE CREDIT NOT USED AS AN OFFSET AGAINST INCOME TAXES SHALL NOT BE REFUNDED BUT MAY BE CARRIED FORWARD AS A TAX CREDIT AGAINST THE PERSON'S SUBSEQUENT YEARS' INCOME TAX LIABILITY FOR A PERIOD NOT TO EXCEED FIVE YEARS AND SHALL BE APPLIED FIRST TO THE EARLIEST YEARS POSSIBLE.
(5) THE CREDIT ALLOWED UNDER SUBSECTION (2) OF THIS SECTION SHALL NOT BE ALLOWED IF THE PERSON WHO IS AN INDIVIDUAL DESIGNATES THE PERSON'S DONATION TO THE SCHOOL TUITION ORGANIZATION FOR THE DIRECT BENEFIT OF ANY DEPENDENT CHILD OF THE PERSON.
3922122. Tax credit for public school extracurricular activity fees and instructional materials for nonpublic homebased educational programs. (1) (a) FOR INCOME TAX YEARS COMMENCING ON AND AFTER JANUARY 1, 1998, A CREDIT IS ALLOWED AGAINST THE INCOME TAXES IMPOSED PURSUANT TO THIS ARTICLE FOR:
(I) THE AMOUNT OF ANY FEES PAID BY A PERSON, AS DEFINED IN SECTION 3921101 (3), DURING THE TAXABLE YEAR TO A PUBLIC SCHOOL LOCATED IN THIS STATE FOR THE SUPPORT OF EXTRACURRICULAR ACTIVITIES OF THE PUBLIC SCHOOL; AND
(II) THE AMOUNT OF MONEY SPENT BY A PERSON DURING THE TAXABLE YEAR TO PURCHASE INSTRUCTIONAL MATERIALS USED IN A NONPUBLIC HOMEBASED EDUCATIONAL PROGRAM.
(b) THE CREDIT PROVIDED PURSUANT TO THIS SUBSECTION (1) SHALL NOT EXCEED TWO HUNDRED DOLLARS IN ANY TAXABLE YEAR.
(2) THE TWOHUNDREDDOLLAR LIMITATION SET FORTH IN SUBSECTION (1) OF THIS SECTION SHALL ALSO APPLY TO PERSONS WHO ARE INDIVIDUALS WHO ELECT TO FILE A JOINT RETURN FOR THE TAXABLE YEAR. A HUSBAND AND WIFE WHO FILE SEPARATE RETURNS FOR A TAXABLE YEAR IN WHICH THEY COULD HAVE FILED A JOINT RETURN MAY EACH CLAIM ONLY ONEHALF OF THE TAX CREDIT THAT WOULD HAVE BEEN ALLOWED FOR A JOINT RETURN.
(3) FOR PURPOSES OF THIS SECTION:
(a) "EXTRACURRICULAR ACTIVITY" MEANS A SCHOOLSPONSORED ACTIVITY FOR WHICH ENROLLED AND NONENROLLED STUDENTS MUST PAY A FEE IN ORDER TO PARTICIPATE, INCLUDING BUT NOT LIMITED TO ACADEMIC, ARTISTIC, ATHLETIC, MUSICAL, RECREATIONAL, OR OTHER ACTIVITIES OFFERED BY THE SCHOOL.
(b) "INSTRUCTIONAL MATERIALS" INCLUDE, BUT ARE NOT LIMITED TO, SUPPLIES, TEXTBOOKS, PERIODICALS, COMPUTER HARDWARE, COMPUTER SOFTWARE, AND OTHER MATERIALS USED FOR EDUCATIONAL PURPOSES.
(c) "NONPUBLIC HOMEBASED EDUCATIONAL PROGRAM" HAS THE SAME MEANING AS SET FORTH IN SECTION 2233104.5, C.R.S.
(4) IF THE CREDIT ALLOWED UNDER SUBSECTION (1) OF THIS SECTION EXCEEDS THE INCOME TAXES DUE ON THE PERSON'S INCOME, THE AMOUNT OF THE CREDIT NOT USED AS AN OFFSET AGAINST INCOME TAXES SHALL NOT BE REFUNDED BUT MAY BE CARRIED FORWARD AS A TAX CREDIT AGAINST THE PERSON'S SUBSEQUENT YEARS' INCOME TAX LIABILITY FOR A PERIOD NOT TO EXCEED FIVE YEARS AND SHALL BE APPLIED FIRST TO THE EARLIEST YEARS POSSIBLE.
SECTION 2. Effective
date. This act shall take effect at 12:01 a.m.
on the day following the expiration of the ninetyday 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; 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.