Bill S.1812

SENATE DOCKET, NO. 1635 FILED ON: 1/19/2023

SENATE . . . . . . . . . . . . . . No. 1812

By Mr. Fattman, a petition (accompanied by bill, Senate, No. 1812) of Ryan C. Fattman for legislation to establish an empowerment scholarship tax credit to expand educational opportunities and fair access to quality education for low-and-moderate-income students. Revenue.

[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE SENATE, NO. 1864 OF 2021-2022.]

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act establishing an empowerment scholarship tax credit to expand educational opportunities and fair access to quality education for low-and-moderate-income students.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 6 of chapter 62 of the General Laws, as appearing in the 2020 Official Edition, is hereby amended by inserting after paragraph (w) the following new subsection:-

(x) (1) A taxpayer making a qualified donation to a qualified scholarship program offered to qualifying students to an accredited Massachusetts tuition-based school providing elementary and/or secondary education, shall be allowed a refundable credit against the taxes imposed by this chapter.

(2) As used in this subsection, the following words have the following meanings:-

“Qualified donation”, a monetary donation to a “qualified scholarship program”.

“Qualified scholarship program”, a means-tested scholarship program offered and maintained by any Massachusetts accredited tuition-based school providing elementary and/or secondary education.

“Qualifying students”, students residing in the Commonwealth of Massachusetts who would otherwise be accepted to any of the afore-referenced tuition-based schools but for the inability to afford tuition, fees and related education expenses, specifically only students whose household income levels do not exceed a specified amount or who are in foster care or out-of-home care.

“Accredited Massachusetts tuition-based school providing elementary and/or secondary education”, any elementary, middle or high school located in the Commonwealth of Massachusetts which has any nationally- or state-recognized accreditation and which maintains a means-based scholarship program for students who would otherwise be accepted to the school but for the inability to afford tuition, fees and related education expenses.

“Taxpayer”, a taxpayer subject to an excise under this chapter.

(3) A taxpayer making a qualified donation to a qualified scholarship program shall be allowed a refundable credit against the taxes imposed by this chapter. The credit shall be equal to 30 per cent of the amount of the qualified donation. The amount of the credit that may be claimed by a taxpayer for each qualified donation shall not exceed $250,000.

(4) If the amount of the credit allowed under this subsection exceeds the taxpayer’s liability, the commissioner shall treat the excess as an overpayment and shall pay the taxpayer the entire amount of the excess.

(5) All or any tax credits issued in accordance with this section may be in addition to any charitable deductions claimed on the taxpayer’s federal income tax return for the same qualified donations.

(6) Any tax credits which arise under this section from the qualified donation by a pass-through tax entity such as a trust, estate, partnership, corporation, limited partnership, limited liability partnership, limited liability corporation, subchapter S organization, or other fiduciary, shall be used either by such entity in the event it is the taxpayer on behalf of such entity or by the member, partner, shareholder, or beneficiary, as the case may be, in proportion to its interest in such entity in the even that income, deductions, and tax liability passes through such entity to such member, partner, shareholder, or beneficiary. Such tax credits may not be claimed by both the entity and the member, partner, shareholder, or beneficiary, for the same donation.

(7) Any tax credits which arise under this chapter from the qualified donations by a married couple shall be used only if the spouses file a joint return, if both spouses are required to file Massachusetts income tax returns. If only one spouse is required to file a Massachusetts income tax return, that spouse may claim the credit allowed by this chapter on a separate return.

(8) The secretaries of education and administration and finance, acting jointly and in writing, shall authorize tax credits under this subsection together with subsection 38II of chapter 63. The total cumulative value of the tax credits authorized pursuant to this section and said section 38II of said chapter 63 shall not exceed $20,000,000 annually. No credits shall be allowed under this subsection except to the extent authorized in this paragraph. The commissioner, after consulting with the secretaries concerning, among other things, the increased access to education opportunities’ objectives of this section, shall adopt regulations governing applications for and other administration of the tax credits.

SECTION 2. Section 38 of Chapter 63 of the General Laws, as appearing in the 2020 Official Edition, is hereby amended by inserting after Section 38HH the following new subsection: -

Section 38II. (a) As used in this subsection, the following words have the following meanings:-

“Qualified donation”, a monetary donation to a “qualified scholarship program”.

“Qualified scholarship program”, a means-tested scholarship program offered and maintained by any Massachusetts accredited tuition-based school providing elementary and/or secondary education.

“Taxpayer”, a taxpayer subject to an excise under this chapter.

(b) A taxpayer making a qualified donation to a qualified scholarship program shall be allowed a refundable credit against the taxes imposed by this chapter. The credit shall be equal to 30 per cent of the amount of the qualified donation. The amount of the credit that may be claimed by a taxpayer for each qualified donation shall not exceed $250,000.

(c) If the amount of the credit allowed under this subsection exceeds the taxpayer’s liability, the commissioner shall treat the excess as an overpayment and shall pay the taxpayer the entire amount of the excess.

(d) All or any tax credits issued in accordance with this section may be in addition to any charitable deductions claimed on the taxpayer’s federal income tax return for the same qualified donations.

(e) Any tax credits which arise under this section from the qualified donation by a pass-through tax entity such as a trust, estate, partnership, corporation, limited partnership, limited liability partnership, limited liability corporation, subchapter S organization, or other fiduciary, shall be used either by such entity in the event it is the taxpayer on behalf of such entity or by the member, partner, shareholder, or beneficiary, as the case may be, in proportion to its interest in such entity in the even that income, deductions, and tax liability passes through such entity to such member, partner, shareholder, or beneficiary. Such tax credits may not be claimed by both the entity and the member, partner, shareholder, or beneficiary, for the same donation.

(f) Any tax credits which arise under this chapter from the qualified donations by a married couple shall be used only if the spouses file a joint return, if both spouses are required to file Massachusetts income tax returns. If only one spouse is required to file a Massachusetts income tax return, that spouse may claim the credit allowed by this chapter on a separate return.

(g) The secretaries of education and administration and finance, acting jointly and in writing, shall authorize tax credits under this subsection together with subsection (x) of section 6 of chapter 62. The total cumulative value of the tax credits authorized pursuant to this section and said subsection (x) shall not exceed $20,000,000 annually. No credits shall be allowed under this subsection except to the extent authorized in this paragraph. The commissioner of revenue, after consulting with the secretaries concerning, among other things, the increased access to education opportunities’ objectives of this section, shall adopt regulations governing applications for and other administration of the tax credits.

SECTION 3. (a) Within 2 years after the effective date of this act, and annually thereafter, the state auditor shall issue an economic analysis report on the performance of this tax credit to the House and Senate Committees on Ways and Means and to the Joint Committee on Revenue. An economic analysis shall include, but not be limited to, a good faith estimate, on both a direct and indirect basis, as to the:

(A) Net change in state revenue; and

(B) Net change in state expenditures, which shall include, but not be limited to, costs of administering the tax credit; and

(D) Net change in public benefit.

(b) Within 2 years after the effective date of this act, and annually thereafter, each recipient school with a qualified scholarship program must report annually to the Department of Revenue, the following:

(A) The total number and dollar value of individual contributions; and

(B) The total number and dollar value of corporate contributions; and

SECTION 4. Sections 1 and 2 shall be effective for tax years beginning on and after January 1, 2023.

Name:	District/Address:
Ryan C. Fattman	Worcester and Hampden