By: Brittany Flaherty Theis
For months, Whitt Law attorneys at the Springfield and Aurora offices have handled questions from school district administrators regarding school funding legislation as it was proposed, withdrawn, or amended (numerous times) in the Illinois General Assembly, including after it was initially vetoed by the Governor. Later, we closely monitored the developments following the amendatory veto, which culminated in the approval of Senate Bill 1947 and the enactment of Public Act 100-0465. Questions currently posed relate to a variety of matters within the final legislation – the evidence-based model, voter-initiated referenda, tax credits, and provisions relating to charter schools. In a series of blog posts over the next few months, we will address different components of Public Act 100-0465.
Today, November 6, 2017, the Illinois Department of Revenue (the “Department”) published an Informational Bulletin for “Scholarship Granting Organizations” and an FAQ regarding the Invest in Kids Act (the “Act”), which was adopted on August 31, 2017. The Act allows income tax credits for taxpayers who make authorized contributions to a Scholarship Granting Organization. Information for taxpayers regarding the benefits and approval process for tax credits, as well as details regarding which students are eligible, were previously describe in a separate Information Brochure published in October 2017. The Department’s new publications provide more information about the implementation of the Act.
Specifically, the Department announced today that beginning on January 2, 2018, it will start accepting applications from individuals and businesses who wish to participate in the tax credit program. To apply, individuals and businesses must report their intention to make an authorized contribution to an approved Scholarship Granting Organization, which in turn provides scholarships to authorized students to attend qualified non-public schools in Illinois. The Act provides that taxpayers may receive a tax credit of 75% of their approved contribution.
Under the Act, the Department is authorized to issue up to $75 million in tax credits per calendar year, beginning in 2018 (for taxes filed in 2019). Illinois has been divided into 5 regions for purposes of awarding the tax credits, which will be awarded on a first-come, first-served basis in a geographically proportionate manner. The boundaries of the regions align with the boundaries of the Illinois Appellate Court districts and include: Region 1 (Cook County), Region 2 (Northern Counties), Region 3 (North Central Counties), Region 4 (Central Counties), and Region 5 (Southern Counties). Tax credits will be awarded based upon each region’s estimated proportionate share of the tax credits, which are currently estimated to be: 51.22% to Region 1, 23.09% to Region 2, 9.97% to Region 3, 7.5% to Region 4, and 8.22% to Region 5.
Previously, the Department announced that organizations will be able to apply for Scholarship Granting Organization status beginning December 1, 2017. To be deemed a Scholarship Granting Organization, each organization must have been granted an exemption from taxation under Section 501(c)(3) of the Internal Revenue Code; submit documentation regarding the organization’s governing board, officers, directors, and others; and provide a copy of the organization’s most recent financial audit, among other details and certifications.
Notably, the Act was part of Senate Bill 1947 – the legislation that contained Illinois’s new evidence-based model for funding education in the State – and later became Public Act 100-0465. Most of the seminars regarding Senate Bill 1947 and the evidence-based model give at least passing attention to the tax credit provisions of the bill that make up the Act as details regarding the program unfold. It may be important to note at this juncture that many groups lobbying on behalf of school districts throughout the State opposed this tax credit program, which has also commonly been referred to as a “voucher program.”
The attorneys at Whitt Law will continue to monitor developments related to Public Act 100-0465 and participate in industry discussions regarding its implications. If you are an individual taxpayer or a not-for-profit interested in the Invest in Kids Act tax credits, or you represent a school district and have questions regarding components of Public Act 100-0465 more generally, please contact Whitt Law Attorney Brittany Flaherty Theis.