Transcript PA Education Improvement Tax Credit Program

PA EDUCATIONAL
IMPROVEMENT TAX CREDIT
PROGRAM (EITC)
STAR Foundation
January 2017
HISTORY OF THE CREDIT
• Act 4 of 2001 amended the Public School
Code to provide for the establishment of the
Educational Improvement Tax Credit (EITC).
• This Act authorized the award of tax credits to
businesses that made contributions to certain
organizations (scholarship and/or educational
improvement organizations).
HISTORY OF THE CREDIT
• Beginning in 2008/2009, the credit became
available to individuals, via a pass-through of
the credit from an S corp., partnership, or
LLC.
• Today, the credit pool is $125 million
• $75 million to Scholarship Organizations (SO);
• $37.5 million to Education Improvement
Organizations (EIO); and
• $12.5 million to Pre-K Scholarship
Organizations (PKSO).
HISTORY OF THE CREDIT
• In July 2012, Governor Tom Corbett signed the
tax code bill that expands the existing
Educational Improvement Tax Credit (EITC)
program, eliminates the delay for some
companies that wish to contribute, and creates
another category of tax-credit supported
scholarships called Opportunity Scholarship Tax
Credit Program (OSTC) targeted at students in
neighborhoods with perpetually underperforming
public schools.
• $50 million is available in this pool.
THOUGHT PROCESS
1. Do you like paying PA taxes?
2. Do you like paying federal income taxes?
3. Are you philanthropic?
NO to question one and/or two and YES to
question three should prompt you to consider
this credit and discuss it with your tax advisor.
TAXES THE CREDIT CAN BE CLAIMED
AGAINST
• Corporate net income tax
• Bank and trust company shares tax
• Title insurance companies shares tax
• Insurance premiums tax
• Mutual thrift institutions tax
• PERSONAL INCOME TAX (via pass-through entities
such as S corps. and LLCs)
NOTE – the business must be an operating business and
authorized to do business in Pennsylvania.
APPLICATION
The application is incredibly simple:
• One page form
• Very simple/basic information regarding the
company applying for the credit
• Disclose amount of donation and credit for which
you are applying
• Which “type” of organization the contribution is
being made to – do not have to disclose who the
nonprofit organization (NPO) is on the
application.
PA DEPARTMENT OF COMMUNITY &
ECONOMIC DEVELOPMENT LINKS
• EITC Overview: Click here
http://www.newpa.com/programs/educational
-improvement-tax-credit-program-eitc/
• OSTC Overview: Click here
http://www.newpa.com/programs/opportunityscholarship-tax-credit-program-ostc/
PA DEPARTMENT OF COMMUNITY &
ECONOMIC DEVELOPMENT LINKS
• Business Application Guide: Click here
http://www.newpa.com/download/ostc-eitchandbook-2014/?wpdmdl=56878
• Single Application Login: Click here
https://www.esa.dced.state.pa.us/Login.aspx
WHAT CAN BE CONTRIBUTED?
• Cash (Cash is king!)
• Personal property (additional information
must be attached to the application)
TO WHOM CAN YOU CONTRIBUTE?
THE
STAR FOUNDATION
OF THE
DIOCESE OF ERIE
TO WHOM CAN YOU CONTRIBUTE?
• Scholarship Organizations (SO) and Opportunity
Scholarship Tax Credit Organizations (OSTC)
(STAR FOUNDATION)
• Educational Improvement Organizations (EIO)
• Pre-K Scholarship Organizations (PKSO)
(STAR FOUNDATION)
All of the above types of organizations must go
through an application process to be approved
by Pennsylvania Department of Community and
Economic Development (PA DCED).
TO WHOM CAN YOU CONTRIBUTE?
STAR Foundation
429 East Grandview Blvd.
Erie, PA 16504
http://www.eriercd.org/tuition.asp
Contact: Charles Banducci
Phone: (814) 824-1188
E-mail: [email protected]
AMOUNT OF CREDIT
SO or EIO
• Tax credit is 75% of amount contributed to an
SO or EIO.
• If a company commits to making two years of
contributions, the credit is 90% of the
contribution in each year to an SO or EIO.
Maximum credit a company can receive in any
one year for contributions to an SO or EIO is
$750,000.
AMOUNT OF CREDIT
PKSO
• Tax credit is 100% of the first $10,000
contributed and 90% for amount above
$10,000.
Maximum credit a company can receive in any
one year for contribution to a PKSO is
$200,000.
TIMING OF APPLICATION
First Timers:
• Application is due ON or AFTER July 1st.
TIMING OF APPLICATION
Renewal Applications:
Second year of two-year commitment (for the
90% credit for SO and EIO contributions) and
businesses just completing a two-year
commitment:
• Applications can be submitted beginning on May 15th
through June 30th. If received after June 30th the
application is processed along with all other 1st year
applications with no guarantee of receiving the credit.
EARNING THE CREDIT
Typically, in August or September, the company
will receive an approval (or denial) letter from
DCED for the credit applied for.
• The company has 60 days from the date of
DCED letter to make the contribution to the
eligible SO, OSTC, EIO, or PKSO.
• The company has 90 days from the date of the
DCED letter to remit proof (written
acknowledgement from the STAR Foundation) of
the contribution to the DCED.
• If either of these deadlines is missed, DCED will
rescind the credit.
EARNING THE CREDIT
Once DCED has received the proof of the
contribution, they submit the information to
the Pennsylvania Department of Revenue so
the company’s account is updated for the
credit.
When the company files its tax return, the
credit is applied first before any cash
payments that may have been made.
THANK YOU
2016-2017
STAR Foundation Awards
Number of Awards
224
Number of Awards
1,700
Number of Awards
146
Pre-K
Award Amount
$81,000
K-12
Award Amount
$1,740,000
OSTC
Award Amount
$260,000
Avg. Award
$360
Avg. Award
$1,000
Avg. Award
$1,800
THANK YOU
From: Chuck Banducci and Bill Grant