HB577 By Representative Williams (P) RFD Ways and Means Education Rd 1 30-APR-15

SYNOPSIS: This bill would provide an annual tax credit of up to 50 percent of the tax liability of an individual or business who donates to a nonprofit organization that provides grants to a school to support digital learning through the use of technology to increase student academic performance, subject to certain annual maximum amounts.

This bill would require the Department of Revenue to establish a procedure to approve the formation of a nonprofit organization that provides digital learning grants for a school to improve learning with technology.

This bill would provide that the grants may be used to purchase technology devices, improve infrastructure, strengthen wireless connectivity, or improve instructional practices with technology.

This bill would provide that a grant funding request shall require a 50 percent match by the requesting organization in cash or other form of negotiable instrument.

This bill would provide that a nonprofit organization, to remain eligible, shall expend 98 percent of its funds on sub-grants, and have an established record of administering funds throughout the state.

This bill would provide that the Department of Revenue may adopt rules regarding the implementation and administration of this act.

A BILL TO BE ENTITLED AN ACT

Relating to tax credits; to provide a tax credit equal to 50 percent of the donation up to 50 percent of the tax liability of an individual or business who donates to a nonprofit organization that provides grants to a school to support digital learning through the use of technology to increase student academic performance; to require the Department of Revenue to establish a procedure to approve the formation of a nonprofit organization that provides digital learning grants for a school to improve learning with technology; to provide that the grants may be used to purchase technology devices, improve infrastructure, strengthen wireless connectivity, or improve instructional practices with technology; to provide that a grant funding request shall require a 50 percent match by the requesting organization in cash or other form of negotiable instrument; to provide that a nonprofit organization, to remain eligible, shall expend 98 percent of its funds on sub-grants, and have a record of administering funds throughout the state; and to provide that the Department of Revenue may adopt rules regarding the implementation and administration of this act.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. The Legislature hereby declares that a digital learning tax credit would provide funding through eligible nonprofit organizations to school districts to help increase access to technology and improve technology infrastructure to support student learning initiatives, including online assessments.

Section 2. (a) For tax years beginning on and after January 1, 2016, an Alabama tax credit is made available to businesses that donate to eligible nonprofit organizations in this state.

(b) The Department of Revenue shall certify all eligible nonprofit organizations wishing to participate in the Digital Learning Tax Credit Program. Organizations that are qualified to participate shall:

(1) Be exempt from federal taxation under Section 501(c)(3) of the Internal Revenue Code.

(2) Be established to support public education.

(3) Have the capacity to make educational grants available to school districts from more than one public or eligible nonpublic school.

(4) Have an established record of administering funds throughout the state.

(5) Have the capacity to submit timely reports to the Department of Revenue on the gross amount expended for digital learning grants.

(c) Qualifying nonprofit organizations that receive digital learning tax credit funds shall do all of the following:

(1) Expend at least 98 percent of its funds on grants.

(2) Allocate at least 50 percent of its funds to rural districts.

Section 3. The Department of Revenue shall promulgate reasonable rules to effectuate the intent and administration of this section.

Section 4. (a) There is created within the Education Trust Fund a separate account named the Digital Learning Tax Credit Account.

(b) The Commissioner of Revenue shall annually certify to the Comptroller the amount of income tax credits due to taxpayers under this act and the Comptroller shall transfer into the Digital Learning Tax Credit Account only the amount from sales tax revenues within the Education Trust Fund that is sufficient for the Department of Revenue to use to cover the income tax credits for the applicable tax year.

(c) The Commissioner of Revenue shall annually distribute the funds in the Digital Learning Tax Credit Account to qualified nonprofit organizations.

(d) Eligible taxpayers may claim credits for donations to eligible nonprofit digital tax credit organizations approved by the Department of Revenue.

(e)(1) A taxpayer may carry forward unused credits for three tax years. The total amount of tax credits that may be granted in the first tax year of operation under this act shall not exceed fifty million dollars ($50,000,000). Following each year in which the total amount of credits claimed are equal to or more than 90 percent of the program cap, the maximum credit will increase by 25 percent.

(2) Businesses that donate to the organizations shall receive an income tax credit equal to 50 percent of their donation, up to 50 percent of their tax liability.

(3) The Department of Revenue shall:

a. Develop a procedure for authorizing taxpayers to claim credits on a first-come basis and notify taxpayers in a timely manner regarding the status of their claim. A taxpayer approved for claiming a credit shall be given priority in claiming a credit of at least the same amount in subsequent consecutive years.

b. Notify an eligible nonprofit digital tax credit funding organization of any of the taxpayers who are receiving tax credits.

c. Require quarterly reports by an eligible nonprofit digital tax credit funding organization regarding the number of school districts participating in the program, grant amount and uses, and additional information only to the minimum extent necessary for the Department of Revenue to ensure general compliance with the law.

d. Each school district that receives funds under this act shall be required to submit a report to the Department of Revenue annually on the usage of funds and return on investment as it relates to student academic achievement including utilization of technology in the classroom and the provision of educational services to students with disabilities.

e. The Department of Revenue shall aggregate all grantee reports and submit a report on the use of funds to the Governor, President of the Senate, and Speaker of the House of Representatives annually. The report shall be submitted no later than October 1 each year.

Section 5. This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law, and the credits provided by this act shall begin with the 2015 tax year.

Tax Credits

Taxation

Schools

Technology

Business and Commerce