HBA-MPM H.B. 3645 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3645 By: Krusee Public Education 4/21/1999 Introduced BACKGROUND AND PURPOSE H.B. 3645 creates a tax credit for contributions from corporations made to nonprofit scholarship funding organizations certified by the commissioner of education. Additionally, this bill provides the criteria by which an organization can be certified by the commissioner. This bill also sets out the time period for which a contribution made within the perimeters of this Act may be taken as a credit. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of education in SECTION 1 (Section 171.705, Education Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 171, Tax Code, by adding Subchapter N, as follows: SUBCHAPTER N. TAX CREDIT FOR CERTAIN CONTRIBUTIONS TO CERTAIN NONPROFIT SCHOLARSHIP FUNDING ORGANIZATIONS Sec. 171.701. DEFINITIONS. Defines for purposes of this subchapter the following terms: "commissioner," "educationally disadvantaged student," "eligible nonpublic school," and "nonprofit scholarship funding organization." Sec. 171.702. CREDIT. Entitles a corporation meeting the eligibility requirement of this subchapter to a tax credit allowed by this subchapter. Sec. 171.703. CREDIT FOR CERTAIN CONTRIBUTIONS TO NONPROFIT SCHOLARSHIP FUNDING ORGANIZATION. Entitles a corporation to a credit under this subchapter for the amount of money it contributes to a nonprofit scholarship funding organization (organization) only if the commissioner of education (commissioner) certifies that the organization is eligible under proposed Section 171.704, Tax Code, to award scholarships for which a corporation may claim a credit under this subchapter and the contribution is used to provide one or more scholarships toward nonpublic school tuition costs of educationally disadvantaged students who meet specific criteria. Sec. 171.704. ELIGIBILITY REQUIREMENTS FOR NONPROFIT SCHOLARSHIP FUNDING ORGANIZATION. (a) Authorizes an organization to apply to the commissioner for certification of eligibility to award scholarships for which a corporation may claim a credit under this subchapter, the amount of which may not exceed $5,000. (b) Authorizes the commissioner to certify an organization only if the organization agrees to: _award scholarships using a random selection process without regard to certain factors; _file reports relating to scholarships with the commissioner, as required by the commissioner; and _adopt accountability measures approved by the commissioner to ensure the proper expenditure of scholarship funds. (c) Authorizes the commissioner to revoke a certification if it is found that an organization has violated an agreement under this section. Provides that revocation of this certification does not affect the validity of a tax credit relating to a scholarship awarded prior to the revocation. Sec. 171.705. ELIGIBILITY REQUIREMENTS FOR NONPUBLIC SCHOOL. (a) Authorizes a nonpublic school to apply to the commissioner for determination of eligibility to accept students whose tuition costs are paid by scholarships for which a corporation may claim a credit under this subchapter. (b) Authorizes the commissioner to determine that a nonpublic school is eligible only if the school agrees to: _accept or reject a student receiving a scholarship subject to this subchapter using criteria that do not discriminate on the basis of certain criteria; _administer or permit the public school to which the student would otherwise be assigned to administer certain assessment instruments; _report the results of the assessment instruments to the commissioner; and _provide information necessary for the school to participate in the Public Education Information Management System (PEIMS) to the extent necessary to provide relevant information relating to the scholarship student as determined by the commissioner. (c) Provides that in addition to the requirements prescribed by Subsection (b), a nonpublic school is required to be accredited by a recognized accrediting agency or receive a wavier from accreditation from the commissioner. (d) Requires the commissioner, by rule, to adopt procedures for the administration of those assessment instruments in eligible nonpublic schools to ensure the security of the instruments specified by Subsection (b) and the validity of the results of those instruments. (e) Authorizes the commissioner to revoke a determination of eligibility under this section if the commissioner finds that a nonpublic school has violated this section or a rule adopted or agreement made under it. Provides that revocation of a determination of eligibility does not affect the validity of a tax credit relating to a scholarship awarded prior to the revocation. Sec. 171.706. APPLICATION FOR CREDIT. Provides that a corporation must apply for credit under this subchapter on or with the tax report for the period for which the credit is claimed. Requires the comptroller of public accounts to prescribe the form and manner of proof required to obtain the credit. Sec. 171.707. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. Authorizes a corporation to claim a credit under this subchapter for a contribution during an accounting period only against tax owed for the corresponding privilege period. Prohibits a corporation from claiming a credit that exceeds the amount of tax due of that report. Prohibits a credit allowed under this subchapter from being carried forward or backward. Sec. 171.708. TRANSFER OF CREDIT. Prohibits a corporation from conveying, assigning, or transferring the credit authorized by this subchapter to another entity unless all of the corporation's assets are conveyed, assigned, or transferred in the same transaction. SECTION 2. Makes application of this Act prospective. SECTION 3. Effective date: January 1, 2000. SECTION 4. Emergency clause.