[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 301 Introduced in Senate (IS)]
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118th CONGRESS
1st Session
S. 301
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for qualified elementary and secondary education tuition.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 7, 2023
Mr. Rubio introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for qualified elementary and secondary education tuition.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Educational Opportunities Act of
2023''.
SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO SCHOLARSHIP GRANTING
ORGANIZATIONS.
(a) Credit for Individuals.--
(1) In general.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 25E the following new section:
``SEC. 25F. CONTRIBUTIONS FOR QUALIFIED ELEMENTARY AND SECONDARY
EDUCATION TUITION.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the amount of qualified
contributions made by the taxpayer during the taxable year.
``(b) Dollar Limitation.--The amount allowed as a credit under
subsection (a) with respect to any taxpayer shall not exceed--
``(1) $2,250, in the case of a married individual filing a
separate return, and
``(2) $4,500, in any other case.
``(c) Qualified Contributions; Other Definitions.--For purposes of
this section--
``(1) Qualified contribution.--The term `qualified
contribution' means a charitable contribution (as defined by
section 170(c)) to a scholarship granting organization.
``(2) Scholarship granting organization.--The term
`scholarship granting organization' means any organization--
``(A) which is described in section 501(c)(3) and
exempt from tax under section 501(a),
``(B) whose exclusive purpose is to provide
scholarships for the qualified elementary and secondary
education expenses of eligible students, and
``(C) which meets the requirements of subsection
(d).
``(3) Eligible student.--The term `eligible student' means
an individual--
``(A) who is enrolled in a school (within the
meaning of section 530(b)(3)(B), after the application
of paragraph (4)(B)), and
``(B) who is a member of a household with a total
annual household income which does not exceed 250
percent of the Federal poverty guidelines (as
determined by the Secretary of Health and Human
Services).
``(4) Qualified elementary and secondary education
expenses.--The term `qualified elementary and secondary
education expenses' has the meaning given such term by section
530(b)(3), except that--
``(A) `child' shall be substituted for
`beneficiary' and `a child' shall be substituted for
`the designated beneficiary of the trust' in clauses
(i) and (iii) of subparagraph (A) thereof, and
``(B) in applying such paragraph, the term `school'
shall only include schools which--
``(i) charge tuition for attendance,
``(ii) comply with all applicable State
laws, including laws relating to unlawful
discrimination, health and safety requirements,
and criminal background checks of employees,
and
``(iii) agree to provide annual reports as
described in subsection (e) to the scholarship
granting organization and to the parents or
guardians of eligible students receiving a
scholarship from the scholarship granting
organization.
``(5) Scholarship.--The term `scholarship' does not include
any payment to fulfill or fund any obligation or project of any
school or school system to provide a free, appropriate public
education.
``(d) Requirements for Scholarship Granting Organizations.--An
organization meets the requirements of this section if--
``(1) such organization does not provide grants to eligible
students for any expenses other than qualified elementary and
secondary education expenses,
``(2) such organization provides grants to--
``(A) more than 1 student, and
``(B) students attending more than 1 school,
``(3) such organization does not earmark or set aside
contributions for scholarships on behalf of any particular
student or to any specific school or group of schools,
``(4) such organization takes appropriate steps to verify
the annual household income and family size of eligible
students to which it provides grants,
``(5) such organization obtains annual audits from an
independent certified public accountant and submits such audits
to the Secretary,
``(6) no employee of such organization has violated any law
relating to the audit described in paragraph (4), and
``(7) such organization--
``(A) requires any eligible student who receives a
scholarship--
``(i) to participate in the evaluation
conducted by the Institute of Education Science
under section 2(d) of the Educational
Opportunities Act of 2023, and
``(ii) to permit such organization to share
assessment information and other data regarding
the student with the Institute in accordance
with subparagraph (B), and
``(B) provides the reports described in subsection
(e)(1)(C) and such other information as necessary to
the Director of the Institute of Education Science for
the purposes of identifying eligible students receiving
a scholarship from such organization and conducting the
evaluations and reports required under section 2(d) of
the Educational Opportunities Act of 2023.
For purposes of paragraph (5), the term `independent certified
public accountant' means, with respect to an organization, a
certified public accountant which is not a related person
(within the meaning of section 465(b)(3)(C)) with respect to
such organization or any employee of such organization.
``(e) Eligible School Reporting Requirement.--
``(1) In general.--The reports described in this subsection
include--
``(A) a report to the parents on the student's
academic achievement, including a comparison with the
aggregate academic achievement of other students in the
same grade or level at the school who receive a
scholarship from a scholarship granting organization,
if available, and
``(B) a report to each scholarship granting
organization that provides scholarships to students at
the school, including--
``(i) the test results, in the aggregate
and disaggregated by race or ethnicity and
grade level, of the students receiving such
scholarships who are in grades 3 through 12 on
a grade-appropriate nationally norm-referenced
standardized test, or a grade-appropriate
State-recognized assessment, and
``(ii) any additional data requested by the
Director of the Institute of Education Sciences
in accordance with section 2(d)(B) of the
Educational Opportunities Act of 2023.
``(2) No personally identifiable information.--In preparing
and submitting the report described in paragraph (1)(B), a
school shall not include any personally identifiable
information regarding a student.
``(f) Denial of Double Benefit.--No deduction shall be allowed
under any provision of this chapter for any expense for which a credit
is allowed under this section.
``(g) Election.--This section shall apply to a taxpayer for a
taxable year only if such taxpayer elects to have this section apply
for such taxable year.''.
(2) Clerical amendment.--The table of sections for subpart
A of part IV of subchapter A of chapter 1 of such Code is
amended by inserting after the item relating to section 25E the
following new item:
``Sec. 25F. Contributions for qualified elementary and secondary
education tuition.''.
(b) Credit for Corporations.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new section:
``SEC. 45AA. CONTRIBUTIONS TO SCHOLARSHIP GRANTING ORGANIZATIONS.
``(a) General Rule.--For purposes of section 38, in the case of a
corporation, the education scholarship credit determined under this
section for the taxable year is the aggregate amount of qualified
contributions for the taxable year.
``(b) Limitation.--The amount of the credit determined under this
section for any taxable year shall not exceed $100,000.
``(c) Qualified Contributions.--For purposes of this section, the
term `qualified contribution' has the meaning given such term under
section 25F.
``(d) Denial of Double Benefit.--No deduction shall be allowed
under any provision of this chapter for any expense for which a credit
is allowed under this section.
``(e) Election.--This section shall apply to a taxpayer for a
taxable year only if such taxpayer elects to have this section apply
for such taxable year.''.
(2) Conforming amendments.--
(A) Section 38(b) of such Code is amended by
striking ``plus'' at the end of paragraph (39), by
striking the period at the end of paragraph (40) and
inserting ``, plus'', and by adding at the end the
following new paragraph:
``(41) the education scholarship credit determined under
section 45AA(a).''.
(B) The table of sections for subpart D of part IV
of subchapter A of chapter 1 of such Code is amended by
adding at the end the following new item:
``Sec. 45AA. Contributions to scholarship granting organizations.''.
(c) Excise Tax on Failure of Scholarship Granting Organizations to
Make Distributions.--
(1) In general.--Chapter 42 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subchapter:
``Subchapter I--Scholarship Granting Organizations
``Sec. 4969. Tax on failure to distribute receipts.
``SEC. 4969. TAX ON FAILURE TO DISTRIBUTE RECEIPTS.
``(a) Tax Imposed.--There is hereby imposed a tax on the failure of
an scholarship granting organization (as defined in section 25F(c)(2))
to make distributions in any taxable year in an amount equal to or in
excess of the required distribution amount before the distribution
deadline.
``(b) Amount of Tax.--The tax imposed by subsection (a) shall be
equal to 15 percent of the excess (if any) of--
``(1) the required distribution amount with respect to the
taxable year, over
``(2) the amount of receipts of the scholarship granting
organization for such taxable year which are distributed before
the distribution deadline with respect to such receipts.
``(c) Definitions.--For purposes of this section--
``(1) Required distribution amount.--The required
distribution amount with respect to a taxable year is an amount
equal to 90 percent of the total receipts of the scholarship
granting organization for such taxable year.
``(2) Distributions.--The term `distribution' includes
amounts which are formally committed but not distributed.
``(3) Distribution deadline.--The distribution deadline
with respect to receipts for a taxable year is the first day of
the second taxable year following the taxable year in which
such receipts are received by the scholarship granting
organization.
``(d) Reasonable Cause Exception.--The tax imposed by subsection
(a) shall not apply with respect to any failure to make required
distributions before the distribution deadline which is not willful and
is due to reasonable cause.''.
(2) Abatement of tax.--
(A) General rule.--Subsection (b) of section 4962
of such Code is amended by striking ``or G'' and
inserting ``G, or I''.
(B) First tier tax.--Subsection (a) of section 4963
of such Code is amended by inserting ``4969,'' after
``4967,''.
(C) Taxable event.--Subsection (c) of section 4963
of such Code is amended by inserting ``4969,'' after
``4967,''.
(3) Correction period.--Subparagraph (A) of section
4963(e)(2) of such Code is amended by inserting ``or 4969''
after ``4942''.
(4) Conforming amendment.--The table of subchapters for
chapter 42 of such Code is amended by adding at the end the
following new item:
``subchapter i--scholarship granting organizations''.
(d) Evaluations.--
(1) Definitions.--In this section--
(A) the terms ``eligible student'', ``qualified
elementary and secondary education expenses'', and
``scholarship granting organization'' have the meanings
given such terms in section 25F(c) of the Internal
Revenue Code of 1986, as added by this Act;
(B) the term ``Director'' means the Director of the
Institute of Education Sciences; and
(C) the term ``participating student'' means an
eligible student who receives a scholarship for
qualified elementary and secondary education expenses
from a scholarship granting organization.
(2) Evaluations.--
(A) In general.--By not later than April 1 of the
year following the year of the date of enactment of
this Act, and by April 1 of each subsequent year, the
Director shall conduct an annual evaluation to
determine the effectiveness of scholarships provided by
scholarship granting organizations to eligible students
in improving the academic achievement and success of
the eligible students.
(B) Contents of the evaluation.--In conducting the
evaluation required under this subsection, the Director
shall--
(i) request, from each scholarship granting
organization, the reports provided to the
scholarship granting organization by the
schools accepting participating students, in
accordance with section 25F(e)(1)(B);
(ii) using the reports described in clause
(i), assess the academic achievement of all
participating students in grades 3 through 12,
based on the nationally norm-referenced
standardized test or State-recognized
assessment used by each school;
(iii) evaluate the school retention rates,
secondary school graduation rates, and
institution of higher education admission rates
of participating students;
(iv) evaluate the success of the tax
credits allowed under section 25F and 45AA of
the Internal Revenue Code of 1986, as added by
this Act, in expanding school choice options
for parents of participating students,
increasing the satisfaction of such parents and
students, and increasing parental involvement
of such parents in the education of their
students; and
(v) evaluate such other issues with respect
to the education of participating students as
the Director considers appropriate for
inclusion in the evaluation.
(3) Reports.--By not later than April 1 of the year after
the year of the first evaluation under paragraph (2), and by
April 1 of each subsequent year, the Director shall submit to
the Committee on Finance and the Committee on Health,
Education, Labor, and Pensions of the Senate, and the Committee
on Ways and Means and the Committee on Education and the
Workforce of the House of Representatives, an annual report on
scholarships provided by scholarship granting organizations
that incorporates the results of the most recent evaluation
described in paragraph (2).
(4) Prohibition.--No personally identifiable information
shall be disclosed in the data, evaluations, and reports
required under this subsection.
(5) Public availability.--The Director shall make all
evaluations, reports, and underlying data gathered pursuant to
this subsection available to the public, upon request and in a
timely manner following submission of the applicable report or
evaluation under this subsection, subject to paragraph (4).
(e) Effective Date.--The amendments made by subsections (a), (b),
and (c) shall apply to taxable years beginning after December 31, 2022.
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