School Choice Now Act
This bill provides for emergency education freedom grants and allows individual and corporate taxpayers a tax credit for contributions to scholarship-granting organizations.
The bill directs the Department of the Treasury, in coordination with the Department of Education, to establish, host, and maintain a web portal that (1) lists all eligible scholarship-granting organizations; (2) enables contributions to such organizations; (3) provides information about the tax benefits of this bill; and (4) enables a state to submit and update information about its programs and scholarship-granting organizations, including information on student eligibility and allowable educational expenses.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8100 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 8100
To provide for emergency education freedom grants, to amend the
Internal Revenue Code of 1986 to establish tax credits to encourage
individual and corporate taxpayers to contribute to scholarships for
students through eligible scholarship-granting organizations, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
August 25, 2020
Mr. Byrne (for himself, Mr. Lipinski, and Mr. Walker) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Education and Labor, for a period
to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To provide for emergency education freedom grants, to amend the
Internal Revenue Code of 1986 to establish tax credits to encourage
individual and corporate taxpayers to contribute to scholarships for
students through eligible scholarship-granting organizations, and for
other purposes.
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 ``School Choice Now Act''.
TITLE I--EMERGENCY EDUCATION FREEDOM GRANTS
SEC. 101. EMERGENCY EDUCATION FREEDOM GRANTS.
(a) Definitions.--In this title:
(1) Definitions from the internal revenue code of 1986.--
The definitions in section 25E(c) of the Internal Revenue Code
of 1986, as added by section 201, shall apply to this section,
except as otherwise provided.
(2) Eligible scholarship-granting organization.--The term
``eligible scholarship-granting organization'' means--
(A) an organization that--
(i) is described in section 501(c)(3) of
the Internal Revenue Code of 1986 and exempt
from taxation under section 501(a) of such
Code;
(ii) provides qualifying scholarships to an
eligible student who--
(I) resides in the State in which
the eligible scholarship-granting
organization is recognized; or
(II) in the case of funds provided
to the Secretary of the Interior,
attending elementary schools or
secondary schools operated or funded by
the Bureau of Indian Education;
(iii) is identified by a Governor to
receive an allotment under subsection (b);
(iv) agrees to allocate at least 95 percent
of its allotment under subsection (c) to
qualifying scholarships;
(v) implements robust policies and
procedures to prevent waste, fraud, and abuse
in the program that it administers; and
(vi) provides qualifying scholarships to--
(I) more than 1 eligible student;
(II) more than 1 eligible family;
and
(III) different eligible students
attending more than 1 education
provider; or
(B) an organization that--
(i) is described in section 501(c)(3) of
the Internal Revenue Code of 1986 and exempt
from taxation under section 501(a) of such
Code;
(ii) pursuant to State law, was able, as of
January 1, 2020, to receive contributions that
are eligible for a State tax credit if such
contributions are used by the organization to
provide scholarships to individual elementary
and secondary students, including scholarships
for attending private schools;
(iii) agrees to allocate at least 95
percent of its allotment under subsection (c)
to qualifying scholarships;
(iv) implements robust policies and
procedures to prevent waste, fraud, and abuse
in the program that it administers; and
(v) provides qualifying scholarships to--
(I) more than 1 eligible student;
(II) more than 1 eligible family;
and
(III) different eligible students
attending more than 1 education
provider.
(3) Emergency education freedom grant funds.--The term
``emergency education freedom grant funds'' means the amount of
funds available under subsection (b) or (c)(1)(A).
(4) Governor.--The term ``Governor'' means the Governor of
a State, the chief executive officer of the United States
Virgin Islands, Guam, American Samoa, and the Commonwealth of
the Northern Mariana Islands, and the Secretary of the
Interior.
(5) Secretary.--The term ``Secretary'' means the Secretary
of Education.
(6) State.--The term ``State'' means each of the 50 States,
the District of Columbia, and the Commonwealth of Puerto Rico.
(b) Grants.--
(1) Program authorized.--
(A) Reservations.--From any amounts appropriated
for section 18003 of division B of the CARES Act on or
after the date of enactment of this Act, the Secretary
shall reserve--
(i) of the amount reserved for the Outlying
Areas in section 18001(a)(1) of Part B of the
CARES Act on or after enactment, 10 percent for
allotments for the United States Virgin
Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands,
to be distributed among those outlying areas on
the basis of their relative need, as determined
by the Secretary, in accordance with the
purpose of this title; and
(ii) of the amount reserved for the Bureau
of Indian Education in section 18001(a)(2) of
part B of the CARES Act on or after enactment,
10 percent of such amounts for the Secretary of
the Interior, acting through the Bureau of
Indian Edu- cation, to be used to provide
subgrants described in subsection (c) to
eligible scholarship-granting organizations
that serve students attending elementary
schools or secondary schools operated or funded
by the Bureau of Indian Education.
(B) State reservation.--From any amount
appropriated for section 18003 of division B of the
CARES Act on or after the date of enactment of this Act
that a State receives, a State shall reserve 10 percent
of those funds to award emergency education freedom
grant funds to eligible scholarship granting
organizations in the State.
(c) Subgrants to Eligible Scholarship-Granting Organizations.--
(1) In general.--A Governor shall use funds reserved under
subsection (b) to award subgrants to eligible scholarship-
granting organizations in the State.
(2) Initial timing.--
(A) States with existing tax credit scholarship
program.--
(i) By not later than 15 days after
receiving an allotment from any amounts
received for section 18003 of division B of the
CARES Act under, a State with an existing, as
of the date of enactment of this Act, tax
credit scholarship program shall distribute not
less than 50 percent of the allotment to award
subgrants to eligible scholarship-granting
organizations under subsection (a)(1)(B) in the
State in proportion to the contributions
received in calendar year 2019 that were
eligible for a State tax credit if such
contributions are used by the organization to
provide scholarships to eligible students,
including scholarships for attending private
schools.
(ii) By not later than 60 days after
receiving an allotment from any amount received
for section 18003 of division B of the CARES
Act, a Governor with an existing tax credit
scholarship program shall use the balance of
the total allotment to award subgrants to
eligible scholarship-grant organizations under
subsection (a)(1)(B).
(B) States without tax credit scholarship
programs.--
(i) By not later than 30 days after
receiving an allotment from any amounts
received for section 18003 of division B of the
CARES Act, a State without a tax credit
scholarship program shall distribute not less
than 50 percent of the allotment to award
subgrants to eligible scholarship-granting
organizations in the State.
(ii) By not later than 90 days after
receiving an allotment from any amounts
received for section 18003 of division B of the
CARES Act, a Governor in a State without an
existing tax credit scholarship program shall
use the balance of the allotment to award
subgrants to eligible scholarship-grant
organizations under subsection (a)(1)(A).
(3) Uses of funds.--An eligible scholarship-granting
organization that receives a subgrant under this subsection--
(A) may reserve not more than 5 percent of the
subgrant funds for public outreach, student and family
support activities, and administrative expenses related
to the subgrant; and
(B) shall use not less than 95 percent of the
subgrant funds to provide qualifying scholarships for
qualified expenses only to eligible students who reside
in the State in which the eligible scholarship-granting
organization is recognized.
(d) Reallocation.--A State shall return to the Secretary any
amounts of the allotment reserved under this Act that the Governor does
not award as subgrants under subsection (c) within 120 days of receipt
of that allotment, and the Secretary shall reallocate such funds to the
remaining eligible States.
(e) Rules of Construction.--
(1) Education providers that accept scholarship funds from
students under this section shall not, by reason of such
participation, be considered recipients of Federal financial
assistance, nor shall they, by reason of such participation, be
required to comply with provisions of federal law not otherwise
in effect as of the date of the passage of this Act.
(2) The rules of construction under section 25E(d) of the
Internal Revenue Code of 1986, as added by section 201, shall
apply to this section in the same manner as such rules apply to
section 25E of such Code, as so added.
TITLE II--TAX CREDITS FOR CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-
GRANTING ORGANIZATIONS
SEC. 201. TAX CREDITS FOR CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-
GRANTING ORGANIZATIONS.
(a) Credit for Individuals.--Subpart A of part IV of subchapter A
of chapter 1 of the Internal Revenue Code of 1986 is amended by adding
after section 25D the following new section:
``SEC. 25E. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-GRANTING
ORGANIZATIONS.
``(a) Allowance of Credit.--Subject to section 202(c) of the School
Choice Now Act, 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 sum of any qualified contributions made by the
taxpayer during the taxable year.
``(b) Amount of Credit.--The credit allowed under subsection (a)
for any taxable year shall not exceed 10 percent of the taxpayer's
adjusted gross income for the taxable year.
``(c) Definitions.--For purposes of this section--
``(1) Eligible scholarship-granting organization.--The term
`eligible scholarship-granting organization' means--
``(A) an organization that--
``(i) is described in section 501(c)(3) and
exempt from taxation under section 501(a),
``(ii) provides qualifying scholarships to
an eligible student who--
``(I) resides in the State in which
the eligible scholarship-granting
organization is recognized, or
``(II) in the case of the Bureau of
Indian Education, are members of a
federally recognized tribe,
``(iii) a State identifies to the Secretary
as an eligible scholarship-granting
organization under section 202(c)(5)(B) of the
School Choice Now Act,
``(iv) allocates at least 90 percent of
qualified contributions to qualifying
scholarships on an annual basis,
``(v) implements robust policies and
procedures to prevent waste, fraud, and abuse
in the program that it administers, and
``(vi) provides qualifying scholarships
to--
``(I) more than 1 eligible student,
``(II) more than 1 eligible family,
and
``(III) different eligible students
attending more than 1 education
provider, or
``(B) an organization that--
``(i) is described in section 501(c)(3) and
exempt from taxation under section 501(a),
``(ii) pursuant to State law, was able, as
of January 1, 2021, to receive contributions
that are eligible for a State tax credit if
such contributions are used by the organization
to provide scholarships to individual
elementary and secondary students, including
scholarships for attending private schools,
``(iii) agrees to allocate at least 905
percent of its allotment under subsection (c)
to qualifying scholarships on an annual basis,
``(iv) implements robust policies and
procedures to prevent waste, fraud, and abuse
in the program that it administers, and
``(v) provides qualifying scholarships to--
``(I) more than 1 eligible student,
``(II) more than 1 eligible family,
and
``(III) different eligible students
attending more than 1 education
provider.
``(2) Eligible student.--The term `eligible student'
means--
``(A) a child, as that term is defined in section
8101(3) of the Elementary and Secondary Education Act
of 1965, who comes from a family whose household income
is no more than 200 percent of the median household
income for that State, as determined by the Bureau of
the Census in compiling the most recent data for the
American Community Survey, or
``(B) a child with a disability, as that term is
defined in section 602 of the Individuals with
Disabilities Education Act.
``(3) Qualified contribution.--The term `qualified
contribution' means a contribution of cash to any eligible
scholarship-granting organization.
``(4) Qualified expense.--The term `qualified expense'
means any educational expense that is--
``(A) for an individual student's elementary or
secondary education, as recognized by the State, or
``(B) for the secondary education component of an
individual elementary or secondary student's career and
technical education, as defined by section 3(5) of the
Carl D. Perkins Career and Technical Education Act of
2006 (20 U.S.C. 2302(5)).
``(5) Qualifying scholarship.--The term `qualifying
scholarship' means a scholarship granted by an eligible
scholarship-granting organization to an individual elementary
or secondary student for a qualified expense.
``(6) State.--The term `State' means each of the 50 States,
the District of Columbia, the Commonwealth of Puerto Rico, the
outlying areas (as defined in section 1121(c) of the Elementary
and Secondary Education Act of 1965 (20 U.S.C. 6331(c)), and
the Department of the Interior (acting through the Bureau of
Indian Education).
``(d) Rules of Construction.--
``(1) In general.--A qualifying scholarship awarded to a
student from the proceeds of a qualified contribution under
this section shall not be considered assistance to the school
or other educational provider that enrolls, or provides
educational services to, the student or the student's parents.
``(2) Exclusion from income.--Gross income shall not
include any amount received by an individual as a qualifying
scholarship and such amount shall not be taken into account as
income or resources for purposes of determining the eligibility
of such individual or any other individual for benefits or
assistance, or the amount or extent of such benefits or
assistance, under any Federal program or under any State or
local program financed in whole or in part with Federal funds.
``(3) Prohibition of control over nonpublic education
providers.--
``(A)(i) Nothing in this section shall be construed
to permit, allow, encourage, or authorize any Federal
control over any aspect of any private, religious, or
home education provider, whether or not a home
education provider is treated as a private school or
home school under State law.
``(ii) This section shall not be construed to
exclude private, religious, or home education providers
from participation in programs or services under this
section.
``(B) Nothing in this section shall be construed to
permit, allow, encourage, or authorize an entity
submitting a list of eligible scholarship-granting
organizations on behalf of a State pursuant to section
202(c)(5) of the School Choice Now Act to mandate,
direct, or control any aspect of a private or home
education provider, regardless of whether or not a home
education provider is treated as a private school under
State law.
``(C) No participating State or entity acting on
behalf of a State pursuant to section 202(c)(5) of the
School Choice Now Act shall exclude, discriminate
against, or otherwise disadvantage any education
provider with respect to programs or services under
this section based in whole or in part on the
provider's religious character or affiliation,
including religiously based or mission-based policies
or practices.
``(4) Parental rights to use scholarships.--No
participating State or entity acting on behalf of a State
pursuant to section 202(c)(5) of the School Choice Now Act
shall disfavor or discourage the use of qualifying scholarships
for the purchase of elementary and secondary education
services, including those services provided by private or
nonprofit entities, such as faith-based providers.
``(5) State and local authority.--Nothing in this section
shall be construed to modify a State or local government's
authority and responsibility to fund education.
``(e) Denial of Double Benefit.--The Secretary shall prescribe such
regulations or other guidance to ensure that the sum of the tax
benefits provided by Federal, State, or local law for a qualified
contribution receiving a Federal tax credit in any taxable year does
not exceed the sum of the qualified contributions made by the taxpayer
for the taxable year.
``(f) Carryforward of Credit.--If a tax credit allowed under this
section is not fully used within the applicable taxable year because of
insufficient tax liability on the part of the taxpayer, the unused
amount may be carried forward for a period not to exceed 5 years.
``(g) Election.--This section shall apply to a taxpayer for a
taxable year only if the taxpayer elects to have this section apply for
such taxable year.
``(h) Alternative Minimum Tax.--For purposes of calculating the
alternative minimum tax under section 55, a taxpayer may use any credit
received for a qualified contribution under this section.''.
(b) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 25D the
following new item:
``Sec. 25E. Contributions to eligible scholarship-granting
organizations.''.
(c) Credit for Corporations.--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. 45U. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-GRANTING
ORGANIZATIONS.
``(a) Allowance of Credit.--Subject to section 202(c) of the School
Choice Now Act, for purposes of section 38, there shall be allowed as a
credit against the tax imposed by this chapter for the taxable year an
amount equal to the sum of any qualified contributions (as defined in
section 25E(c)(2)) made by such corporation taxpayer during the taxable
year.
``(b) Amount of Credit.--The credit allowed under subsection (a)
for any taxable year shall not exceed 5 percent of the taxable income
(as defined in section 170(b)(2)(D)) of the domestic corporation for
such taxable year.
``(c) Additional Provisions.--For purposes of this section, any
qualified contributions made by a domestic corporation shall be subject
to the provisions of section 25E (including subsection (d) of such
section), to the extent applicable.
``(d) Election.--This section shall apply to a taxpayer for a
taxable year only if the taxpayer elects to have this section apply for
such taxable year.''.
(d) Credit Part of General Business Credit.--Section 38(b) is
amended--
(1) by striking ``plus'' at the end of paragraph (32);
(2) by striking the period at the end of paragraph (33) and
inserting ``, plus''; and
(3) by adding at the end the following new paragraph:
``(34) the credit for qualified contributions determined
under section 45U(a).''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding at the end
the following new item:
``Sec. 45U. Contributions to eligible scholarship-granting
organizations.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2020.
SEC. 202. EDUCATION FREEDOM SCHOLARSHIPS WEB PORTAL AND ADMINISTRATION.
(a) In General.--The Secretary of Treasury shall, in coordination
with the Secretary of Education, establish, host, and maintain a web
portal that--
(1) lists all eligible scholarship-granting organizations;
(2) enables a taxpayer to make a qualifying contribution to
one or more eligible scholarship-granting organizations and to
immediately obtain both a pre-approval of a tax credit for that
contribution and a receipt for tax filings;
(3) provides information about the tax benefits under
sections 25E and 45U of the Internal Revenue Code of 1986; and
(4) enables a State to submit and update information about
its programs and its eligible scholarship-granting
organizations for informational purposes only, including
information on--
(A) student eligibility;
(B) allowable educational expenses;
(C) the types of allowable education providers;
(D) the percentage of funds an organization may use
for program administration; and
(E) the percentage of total contributions the
organization awards in a calendar year.
(b) Nonportal Contributions.--A taxpayer may opt to make a
contribution directly to an eligible scholarship-granting organization,
instead of through the web portal described in subsection (a), provided
that the taxpayer, or the eligible scholarship-granting organization on
behalf of the taxpayer, applies for, and receives pre-approval for a
tax credit from the Secretary of Treasury in coordination with the
Secretary of the Education.
(c) National and State Limitations on Credits.--
(1) National limitation.--For each fiscal year, the total
amount of qualifying contributions for which a credit is
allowed under sections 25E and 45U of the Internal Revenue Code
of 1986 shall not exceed $5,000,000,000.
(2) Allocation of limitation.--
(A) Initial allocations.--For each calendar year,
with respect to the limitation under paragraph (1), the
Secretary of the Treasury, in consultation with the
Secretary of Education, shall--
(i) allocate to each State an amount equal
to the sum of the qualifying contributions made
in the State in the previous year; and
(ii) from any amounts remaining following
allocations made under clause (i), allocate to
each participating State an amount that bears
the same relation to such remaining amount as
the number of individuals aged 5 through 19 in
the State, as determined by the Secretary of
Education on the basis of the most recent
satisfactory data, bears to the number of those
individuals, as so determined, in all such
States, as so determined.
(B) Minimum allocation.--Notwithstanding
subparagraph (A), no State receiving an allocation
under this section may receive less than one-half of 1
percent of the amount allocated for a fiscal year.
(C) Alternative allocation.--
(i) In general.--Not later than the end of
the fifth year of the program or 1 year after
the end of the first fiscal year for which the
total amount of credits claimed under section
25E and section 45U of the Internal Revenue
Code of 1986 is $2,500,000,000 or more,
whichever comes first, the Secretary of the
Treasury, in consultation with the Secretary of
Education, shall, by regulation, provide for an
alternative allocation method that shall take
effect beginning with the first fiscal year
after such regulation takes effect.
(ii) Alternative allocation method.--The
alternative allocation method shall be
expressed as a formula based on a combination
of the following data for each State, as
reported by the State to the Secretary of
Treasury:
(I) The relative percentage of
students in the State who receive an
elementary or secondary scholarship
through a State program that is
financed through State tax-credited
donations or appropriations and that
permits the elementary or secondary
scholarship to be used to attend a
private school.
(II) The total amount of all
elementary and secondary scholarships
awarded through a State program that is
financed through State tax-credited
donations or appropriations compared to
the total amount of current State and
local expenditures for free public
education in the State.
(iii) Allocation formula.--For any fiscal
year to which clause (i) applies, the Secretary
of Treasury, in consultation with the Secretary
of Education, shall--
(I) for each State, allocate an
amount equal to the sum of the
qualifying contributions made in the
State in the previous year;
(II) allocate \2/3\ of the
remaining amount (after application of
subclause (I)) of the national
limitation for that year using the
alternative allocation method under
clause (ii); and
(III) allocate \1/3\ of the
remaining amount (after application of
subclause (I) and (II)) in accordance
with subparagraph (A)(ii).
(iv) Ineligibility.--For any fiscal year to
which clause (i) applies, a State that does not
provide the Secretary of the Treasury with
information described in clause (ii) is not
eligible to receive an allocation through the
alternative allocation method under such
clause.
(3) Allowable partnerships.--A State may choose to
administer the allocation it receives under paragraph (2) in
partnership with one or more States, provided that the eligible
scholarship-granting organizations in each partner State serve
students who reside in all States in the partnership.
(4) Allocation and adjustments.--
(A) Initial allocation to states.--Not later than
November 1 of the year preceding a year for which there
is a national limitation on credits under paragraph (1)
(referred to in this section as the ``applicable
year''), or as early as practicable with respect to the
first year, the Secretary of the Treasury shall
announce the State allocations under paragraph (2) for
the applicable year.
(B) List of eligible scholarship-granting
organizations.--
(i) In general.--Not later than January 1
of each applicable year, or as early as
practicable with respect to the first year,
each State shall provide the Secretary of the
Treasury a list of eligible scholarship-
granting organizations, including a
certification that the entity submitting the
list on behalf of the State has the authority
to perform this function.
(ii) Rule of construction.--Neither this
section nor any other Federal law shall be
construed as limiting the entities that may
submit the list on behalf of a State.
(C) Reallocation of unclaimed credits.--The
Secretary of the Treasury shall reallocate a State's
allocation to other States, in accordance with
paragraph (2), if the State--
(i) chooses not to identify scholarship-
granting organizations under subparagraph (B)
in any applicable year; or
(ii) does not have an existing eligible
scholarship-granting organization.
(D) Reallocation.--On or after April 1 of any
applicable year, the Secretary of the Treasury may
reallocate, to one or more other States that have
eligible scholarship-granting organizations in the
States, without regard to paragraph (2), the allocation
of a State for which the State's allocation has not
been claimed.
(d) Definitions.--Any term used in this section which is also used
in section 25E of the Internal Revenue Code of 1986 shall have the same
meaning as when used in such section.
(e) Authorization of Appropriations.--There are authorized to be
appropriated $50,000,000 to carry out section 202(a) of this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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