,,ii #aafth ,,congress #ast ,session ,s4 #fcd ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,february #bh1 #bjai,mr4 ,cruz 7for himself1 ,mr4 ,scott of ,south ,carolina1 ,mr4 ,alexander1 ,ms4 ,ernst1 ,mr4 ,cotton1 and ,mr4 ,toomey7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to establish tax credits to encourage individual and corporate taxpayers to contribute to scholarships for students through eligible scholarship-granting organizations and eligible workforce training organizations1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,education ,freedom ,scholarships and ,opportunity ,act4 #b4 ,purpose ,the purpose of this ,act is to encourage individual and corporate taxpayers to contribute to scholarships for individual students through eligible scholarship-granting organizations and eligible workforce training organizations1 as identified by ,states4 ,i ,amendments to the ,internal ,revenue ,code of #aihf #aja4 ,references to the ,internal ,revenue ,code of #aihf ,except as otherwise expressly provided1 whenever in this title an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 #ajb4 ,tax credits for contributions to eligible scholarship-granting organizations and eligible workforce training organizations 7a7 ,credit for individuals 7#a7 ,in general ,subpart ,a of part ,,iv of subchapter ,a of chapter #a is amended by adding after section #be;,d the following new section3 #be;,e4 ,contributions to eligible scholarship-granting organizations and eligible workforce training organizations 7a7 ,allowance of credit ,in the case of an individual1 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 year4 7b7 ,amount of credit ,the credit allowed under subsection 7a7 in any taxable year shall not exceed #aj percent of the taxpayer's adjusted gross income for the taxable year4 7c7 ,definitions ,for purposes of this section-- 7#a7 ,qualified contribution ,the term qualified contribution means a contribution of cash to any eligible scholarship-granting organization or eligible workforce training organization4 7#b7 ,qualified expense ,the term qualified expense means any educational expense that is-- 7,a7 for an individual student's elementary or secondary education1 as recognized by the ,state1 7,b7 for the secondary education component of an individual elementary or secondary student's career and technical education1 as defined by section #c7e7 of the ,carl ,d4 ,perkins ,career and ,technical ,education ,act of #bjjf 7#bj ,u4,s4,c4 #bcjb7e771 or 7,c7 for the purpose of providing eligible individual participants with scholarships for secondary or postsecondary vocational education and training1 workforce development1 or apprenticeship training1 including preparation and examination costs relating to portable certificates or credentials1 or industry recognized certification or credentialing programs4 7#c7 ,eligible scholarship-granting organization ,the term eligible scholarship-granting organization means-- 7,a7 an organization that-- 7i7 is described in section #eja7;c77#c7 and exempt from taxation under section #eja7;a71 7ii7 provides qualifying scholarships for qualified expenses to only individual elementary and secondary students who-- 7,i7 reside in the ,state in which the eligible scholarship-granting organization is recognized1 or 7,,ii7 in the case of the ,bureau of ,indian ,education1 are members of a federally recognized tribe1 7iii7 a ,state reports to the ,secretary of ,education as an eligible scholarship-granting organization pursuant to section #bja7;c77#e77;,b7 of the ,education ,freedom ,scholarships and ,opportunity ,act1 7iv7 allocates at least #ij percent of qualified contributions to qualifying scholarships for qualified expenses1 and 7v7 provides scholarships to-- 7,i7 more than #a eligible student1 7,,ii7 more than #a eligible family1 and 7,,iii7 different eligible students attending more than one education provider1 or 7,b7 an organization that-- 7i7 is described in section #eja7;c77#c7 and exempt from taxation under section #eja7;a71 and 7ii7 pursuant to ,state law1 was able1 as of the date of the enactment of the ,education ,freedom ,scholarships and ,opportunity ,act1 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 students1 including scholarships for attending private schools4 7#d7 ,eligible workforce training organization 7,a7 ,in general ,the term eligible workforce training organization means any organization-- 7i7 which is-- 7,i7 described in section #eja7;c77#c7 and exempt from taxation under section #eja7;a71 and 7,,ii7 not a private foundation 7as defined in section #eji71 7ii7 whose purpose is to provide vocational education and training1 workforce development1 or apprenticeship training to eligible potential secondary or postsecondary students1 including organizations whose purpose is to provide scholarships for portable certificates or credentials1 or industry recognized certifications or credentialing programs1 including preparation and examination costs1 7iii7 which is in compliance with applicable ,state laws1 7iv7 which a ,state has reported to the ,secretary of ,education as an eligible workforce training organization pursuant to section #bja7;c77#e77;,b7 of the ,education ,freedom ,scholarships and ,opportunity ,act1 7v7 which satisfies the requirements described in clauses 7iv7 and 7v7 of paragraph 7#c77;,a74 7,b7 ,potential eligible workforce training organizations ,eligible workforce training organizations may include1 but are not limited to1 organizations such as the following 7provided that such organizations satisfy the requirements under subparagraph 7,a773 7i7 ,community colleges4 7ii7 ,workforce training programs 7as defined by the applicable ,state workforce agency74 7iii7 ,organizations which provide-- 7,i7 career and technical education1 or 7,,ii7 training or apprenticeships1 including1 but not limited to1 training or apprenticeships operated by a collective bargaining organization or that provide industry recognized certifications or credentials4 7iv7 ,community organizations that provide training that results in a certification4 7#e7 ,qualifying scholarship ,the term qualifying scholarship means-- 7,a7 a scholarship granted by an eligible scholarship-granting organization to an individual elementary or secondary student1 or 7,b7 a scholarship granted by an eligible workforce training organization as a scholarship to a secondary or postsecondary student for the purpose of vocational education and training1 workforce development1 obtaining portable certificates or credentials1 or industry recognized certification or credentialing programs1 including preparation and examination costs1 under this section4 7#f7 ,state ,the term ,state means each of the #ej ,states1 the ,district of ,columbia1 the ,commonwealth of ,puerto ,rico1 ,american ,samoa1 ,guam1 the ,commonwealth of the ,northern ,mariana ,islands1 the ,united ,states ,virgin ,islands1 and the ,department of the ,interior 7acting through the ,bureau of ,indian ,education74 7d7 ,rules of construction 7#a7 ,in general ,a scholarship awarded to a student from the proceeds of a qualified contribution under this section or section #de,t shall not be considered assistance to the school1 eligible workforce training organization1 or other educational provider that enrolls1 or provides educational services to1 the student or the student's parents4 7#b7 ,not treated as income ,the amount of any such scholarship shall not be treated as income of the student or their parents for purposes of ,federal tax laws or for determining eligibility for any other ,federal program4 7#c7 ,prohibition of control over nonpublic education providers 7,a7 ,nothing in this ,act shall be construed to permit1 allow1 encourage1 or authorize any ,federal control over any aspect of any private1 religious1 or home education provider1 whether or not a home education provider is treated as a private school or home school under ,state law4 ,this ,act shall not be construed to exclude private1 religious1 or home education providers from participation in programs or services under this ,act4 7,b7 ,nothing in this ,act shall be construed to permit1 allow1 encourage1 or authorize an entity submitting a list of eligible scholarship-granting organizations or eligible workforce training organizations on behalf of a ,state to mandate1 direct1 or control any aspect of a private or home education provider1 regardless of whether or not a home education provider is treated as a private school under state law4 7,c7 ,no participating ,state or entity acting on behalf of a ,state shall exclude1 discriminate against1 or otherwise disadvantage any education provider with respect to programs or services under this ,act based in whole or in part on the provider's religious education character or affiliation1 including religiously or mission-based policies or practices4 7#d7 ,parental rights to use scholarships ,no participating ,state or entity acting on behalf of a ,state shall disfavor or discourage the use of such scholarships for the purchase of elementary and secondary or workforce training education services1 including those services provided by private or nonprofit entities1 such as faith-based providers4 7#e7 ,state and local authority ,nothing in this section or section #de,t shall be construed to modify a ,state or local government's authority and responsibility to fund education4 7e7 ,limitations 7#a7 ,tax liability ,no credit allowed under this section or section #de,t shall exceed the taxpayer's ,federal income tax liability for the taxable year4 7#b7 ,prohibitions ,a taxpayer is prohibited from selling or transferring any portion of a tax credit allowed under this section or section #de,t4 7#c7 ,denial of double benefit ,the ,secretary shall prescribe such regulations or other guidance to ensure that the sum of the tax benefits provided by ,federal1 ,state1 or local law for a qualified contribution receiving a ,federal tax credit in any taxable year shall not exceed the sum of the qualified contributions made by the taxpayer for the taxable year4 7f7 ,carryover of credit ,if a tax credit allowed under this section or section #de,t is not fully used within the applicable taxable year because of insufficient tax liability on the part of the taxpayer1 the unused amount may be carried forward for a period not to exceed #e years4 7g7 ,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 year4 7h7 ,alternative minimum tax ,for purposes of calculating the alternative minimum tax under section #ee1 a taxpayer may use any credit received for a qualified contribution under this section4 4 7#b7 ,clerical amendment ,the table of sections for subpart ,a of part ,,iv of subchapter ,a of chapter #a of is amended by inserting after the item relating to section #be;,d the following new item3 ,sec4 #be;,e4 ,contributions to eligible scholarship-granting organizations and eligible workforce training organizations4 4 7b7 ,credit for corporations 7#a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a is amended by adding at the end the following new section3 #de,t4 ,contributions to eligible scholarship-granting organizations and eligible workforce training organizations 7a7 ,allowance of credit ,for purposes of section #ch1 in the case of a domestic corporation1 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 7as defined in section #be;,e7c77#a77 made by such corporation taxpayer during the taxable year4 7b7 ,amount of credit ,the credit allowed under subsection 7a7 for any taxable year shall not exceed #e percent of the taxable income 7as defined in section #agj7;b77#b77;,d77 of the domestic corporation for such taxable year4 7c7 ,additional provisions ,for purposes of this section1 any qualified contributions made by a domestic corporation shall be subject to the provisions of section #be;,e1 to the extent applicable4 7d7 ,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 year4 4 7#b7 ,credit part of general business credit ,section #ch7;b7 is amended-- 7,a7 by striking plus at the end of paragraph 7#ca71 7,b7 by striking the period at the end of paragraph 7#cb7 and inserting 1 plus1 and 7,c7 by adding at the end the following new paragraph3 7#cc7 the credit for qualified contributions determined under section #de,t7a74 4 7#c7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a is amended by adding at the end the following new item3 ,sec4 #de,t4 ,contributions to eligible scholarship-granting organizations and eligible workforce training organizations4 4 ,,ii ,education ,freedom ,scholarships and ,opportunity ,act web portal and administration #bja4 ,education ,freedom ,scholarships and ,opportunity ,act web portal and administration 7a7 ,in general ,the ,secretary of ,education shall1 in coordination with the ,secretary of the ,treasury and the ,secretary of ,labor1 establish1 host1 and maintain a ,web portal that-- 7#a7 lists all scholarship-granting organizations and workforce training organizations that are eligible under section #be;,e or #de,t of the ,internal ,revenue ,code of #aihf2 7#b7 enables a taxpayer to make a qualifying contribution to one or more eligible scholarship-granting organizations and eligible workforce training organizations and to immediately obtain both a pre-approval of a tax credit for that contribution and a receipt for tax filings2 7#c7 provides information about the tax benefits of the provisions of the ,education ,freedom ,scholarships and ,opportunity ,act under the ,internal ,revenue ,code of #aihf2 and 7#d7 enables a ,state to submit and update information about its programs and its eligible scholarship-granting organizations and eligible workforce training organizations for informational purposes only1 including information on-- 7,a7 student eligibility2 7,b7 allowable educational expenses2 7,c7 the types of allowable education providers2 7,d7 the percentage of funds an organization may use for program administration2 and 7,e7 the percentage of total contributions the organization awards in a calendar year4 7b7 ,nonportal contributions ,a taxpayer may opt to make a contribution directly to an eligible scholarship-granting organization or an eligible workforce training organization1 instead of through the ,web portal described in subsection 7a71 provided that the taxpayer1 or the eligible scholarship-granting organization or eligible workforce training organization on behalf of the taxpayer1 applies for1 and receives pre-approval for a tax credit from the ,secretary of ,education in coordination with the ,secretary of the ,treasury4 7c7 ,national and ,state caps on credits 7#a7 ,national cap ,there is a cap of #aj1jjj1jjj1jjj on the sum of the contributions that qualify for a credit under section #be;,e and section #de,t of the ,internal ,revenue ,code of #aihf for each calendar year1 of which-- 7,a7 #e1jjj1jjj1jjj shall be allotted for qualified contributions to eligible scholarship-granting organizations2 and 7,b7 #e1jjj1jjj1jjj shall be allotted for qualified contributions to eligible workforce training organizations4 7#b7 ,allocation of cap 7,a7 ,initial allocations ,for each calendar year1 the ,secretary of ,education1 in coordination with the ,secretary of ,labor1 shall-- 7i7 from the amount allotted under paragraph 7#a77;,a7-- 7,i7 first reserve1 for each ,state1 an amount equal to the sum of the qualifying contributions made in the ,state in the previous year2 and 7,,ii7 next1 allocate the remaining amount among the participating ,states by allocating to each ,state the sum of-- 7aa7 an amount that bears the same relationship to #bj percent of such remaining amount as the number of individuals aged #e through #ag in the ,state1 as determined by the ,secretary of ,education on the basis of the most recent satisfactory data1 bears to the number of those individuals in all such ,states1 as so determined2 and 7bb7 an amount that bears the same relationship to #hj percent of such remaining amount as the number of individuals aged #e through #ag from families with incomes below the poverty line in the ,state1 as determined by the ,secretary of ,education1 on the basis of the most recent satisfactory data1 bears to the number of those individuals in all such ,states1 as so determined2 and 7ii7 from the amount allotted under paragraph 7#a77;,b7-- 7,i7 first reserve1 for each ,state1 an amount equal to the sum of the qualifying contributions made in the ,state in the previous year attributable to eligible workforce training organizations2 and 7,,ii7 next1 allocate the remaining amount among the participating ,states by allocating to each ,state an amount determined through a system1 as established and maintained by the ,secretary of ,labor1 that accurately reflects demand and potential qualified participants for apprenticeships and workforce training within that ,state4 7,b7 ,minimum allocation ,notwithstanding subparagraph 7,a71 no ,state receiving an allotment under this section may receive less than one-half of one percent of the amount allotted for a fiscal year4 7,c7 ,alternative allocation for qualified contributions to eligible scholarship-granting organizations 7i7 ,in general ,not later than the end of the fifth year of the program or one year after the end of the first fiscal year for which the total amount of credits claimed under section #be;,e and section #de,t of the ,internal ,revenue ,code of #aihf for qualified contributions to eligible scholarship-granting organizations is #b1ejj1jjj1jjj or more1 whichever comes first1 the ,secretary of ,education shall1 by regulation1 provide for an alternative allocation method for the amount described in paragraph 7#a77;,a7 that shall take effect beginning with the first fiscal year after the regulation takes effect4 7ii7 ,alternative allocation method ,the alternative allocation method described in clause 7i7 shall be expressed as a formula based on a combination of the following data for each ,state1 as reported by the ,state to the ,secretary of ,education3 7,i7 ,the relative percentage of students in the ,state who receive a 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 school4 7,,ii7 ,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 ,state4 7iii7 ,allocation formula ,for any fiscal year to which clause 7i7 applies1 the ,secretary of ,education shall-- 7,i7 first reserve1 for each ,state1 an amount equal to the sum of the qualifying contributions made in the ,state in the previous year2 7,,ii7 next1 allocate two-thirds of the remaining amount of the national cap for that year using the alternative allocation method in clause 7ii72 and 7,,iii7 then1 allocate one-third of the remaining amount in accordance with subparagraph 7,a77ii74 7iv7 ,ineligibility ,for any fiscal year to which clause 7i7 applies1 a ,state that does not provide the ,secretary of ,education with information described in clause 7ii7 is not eligible to receive an allocation through the alternative allocation method under clause 7ii74 7#c7 ,allowable partnerships ,a ,state may choose to administer the allocation it receives under paragraph 7#b7 in partnership with #a or more ,states1 provided that the eligible scholarship-granting organizations or eligible workforce training organizations in each partner ,state serve students who reside in all ,states in the partnership4 7#d7 ,total allocation ,a ,state's allocation1 for any fiscal year1 is the sum of the amount determined for it under subparagraphs 7,a7 and 7,b7 of paragraph 7#b71 except as provided in paragraph 7#b77;,c74 7#e7 ,allocation and adjustments 7,a7 ,initial allocation to ,states ,no later than ,november #a of the year preceding a year for which there is a national cap on credits under paragraph 7#a7 7hereafter in this section1 the applicable year71 or as early as practicable with respect to the first year1 the ,secretary of ,education shall announce the ,state allocations under paragraph 7#b7 for the applicable year4 7,b7 ,list of eligible scholarship-granting organizations and eligible workforce training organizations ,no later than ,january #a of each applicable year1 or as early as practicable with respect to the first year1 each ,state shall provide the ,secretary of ,education a list of eligible scholarship-granting organizations and eligible workforce training organizations described in paragraphs 7#c77;,a7 and 7#d7 of section #be;,e7c7 of the ,internal ,revenue ,code of #aihf1 including a certification that the entity submitting the list on behalf of the ,state has the authority to perform this function4 ,neither this ,act nor any other ,federal law shall be construed as limiting the entities that may submit the list on behalf of a state4 7,c7 ,reallocation 7i7 ,in general ,the ,secretary of ,education shall1 in accordance with paragraph 7#b71 reallocate to any other ,states the allocation of a ,state which1 for any applicable year-- 7,i7 fails to provide the ,secretary of ,education a list of eligible scholarship-granting organizations and eligible workforce training organizations pursuant to subparagraph 7,b72 and 7,,ii7 does not have an eligible scholarship-granting organization 7as described in section #be;,e7c77#c77;,b7 of the ,internal ,revenue ,code of #aihf7 located in such ,state4 7ii7 ,unclaimed credits ,on or after ,april #a of any applicable year1 the ,secretary of ,education may reallocate1 to #a or more other ,states that have eligible scholarship-granting organizations and eligible workforce training organizations in the ,states1 without regard to paragraph 7#b71 the allocation of a ,state for which the ,state's allocation has not been claimed4 7d7 ,definitions ,the definitions of terms in section #be;,e7c7 of the ,internal ,revenue ,code of #aihf apply to those terms as used in this title4 7e7 ,authorization of appropriations ,for the purpose of administering this section and sections #be;,e and #de,t of the ,internal ,revenue ,code of #aihf1 there are authorized to be appropriated1 and there are appropriated1 such sums as may be necessary for fiscal year #bjai and each succeeding fiscal year4