S370-119

1. Short title This Act may be cited as the Education Freedom Scholarships and Opportunity Act.

2. 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 organizations, as identified by States.

101. References to the Internal Revenue Code of 1986 Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

102. Tax credits for contributions to eligible scholarship-granting organizations and eligible workforce training organizations Subpart A of part IV of subchapter A of chapter 1 is amended by adding after section 25E the following new section: 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. The credit allowed under subsection (a) in any taxable year shall not exceed 10 percent of the taxpayer's adjusted gross income for the taxable year. For purposes of this section— The term qualified contribution means a contribution of cash to any eligible scholarship-granting organization or eligible workforce training organization. The term qualified expense means any educational expense that is— for an individual student’s elementary or secondary education, as recognized by the State, 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)), or for the purpose of providing eligible individual participants with scholarships for secondary or postsecondary vocational education and training, workforce development, or apprenticeship training, including preparation and examination costs relating to portable certificates or credentials, or industry recognized certification or credentialing programs. The term eligible scholarship-granting organization means— an organization that— is described in section 501(c)(3) and exempt from taxation under section 501(a), provides qualifying scholarships for qualified expenses to only individual elementary and secondary students who— reside in the State in which the eligible scholarship-granting organization is recognized, or in the case of the Bureau of Indian Education, are members of a federally recognized tribe, a State reports to the Secretary of Education as an eligible scholarship-granting organization pursuant to section 201(c)(5)(B) of the Education Freedom Scholarships and Opportunity Act, allocates at least 90 percent of qualified contributions to qualifying scholarships for qualified expenses, and provides scholarships to— more than 1 eligible student, more than 1 eligible family, and different eligible students attending more than one education provider, or an organization that— is described in section 501(c)(3) and exempt from taxation under section 501(a), and pursuant to State law, was able, as of the date of the enactment of the Education Freedom Scholarships and Opportunity Act, 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. The term eligible workforce training organization means any organization— which is— described in section 501(c)(3) and exempt from taxation under section 501(a), and not a private foundation (as defined in section 509), whose purpose is to provide vocational education and training, workforce development, or apprenticeship training to eligible potential secondary or postsecondary students, including organizations whose purpose is to provide scholarships for portable certificates or credentials, or industry recognized certifications or credentialing programs, including preparation and examination costs, which is in compliance with applicable State laws, which a State has reported to the Secretary of Education as an eligible workforce training organization pursuant to section 201(c)(5)(B) of the Education Freedom Scholarships and Opportunity Act, and which satisfies the requirements described in clauses (iv) and (v) of paragraph (3)(A). Eligible workforce training organizations may include, but are not limited to, organizations such as the following (provided that such organizations satisfy the requirements under subparagraph (A)): Community colleges. Workforce training programs (as defined by the applicable State workforce agency). Organizations which provide— career and technical education, or training or apprenticeships, including, but not limited to, training or apprenticeships operated by a collective bargaining organization or that provide industry recognized certifications or credentials. Community organizations that provide training that results in a certification. The term qualifying scholarship means— a scholarship granted by an eligible scholarship-granting organization to an individual elementary or secondary student, or 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 training, workforce development, obtaining portable certificates or credentials, or industry recognized certification or credentialing programs, including preparation and examination costs, The term State means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the United States Virgin Islands, and the Department of the Interior (acting through the Bureau of Indian Education). A scholarship awarded to a student from the proceeds of a qualified contribution under this section or section 45BB shall not be considered assistance to the school, eligible workforce training organization, or other educational provider that enrolls, or provides educational services to, the student or the student's parents. 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 program. Nothing in this Act 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. This Act shall not be construed to exclude private, religious, or home education providers from participation in programs or services under this Act. Nothing in this Act shall be construed to permit, allow, encourage, or authorize an entity submitting a list of eligible scholarship-granting organizations or eligible workforce training organizations on behalf of a State 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. No participating State or entity acting on behalf of a State shall exclude, discriminate against, 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 affiliation, including religiously or mission-based policies or practices. 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 services, including those services provided by private or nonprofit entities, such as faith-based providers. Nothing in this section or section 45BB shall be construed to modify a State or local government’s authority and responsibility to fund education. No credit allowed under this section or section 45BB shall exceed the taxpayer’s Federal income tax liability for the taxable year. A taxpayer is prohibited from selling or transferring any portion of a tax credit allowed under this section or section 45BB. 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 shall not exceed the sum of the qualified contributions made by the taxpayer for the taxable year. If a tax credit allowed under this section or section 45BB 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. 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. 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. The table of sections for subpart A of part IV of subchapter A of chapter 1 of is amended by inserting after the item relating to section 25E the following new item: Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section: For purposes of section 38, in the case of a domestic corporation, 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 25F(c)(1)) made by such corporation taxpayer during the taxable year. 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. For purposes of this section, any qualified contributions made by a domestic corporation shall be subject to the provisions of section 25F, to the extent applicable. 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. Section 38(b) is amended— by striking plus at the end of paragraph (40); by striking the period at the end of paragraph (41) and inserting , plus; and by adding at the end the following new paragraph: the credit for qualified contributions determined under section 45BB(a). 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: 25F.Contributions to eligible scholarship-granting organizations and eligible workforce training organizations(a)Allowance of creditIn 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 creditThe credit allowed under subsection (a) in any taxable year shall not exceed 10 percent of the taxpayer's adjusted gross income for the taxable year.(c)DefinitionsFor purposes of this section—(1)Qualified contributionThe term qualified contribution means a contribution of cash to any eligible scholarship-granting organization or eligible workforce training organization.(2)Qualified expenseThe term qualified expense means any educational expense that is—(A)for an individual student’s elementary or secondary education, as recognized by the State,(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)), or(C)for the purpose of providing eligible individual participants with scholarships for secondary or postsecondary vocational education and training, workforce development, or apprenticeship training, including preparation and examination costs relating to portable certificates or credentials, or industry recognized certification or credentialing programs.(3)Eligible scholarship-granting organizationThe 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 for qualified expenses to only individual elementary and secondary students who—(I)reside 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 reports to the Secretary of Education as an eligible scholarship-granting organization pursuant to section 201(c)(5)(B) of the Education Freedom Scholarships and Opportunity Act,(iv)allocates at least 90 percent of qualified contributions to qualifying scholarships for qualified expenses, and(v)provides scholarships to—(I)more than 1 eligible student,(II)more than 1 eligible family, and(III)different eligible students attending more than one education provider, or(B)an organization that—(i)is described in section 501(c)(3) and exempt from taxation under section 501(a), and(ii)pursuant to State law, was able, as of the date of the enactment of the Education Freedom Scholarships and Opportunity Act, 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.(4)Eligible workforce training organization(A)In generalThe term eligible workforce training organization means any organization—(i)which is—(I)described in section 501(c)(3) and exempt from taxation under section 501(a), and(II)not a private foundation (as defined in section 509),(ii)whose purpose is to provide vocational education and training, workforce development, or apprenticeship training to eligible potential secondary or postsecondary students, including organizations whose purpose is to provide scholarships for portable certificates or credentials, or industry recognized certifications or credentialing programs, including preparation and examination costs,(iii)which is in compliance with applicable State laws,(iv)which a State has reported to the Secretary of Education as an eligible workforce training organization pursuant to section 201(c)(5)(B) of the Education Freedom Scholarships and Opportunity Act, and(v)which satisfies the requirements described in clauses (iv) and (v) of paragraph (3)(A).(B)Potential eligible workforce training organizationsEligible workforce training organizations may include, but are not limited to, organizations such as the following (provided that such organizations satisfy the requirements under subparagraph (A)):(i)Community colleges.(ii)Workforce training programs (as defined by the applicable State workforce agency).(iii)Organizations which provide—(I)career and technical education, or(II)training or apprenticeships, including, but not limited to, training or apprenticeships operated by a collective bargaining organization or that provide industry recognized certifications or credentials.(iv)Community organizations that provide training that results in a certification.(5)Qualifying scholarshipThe term qualifying scholarship means—(A)a scholarship granted by an eligible scholarship-granting organization to an individual elementary or secondary student, or(B)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 training, workforce development, obtaining portable certificates or credentials, or industry recognized certification or credentialing programs, including preparation and examination costs,under this section.(6)StateThe term State means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the United States Virgin Islands, and the Department of the Interior (acting through the Bureau of Indian Education).(d)Rules of construction(1)In generalA scholarship awarded to a student from the proceeds of a qualified contribution under this section or section 45BB shall not be considered assistance to the school, eligible workforce training organization, or other educational provider that enrolls, or provides educational services to, the student or the student's parents.(2)Not treated as incomeThe 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 program.(3)Prohibition of control over nonpublic education providers(A)Nothing in this Act 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. This Act shall not be construed to exclude private, religious, or home education providers from participation in programs or services under this Act.(B)Nothing in this Act shall be construed to permit, allow, encourage, or authorize an entity submitting a list of eligible scholarship-granting organizations or eligible workforce training organizations on behalf of a State 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 shall exclude, discriminate against, 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 affiliation, including religiously or mission-based policies or practices.(4)Parental rights to use scholarshipsNo 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 services, including those services provided by private or nonprofit entities, such as faith-based providers.(5)State and local authorityNothing in this section or section 45BB shall be construed to modify a State or local government’s authority and responsibility to fund education.(e)Limitations(1)Tax liabilityNo credit allowed under this section or section 45BB shall exceed the taxpayer’s Federal income tax liability for the taxable year.(2)ProhibitionsA taxpayer is prohibited from selling or transferring any portion of a tax credit allowed under this section or section 45BB.(3)Denial of double benefitThe 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 shall not exceed the sum of the qualified contributions made by the taxpayer for the taxable year.(f)Carryover of creditIf a tax credit allowed under this section or section 45BB 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)ElectionThis 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 taxFor purposes of calculating the alternative minimum tax under section 55, a taxpayer may use any credit received for a qualified contribution under this section.. Sec. 25F. Contributions to eligible scholarship-granting organizations and eligible workforce training organizations.. 45BB.Contributions to eligible scholarship-granting organizations and eligible workforce training organizations(a)Allowance of creditFor purposes of section 38, in the case of a domestic corporation, 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 25F(c)(1)) made by such corporation taxpayer during the taxable year.(b)Amount of creditThe 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 provisionsFor purposes of this section, any qualified contributions made by a domestic corporation shall be subject to the provisions of section 25F, to the extent applicable.(d)ElectionThis section shall apply to a taxpayer for a taxable year only if the taxpayer elects to have this section apply for such taxable year.. (42)the credit for qualified contributions determined under section 45BB(a).. Sec. 45BB. Contributions to eligible scholarship-granting organizations and eligible workforce training organizations..

25F. Contributions to eligible scholarship-granting organizations and eligible workforce training organizations 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. The credit allowed under subsection (a) in any taxable year shall not exceed 10 percent of the taxpayer's adjusted gross income for the taxable year. For purposes of this section— The term qualified contribution means a contribution of cash to any eligible scholarship-granting organization or eligible workforce training organization. The term qualified expense means any educational expense that is— for an individual student’s elementary or secondary education, as recognized by the State, 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)), or for the purpose of providing eligible individual participants with scholarships for secondary or postsecondary vocational education and training, workforce development, or apprenticeship training, including preparation and examination costs relating to portable certificates or credentials, or industry recognized certification or credentialing programs. The term eligible scholarship-granting organization means— an organization that— is described in section 501(c)(3) and exempt from taxation under section 501(a), provides qualifying scholarships for qualified expenses to only individual elementary and secondary students who— reside in the State in which the eligible scholarship-granting organization is recognized, or in the case of the Bureau of Indian Education, are members of a federally recognized tribe, a State reports to the Secretary of Education as an eligible scholarship-granting organization pursuant to section 201(c)(5)(B) of the Education Freedom Scholarships and Opportunity Act, allocates at least 90 percent of qualified contributions to qualifying scholarships for qualified expenses, and provides scholarships to— more than 1 eligible student, more than 1 eligible family, and different eligible students attending more than one education provider, or an organization that— is described in section 501(c)(3) and exempt from taxation under section 501(a), and pursuant to State law, was able, as of the date of the enactment of the Education Freedom Scholarships and Opportunity Act, 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. The term eligible workforce training organization means any organization— which is— described in section 501(c)(3) and exempt from taxation under section 501(a), and not a private foundation (as defined in section 509), whose purpose is to provide vocational education and training, workforce development, or apprenticeship training to eligible potential secondary or postsecondary students, including organizations whose purpose is to provide scholarships for portable certificates or credentials, or industry recognized certifications or credentialing programs, including preparation and examination costs, which is in compliance with applicable State laws, which a State has reported to the Secretary of Education as an eligible workforce training organization pursuant to section 201(c)(5)(B) of the Education Freedom Scholarships and Opportunity Act, and which satisfies the requirements described in clauses (iv) and (v) of paragraph (3)(A). Eligible workforce training organizations may include, but are not limited to, organizations such as the following (provided that such organizations satisfy the requirements under subparagraph (A)): Community colleges. Workforce training programs (as defined by the applicable State workforce agency). Organizations which provide— career and technical education, or training or apprenticeships, including, but not limited to, training or apprenticeships operated by a collective bargaining organization or that provide industry recognized certifications or credentials. Community organizations that provide training that results in a certification. The term qualifying scholarship means— a scholarship granted by an eligible scholarship-granting organization to an individual elementary or secondary student, or 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 training, workforce development, obtaining portable certificates or credentials, or industry recognized certification or credentialing programs, including preparation and examination costs, The term State means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the United States Virgin Islands, and the Department of the Interior (acting through the Bureau of Indian Education). A scholarship awarded to a student from the proceeds of a qualified contribution under this section or section 45BB shall not be considered assistance to the school, eligible workforce training organization, or other educational provider that enrolls, or provides educational services to, the student or the student's parents. 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 program. Nothing in this Act 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. This Act shall not be construed to exclude private, religious, or home education providers from participation in programs or services under this Act. Nothing in this Act shall be construed to permit, allow, encourage, or authorize an entity submitting a list of eligible scholarship-granting organizations or eligible workforce training organizations on behalf of a State 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. No participating State or entity acting on behalf of a State shall exclude, discriminate against, 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 affiliation, including religiously or mission-based policies or practices. 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 services, including those services provided by private or nonprofit entities, such as faith-based providers. Nothing in this section or section 45BB shall be construed to modify a State or local government’s authority and responsibility to fund education. No credit allowed under this section or section 45BB shall exceed the taxpayer’s Federal income tax liability for the taxable year. A taxpayer is prohibited from selling or transferring any portion of a tax credit allowed under this section or section 45BB. 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 shall not exceed the sum of the qualified contributions made by the taxpayer for the taxable year. If a tax credit allowed under this section or section 45BB 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. 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. 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.

45BB. Contributions to eligible scholarship-granting organizations and eligible workforce training organizations For purposes of section 38, in the case of a domestic corporation, 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 25F(c)(1)) made by such corporation taxpayer during the taxable year. 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. For purposes of this section, any qualified contributions made by a domestic corporation shall be subject to the provisions of section 25F, to the extent applicable. 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.