HOUSE BILL 388: Tax Credits for Children with Disabilities
BILL ANALYSIS
House Education Committee: Introduced by: Reps. Glazier, Lucas, Stam, Wiley PCS to First Edition Version: H388-CSRQ-43[v.5]
June 23, 2008 Date: Summary by: Shirley Iorio and Drupti Chauhan*
SUMMARY: House Bill 388 would allow an individual income tax credit for up to $3,000 per semester for tuition and special education and related services expenses for a taxpayer's eligible dependent child with a disability who attends a nonpublic school or a public school where tuition is charged for the eligible dependent child's enrollment. The bill would require the Department of Revenue to report to the Revenue Laws Study Committee on the administration of the education expenses credit and on the number and amount of education expenses credits taken. The bill also would give a board of county commissioners discretion to appropriate funds for the special education and related services expenses of resident children under the age of 22 who require special education and related services enrolled in nonpublic schools. The funds would be issued to the individual entitled to the education expenses tax credit. The amount appropriated by a board of county commissioners could not exceed $500 per eligible dependent child per year. The PCS makes the following changes: Requires that the eligible dependent child be enrolled in and attending public school for more than 80 days during the semester rather than 3 months of the semester; Removes Section 3 and 4 of the original bill that allowed the board of county commissioners discretion to appropriate funds; Clarifies that home schools are not eligible for the tax credit for tuition expenses; Adds a reporting requirement to the Joint Legislative Education Oversight Committee; and Places a five year sunset on the bill
BILL ANALYSIS: Section 1 of the PCS creates the education expenses tax credit. Qualifications for the Tax Credit A taxpayer would be entitled to an education expenses tax credit of up to $3,000 per semester for tuition and special education and related services expenses for each "eligible dependent child" who meets all of the following criteria: Is a resident of North Carolina. Has been enrolled for at least 2 semesters in a taxable year in a public school and while enrolled at that school was determined to: o Require an individualized education program (IEP) under Article 9 of Chapter 115C of the General Statutes (Education of Students with Disabilities and federal Individuals with Disabilities Education Improvement Act (IDEA), 20 U.S.C. § 1400 et seq.(2004), as amended; and Require at least daily special education and related services outside the regular classroom.
o
Is enrolled for one or two semesters during the taxable year in grades Kindergarten-12 at either:
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o o A non-public school or A public school where tuition is charged for the child's enrollment.
For the initial eligibility for the tax credit, the eligible dependent child must have been enrolled in and attended at least two semesters in a public school in the immediately preceding taxable year. The PCS would provide that there are two semesters during each taxable year and an eligible dependent child is considered to have been enrolled in a school for a semester if the eligible dependent child is enrolled in that school for more than 80 days during that semester. Disqualifications for the Tax Credit A taxpayer would not qualify for the education expenses tax credit for any semester when the taxpayer's otherwise eligible dependent child was: Enrolled for any time as a full-time student taking at least 12 hours of academic credit at a postsecondary educational institution, or 22 years of age or older during the entire semester.
Reduction of the Tax Credit The amount of the education expenses tax credit would be reduced for any semester in which the eligible dependent child spent any time enrolled in a public school. The amount of the reduction would be equal to the percentage of the semester that the eligible dependent child was enrolled in a public school. Information Required to be Submitted to the Department of Revenue to Claim Education Expenses Tax Credit In order to claim the education expenses tax credit, the taxpayer would have to provide all of the following information to the Secretary of the Department of Revenue: The name, address and social security number of each eligible dependent child for whom the credit is claimed and the name and address of the school or schools in which the eligible dependent child was enrolled in and attended for more than 80 days of each semester. A certification that there were no disqualifying factors. The name of the local school administrative unit in which the eligible dependent child resides. The amount of the tuition paid to a public school for each semester the eligible dependent child was enrolled in and attended that public school. The eligibility determination that the eligible dependent child is a child with a disability who requires special education and related services. A listing of the tuition and special education and related services expenses on which the education expenses tax credit is based. For home schools, a listing of the special education and related services expenses on which the education expenses tax credit is based.
Credit Refundable The amount of the credit may exceed the amount of tax owed by the taxpayer. If the credit allowed exceeds the amount of tax imposed, the excess is refundable to the taxpayer. Section 2 of the PCS would require that the Department of Revenue report to the Revenue Laws Study Committee and the Joint Legislative Education Oversight Committee on the administration of the education expenses tax credit provided by this bill by January 1, 2010. The report must include the following: The number and amount of education expenses tax credits taken;
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Concerns relating to the administration of the education expenses tax credits or taxpayer compliance; and Any other matter the Department wishes to address with respect to the education expenses tax credit.
EFFECTIVE DATE: The act would become effective for taxable years beginning on or after January 1, 2008, and would apply to semesters beginning on or after July 1, 2008. The act would expire on December 31, 2013. BACKGROUND: Currently, four states provide scholarship programs for students with disabilities to attend private schools: Florida, Utah, Ohio and Georgia. The John M. McKay Scholarships Program for Students with Disabilities in Florida gives parents a voucher to send their child to a private school or another public school of their choice. The Special Education Pilot Project (also known as the Autism Scholarship Program) in Ohio is a scholarship awarded to parents of autistic children for services at a public or nonpublic special education program, which includes tuition at a private school. The Carson Smith Special Needs Scholarship Program in Utah awards scholarships to students with disabilities who attend a private school, both secular and non-secular. Georgia enacted the Special Needs Scholarship Act in 2007, creating a program which allows children with special needs to attend the public or private school that best meets their educational needs. Arizona established the Scholarships for Pupils with Disabilities Program for students to attend a public or eligible qualified school of their choice; however, the program was struck down by the Court of Appeals as unconstitutional under the Arizona State Constitution “No Aid” Clause.
H0388e1-SMRQ-CSRQ-43v5 *Sara Kamprath, Committee Analyst, substantially contributed to this summary.
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