H.R. 8100, School Choice Now Act
Summary
H.R. 8100, the School Choice Now Act, is a bill introduced in the House of Representatives on August 25, 2020 by Mr. Byrne and referred to the Committee on Ways and Means, and in addition to the Committee on Education and Labor. Its stated purpose is to provide for emergency education freedom grants and 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. Title I covers emergency education freedom grants. The bill authorizes appropriations of $50,000,000 to carry out section 202(a) of the Act.
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“H.R. 8100, School Choice Now Act.”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/bills-bills-116hr8100ih-bills-116hr8100ih/
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I
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 pur-
poses.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 25, 2020
Mr. BYRNE (for himself, Mr. LIPINSKI, and Mr. WALKER) introduced the fol-
lowing 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 consider-
ation 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 tax-
payers to contribute to scholarships for students through
eligible scholarship-granting organizations, and for other
purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.
2 This Act may be cited as the ‘‘School Choice Now
3 Act’’.
4 TITLE I—EMERGENCY
5 EDUCATION FREEDOM GRANTS
6 SEC. 101. EMERGENCY EDUCATION FREEDOM GRANTS.
7 (a) DEFINITIONS.—In this title:
8 (1) DEFINITIONS FROM THE INTERNAL REV-
9 ENUE CODE OF 1986.—The definitions in section
10 25E(c) of the Internal Revenue Code of 1986, as
11 added by section 201, shall apply to this section, ex-
12 cept as otherwise provided.
13 (2) ELIGIBLE SCHOLARSHIP-GRANTING ORGANI-
14 ZATION.—The term ‘‘eligible scholarship-granting
15 organization’’ means—
16 (A) an organization that—
17 (i) is described in section 501(c)(3) of
18 the Internal Revenue Code of 1986 and ex-
19 empt from taxation under section 501(a)
20 of such Code;
21 (ii) provides qualifying scholarships to
22 an eligible student who—
23 (I) resides in the State in which
24 the eligible scholarship-granting orga-
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25 nization is recognized; or
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1 (II) in the case of funds provided
2 to the Secretary of the Interior, at-
3 tending elementary schools or sec-
4 ondary schools operated or funded by
5 the Bureau of Indian Education;
6 (iii) is identified by a Governor to re-
7 ceive an allotment under subsection (b);
8 (iv) agrees to allocate at least 95 per-
9 cent of its allotment under subsection (c)
10 to qualifying scholarships;
11 (v) implements robust policies and
12 procedures to prevent waste, fraud, and
13 abuse in the program that it administers;
14 and
15 (vi) provides qualifying scholarships
16 to—
17 (I) more than 1 eligible student;
18 (II) more than 1 eligible family;
19 and
20 (III) different eligible students
21 attending more than 1 education pro-
22 vider; or
23 (B) an organization that—
24 (i) is described in section 501(c)(3) of
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25 the Internal Revenue Code of 1986 and ex-
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1 empt from taxation under section 501(a)
2 of such Code;
3 (ii) pursuant to State law, was able,
4 as of January 1, 2020, to receive contribu-
5 tions that are eligible for a State tax credit
6 if such contributions are used by the orga-
7 nization to provide scholarships to indi-
8 vidual elementary and secondary students,
9 including scholarships for attending private
10 schools;
11 (iii) agrees to allocate at least 95 per-
12 cent of its allotment under subsection (c)
13 to qualifying scholarships;
14 (iv) implements robust policies and
15 procedures to prevent waste, fraud, and
16 abuse in the program that it administers;
17 and
18 (v) provides qualifying scholarships
19 to—
20 (I) more than 1 eligible student;
21 (II) more than 1 eligible family;
22 and
23 (III) different eligible students
24 attending more than 1 education pro-
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25 vider.
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1 (3) EMERGENCY EDUCATION FREEDOM GRANT
2 FUNDS.—The term ‘‘emergency education freedom
3 grant funds’’ means the amount of funds available
4 under subsection (b) or (c)(1)(A).
5 (4) GOVERNOR.—The term ‘‘Governor’’ means
6 the Governor of a State, the chief executive officer
7 of the United States Virgin Islands, Guam, Amer-
8 ican Samoa, and the Commonwealth of the Northern
9 Mariana Islands, and the Secretary of the Interior.
10 (5) SECRETARY.—The term ‘‘Secretary’’ means
11 the Secretary of Education.
12 (6) STATE.—The term ‘‘State’’ means each of
13 the 50 States, the District of Columbia, and the
14 Commonwealth of Puerto Rico.
15 (b) GRANTS.—
16 (1) PROGRAM AUTHORIZED.—
17 (A) RESERVATIONS.—From any amounts
18 appropriated for section 18003 of division B of
19 the CARES Act on or after the date of enact-
20 ment of this Act, the Secretary shall reserve—
21 (i) of the amount reserved for the
22 Outlying Areas in section 18001(a)(1) of
23 Part B of the CARES Act on or after en-
24 actment, 10 percent for allotments for the
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25 United States Virgin Islands, Guam,
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1 American Samoa, and the Commonwealth
2 of the Northern Mariana Islands, to be dis-
3 tributed among those outlying areas on the
4 basis of their relative need, as determined
5 by the Secretary, in accordance with the
6 purpose of this title; and
7 (ii) of the amount reserved for the
8 Bureau of Indian Education in section
9 18001(a)(2) of part B of the CARES Act
10 on or after enactment, 10 percent of such
11 amounts for the Secretary of the Interior,
12 acting through the Bureau of Indian Edu-
13 cation, to be used to provide subgrants de-
14 scribed in subsection (c) to eligible scholar-
15 ship-granting organizations that serve stu-
16 dents attending elementary schools or sec-
17 ondary schools operated or funded by the
18 Bureau of Indian Education.
19 (B) STATE RESERVATION.—From any
20 amount appropriated for section 18003 of divi-
21 sion B of the CARES Act on or after the date
22 of enactment of this Act that a State receives,
23 a State shall reserve 10 percent of those funds
24 to award emergency education freedom grant
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1 funds to eligible scholarship granting organiza-
2 tions in the State.
3 (c) SUBGRANTS TO ELIGIBLE SCHOLARSHIP-GRANT-
4 ING ORGANIZATIONS.—
5 (1) IN GENERAL.—A Governor shall use funds
6 reserved under subsection (b) to award subgrants to
7 eligible scholarship-granting organizations in the
8 State.
9 (2) INITIAL TIMING.—
10 (A) STATES WITH EXISTING TAX CREDIT
11 SCHOLARSHIP PROGRAM.—
12 (i) By not later than 15 days after re-
13 ceiving an allotment from any amounts re-
14 ceived for section 18003 of division B of
15 the CARES Act under, a State with an ex-
16 isting, as of the date of enactment of this
17 Act, tax credit scholarship program shall
18 distribute not less than 50 percent of the
19 allotment to award subgrants to eligible
20 scholarship-granting organizations under
21 subsection (a)(1)(B) in the State in pro-
22 portion to the contributions received in cal-
23 endar year 2019 that were eligible for a
24 State tax credit if such contributions are
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25 used by the organization to provide schol-
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1 arships to eligible students, including
2 scholarships for attending private schools.
3 (ii) By not later than 60 days after
4 receiving an allotment from any amount
5 received for section 18003 of division B of
6 the CARES Act, a Governor with an exist-
7 ing tax credit scholarship program shall
8 use the balance of the total allotment to
9 award subgrants to eligible scholarship-
10 grant organizations under subsection
11 (a)(1)(B).
12 (B) STATES WITHOUT TAX CREDIT SCHOL-
13 ARSHIP PROGRAMS.—
14 (i) By not later than 30 days after re-
15 ceiving an allotment from any amounts re-
16 ceived for section 18003 of division B of
17 the CARES Act, a State without a tax
18 credit scholarship program shall distribute
19 not less than 50 percent of the allotment
20 to award subgrants to eligible scholarship-
21 granting organizations in the State.
22 (ii) By not later than 90 days after
23 receiving an allotment from any amounts
24 received for section 18003 of division B of
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25 the CARES Act, a Governor in a State
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1 without an existing tax credit scholarship
2 program shall use the balance of the allot-
3 ment to award subgrants to eligible schol-
4 arship-grant organizations under sub-
5 section (a)(1)(A).
6 (3) USES OF FUNDS.—An eligible scholarship-
7 granting organization that receives a subgrant under
8 this subsection—
9 (A) may reserve not more than 5 percent
10 of the subgrant funds for public outreach, stu-
11 dent and family support activities, and adminis-
12 trative expenses related to the subgrant; and
13 (B) shall use not less than 95 percent of
14 the subgrant funds to provide qualifying schol-
15 arships for qualified expenses only to eligible
16 students who reside in the State in which the
17 eligible scholarship-granting organization is rec-
18 ognized.
19 (d) REALLOCATION.—A State shall return to the Sec-
20 retary any amounts of the allotment reserved under this
21 Act that the Governor does not award as subgrants under
22 subsection (c) within 120 days of receipt of that allotment,
23 and the Secretary shall reallocate such funds to the re-
24 maining eligible States.
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25 (e) RULES OF CONSTRUCTION.—
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1 (1) Education providers that accept scholarship
2 funds from students under this section shall not, by
3 reason of such participation, be considered recipients
4 of Federal financial assistance, nor shall they, by
5 reason of such participation, be required to comply
6 with provisions of federal law not otherwise in effect
7 as of the date of the passage of this Act.
8 (2) The rules of construction under section
9 25E(d) of the Internal Revenue Code of 1986, as
10 added by section 201, shall apply to this section in
11 the same manner as such rules apply to section 25E
12 of such Code, as so added.
13 TITLE II—TAX CREDITS FOR
14 CONTRIBUTIONS TO ELIGI-
15 BLE SCHOLARSHIP-GRANT-
16 ING ORGANIZATIONS
17 SEC. 201. TAX CREDITS FOR CONTRIBUTIONS TO ELIGIBLE
18 SCHOLARSHIP-GRANTING ORGANIZATIONS.
19 (a) CREDIT FOR INDIVIDUALS.—Subpart A of part
20 IV of subchapter A of chapter 1 of the Internal Revenue
21 Code of 1986 is amended by adding after section 25D the
22 following new section:
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1 ‘‘SEC. 25E. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-
2 GRANTING ORGANIZATIONS.
3 ‘‘(a) ALLOWANCE OF CREDIT.—Subject to section
4 202(c) of the School Choice Now Act, in the case of an
5 individual, there shall be allowed as a credit against the
6 tax imposed by this chapter for the taxable year an
7 amount equal to the sum of any qualified contributions
8 made by the taxpayer during the taxable year.
9 ‘‘(b) AMOUNT OF CREDIT.—The credit allowed under
10 subsection (a) for any taxable year shall not exceed 10
11 percent of the taxpayer’s adjusted gross income for the
12 taxable year.
13 ‘‘(c) DEFINITIONS.—For purposes of this section—
14 ‘‘(1) ELIGIBLE SCHOLARSHIP-GRANTING ORGA-
15 NIZATION.—The term ‘eligible scholarship-granting
16 organization’ means—
17 ‘‘(A) an organization that—
18 ‘‘(i) is described in section 501(c)(3)
19 and exempt from taxation under section
20 501(a),
21 ‘‘(ii) provides qualifying scholarships
22 to an eligible student who—
23 ‘‘(I) resides in the State in which
24 the eligible scholarship-granting orga-
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25 nization is recognized, or
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1 ‘‘(II) in the case of the Bureau of
2 Indian Education, are members of a
3 federally recognized tribe,
4 ‘‘(iii) a State identifies to the Sec-
5 retary as an eligible scholarship-granting
6 organization under section 202(c)(5)(B) of
7 the School Choice Now Act,
8 ‘‘(iv) allocates at least 90 percent of
9 qualified contributions to qualifying schol-
10 arships on an annual basis,
11 ‘‘(v) implements robust policies and
12 procedures to prevent waste, fraud, and
13 abuse in the program that it administers,
14 and
15 ‘‘(vi) provides qualifying scholarships
16 to—
17 ‘‘(I) more than 1 eligible student,
18 ‘‘(II) more than 1 eligible family,
19 and
20 ‘‘(III) different eligible students
21 attending more than 1 education pro-
22 vider, or
23 ‘‘(B) an organization that—
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1 ‘‘(i) is described in section 501(c)(3)
2 and exempt from taxation under section
3 501(a),
4 ‘‘(ii) pursuant to State law, was able,
5 as of January 1, 2021, to receive contribu-
6 tions that are eligible for a State tax credit
7 if such contributions are used by the orga-
8 nization to provide scholarships to indi-
9 vidual elementary and secondary students,
10 including scholarships for attending private
11 schools,
12 ‘‘(iii) agrees to allocate at least 905
13 percent of its allotment under subsection
14 (c) to qualifying scholarships on an annual
15 basis,
16 ‘‘(iv) implements robust policies and
17 procedures to prevent waste, fraud, and
18 abuse in the program that it administers,
19 and
20 ‘‘(v) provides qualifying scholarships
21 to—
22 ‘‘(I) more than 1 eligible student,
23 ‘‘(II) more than 1 eligible family,
24 and
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1 ‘‘(III) different eligible students
2 attending more than 1 education pro-
3 vider.
4 ‘‘(2) ELIGIBLE STUDENT.—The term ‘eligible
5 student’ means—
6 ‘‘(A) a child, as that term is defined in sec-
7 tion 8101(3) of the Elementary and Secondary
8 Education Act of 1965, who comes from a fam-
9 ily whose household income is no more than
10 200 percent of the median household income for
11 that State, as determined by the Bureau of the
12 Census in compiling the most recent data for
13 the American Community Survey, or
14 ‘‘(B) a child with a disability, as that term
15 is defined in section 602 of the Individuals with
16 Disabilities Education Act.
17 ‘‘(3) QUALIFIED CONTRIBUTION.—The term
18 ‘qualified contribution’ means a contribution of cash
19 to any eligible scholarship-granting organization.
20 ‘‘(4) QUALIFIED EXPENSE.—The term ‘quali-
21 fied expense’ means any educational expense that
22 is—
23 ‘‘(A) for an individual student’s elementary
24 or secondary education, as recognized by the
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1 ‘‘(B) for the secondary education compo-
2 nent of an individual elementary or secondary
3 student’s career and technical education, as de-
4 fined by section 3(5) of the Carl D. Perkins Ca-
5 reer and Technical Education Act of 2006 (20
6 U.S.C. 2302(5)).
7 ‘‘(5) QUALIFYING SCHOLARSHIP.—The term
8 ‘qualifying scholarship’ means a scholarship granted
9 by an eligible scholarship-granting organization to
10 an individual elementary or secondary student for a
11 qualified expense.
12 ‘‘(6) STATE.—The term ‘State’ means each of
13 the 50 States, the District of Columbia, the Com-
14 monwealth of Puerto Rico, the outlying areas (as de-
15 fined in section 1121(c) of the Elementary and Sec-
16 ondary Education Act of 1965 (20 U.S.C. 6331(c)),
17 and the Department of the Interior (acting through
18 the Bureau of Indian Education).
19 ‘‘(d) RULES OF CONSTRUCTION.—
20 ‘‘(1) IN GENERAL.—A qualifying scholarship
21 awarded to a student from the proceeds of a quali-
22 fied contribution under this section shall not be con-
23 sidered assistance to the school or other educational
24 provider that enrolls, or provides educational services
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25 to, the student or the student’s parents.
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1 ‘‘(2) EXCLUSION FROM INCOME.—Gross income
2 shall not include any amount received by an indi-
3 vidual as a qualifying scholarship and such amount
4 shall not be taken into account as income or re-
5 sources for purposes of determining the eligibility of
6 such individual or any other individual for benefits
7 or assistance, or the amount or extent of such bene-
8 fits or assistance, under any Federal program or
9 under any State or local program financed in whole
10 or in part with Federal funds.
11 ‘‘(3) PROHIBITION OF CONTROL OVER NON-
12 PUBLIC EDUCATION PROVIDERS.—
13 ‘‘(A)(i) Nothing in this section shall be
14 construed to permit, allow, encourage, or au-
15 thorize any Federal control over any aspect of
16 any private, religious, or home education pro-
17 vider, whether or not a home education provider
18 is treated as a private school or home school
19 under State law.
20 ‘‘(ii) This section shall not be construed to
21 exclude private, religious, or home education
22 providers from participation in programs or
23 services under this section.
24 ‘‘(B) Nothing in this section shall be con-
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25 strued to permit, allow, encourage, or authorize
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1 an entity submitting a list of eligible scholar-
2 ship-granting organizations on behalf of a State
3 pursuant to section 202(c)(5) of the School
4 Choice Now Act to mandate, direct, or control
5 any aspect of a private or home education pro-
6 vider, regardless of whether or not a home edu-
7 cation provider is treated as a private school
8 under State law.
9 ‘‘(C) No participating State or entity act-
10 ing on behalf of a State pursuant to section
11 202(c)(5) of the School Choice Now Act shall
12 exclude, discriminate against, or otherwise dis-
13 advantage any education provider with respect
14 to programs or services under this section based
15 in whole or in part on the provider’s religious
16 character or affiliation, including religiously
17 based or mission-based policies or practices.
18 ‘‘(4) PARENTAL RIGHTS TO USE SCHOLAR-
19 SHIPS.—No participating State or entity acting on
20 behalf of a State pursuant to section 202(c)(5) of
21 the School Choice Now Act shall disfavor or discour-
22 age the use of qualifying scholarships for the pur-
23 chase of elementary and secondary education serv-
24 ices, including those services provided by private or
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25 nonprofit entities, such as faith-based providers.
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1 ‘‘(5) STATE AND LOCAL AUTHORITY.—Nothing
2 in this section shall be construed to modify a State
3 or local government’s authority and responsibility to
4 fund education.
5 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—The Secretary
6 shall prescribe such regulations or other guidance to en-
7 sure that the sum of the tax benefits provided by Federal,
8 State, or local law for a qualified contribution receiving
9 a Federal tax credit in any taxable year does not exceed
10 the sum of the qualified contributions made by the tax-
11 payer for the taxable year.
12 ‘‘(f) CARRYFORWARD OF CREDIT.—If a tax credit al-
13 lowed under this section is not fully used within the appli-
14 cable taxable year because of insufficient tax liability on
15 the part of the taxpayer, the unused amount may be car-
16 ried forward for a period not to exceed 5 years.
17 ‘‘(g) ELECTION.—This section shall apply to a tax-
18 payer for a taxable year only if the taxpayer elects to have
19 this section apply for such taxable year.
20 ‘‘(h) ALTERNATIVE MINIMUM TAX.—For purposes of
21 calculating the alternative minimum tax under section 55,
22 a taxpayer may use any credit received for a qualified con-
23 tribution under this section.’’.
24 (b) CLERICAL AMENDMENT.—The table of sections
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25 for subpart A of part IV of subchapter A of chapter 1
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1 of the Internal Revenue Code of 1986 is amended by in-
2 serting after the item relating to section 25D the following
3 new item:
‘‘Sec. 25E. Contributions to eligible scholarship-granting organizations.’’.
4 (c) CREDIT FOR CORPORATIONS.—Subpart D of part
5 IV of subchapter A of chapter 1 of the Internal Revenue
6 Code of 1986 is amended by adding at the end the fol-
7 lowing new section:
8 ‘‘SEC. 45U. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-
9 GRANTING ORGANIZATIONS.
10 ‘‘(a) ALLOWANCE OF CREDIT.—Subject to section
11 202(c) of the School Choice Now Act, for purposes of sec-
12 tion 38, there shall be allowed as a credit against the tax
13 imposed by this chapter for the taxable year an amount
14 equal to the sum of any qualified contributions (as defined
15 in section 25E(c)(2)) made by such corporation taxpayer
16 during the taxable year.
17 ‘‘(b) AMOUNT OF CREDIT.—The credit allowed under
18 subsection (a) for any taxable year shall not exceed 5 per-
19 cent of the taxable income (as defined in section
20 170(b)(2)(D)) of the domestic corporation for such taxable
21 year.
22 ‘‘(c) ADDITIONAL PROVISIONS.—For purposes of this
23 section, any qualified contributions made by a domestic
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24 corporation shall be subject to the provisions of section
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1 25E (including subsection (d) of such section), to the ex-
2 tent applicable.
3 ‘‘(d) ELECTION.—This section shall apply to a tax-
4 payer for a taxable year only if the taxpayer elects to have
5 this section apply for such taxable year.’’.
6 (d) CREDIT PART OF GENERAL BUSINESS CRED-
7 IT.—Section 38(b) is amended—
8 (1) by striking ‘‘plus’’ at the end of paragraph
9 (32);
10 (2) by striking the period at the end of para-
11 graph (33) and inserting ‘‘, plus’’; and
12 (3) by adding at the end the following new
13 paragraph:
14 ‘‘(34) the credit for qualified contributions de-
15 termined under section 45U(a).’’.
16 (e) CLERICAL AMENDMENT.—The table of sections
17 for subpart D of part IV of subchapter A of chapter 1
18 is amended by adding at the end the following new item:
‘‘Sec. 45U. Contributions to eligible scholarship-granting organizations.’’.
19 (f) EFFECTIVE DATE.—The amendments made by
20 this section shall apply to taxable years beginning after
21 December 31, 2020.
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1 SEC. 202. EDUCATION FREEDOM SCHOLARSHIPS WEB POR-
2 TAL AND ADMINISTRATION.
3 (a) IN GENERAL.—The Secretary of Treasury shall,
4 in coordination with the Secretary of Education, establish,
5 host, and maintain a web portal that—
6 (1) lists all eligible scholarship-granting organi-
7 zations;
8 (2) enables a taxpayer to make a qualifying
9 contribution to one or more eligible scholarship-
10 granting organizations and to immediately obtain
11 both a pre-approval of a tax credit for that contribu-
12 tion and a receipt for tax filings;
13 (3) provides information about the tax benefits
14 under sections 25E and 45U of the Internal Rev-
15 enue Code of 1986; and
16 (4) enables a State to submit and update infor-
17 mation about its programs and its eligible scholar-
18 ship-granting organizations for informational pur-
19 poses only, including information on—
20 (A) student eligibility;
21 (B) allowable educational expenses;
22 (C) the types of allowable education pro-
23 viders;
24 (D) the percentage of funds an organiza-
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1 (E) the percentage of total contributions
2 the organization awards in a calendar year.
3 (b) NONPORTAL CONTRIBUTIONS.—A taxpayer may
4 opt to make a contribution directly to an eligible scholar-
5 ship-granting organization, instead of through the web
6 portal described in subsection (a), provided that the tax-
7 payer, or the eligible scholarship-granting organization on
8 behalf of the taxpayer, applies for, and receives pre-ap-
9 proval for a tax credit from the Secretary of Treasury in
10 coordination with the Secretary of the Education.
11 (c) NATIONAL AND STATE LIMITATIONS ON CRED-
12 ITS.—
13 (1) NATIONAL LIMITATION.—For each fiscal
14 year, the total amount of qualifying contributions for
15 which a credit is allowed under sections 25E and
16 45U of the Internal Revenue Code of 1986 shall not
17 exceed $5,000,000,000.
18 (2) ALLOCATION OF LIMITATION.—
19 (A) INITIAL ALLOCATIONS.—For each cal-
20 endar year, with respect to the limitation under
21 paragraph (1), the Secretary of the Treasury,
22 in consultation with the Secretary of Education,
23 shall—
24 (i) allocate to each State an amount
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1 tributions made in the State in the pre-
2 vious year; and
3 (ii) from any amounts remaining fol-
4 lowing allocations made under clause (i),
5 allocate to each participating State an
6 amount that bears the same relation to
7 such remaining amount as the number of
8 individuals aged 5 through 19 in the State,
9 as determined by the Secretary of Edu-
10 cation on the basis of the most recent sat-
11 isfactory data, bears to the number of
12 those individuals, as so determined, in all
13 such States, as so determined.
14 (B) MINIMUM ALLOCATION.—Notwith-
15 standing subparagraph (A), no State receiving
16 an allocation under this section may receive less
17 than one-half of 1 percent of the amount allo-
18 cated for a fiscal year.
19 (C) ALTERNATIVE ALLOCATION.—
20 (i) IN GENERAL.—Not later than the
21 end of the fifth year of the program or 1
22 year after the end of the first fiscal year
23 for which the total amount of credits
24 claimed under section 25E and section
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25 45U of the Internal Revenue Code of 1986
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1 is $2,500,000,000 or more, whichever
2 comes first, the Secretary of the Treasury,
3 in consultation with the Secretary of Edu-
4 cation, shall, by regulation, provide for an
5 alternative allocation method that shall
6 take effect beginning with the first fiscal
7 year after such regulation takes effect.
8 (ii) ALTERNATIVE ALLOCATION METH-
9 OD.—The alternative allocation method
10 shall be expressed as a formula based on
11 a combination of the following data for
12 each State, as reported by the State to the
13 Secretary of Treasury:
14 (I) The relative percentage of
15 students in the State who receive an
16 elementary or secondary scholarship
17 through a State program that is fi-
18 nanced through State tax-credited do-
19 nations or appropriations and that
20 permits the elementary or secondary
21 scholarship to be used to attend a pri-
22 vate school.
23 (II) The total amount of all ele-
24 mentary and secondary scholarships
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1 that is financed through State tax-
2 credited donations or appropriations
3 compared to the total amount of cur-
4 rent State and local expenditures for
5 free public education in the State.
6 (iii) ALLOCATION FORMULA.—For any
7 fiscal year to which clause (i) applies, the
8 Secretary of Treasury, in consultation with
9 the Secretary of Education, shall—
10 (I) for each State, allocate an
11 amount equal to the sum of the quali-
12 fying contributions made in the State
13 in the previous year;
14 (II) allocate 2⁄3 of the remaining
15 amount (after application of subclause
16 (I)) of the national limitation for that
17 year using the alternative allocation
18 method under clause (ii); and
19 (III) allocate 1⁄3 of the remaining
20 amount (after application of subclause
21 (I) and (II)) in accordance with sub-
22 paragraph (A)(ii).
23 (iv) INELIGIBILITY.—For any fiscal
24 year to which clause (i) applies, a State
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1 Treasury with information described in
2 clause (ii) is not eligible to receive an allo-
3 cation through the alternative allocation
4 method under such clause.
5 (3) ALLOWABLE PARTNERSHIPS.—A State may
6 choose to administer the allocation it receives under
7 paragraph (2) in partnership with one or more
8 States, provided that the eligible scholarship-grant-
9 ing organizations in each partner State serve stu-
10 dents who reside in all States in the partnership.
11 (4) ALLOCATION AND ADJUSTMENTS.—
12 (A) INITIAL ALLOCATION TO STATES.—Not
13 later than November 1 of the year preceding a
14 year for which there is a national limitation on
15 credits under paragraph (1) (referred to in this
16 section as the ‘‘applicable year’’), or as early as
17 practicable with respect to the first year, the
18 Secretary of the Treasury shall announce the
19 State allocations under paragraph (2) for the
20 applicable year.
21 (B) LIST OF ELIGIBLE SCHOLARSHIP-
22 GRANTING ORGANIZATIONS.—
23 (i) IN GENERAL.—Not later than Jan-
24 uary 1 of each applicable year, or as early
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25 as practicable with respect to the first
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1 year, each State shall provide the Sec-
2 retary of the Treasury a list of eligible
3 scholarship-granting organizations, includ-
4 ing a certification that the entity submit-
5 ting the list on behalf of the State has the
6 authority to perform this function.
7 (ii) RULE OF CONSTRUCTION.—Nei-
8 ther this section nor any other Federal law
9 shall be construed as limiting the entities
10 that may submit the list on behalf of a
11 State.
12 (C) REALLOCATION OF UNCLAIMED CRED-
13 ITS.—The Secretary of the Treasury shall re-
14 allocate a State’s allocation to other States, in
15 accordance with paragraph (2), if the State—
16 (i) chooses not to identify scholarship-
17 granting organizations under subparagraph
18 (B) in any applicable year; or
19 (ii) does not have an existing eligible
20 scholarship-granting organization.
21 (D) REALLOCATION.—On or after April 1
22 of any applicable year, the Secretary of the
23 Treasury may reallocate, to one or more other
24 States that have eligible scholarship-granting
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1 paragraph (2), the allocation of a State for
2 which the State’s allocation has not been
3 claimed.
4 (d) DEFINITIONS.—Any term used in this section
5 which is also used in section 25E of the Internal Revenue
6 Code of 1986 shall have the same meaning as when used
7 in such section.
8 (e) AUTHORIZATION OF APPROPRIATIONS.—There
9 are authorized to be appropriated $50,000,000 to carry
10 out section 202(a) of this Act.
Æ
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