A.R.S. Section 43-1184: Corporate Income Tax Credit for Disabled/Displaced Students

43-1184: Credit contributions to school tuition organizations; displaced students; students with disabilities; definitions

  1. Beginning from and after June 30, 2009, a credit is allowed against the taxes imposed by this title for the amount of voluntary cash contributions made by the taxpayer during the taxable year to a school tuition organization.
  2. The amount of the credit is the total amount of the taxpayer’s contributions for the taxable year under subsection A of this section and is pre-approved by the department of revenue pursuant to subsection d of this section.
  3. The department of revenue:
    1. Shall not allow tax credits under this section and section 20-224.06 that exceed in the aggregate a combined total of five million dollars in any fiscal year.
    2. Shall pre-approve tax credits under this section and section 20-224.06 subject to subsection d of this section.
    3. Shall allow the tax credits under this section and section 20-224.06 on a first come, first served basis.
  4. For the purposes of subsection c, paragraph 2 of this section, before making a contribution to a school tuition organization, the taxpayer under this title or title 20 must notify the school tuition organization of the total amount of contributions that the taxpayer intends to make to the school tuition organization. Before accepting the contribution, the school tuition organization shall request preapproval from the department of revenue for the taxpayer’s intended contribution amount. The department of revenue shall pre-approve or deny the requested amount within twenty days after receiving the request from the school tuition organization. If the department of revenue pre-approves the request, the school tuition organization shall immediately notify the taxpayer that the requested amount was pre-approved by the department of revenue. In order to receive a tax credit under this subsection, the taxpayer shall make the contribution to the school tuition organization within ten days after receiving notice from the school tuition organization that the requested amount was pre-approved. If the school tuition organization does not receive the pre-approved contribution from the taxpayer within the required ten days, the school tuition organization shall immediately notify the department of revenue and the department shall no longer include this pre-approved contribution amount when calculating the limit prescribed in subsection c, paragraph 1 of this section.
  5. A school tuition organization that receives contributions under this section or section 20-224.06 shall allow the department to verify that the educational scholarships and tuition grants that are issued pursuant to this section are awarded to qualified students who attend a qualified school.
  6. If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant’s income, or if there are no taxes due under this title, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years’ income tax liability.
  7. Co-owners of a business, including corporate partners in a partnership, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest. The total of the credits allowed all such owners may not exceed the amount that would have been allowed a sole owner.
  8. The credit allowed by this section is in lieu of any deduction pursuant to section 170 of the internal revenue code and taken for state tax purposes.
  9. A taxpayer shall not claim a credit under this section and also under section 43-1183 with respect to the same contribution.
  10. The tax credit is not allowed if the taxpayer designates the taxpayer’s contribution to the school tuition organization for the direct benefit of any specific student.
  11. A school tuition organization that receives contributions under this section or section 20-224.06 shall use at least ninety per cent of those contributions to provide educational scholarships or tuition grants to qualified students who either:
    1. Received a grant or scholarship under title 15, chapter 8, article 1.2 or 8 in order to attend a qualified school during the 2008-2009 academic year. In fiscal year 2009-2010, the school tuition organization shall give priority to qualified students under this paragraph before providing educational scholarships or tuition grants under paragraph 2 of this subsection.
    2. Attended a governmental primary or secondary school as a full-time student as defined in section 15-901 for at least the first one hundred days of the prior fiscal year and transferred from a governmental primary or secondary school to a qualified school.
    3. Received an educational scholarship or tuition grant under paragraph 1 or 2 of this subsection if the qualified student continues to attend a qualified school in a subsequent year.
  12. The amount of an educational scholarship or a tuition grant that is issued by a school tuition organization under this section shall not exceed the cost of tuition for the student to attend the qualified school or ninety per cent of the amount of state aid that otherwise would be computed for the student as provided in title 15, chapter 9, article 5, whichever is less. On request from a school tuition organization, the department of education shall provide to the school tuition organization in a timely manner the amount computed for the student under this subsection that represents the ninety per cent limitation prescribed in this subsection.
  13. The school tuition organization shall require that the qualified student use the educational scholarship or tuition grant on a full-time basis. If a qualified student leaves the qualified school before completing an entire school year, the qualified school shall refund a prorated amount of the educational scholarship or tuition grant to the school tuition organization that issued the educational scholarship or tuition grant to the student. Any refunds received by the school tuition organization under this subsection shall be allocated for educational scholarships or tuition grants to qualified students in the following year.
  14. Qualified students who receive educational scholarships or tuition grants under this section shall be allowed to attend any qualified school of their custodians’ choice.
  15. A school tuition organization that receives a voluntary cash contribution pursuant to this section or section 20-224.06 shall report to the department of revenue, in a form prescribed by the department of revenue, by June 30 of each year the following information:
    1. The name, address and contact name of the school tuition organization.
    2. The total number of contributions received during the previous calendar year, identified for the purposes of this section or section 20-224.06.
    3. The total dollar amount of contributions received during the previous calendar year, identified for the purposes of this section or section 20-224.06.
    4. The total number of qualified students awarded educational scholarships or tuition grants during the previous calendar year.
    5. The total dollar amount of educational scholarships and tuition grants awarded during the previous calendar year.
    6. The percentage of the total dollar amount of educational scholarships and tuition grants awarded to students during the previous calendar year for each paragraph under subsection k of this section.
    7. For each qualified school to which educational scholarships or tuition grants were awarded:
      1. The name and address of the qualified school.
      2. The number of educational scholarships and tuition grants awarded during the previous calendar year.
      3. The total dollar amount of educational scholarships and tuition grants awarded during the previous calendar year.
    8. Verification that an independent review of financial statements according to generally accepted accounting principles was completed by a certified public accountant for the previous calendar year.
  16. The department of revenue shall adopt rules necessary for the administration of this section.
  17. For the purposes of this section:
    1. “Custodian” means a resident of this state who is a parent or an authorized out-of-home care provider or, if none, the legal guardian of a qualifying student.
    2. “Qualified school” means a nongovernmental primary school or secondary school or a preschool for handicapped students that is located in this state, that does not discriminate on the basis of race, color, handicap, familial status or national origin and that satisfies the requirements prescribed by law for private schools in this state on january 1, 2009.
    3. “Qualified student” means a student who has been either:
      1. Placed in foster care pursuant to title 8, chapter 5 at any time before the student graduates from high school or obtains a general equivalency diploma.
      2. Identified as having a disability under section 504 of the rehabilitation act (29 united states code section 794) or identified by a school district as a child with a disability as defined in section 15-761 or a child with a disability who is eligible to receive services from a school district under section 15-763.
    4. “School tuition organization” means a charitable organization in this state that both:
      1. Is exempt from federal taxation under section 501(c)(3) of the internal revenue code and that allocates ninety per cent of its annual revenue for educational scholarships or tuition grants to qualified students to allow them to attend any qualified school of their custodians’ choice.
      2. Provides educational scholarships or tuition grants to students without limiting availability to only students of one school.