Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                              HB 408.1
                                                 HOUSE BILL NO. 408
                                     INTRODUCED BY S. VINTON, M. BINKLEY
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  A BILL FOR AN ACT ENTITLED: “AN ACT REVISING THE STUDENT SCHOLARSHIP ORGANIZATION AND
  INNOVATIVE EDUCATIONAL PROGRAM INCOME TAX CREDITS; INCREASING THE AGGREGATE LIMITS
  FOR THE CREDITS; LIMITING THE AMOUNT OF DONATIONS THAT A SCHOOL DISTRICT MAY RETAIN;
  PROVIDING FOR REDISTRIBUTION OF FUNDS THAT EXCEED A SCHOOL DISTRICT'S LIMIT TO
  SCHOOL DISTRICTS THAT RECEIVE ADVANCED OPPORTUNITY AID; REVISING THE DEFINITION OF
  "INNOVATIVE EDUCATIONAL PROGRAM"; PROVIDING A STATUTORY APPROPRIATION; AMENDING
  SECTIONS 15-30-3102, 15-30-3110, 15-30-3111, AND 17-7-502, MCA; AMENDING SECTIONS 23 AND 24,
  CHAPTER 480, LAWS OF 2021; REPEALING SECTIONS 8, 9, 10, 14, 15, 16, AND 25, CHAPTER 480, LAWS
  OF 2021; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE, AN APPLICABILITY DATE, AND A
  TERMINATION DATE.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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          NEW SECTION. Section 1.         Innovative educational program account -- revenue allocated --
  appropriations from account. (1) There is an innovative educational program account in the state special
  revenue f und established in 17-2-102. The f unds in the account must be administered by the superintendent of
  public instruction.
          (2)      The superintendent of public instruction shall deposit in the account innovative educational
  program donations transf erred f rom school districts because the donations exceed the limits provided f or in 15-
  30-3110(7).
          (3)      Interest and earnings on the account must be deposited in the account.
          (4)      Money in the account is statutorily appropriated, as provided in 17-7-502, to the superintendent
  of public instruction f or distribution pursuant to 15-30-3110(7)(c) to school districts that receive advanced
  opportunity aid under 20-7-1506(4). The f unds must be distributed at the same time and in the same proportion
  as the advanced opportunity aid distributions.
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68th Legislature 2023                                                                                                HB 408.1
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          Section 2. Section 15-30-3102, MCA, is amended to read:
          "15-30-3102.     (Temporary) Definitions. As used in this part, the f ollowing def initions apply:
          (1)      "Department" means the department of revenue provided f or in 2-15-1301.
          (2)      "Donation" means a gif t of cash.
          (3)      "Eligible student" means a student who is a Montana resident and who is 5 years of age or
  older on or bef ore September 10 of the year of attendance and has not yet reached 19 years of age.
          (4)      "Innovative educational program" includes any of the f ollowing:
          (a)      transf ormational learning as def ined in 20-7-1602;
          (b)      advanced opportunity as def ined in 20-7-1503;
          (c)      any program, service, instructional methodology, or adaptive equipment used to expand
  opportunity f or a child with a disability as def ined in 20-7-401;
          (d)      any courses provided through work-based learning partnerships or f or postsecondary credit or
  career certif ication; and
          (e)      technology enhancements, including but not limited to any expenditure incurred f or purposes
  specif ied in 20-9-533; and
          (f )     capital improvements and equipment necessary to support an innovative educational program .
          (5)      "Partnership" has the meaning provided in 15-30-2101.
          (6)      "Pass-through entity" has the meaning provided in 15-30-2101.
          (7)      "Qualif ied education provider" means an education provider that:
          (a)      is not a public school;
          (b)      (i) is accredited, has applied f or accreditation, or is provisionally accredited by a state, regional,
  or national accreditation organization; or
          (ii)     is a nonaccredited provider or tutor and has inf ormed the child's parents or legal guardian in
  writing at the time of enrollment that the provider is not accredited and is not seeking accreditation;
          (c)      is not a home school as ref erred to in 20-5-102(2)(e);
          (d)      satisf ies the health and saf ety requirements prescribed by law f or private schools in this state;
  and
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68th Legislature 2023                                                                                                 HB 408.1
          (e)       qualif ies f or an exemption f rom compulsory enrollment under 20-5-102(2)(e) and 20-5-109.
          (8)       "Small business corporation" has the meaning provided in 15-30-3301.
          (9)       "Student scholarship organization" means a charitable organization in this state that:
          (a)       is exempt f rom f ederal income taxation under section 501(c)(3) of the Internal Revenue Code,
  26 U.S.C. 501(c)(3);
          (b)       allocates not less than 90% of its annual revenue f rom donations eligible f or the tax credit
  under 15-30-3111 f or scholarships to allow students to enroll with any qualif ied education provider; and
          (c)       provides educational scholarships to eligible students without limiting student access to only
  one education provider.
          (10)      "Taxpayer" has the meaning provided in 15-30-2101. (Terminates December 31, 2029--secs.
  20 and 24(6), Ch. 480, L. 2021.)"
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          Section 3. Section 15-30-3110, MCA, is amended to read:
          " 15-30-3110.     (Temporary) Credit for providing supplemental funding to public schools --
  innovative educational program. (1) Subject to subsection (4), a taxpayer or corporation is allowed a credit
  against the tax imposed by chapter 30 or 31 f or donations made to a school district f or the purpose of providing
  supplemental f unding to the school district f or innovative educational programs. The amount of the credit
  allowed is equal to the amount of the donation, not to exceed $200,000. A district shall deposit a donation made
  f or an innovative educational program into the district's miscellaneous programs f und and shall limit the
  expenditure of the donation to expenditures f or innovativ e educational programs of the district.
          (2)    (a) If the credit allowed under this section is claimed by a small business corporation, a pass -
  through entity, or a partnership, the credit must be attributed to shareholders, owners, or partners using the
  same proportion as used to report the entity's income or loss.
          (b)    A donation by an estate or trust qualif ies f or the credit. Any credit not used by the estate or trust
  may be attributed to each benef iciary of the estate or trust in the same proportion used to report the
  benef iciary's income f rom the estate or trust f or Montana income tax purposes.
          (3)    The credit allowed under this section may not exceed the taxpayer's income tax liability but may
  be carried f orward 3 years. The entire amount of the tax credit not used in the year earned must be carried f irst
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68th Legislature 2023                                                                                              HB 408.1
  to the earliest tax year in which the credit may be applied and then to each succeeding tax year.
           (4)   (a) (i) The aggregate amount of tax credits allowed under this section is $1 million per year in tax
  year 2022 and $2 million per year in tax year 2023 and subsequent tax years except as provided in this
  subsection (4)(a).
           (ii) Beginning in 2023, by December 31 of each year, the department shall determine if 80% of the
  aggregate limit provided f or in subsection (4)(a)(iii) in donations was preapproved by the department. If this
  condition is satisf ied, the aggregate amount of tax credits allowed must be increased by 20% f or the
  succeeding tax years.
           (iii) If the aggregate limit is increased in any tax year, the department shall use the new limit as the
  base aggregate limit f or succeeding tax years until a new aggregated limit is established under the provisions of
  subsection (4)(a)(ii).
           (b)   The aggregate limit under this subsection (4) applies to the year in which a donation is made
  regardless of whether the f ull credit is claimed in that tax year or carried f orward.
           (5)   A credit is not allowed under this section with respect to any amount deducted by the taxpayer f or
  state tax purposes as a charitable contribution to a charitable organization qualif ied under section 501(c)(3) of
  the Internal Revenue Code, 26 U.S.C. 501(c)(3). This section does not prevent a taxpayer f rom:
           (a)   claiming a credit under this section instead of a deduction; or
           (b)   claiming an exclusion, deduction, or credit f or a charitable contribution that exceeds the amount
  f or which the credit is allowed under this section.
           (6)   (a) On receiving a donation under this part, a school district shall seek preapproval, in a manner
  prescribed by the department, that the amount of tax credit sought by the taxpayer is available under the
  aggregate limit under subsection (4).
           (b)   On preapproval by the department, a school district shall issue a receipt, in a f orm prescribed by
  the department, to each contributing taxpayer indicating the value of the donation received and preapproval of
  the tax credit.
           (c)   A taxpayer shall provide a copy of the receipt when claiming the tax credit. (Terminates December
  31, 2022, 2023, and 2024, on occurrence of contingency until June 30, 2025--secs. 23(7), 25, Ch. 480, L. 2021-
  -see compiler's comment.)
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68th Legislature 2023                                                                                                 HB 408.1
           15-30-3110.     (Temporary -- effective on occurrence of contingency) Credit for providing
  supplemental funding to public schools -- innovative educational program. (1) Subject to subsection (4),
  a taxpayer or corporation is allowed a credit against the tax imposed by chapter 30 or 31 f or donations made to
  a school district f or the purpose of providing supplemental f unding to the school district f or innovative
  educational programs. The amount of the credit allowed is equal to the amount of the donation, not to exceed
  $150. A district shall deposit a donation made f or an innovative educational program into the district's
  miscellaneous programs f und and shall limit the expenditure of the donation to expenditures f or innovative
  educational programs of the district.
           (2)   (a) If the credit allowed under this section is claimed by a small business corporation, a pass -
  through entity, or a partnership, the credit must be attributed to shareholders, owners, or partners using the
  same proportion as used to report the entity's income or loss.
           (b)   A donation by an estate or trust qualif ies f or the credit. Any credit not used by the estate or trust
  may be attributed to each benef iciary of the estate or trust in the same proportion used to report the
  benef iciary's income f rom the estate or trust f or Montana income tax purposes.
           (3)   The credit allowed under this section may not exceed the taxpayer's income tax liability. There is
  no carryback or carryf orward of the credit permitted under this section, and the credit must be applied in the
  year the donation is made, as determined by the taxpayer's accounting method.
           (4)   (a) (i) The aggregate amount of tax credits allowed under this section is $1 million per year in tax
  year 2022 and $2 million per year in tax year 2023 and subsequent tax years except as provided in this
  subsection (4)(a).
           (ii) Beginning in 2023, by December 31 of each year, the department shall determine if 80% of the
  aggregate limit provided f or in subsection (4)(a)(iii) in donations was preapproved by the department. If this
  condition is satisf ied, the aggregate amount of tax credits allowed must be increased by 20% f or the
  succeeding tax years.
           (iii) If the aggregate limit is increased in any tax year, the department shall use the new limit as the
  base aggregate limit f or succeeding tax years until a new aggregated limit is established under the provisions of
  subsection (4)(a)(ii).
           (b)   The aggregate limit under this subsection (4) applies to the year in which a donation is made
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68th Legislature 2023                                                                                                    HB 408.1
  regardless of whether the f ull credit is claimed in that tax year or carried f orward.
              (5)   A credit is not allowed under this section with respect to any amount deducted by the taxpayer f or
  state tax purposes as a charitable contribution to a charitable organization qualif ied under section 501(c)(3) of
  the Internal Revenue Code, 26 U.S.C. 501(c)(3). This section does not prevent a taxpayer f rom:
              (a)   claiming a credit under this section instead of a deduction; or
              (b)   claiming an exclusion, deduction, or credit f or a charitable contribution that exceeds the amount
  f or which the credit is allowed under this section.
              (6)   (a) On receiving a donation under this part, a school district shall seek preapproval, in a manner
  prescribed by the department, that the amount of tax credit sought by the taxpayer is available under the
  aggregate limit under subsection (4).
              (b)   On preapproval by the department, a school district shall issue a receipt, in a f orm prescribed by
  the department, to each contributing taxpayer indicating the value of the donation received and preapproval of
  the tax credit.
              (c)   A taxpayer shall provide a copy of the receipt when claiming the tax credit.
              15-30-3110.    (Temporary -- effective July 1, 2025) Credit for providing supplemental funding to
  public schools -- innovative educational program. (1) Subject to subsection (4), a taxpayer or corporation is
  allowed a credit against the tax imposed by chapter 30 or 31 f or donations made to a school district f or the
  purpose of providing supplemental f unding to the school district f or innovative educational programs. The
  amount of the credit allowed is equal to the amount of the donation, not to exceed $200,000. A district shall
  deposit a donation made f or an innovative educational program into the district's miscellaneous programs f und
  and shall limit the expenditure of the donation to expenditures f or innovative educational programs of the
  district.
              (2)      (a) If the credit allowed under this section is claimed by a small business corporation, a pass-
  through entity, or a partnership, the credit must be attributed to shareholders, owners, or partners using the
  same proportion as used to report the entity's income or loss.
              (b)      A donation by an estate or trust qualif ies f or the credit. Any credit not used by the estate or trust
  may be attributed to each benef iciary of the estate or trust in the same proportion used to report the
  benef iciary's income f rom the estate or trust f or Montana income tax purposes.
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68th Legislature 2023                                                                                                 HB 408.1
           (3)         The credit allowed under this section may not exceed the taxpayer's income tax liability but
  may be carried f orward 3 years. The entire amount of the tax credit not used in the year earned must be carried
  f irst to the earliest tax year in which the credit may be applied and then to each succeeding tax year.
           (4)         (a) (i) The aggregate amount of tax credits allowed under this section is $1 million per year in
  tax year 2022 and $2 million per year in tax year 2023 and $5 million per year in tax year 2024 and subsequent
  tax years except as provided in this subsection (4)(a).
           (ii)        Beginning in 2023 2024, by December 31 of each year, the department shall determine if 80%
  of the aggregate limit provided f or in subsection (4)(a)(iii) in donations was preapproved by the departme nt. If
  this condition is satisf ied, the aggregate amount of tax credits allowed must be increased by 20% f or the
  succeeding tax years.
           (iii)       If the aggregate limit is increased in any tax year, the department shall use the new limit as the
  base aggregate limit f or succeeding tax years until a new aggregated limit is established under the provisions of
  subsection (4)(a)(ii).
           (b)         The aggregate limit under this subsection (4) applies to the year in which a donation is made
  regardless of whether the f ull cr