[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1813 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 1813
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for charitable donations for the creation or expansion of charter
schools.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 20, 2025
Mr. Scott of South Carolina introduced the following bill; which was
read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for charitable donations for the creation or expansion of charter
schools.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``High-Quality Charter Schools Act''.
SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO ELIGIBLE CHARTER SCHOOL
ORGANIZATIONS.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 25E the following new section:
``SEC. 25F. CONTRIBUTIONS TO ELIGIBLE CHARTER SCHOOL ORGANIZATIONS.
``(a) Allowance of Credit.--In the case of an individual who is a
citizen or resident of the United States (as defined in section
7701(a)(9)), there shall be allowed as a credit against the tax imposed
by this chapter for the taxable year an amount equal to 75 percent of
the amount of qualified contributions made by the taxpayer during the
taxable year.
``(b) Amount of Credit.--The credit allowed under subsection (a) in
any taxable year shall not exceed an amount equal to the greater of--
``(1) 10 percent of the adjusted gross income of the
taxpayer for the taxable year, or
``(2) $5,000.
``(c) Definitions.--For purposes of this section--
``(1) Charter school.--The term `charter school' has the
meaning given such term in section 4310 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C. 7221i).
``(2) Eligible charter school organization.--
``(A) In general.--The term `eligible charter
school organization' means an entity which--
``(i) is described in section 501(c)(3) and
exempt from tax under section 501(a) and is not
a private foundation,
``(ii) is a charter management organization
(as defined in section 4310 of the Elementary
and Secondary Education Act of 1965 (20 U.S.C.
7221i)), or a charter school, that--
``(I)(aa) has received a grant for
the replication or expansion of high-
quality charter schools under section
4305(b) of the Elementary and Secondary
Education Act of 1965 (20 U.S.C.
7221d(b)), or
``(bb) manages or operates a
charter school that has been supported
under such a grant, or
``(II) has been selected by a State
for eligibility under this section
based on a determination by the State
that the entity is in the highest 10
percent of charter management
organizations (as so defined) or
charter schools, as the case may be,
for student performance in the State,
``(iii) separate from any other funds or
contributions received by the entity, maintains
and accounts for any contributions made by any
person for the purpose of the creation or
expansion of charter schools operated or
managed by such entity,
``(iv) obtains from an independent
certified public accountant annual financial
and compliance audits, and
``(v) certifies to the Secretary (at such
time, and in such form and manner, as the
Secretary may prescribe) that the audit
described in clause (iv) has been completed.
``(B) Independent certified public accountant.--For
purposes of subparagraph (A), the term `independent
certified public accountant' means, with respect to an
organization, a certified public accountant who is not
a person described in section 465(b)(3)(A) with respect
to such organization or any employee of such
organization.
``(3) Qualified contribution.--The term `qualified
contribution' means a charitable contribution (as defined by
section 170(c)) to an eligible charter school organization in
the form of cash or marketable securities for the purpose of
the creation or expansion of charter schools managed or
operated by such organization.
``(d) Denial of Double Benefit.--Any qualified contribution for
which a credit is allowed under this section shall not be taken into
account as a charitable contribution for purposes of section 170.
``(e) Carryforward of Unused Credit.--
``(1) In general.--If the credit allowable under subsection
(a) for any taxable year exceeds the limitation imposed by
section 26(a) for such taxable year reduced by the sum of the
credits allowable under this subpart (other than this section,
section 23, and section 25D), such excess shall be carried to
the succeeding taxable year and added to the credit allowable
under subsection (a) for such taxable year.
``(2) Limitation.--No credit may be carried forward under
this subsection to any taxable year following the fifth taxable
year after the taxable year in which the credit arose. For
purposes of the preceding sentence, credits shall be treated as
used on a first-in first-out basis.
``(f) Application of Volume Cap.--
``(1) In general.--Subject to paragraph (2), a qualified
contribution shall not be taken into account under this section
if such contribution would result in the aggregate amount of
credits claimed under this section exceeding the volume cap
established under section 4 of the High-Quality Charter Schools
Act.
``(2) State allocations.--For purposes of the allocation
made to a State pursuant to subparagraph (A) of section 4(a)(1)
of the High-Quality Charter Schools Act, if a qualified
contribution made by an individual residing in such State would
result in the aggregate amount of credits claimed under this
section by individuals residing in such State exceeding the
allocation made to such State pursuant to such subparagraph,
such contribution shall only be taken into account under this
section if such contribution does not result in the aggregate
amount of credits claimed by individuals pursuant to
subparagraph (B) of such section exceeding the amount made
available pursuant to such subparagraph.''.
(b) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 25E the following new
item:
``Sec. 25F. Contributions to eligible charter school organizations.''.
SEC. 3. FAILURE OF ELIGIBLE CHARTER SCHOOL ORGANIZATION TO MAKE
EXPENDITURES.
(a) In General.--Chapter 42 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subchapter:
``Subchapter I--Eligible Charter School Organizations
``Sec. 4969. Failure to expend receipts.
``SEC. 4969. FAILURE TO EXPEND RECEIPTS.
``(a) In General.--In the case of any eligible charter school
organization (as defined in section 25F(c)(2)) which has been
determined by the Secretary to have failed to satisfy the requirement
under subsection (b) for any taxable year, any contribution made to
such organization during the first taxable year beginning after the
date of such determination shall not be treated as a qualified
contribution (as defined in section 25F(c)(3)) for purposes of section
25F.
``(b) Requirement.--The requirement described in this subsection is
that the amount of qualified contributions of the eligible charter
school organization for the taxable year which are expended before the
expenditure deadline with respect to such receipts shall not be less
than the required expenditure amount with respect to such taxable year.
``(c) Definitions.--For purposes of this section--
``(1) Required expenditure amount.--
``(A) In general.--The required expenditure amount
with respect to a taxable year is the amount equal to
100 percent of qualified contributions for such taxable
year--
``(i) reduced by the sum of such qualified
contributions that are retained for reasonable
administrative expenses for the taxable year or
are carried to the succeeding taxable year
under subparagraph (C), and
``(ii) increased by the amount of the
carryover under subparagraph (C) from the
preceding taxable year.
``(B) Safe harbor for reasonable administrative
expenses.--For purposes of subparagraph (A)(i), if the
percentage of total qualified contributions to an
eligible charter school organization for a taxable year
which are used for administrative purposes related to
activities for the creation or expansion of charter
schools (as defined in section 25F(c)(1)) operated or
managed by such organization is equal to or less than
10 percent, such expenses shall be deemed to be
reasonable for purposes of such subparagraph.
``(C) Carryover.--With respect to the amount of the
total qualified contributions to an eligible charter
school organization with respect to any taxable year,
an amount not greater than 15 percent of such amount
may, at the election of such organization, be carried
to the succeeding taxable year.
``(2) Expenditures.--The term `expenditures' includes
amounts which are formally committed but not expended. A formal
commitment described in the preceding sentence may include
qualified contributions set aside for the creation or expansion
of charter schools operated or managed by such organization for
more than one year.
``(3) Expenditure deadline.--The expenditure deadline with
respect to qualified contributions for a taxable year is the
first day of the fifth taxable year following the taxable year
in which such qualified contributions are received by the
eligible charter school organization.
``(4) Qualified contributions.--The term `qualified
contributions' means contributions eligible for the credit
under section 25F.''.
(b) Clerical Amendment.--The table of subchapters for chapter 42 of
such Code is amended by adding at the end the following new item:
``subchapter i. eligible charter school organizations''.
SEC. 4. VOLUME CAP.
(a) Allocation.--
(1) In general.--For purposes of section 25F(f) of the
Internal Revenue Code of 1986 (as added by this Act), the
volume cap applicable with respect to such section shall be
$5,000,000,000 of tax credits for taxable years beginning in
calendar year 2026 and each subsequent year thereafter, with
such amount to be allocated as follows:
(A) $10,000,000 of tax credits shall be allocated
to each State (as defined in section 7701(a)(10) of the
Internal Revenue Code of 1986), with such amount to be
made available, in the manner described in subsection
(b), for any individual residing in such State to claim
the credit allowed under section 25F of the Internal
Revenue Code of 1986 with respect to any qualified
contributions (as defined in such section) made by such
individual during any taxable year beginning during
such calendar year.
(B) With respect to the amount remaining after the
allocation under subparagraph (A), such amount (as
adjusted pursuant to paragraph (3)) shall be made
available, in the manner described in subsection (b),
for any individual to claim the credit allowed under
section 25F of the Internal Revenue Code of 1986 with
respect to any qualified contributions made by such
individual during any taxable year beginning during
such calendar year.
(2) Carryover.--The amount of any allotment to a State
under paragraph (1)(A) for any calendar year which is not
claimed by taxpayers described in such paragraph during such
calendar year shall be added to the allotment provided under
paragraph (1)(B) for the subsequent calendar year.
(3) Increase in nationwide volume cap.--For purposes of
paragraph (1)(B), if the Secretary determines during any
calendar year that the amount of tax credits allowable under
section 25F with respect to qualified contributions made during
such calendar year is equal to or greater than 90 percent of
the total amount made available under such paragraph for such
calendar year, such amount shall be increased by an amount
equal to 5 percent of the total amount made available under
such paragraph as of January 1 of such calendar year, with such
increase to remain in effect for the subsequent calendar year.
(b) First-Come, First-Serve.--For purposes of applying the volume
cap under this section, such volume cap shall be applied based on a
first-come, first-serve basis, as determined based on the date on which
the taxpayer made the qualified contribution.
(c) Real-Time Information.--For purposes of this section, the
Secretary of the Treasury (or the Secretary's delegate) shall develop a
system to track the amount of qualified contributions made during the
calendar year for which a credit may be claimed under section 25F of
the Internal Revenue Code of 1986, with such information to be updated
in real time.
SEC. 5. ORGANIZATIONAL AND PARENTAL AUTONOMY.
(a) Prohibition of Control Over Eligible Charter School
Organizations.--
(1) In general.--An eligible charter school organization
shall not, by virtue of participation under any provision of
this Act or any amendment made by this Act, be regarded as
acting on behalf of any governmental entity.
(2) Maximum freedom.--To the extent permissible by law,
this Act, and any amendment made by this Act, shall be
construed to allow eligible charter school organizations
maximum freedom to provide for the needs of the students served
by the charter schools operated or managed by the organization
without governmental control.
(b) Definitions.--For purposes of this section, the terms ``charter
school'' and ``eligible charter school organization'' shall have the
same meanings given such terms under section 25F(c) of the Internal
Revenue Code of 1986 (as added by section 2(a) of this Act).
SEC. 6. EFFECTIVE DATE.
The amendments made by this Act shall apply to taxable years
beginning after December 31, 2025.
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