AZ Corporate Scholarship Tax Credit Program Changed
Governor Ducey recently signed into law HB 2153 which now allows S-corporations to participate in the State of Arizona Low Income Corporate Tax Credit which supports private schools in Arizona. This corporate tax credit program provides scholarships for thousands of children each year to attend the schools chosen by their parents to best meet their needs. In the past this corporate program was only available to businesses that are structured as C-corporations, which are typically larger businesses that incur a state income tax liability at the entity level. HB 2153 now allows businesses, particularly small businesses, structured as S-corporations to participate in Corporate Tax Credit.
Under the current program, C-corporations make a donation and receive a tax credit against their Arizona corporate income tax liability. HB 2153 allows the typically smaller S-corporations to make a donation and receive a tax credit that is then passed through to the stockholders of the company in the same way that profits and losses are passed through.
Some of the requirements for this program are:
- The minimum contribution amount is $5,000 with no maximum.
- There is an annual cap of the total corporate funds that can be received by a School Tuition Organization (STO) during the government fiscal year. $51.6 million for 2015.
- Submissions for the program can be made on or after July 1, 2015 until the cap has been met.
- The corporation should submit a request to an STO, who in turn has would receive pre-certification from the State of Arizona.
- Once the pre-certification has been given to the STO, the corporation has 20 days to make their payment/contribution to the STO.
The Arizona Department of Revenue is currently putting together an implementation plan for the bill, therefore their website has not yet been updated to reflect the changes. We will keep informed of the implementation and are happy to answer any questions you may have.
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