I 

108TH CONGRESS 

1ST SESSION H. R. 2234

To amend the Internal Revenue Code of 1986 to provide for a credit which 

is dependent on enactment of State qualified scholarship tax credits 

and which is allowed against the Federal income tax for charitable 

contributions to education investment organizations that provide assistance for elementary and secondary education. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 22, 2003

Mr. FRANKS of Arizona (for himself, Mr. BOEHNER, Mrs. MUSGRAVE, Mr. 

DOOLITTLE, Mr. KING of Iowa, Mr. CANTOR, Mr. FEENEY, Mr. AKIN, 

Mr. TANCREDO, Mr. VITTER, Mr. HOEKSTRA, Mr. DEMINT, Mr. 

SOUDER, Mr. GARRETT of New Jersey, Mr. BARRETT of South Carolina, 

Mr. BARTLETT of Maryland, Mr. BEAUPREZ, Mr. PAUL, Mr. PITTS, Mr. 

RENZI, Mr. HAYWORTH, and Mrs. MYRICK) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

for a credit which is dependent on enactment of State 

qualified scholarship tax credits and which is allowed 

against the Federal income tax for charitable contributions to education investment organizations that provide 

assistance for elementary and secondary education.

1 Be it enacted by the Senate and House of Representa2 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 ‘‘Children’s Hope Act 

3 of 2003’’. 

4 SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO EDUCATION 

5 INVESTMENT ORGANIZATIONS. 

6 (a) IN GENERAL.—Subpart B of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986 (relating to other credits) is amended by inserting 

9 after section 30A the following new section: 

10 ‘‘SEC. 30B. CONTRIBUTIONS TO EDUCATION INVESTMENT 

11 ORGANIZATIONS. 

12 ‘‘(a) IN GENERAL.—There shall be allowed as a cred13 it against the tax imposed by this chapter for the taxable 

14 year the aggregate amount of qualified contributions for 

15 the taxable year. 

16 ‘‘(b) LIMITATION.—The amount allowed as a credit 

17 under subsection (a) for a taxable year shall not exceed 

18 $100 ($200 in the case of a joint return). 

19 ‘‘(c) QUALIFIED CONTRIBUTIONS.—For purposes of 

20 this section—

21 ‘‘(1) IN GENERAL.—The term ‘qualified con22 tribution’ means a charitable contribution (as de23 fined by section 170(c)) to an education investment 

24 organization. 

25 ‘‘(2) EDUCATION INVESTMENT ORGANIZA26 TION.—The term ‘education investment organiza-
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1 tion’ means any organization described in section 

2 170(c)(2) if the annual disbursements of the organi3 zation in the form of grants to students who are eli4 gible for free or reduced-cost lunches under the 

5 school lunch program established under the Richard 

6 B. Russell National School Lunch Act for qualified 

7 elementary and secondary education expenses are 

8 normally not less than 90 percent of the sum of such 

9 organization’s annual cash contributions. 

10 ‘‘(3) QUALIFIED ELEMENTARY AND SECONDARY

11 EDUCATION EXPENSES.—The term ‘qualified ele12 mentary and secondary education expenses’ has the 

13 meaning given such term by section 530(b)(4), ex14 cept that ‘child’ shall be substituted for ‘beneficiary’ 

15 and ‘a child’ shall be substituted for ‘the designated 

16 beneficiary of the trust’ in clauses (i) and (iii) of 

17 subparagraph (A). 

18 ‘‘(4) STATE CREDIT MUST BE TAKEN FIRST.—

19 ‘‘(A) No credit shall be allowed to a tax20 payer under this section for a taxable year un21 less, for the taxable year, the taxpayer is al22 lowed on the taxpayer’s State tax return the 

23 minimum State qualified scholarship tax credit 

24 (as defined in section 3 of the Children’s Hope 

25 Act of 2003). 
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1 ‘‘(B) No credit shall be allowed to a tax2 payer under this section for such taxable year 

3 for any contributions that were taken into ac4 count for purposes of such State qualified 

5 scholarship tax credit. 

6 ‘‘(d) SPECIAL RULES.—

7 ‘‘(1) DENIAL OF DOUBLE BENEFIT.—No deduc8 tion shall be allowed under any provision of this 

9 chapter for any expense for which a credit is allowed 

10 under this section. 

11 ‘‘(2) TIME WHEN CONTRIBUTIONS DEEMED

12 MADE.—For purposes of this section, a taxpayer 

13 shall be deemed to have made a contribution to an 

14 education investment organization on the last day of 

15 the preceding taxable year if the contribution is 

16 made on account of such taxable year and is made 

17 not later than the time prescribed by law for filing 

18 the return for such taxable year (not including ex19 tensions thereof).’’. 

20 (b) CLERICAL AMENDMENT.—The table of sections 

21 for such subpart B is amended by inserting after the item 

22 relating to section 30A the following new item:

‘‘Sec. 30B. Contributions to education investment organizations.’’.

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to taxable years beginning after 

25 December 31, 2004. 
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1 SEC. 3. FEDERAL SCHOLARSHIP TAX CREDIT CONDITIONED 

2 ON STATE QUALIFIED SCHOLARSHIP TAX 

3 CREDIT. 

4 (a) IN GENERAL.—For purposes of section 30B(e) 

5 of the Internal Revenue Code of 1986 (as added by section 

6 2 of this Act) a scholarship tax credit shall not be treated 

7 as a State qualified scholarship tax credit unless the re8 quirements of subsection (b) are met. 

9 (b) REQUIREMENTS RELATING TO STATE QUALIFIED

10 SCHOLARSHIP TAX CREDIT.—

11 (1) IN GENERAL.—For purposes of subsection 

12 (a), the requirements of this subsection are met only 

13 if—

14 (A) the tax credit is for an amount of not 

15 less than $250 per taxpayer and is allowed 

16 against the State income tax (property tax for 

17 those States that don’t have income tax) for the 

18 amount of voluntary cash contributions made 

19 by the taxpayer during the taxable year to a 

20 school tuition organization described in para21 graph (2), 

22 (B) the excess of such credit over tax li23 ability may be carried forward for not more 

24 than five years, 
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1 (C) if the taxpayer does not require, as a 

2 condition of the contribution, that the contribu3 tion must benefit a specific child, and 

4 (D) such credit is not allowable for direct 

5 donations to private schools. 

6 (2) SCHOOL TUITION ORGANIZATION.—For pur7 poses of paragraph (1), a school tuition organization 

8 is described in this paragraph if such organization—

9 (A) is an organization operating in the 

10 State and is described in section 501(c)(3), and 

11 is exempt from tax under section 501(a), of the 

12 Internal Revenue Code of 1986, 

13 (B) expends at least 90 percent of its an14 nual cash contributions for educational scholar15 ships or tuition grants to children to allow them 

16 to attend any qualified school chosen at the sole 

17 discretion of their parents, and 

18 (C) disburses at least 90 percent of its an19 nual cash contributions within one year of their 

20 receipt. 

21 (3) QUALIFIED SCHOOL.—For purposes of 

22 paragraph (2), the term ‘‘qualified school’’ means 

23 any elementary school or secondary school that is lo24 cated in the State in which the taxpayer resides and 

25 does not discriminate on the basis of race, color, 
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1 handicap, familial status, or national origin and that 

2 satisfies the requirements prescribed by State law 

3 for such schools as of December 31, 2004. 

4 (4) EDUCATIONAL SCHOLARSHIPS OR TUITION

5 GRANTS.—The term ‘‘educational scholarship or a 

6 tuition grant’’ means any scholarship or grant 

7 awarded for qualified elementary and secondary edu8 cation expenses (as defined in section 530(b)(4) of 

9 the Internal Revenue Code of 1986). 

10 (c) STATE.—For purposes of this section, the term 

11 ‘‘State’’ means any of the several States.

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