I 

115TH CONGRESS 

1ST SESSION H. R. 895 

To amend the Internal Revenue Code of 1986 to allow a credit against 

tax for qualified elementary and secondary education tuition. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 6, 2017 

Mr. ROKITA (for himself, Mr. MESSER, and Mr. FRANKS of Arizona) introduced the following bill; which was referred to the Committee on Ways 

and Means, and in addition to the Committee on Education and the 

Workforce, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

credit against tax for qualified elementary and secondary 

education tuition. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Educational Opportu5 nities Act’’. 

6 SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO SCHOLAR7 SHIP GRANTING ORGANIZATIONS. 

8 (a) CREDIT FOR INDIVIDUALS.— 


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1 (1) IN GENERAL.—Subpart A of part IV of sub2 chapter A of chapter 1 of the Internal Revenue Code 

3 of 1986 is amended by inserting after section 25D 

4 the following new section: 

5 ‘‘SEC. 25E. QUALIFIED ELEMENTARY AND SECONDARY EDU6 CATION TUITION. 

7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in8 dividual, there shall be allowed as a credit against the tax 

9 imposed by this chapter for the taxable year an amount 

10 equal to the amount of qualified contributions made by 

11 the taxpayer during the taxable year. 

12 ‘‘(b) DOLLAR LIMITATION.—The amount allowed as 

13 a credit under subsection (a) with respect to any taxpayer 

14 shall not exceed— 

15 ‘‘(1) $2,250, in the case of a married individual 

16 filing a separate return, and 

17 ‘‘(2) $4,500, in any other case. 

18 ‘‘(c) QUALIFIED CONTRIBUTIONS; OTHER DEFINI19 TIONS.—For purposes of this section— 

20 ‘‘(1) QUALIFIED CONTRIBUTION.—The term 

21 ‘qualified contribution’ means a charitable contribu22 tion (as defined by section 170(c)) to a scholarship 

23 granting organization. 


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1 ‘‘(2) SCHOLARSHIP GRANTING ORGANIZA2 TION.—The term ‘scholarship granting organization’ 

3 means any organization— 

4 ‘‘(A) which is described in section 

5 501(c)(3) and exempt from tax under section 

6 501(a), 

7 ‘‘(B) whose exclusive purpose is to provide 

8 scholarships for the qualified elementary and 

9 secondary education expenses of eligible stu10 dents, and 

11 ‘‘(C) which meets the requirements of sub12 section (d). 

13 ‘‘(3) ELIGIBLE STUDENT.—The term ‘eligible 

14 student’ means an individual— 

15 ‘‘(A) who is enrolled in an elementary or 

16 secondary school (within the meaning of section 

17 530(b)(3)(B), after the application of para18 graph (4)(B)), and 

19 ‘‘(B) who is a member of a household with 

20 a total annual household income which does not 

21 exceed 250 percent of the Federal poverty 

22 guidelines (as determined by the Secretary of 

23 Health and Human Services). 

24 ‘‘(4) QUALIFIED ELEMENTARY AND SECONDARY

25 EDUCATION EXPENSES.—The term ‘qualified eleVerDate Sep 11 2014 02:34 Feb 14, 2017 Jkt 069200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H895.IH H895

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1 mentary and secondary education expenses’ has the 

2 meaning given such term by section 530(b)(3), ex3 cept that— 

4 ‘‘(A) ‘child’ shall be substituted for ‘bene5 ficiary’ and ‘a child’ shall be substituted for 

6 ‘the designated beneficiary of the trust’ in 

7 clauses (i) and (iii) of subparagraph (A) there8 of, and 

9 ‘‘(B) in applying such paragraph, the term 

10 ‘school’ shall only include schools which— 

11 ‘‘(i) charge tuition for attendance, 

12 ‘‘(ii) comply with all applicable State 

13 laws, including laws relating to unlawful 

14 discrimination, health and safety require15 ments, and criminal background checks of 

16 employees, and 

17 ‘‘(iii) agree to provide annual reports 

18 as described in subsection (e) to a scholar19 ship granting organization and to the par20 ents or guardians of eligible students re21 ceiving a scholarship from the scholarship 

22 granting organization. 

23 ‘‘(5) SCHOLARSHIP.—The term ‘scholarship’ 

24 does not include any payment to fulfill or fund any 


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1 obligation or project of any school or school system 

2 to provide a free, appropriate public education. 

3 ‘‘(d) REQUIREMENTS FOR SCHOLARSHIP GRANTING

4 ORGANIZATIONS.—An organization meets the require5 ments of this section if— 

6 ‘‘(1) such organization does not provide grants 

7 to eligible students for any expenses other than 

8 qualified elementary and secondary education ex9 penses, 

10 ‘‘(2) such organization provides grants to— 

11 ‘‘(A) more than 1 student, and 

12 ‘‘(B) different students attending more 

13 than 1 school, 

14 ‘‘(3) such organization does not earmark or set 

15 aside contributions for scholarships on behalf of any 

16 particular student or to any specific school or group 

17 of schools, 

18 ‘‘(4) such organization takes appropriate steps 

19 to verify the annual household income and family 

20 size of eligible students to which it provides grants, 

21 ‘‘(5) such organization obtains annual audits 

22 from an independent certified public accountant and 

23 submits such audits to the Secretary, 


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1 ‘‘(6) no employee of such organization has vio2 lated any law relating to the audit described in para3 graph (4), and 

4 ‘‘(7) such organization— 

5 ‘‘(A) requires any eligible student who re6 ceives a scholarship— 

7 ‘‘(i) to participate in the evaluation 

8 conducted by the Institute of Education 

9 Science under section 2(d) of the Edu10 cational Opportunities Act, and 

11 ‘‘(ii) to permit such organization to 

12 share assessment information and other 

13 data regarding the student with the Insti14 tute in accordance with subparagraph (B), 

15 and 

16 ‘‘(B) provides the reports described in sub17 section (e)(1)(C) and such other information as 

18 necessary to the Director of the Institute of 

19 Education Science for the purposes of identi20 fying eligible students receiving a scholarship 

21 from such organization and conducting the eval22 uations and reports required under section 2(d) 

23 of the Educational Opportunities Act. 

24 For purposes of paragraph (5), the term ‘inde25 pendent certified public accountant’ means, with reVerDate Sep 11 2014 02:34 Feb 14, 2017 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H895.IH H895

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1 spect to an organization, a certified public account2 ant which is not a related person (within the mean3 ing of section 465(b)(3)(C)) with respect to such or4 ganization or any employee of such organization. 

5 ‘‘(e) ELIGIBLE SCHOOL REPORTING REQUIRE6 MENT.— 

7 ‘‘(1) IN GENERAL.—The reports described in 

8 this subsection include— 

9 ‘‘(A) a report to the parents on the stu10 dent’s academic achievement, including a com11 parison with the aggregate academic achieve12 ment of other students in the same grade or 

13 level at the school who receive a scholarship 

14 from a scholarship granting organization, if 

15 available, and 

16 ‘‘(B) a report, to each scholarship granting 

17 organization that provides scholarships to stu18 dents at the school, that includes— 

19 ‘‘(i) the test results, in the aggregate 

20 and disaggregated by race or ethnicity and 

21 grade level, of the students receiving such 

22 scholarships who are in grades 3 through 

23 12 on a grade-appropriate nationally norm24 referenced standardized test, or a gradeVerDate Sep 11 2014 02:34 Feb 14, 2017 Jkt 069200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H895.IH H895

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1 appropriate State-recognized assessment, 

2 and 

3 ‘‘(ii) any additional data requested by 

4 the Director of the Institute of Education 

5 Sciences in accordance with section 

6 2(d)(B) of the Educational Opportunities 

7 Act. 

8 ‘‘(2) NO PERSONALLY IDENTIFIABLE INFORMA9 TION.—In preparing and submitting the report de10 scribed in paragraph (1)(B), a school shall not in11 clude any personally identifiable information regard12 ing a student. 

13 ‘‘(f) DENIAL OF DOUBLE BENEFIT.—No deduction 

14 shall be allowed under any provision of this chapter for 

15 any expense for which a credit is allowed under this sec16 tion. 

17 ‘‘(g) ELECTION.—This section shall apply to a tax18 payer for a taxable year only if such taxpayer elects to 

19 have this section apply for such taxable year.’’. 

20 (2) CLERICAL AMENDMENT.—The table of sec21 tions for subpart A of part IV of subchapter A of 

22 chapter 1 of such Code is amended by inserting 

23 after the item relating to section 25D the following 

24 new item: 

‘‘Sec. 25E. Qualified elementary and secondary education tuition.’’. 

25 (b) CREDIT FOR CORPORATIONS.— 


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1 (1) IN GENERAL.—Subpart D of part IV of 

2 subchapter A of chapter 1 of the Internal Revenue 

3 Code of 1986 is amended by adding at the end the 

4 following new section: 

5 ‘‘SEC. 45S. CONTRIBUTIONS TO SCHOLARSHIP GRANTING 

6 ORGANIZATIONS. 

7 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

8 in the case of a corporation, the education scholarship 

9 credit determined under this section for the taxable year 

10 is the aggregate amount of qualified contributions for the 

11 taxable year. 

12 ‘‘(b) LIMITATION.—The amount of the credit deter13 mined under this section for any taxable year shall not 

14 exceed $100,000. 

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

16 this section, the term ‘qualified contribution’ has the 

17 meaning given such term under section 25E. 

18 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 

19 shall be allowed under any provision of this chapter for 

20 any expense for which a credit is allowed under this sec21 tion. 

22 ‘‘(e) ELECTION.—This section shall apply to a tax23 payer for a taxable year only if such taxpayer elects to 

24 have this section apply for such taxable year.’’. 

25 (2) CONFORMING AMENDMENTS.— 


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1 (A) Section 38(b) of such Code is amended 

2 by striking ‘‘plus’’ at the end of paragraph 

3 (35), by striking the period and inserting ‘‘, 

4 plus’’ at the end of paragraph (36), and by 

5 adding at the end the following new paragraph: 

6 ‘‘(37) the education scholarship credit deter7 mined under section 45S(a).’’. 

8 (B) The table of sections for subpart D of 

9 part IV of subchapter A of chapter 1 of such 

10 Code is amended by adding at the end the fol11 lowing new item: 

‘‘Sec. 45S. Contributions to scholarship granting organizations.’’. 

12 (c) EXCISE TAX ON FAILURE OF SCHOLARSHIP

13 GRANTING ORGANIZATIONS TO MAKE DISTRIBUTIONS.— 

14 (1) IN GENERAL.—Chapter 42 of the Internal 

15 Revenue Code of 1986 is amended by adding at the 

16 end the following new subchapter: 

17 ‘‘Subchapter H—Scholarship Granting 

18 Organizations 

‘‘Sec. 4968. Tax on failure to distribute receipts. 

19 ‘‘SEC. 4968. TAX ON FAILURE TO DISTRIBUTE RECEIPTS. 

20 ‘‘(a) TAX IMPOSED.—There is hereby imposed a tax 

21 on the failure of a scholarship granting organization (as 

22 defined in section 25E(c)(2)) to make distributions in any 

23 taxable year in an amount equal to or in excess of the 


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1 required distribution amount before the distribution dead2 line. 

3 ‘‘(b) AMOUNT OF TAX.—The tax imposed by sub4 section (a) shall be equal to 15 percent of the excess (if 

5 any) of— 

6 ‘‘(1) the required distribution amount with re7 spect to the taxable year, over 

8 ‘‘(2) the amount of receipts of the scholarship 

9 granting organization for such taxable year which 

10 are distributed before the distribution deadline with 

11 respect to such receipts. 

12 ‘‘(c) DEFINITIONS.—For purposes of this section— 

13 ‘‘(1) REQUIRED DISTRIBUTION AMOUNT.—The 

14 required distribution amount with respect to a tax15 able year is the amount equal to 90 percent of the 

16 total receipts of the scholarship granting organiza17 tion for such taxable year. 

18 ‘‘(2) DISTRIBUTIONS.—The term ‘distribution’ 

19 includes amounts which are formally committed but 

20 not distributed. 

21 ‘‘(3) DISTRIBUTION DEADLINE.—The distribu22 tion deadline with respect to receipts for a taxable 

23 year is the first day of the second taxable year fol24 lowing the taxable year in which such receipts are 

25 received by the scholarship granting organization. 


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1 ‘‘(d) REASONABLE CAUSE EXCEPTION.—The tax im2 posed by subsection (a) shall not apply with respect to any 

3 failure to make required distributions before the distribu4 tion deadline which is not willful and is due to reasonable 

5 cause.’’. 

6 (2) ABATEMENT OF TAX.— 

7 (A) GENERAL RULE.—Subsection (b) of 

8 section 4962 of such Code is amended by strik9 ing ‘‘or G’’ and inserting ‘‘G, or H’’. 

10 (B) FIRST TIER TAX.—Subsection (a) of 

11 section 4963 of such Code is amended by in12 serting ‘‘4968,’’ after ‘‘4967,’’. 

13 (C) TAXABLE EVENT.—Subsection (c) of 

14 section 4963 of such Code is amended by in15 serting ‘‘4968,’’ after ‘‘4967,’’. 

16 (3) CORRECTION PERIOD.—Subparagraph (A) 

17 of section 4963(e)(2) of such Code is amended by in18 serting ‘‘or 4968’’ after ‘‘4942’’. 

19 (4) CONFORMING AMENDMENT.—The table of 

20 subchapters for chapter 42 of such Code is amended 

21 by adding at the end the following new item: 

‘‘SUBCHAPTER H. SCHOLARSHIP GRANTING ORGANIZATIONS’’. 

22 (d) EVALUATIONS.— 

23 (1) DEFINITIONS.—In this section— 

24 (A) the terms ‘‘eligible student’’, ‘‘qualified 

25 elementary and secondary education expenses’’, 


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1 and ‘‘scholarship granting organization’’ have 

2 the meanings given such terms in section 

3 25E(c) of the Internal Revenue Code of 1986, 

4 as added by this Act; 

5 (B) the term ‘‘Director’’ means the Direc6 tor of the Institute of Education Sciences; and 

7 (C) the term ‘‘participating student’’ 

8 means an eligible student who receives a schol9 arship for qualified elementary and secondary 

10 education expenses from a scholarship granting 

11 organization. 

12 (2) EVALUATIONS.— 

13 (A) IN GENERAL.—By not later than April 

14 1 of the year following the year of the date of 

15 enactment of this Act, and by April 1 of each 

16 subsequent year, the Director shall conduct an 

17 annual evaluation to determine the effectiveness 

18 of scholarships provided by scholarship granting 

19 organizations to eligible students in improving 

20 the academic achievement and success of the el21 igible students. 

22 (B) CONTENTS OF THE EVALUATION.—In 

23 conducting the evaluation required under this 

24 subsection, the Director shall— 


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1 (i) request, from each scholarship 

2 granting organization, the reports provided 

3 to the scholarship granting organization by 

4 the schools accepting participating stu5 dents, in accordance with section 

6 25E(e)(1)(B); 

7 (ii) using the reports described in 

8 clause (i), assess the academic achievement 

9 of all participating students in grades 3 

10 through 12, based on the nationally norm11 referenced standardized test or State-rec12 ognized assessment used by each school; 

13 (iii) evaluate the school retention 

14 rates, secondary school graduation rates, 

15 and institution of higher education admis16 sion rates of participating students; 

17 (iv) evaluate the success of the tax 

18 credits allowed under sections 25E and 

19 45S of the Internal Revenue Code of 1986, 

20 as added by this Act, in expanding school 

21 choice options for parents of participating 

22 students, increasing the satisfaction of 

23 such parents and students, and increasing 

24 parental involvement of such parents in the 

25 education of their students; and 


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1 (v) evaluate such other issues with re2 spect to the education of participating stu3 dents as the Director considers appropriate 

4 for inclusion in the evaluation. 

5 (3) REPORTS.—By not later than April 1 of the 

6 year after the year of the first evaluation under 

7 paragraph (2), and by April 1 of each subsequent 

8 year, the Director shall submit to the Committee on 

9 Ways and Means and the Committee on Health, 

10 Education, Labor, and Pensions of the Senate, and 

11 the Committee on Finance and the Committee on 

12 Education and the Workforce of the House of Rep13 resentatives, an annual report on scholarships pro14 vided by scholarship granting organizations that in15 corporates the results of the most recent evaluation 

16 described in paragraph (2). 

17 (4) PROHIBITION.—No personally identifiable 

18 information shall be disclosed in the data, evalua19 tions, and reports required under this subsection. 

20 (5) PUBLIC AVAILABILITY.—The Director shall 

21 make all evaluations, reports, and underlying data 

22 gathered pursuant to this subsection available to the 

23 public, upon request and in a timely manner fol24 lowing submission of the applicable report or evalua25 tion under this subsection, subject to paragraph (4). 


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1 (e) EFFECTIVE DATE.—The amendments made by 

2 subsections (a), (b), and (c) shall apply to taxable years 

3 beginning after December 31, 2017. 

Æ 


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