I 

112TH CONGRESS 

1ST SESSION H. R. 485 

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 

JANUARY 26, 2011 

Mr. FRANKS of Arizona 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Children’s Hope Act 

5 of 2011’’. 


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1 SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO EDUCATION 

2 INVESTMENT ORGANIZATIONS. 

3 (a) IN GENERAL.—Subpart B of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of 

5 1986 (relating to other credits) is amended by inserting 

6 after section 30D the following new section: 

7 ‘‘SEC. 30E. CONTRIBUTIONS TO EDUCATION INVESTMENT 

8 ORGANIZATIONS. 

9 ‘‘(a) IN GENERAL.—There shall be allowed as a cred10 it against the tax imposed by this chapter for the taxable 

11 year the aggregate amount of qualified contributions for 

12 the taxable year. 

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

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

15 $100 ($200 in the case of a joint return). 

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

17 this section— 

18 ‘‘(1) IN GENERAL.—The term ‘qualified con19 tribution’ means a charitable contribution (as de20 fined by section 170(c)) to an education investment 

21 organization. 

22 ‘‘(2) EDUCATION INVESTMENT ORGANIZA23 TION.—The term ‘education investment organiza24 tion’ means any organization described in section 

25 170(c)(2) if— 


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1 ‘‘(A) normally not less than 90 percent of 

2 the annual cash contributions to such organiza3 tion are disbursed in the form of grants to stu4 dents for qualified elementary and secondary 

5 education expenses, and 

‘‘(B) not less than 1 6 ⁄2 of such disburse7 ments are to students who are eligible for free 

8 or reduced-cost lunches under the school lunch 

9 program established under the Richard B. Rus10 sell National School Lunch Act. 

11 ‘‘(3) QUALIFIED ELEMENTARY AND SECONDARY

12 EDUCATION EXPENSES.—The term ‘qualified ele13 mentary and secondary education expenses’ has the 

14 meaning given such term by section 530(b)(3), ex15 cept that ‘child’ shall be substituted for ‘beneficiary’ 

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

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

18 subparagraph (A). 

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

20 ‘‘(A) No credit shall be allowed to a tax21 payer under this section for a taxable year un22 less, for the taxable year, the taxpayer is al23 lowed on the taxpayer’s State tax return the 

24 minimum State qualified scholarship tax credit 


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

2 Act of 2011). 

3 ‘‘(B) No credit shall be allowed to a tax4 payer under this section for such taxable year 

5 for any contributions that were taken into ac6 count for purposes of such State qualified 

7 scholarship tax credit. 

8 ‘‘(d) SPECIAL RULES.— 

9 ‘‘(1) DENIAL OF DOUBLE BENEFIT.—No deduc10 tion shall be allowed under any provision of this 

11 chapter for any expense for which a credit is allowed 

12 under this section. 

13 ‘‘(2) TIME WHEN CONTRIBUTIONS DEEMED

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

15 shall be deemed to have made a contribution to an 

16 education investment organization on the last day of 

17 the preceding taxable year if the contribution is 

18 made on account of such taxable year and is made 

19 not later than the time prescribed by law for filing 

20 the return for such taxable year (not including ex21 tensions thereof).’’. 

22 (b) SCHOLARSHIPS FROM EDUCATION INVESTMENT

23 ORGANIZATIONS EXCLUDED FROM INCOME.—Section 74 

24 of such Code (relating to prizes and awards) is amended 

25 by adding at the end the following new subsection: 


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1 ‘‘(d) SCHOLARSHIPS FROM EDUCATION INVESTMENT

2 ORGANIZATIONS.—Gross income does not include 

3 amounts received as a scholarship from an education in4 vestment organization (as defined in section 30E(c)(2)) 

5 for qualified elementary and secondary education expenses 

6 (as defined in section 30E(c)(3)). Such scholarship shall 

7 not be taken into account for purposes of determining eli8 gibility for any Federal program.’’. 

9 (c) CLERICAL AMENDMENT.—The table of sections 

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

11 relating to section 30D the following new item: 

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

12 (d) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2010. 

15 SEC. 3. FEDERAL SCHOLARSHIP TAX CREDIT CONDITIONED 

16 ON STATE QUALIFIED SCHOLARSHIP TAX 

17 CREDIT. 

18 (a) IN GENERAL.—For purposes of section 30E(c)(4) 

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

20 2 of this Act), a scholarship tax credit shall not be treated 

21 as a State qualified scholarship tax credit unless the re22 quirements of subsection (b) are met. 

23 (b) REQUIREMENTS RELATING TO STATE QUALIFIED

24 SCHOLARSHIP TAX CREDIT.— 


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

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

3 if— 

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

5 less than $250 per taxpayer and is allowed 

6 against the State income tax (property tax for 

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

8 amount of voluntary cash contributions made 

9 by the taxpayer during the taxable year to a 

10 school tuition organization described in para11 graph (2), 

12 (B) the excess of such credit over tax li13 ability may be carried forward for not more 

14 than five years, 

15 (C) the taxpayer does not require, as a 

16 condition of the contribution, that the contribu17 tion must benefit a specific child, and 

18 (D) such credit is not allowable for direct 

19 donations to private schools. 

20 (2) SCHOOL TUITION ORGANIZATION.—For pur21 poses of paragraph (1), a school tuition organization 

22 is described in this paragraph if such organization— 

23 (A) is an organization operating in the 

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


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

2 Internal Revenue Code of 1986, 

3 (B) expends at least 90 percent of its an4 nual cash contributions for educational scholar5 ships or tuition grants to children to allow them 

6 to attend any qualified school chosen at the sole 

7 discretion of their parents, and 

8 (C) disburses at least 90 percent of its an9 nual cash contributions within one year of their 

10 receipt. 

11 (3) QUALIFIED SCHOOL.—For purposes of 

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

13 any elementary school or secondary school that is lo14 cated in the State in which the taxpayer resides and 

15 does not discriminate on the basis of race, color, 

16 handicap, familial status, or national origin and that 

17 satisfies the requirements prescribed by State law 

18 for such schools as of December 31, 2010. 

19 (4) EDUCATIONAL SCHOLARSHIPS OR TUITION

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

21 tuition grant’’ means any scholarship or grant 

22 awarded for qualified elementary and secondary edu23 cation expenses (as defined in section 30E(c)(3) of 

24 the Internal Revenue Code of 1986). 


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

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

Æ 


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