I 

116TH CONGRESS 

1ST SESSION H. R. 1739 

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

tax for charitable donations to nonprofit organizations providing workforce training and education scholarships to qualified elementary and 

secondary students. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 13, 2019 

Mr. SMUCKER (for himself, Mr. MOONEY of West Virginia, Ms. STEFANIK, 

Mr. BUDD, Mr. GAETZ, Mr. COLLINS of New York, Mrs. LESKO, and Mr. 

KUSTOFF of Tennessee) 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 allow a 

credit against tax for charitable donations to nonprofit 

organizations providing workforce training and education 

scholarships to qualified elementary and secondary students. 

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 ‘‘USA Workforce Tax 

5 Credit Act’’. 


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1 SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO WORKFORCE 

2 DEVELOPMENT AND APPRENTICESHIP 

3 TRAINING ORGANIZATIONS. 

4 (a) CREDIT FOR INDIVIDUALS.— 

5 (1) IN GENERAL.—Subpart A of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code 

7 of 1986 is amended by inserting after section 25D 

8 the following new section: 

9 ‘‘SEC. 25E. QUALIFIED WORKFORCE DEVELOPMENT AND 

10 APPRENTICESHIP TRAINING PROGRAMS. 

11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in12 dividual, there shall be allowed as a credit against the tax 

13 imposed by this chapter for the taxable year an amount 

14 equal to the amount of qualified contributions made by 

15 the taxpayer during the year. 

16 ‘‘(b) DOLLAR LIMITATIONS.— 

17 ‘‘(1) INCOME LIMITATION.—The amount al18 lowed as a credit under subsection (a) with respect 

19 to any taxpayer shall not exceed 25 percent of the 

20 tax liability of the taxpayer with a maximum value 

21 of $250,000. 

22 ‘‘(2) REDUCTION BASED ON STATE CREDIT.— 

23 The amount allowed as a credit under subsection (a) 

24 for a taxable year shall be reduced by the amount 

25 allowed as a credit on any State tax return of the 


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1 individual for qualified contributions made by the 

2 taxpayer during the taxable year. 

3 ‘‘(c) QUALIFIED CONTRIBUTIONS; OTHER DEFINI4 TIONS.—For purposes of this section— 

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

6 ‘qualified contribution’ means a charitable contribu7 tion (as defined by section 170(c)) to a workforce 

8 development or apprenticeship training organization. 

9 ‘‘(2) WORKFORCE DEVELOPMENT OR APPREN10 TICESHIP TRAINING ORGANIZATION.—The term 

11 ‘workforce development or apprenticeship training 

12 organization’ means any organization— 

13 ‘‘(A) which— 

14 ‘‘(i) is described in section 501(c)(3) 

15 and exempt from tax under section 501(a), 

16 and 

17 ‘‘(ii) is not a private foundation, 

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

19 workforce development and apprenticeship 

20 training to eligible participants, including— 

21 ‘‘(i) community colleges, 

22 ‘‘(ii) workforce training programs, as 

23 defined by State workforce agencies, 

24 ‘‘(iii) organizations that provide career 

25 and technical education, 


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1 ‘‘(iv) organizations that provide train2 ing or apprenticeships operated by a collec3 tive bargaining organization, 

4 ‘‘(v) community organizations that 

5 provide full certified training, and 

6 ‘‘(vi) private schools that confer diplo7 mas, degrees, or certify completion of cer8 tain grades, 

9 ‘‘(C) that is in compliance with all applica10 ble State laws, including laws relating to unlaw11 ful discrimination, health and safety require12 ments, and criminal background checks of em13 ployees, and 

14 ‘‘(D) which meets the requirements of sub15 section (d). 

16 ‘‘(3) ELIGIBLE PARTICIPANTS.—The term ‘eli17 gible participant’ means an individual who is en18 rolled in a workforce development and apprentice19 ship training organization, as described in paragraph 

20 (2)(B). 

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

22 shall be allowed under any provision of this chapter for 

23 any expense for which a credit is allowed under this sec24 tion. 


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1 ‘‘(e) ELECTION.—This section shall apply to a tax2 payer for a taxable year only if such taxpayer elects to 

3 have this section apply for such taxable year. 

4 ‘‘(f) APPLICATION OF VOLUME CAP.—A contribution 

5 shall be taken into account under this section only if such 

6 contribution is recognized by the Secretary as applying 

7 against the volume cap established under section 5 of the 

8 USA Workforce Tax Credit Act.’’. 

9 (2) CLERICAL AMENDMENT.—The table of sec10 tions for subpart A of part IV of subchapter A of 

11 chapter 1 of such Code is amended by inserting 

12 after the item relating to section 25D the following 

13 new item: 

‘‘Sec. 25E. Qualified Workforce Development and Apprenticeship Training Programs.’’. 

14 (b) CREDIT FOR CORPORATIONS.— 

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

16 subchapter A of chapter 1 of such Code is amended 

17 by adding at the end the following new section: 

18 ‘‘SEC. 45T. CONTRIBUTIONS TO WORKFORCE DEVELOP19 MENT OR APPRENTICESHIP TRAINING ORGA20 NIZATIONS. 

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

22 in the case of a corporation, the workforce development 

23 and apprenticeship training credit determined under this 


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1 section for the taxable year is the aggregate amount of 

2 qualified contributions for the taxable year. 

3 ‘‘(b) LIMITATION.— 

4 ‘‘(1) INCOME LIMITATION.—The amount of the 

5 credit determined under this section for any taxable 

6 year shall not exceed the lesser of— 

7 ‘‘(A) 25 percent of the tax liability of the 

8 taxpayer for the taxable year, and 

9 ‘‘(B) $250,000. 

10 ‘‘(2) REDUCTION BASED ON STATE CREDIT.— 

11 The amount allowed as a credit under subsection (a) 

12 for a taxable year shall be reduced by the amount 

13 allowed as a credit on any State tax return of the 

14 individual for qualified contributions made by the 

15 taxpayer during the taxable year. 

16 ‘‘(3) QUALIFIED CONTRIBUTIONS.—For pur17 poses of this section, the term ‘qualified contribu18 tion’ has the meaning given such term under section 

19 25E. 

20 ‘‘(c) DENIAL OF DOUBLE BENEFIT.—No deduction 

21 shall be allowed under any provision of this chapter for 

22 any expense for which a credit is allowed under this sec23 tion. 


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1 ‘‘(d) ELECTION.—This section shall apply to a tax2 payer for a taxable year only if such taxpayer elects to 

3 have this section apply for such taxable year. 

4 ‘‘(e) APPLICATION OF VOLUME CAP.—A contribution 

5 shall be taken into account under this section only if such 

6 contribution is recognized by the Secretary as applying 

7 against the volume cap established under section 5 of the 

8 USA Workforce Tax Credit Act.’’. 

9 (2) CONFORMING AMENDMENTS.—Section 

10 38(b) of such Code is amended by striking ‘‘plus’’ at 

11 the end of paragraph (31), by striking the period 

12 and inserting ‘‘, plus’’ at the end of paragraph (32), 

13 and by adding at the end the following new para14 graph: 

15 ‘‘(33) the workforce development or apprentice16 ship training credit determined under section 

17 45T(a).’’. 

18 (3) CLERICAL AMENDMENT.—The table of sec19 tions for subpart D of part IV of subchapter A of 

20 chapter 1 of such Code is amended by adding at the 

21 end the following new item: 

‘‘Sec. 45T. Contributions to workforce development or apprenticeship training 

organizations.’’. 

22 SEC. 3. TAX CREDIT FOR CONTRIBUTIONS TO SCHOLAR23 SHIP GRANTING ORGANIZATIONS. 

24 (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, as amended by this Act, is amended by in4 serting after section 25E the following new section: 

5 ‘‘SEC. 25F. QUALIFIED ELEMENTARY AND SECONDARY EDU6 CATION SCHOLARSHIPS. 

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 LIMITATIONS.— 

13 ‘‘(1) INCOME LIMITATION.—The amount al14 lowed as a credit under subsection (a) with respect 

15 to any taxpayer shall not exceed the lesser of— 

16 ‘‘(A) 25 percent of the tax liability of the 

17 taxpayer, and 

18 ‘‘(B) $250,000. 

19 ‘‘(2) REDUCTION BASED ON STATE CREDIT.— 

20 The amount allowed as a credit under subsection (a) 

21 for a taxable year shall be reduced by the amount 

22 allowed as a credit on any State tax return of the 

23 individual for qualified contributions made by the 

24 taxpayer during the taxable year. 


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1 ‘‘(c) QUALIFIED CONTRIBUTIONS; OTHER DEFINI2 TIONS.—For purposes of this section— 

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

4 ‘qualified contribution’ means a charitable contribu5 tion (as defined by section 170(c)) to a scholarship 

6 granting organization. 

7 ‘‘(2) SCHOLARSHIP GRANTING ORGANIZA8 TION.—The term ‘scholarship granting organization’ 

9 means any organization— 

10 ‘‘(A) which— 

11 ‘‘(i) is described in section 501(c)(3) 

12 and exempt from tax under section 501(a), 

13 and 

14 ‘‘(ii) is not a private foundation, 

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

16 scholarships for tuition for qualified elementary 

17 and secondary education expenses of eligible 

18 students, and 

19 ‘‘(C) which meets the requirements of sub20 section (d). 

21 ‘‘(d) REQUIREMENTS FOR SCHOLARSHIP GRANTING

22 ORGANIZATIONS.— 

23 ‘‘(1) IN GENERAL.—An organization meets the 

24 requirements of this subsection if— 


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1 ‘‘(A) such organization provides scholar2 ships to— 

3 ‘‘(i) more than 1 student, and 

4 ‘‘(ii) different students attending more 

5 than 1 school, 

6 ‘‘(B) such organization does not provide 

7 scholarships for any expenses other than quali8 fied elementary and secondary education ex9 penses, 

10 ‘‘(C) such organization provides a scholar11 ship to eligible students with a priority for stu12 dents awarded a scholarship the previous school 

13 year, 

14 ‘‘(D) such organization does not earmark 

15 or set aside contributions for scholarships on 

16 behalf of any particular student, 

17 ‘‘(E) such organization takes appropriate 

18 steps to verify the annual household income and 

19 family size of eligible students to whom it 

20 awards scholarships, and limits them to a mem21 ber of a household with a total annual house22 hold income, which does not exceed 200 percent 

23 of the median gross income, as determined by 

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1 ment, for the purposes of the low-income hous2 ing credit under section 42, 

3 ‘‘(F) such organization obtains from an 

4 independent certified public accountant annual 

5 financial and compliance audits and submits 

6 such audits to the Secretary, 

7 ‘‘(G) no officer or board member of such 

8 organization has been convicted of a felony, and 

9 ‘‘(H) such organization requires any eligi10 ble student who receives a scholarship to permit 

11 such organization to share assessment informa12 tion and other data regarding the student for 

13 the purpose of providing reports described in 

14 subsection (e), and such other information as 

15 necessary for the purposes of reporting on the 

16 academic achievement of eligible students re17 ceiving a scholarship from such organization. 

18 ‘‘(2) INDEPENDENT CERTIFIED PUBLIC AC19 COUNTANT.—For purposes of paragraph (1)(F), the 

20 term ‘independent certified public accountant’ 

21 means, with respect to an organization, a certified 

22 public accountant who is not a related person (with23 in the meaning of section 465(b)(3)(C)) with respect 

24 to such organization or any employee of such organi25 zation. 


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1 ‘‘(e) ELIGIBLE SCHOOL REPORTING REQUIRE2 MENT.— 

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

4 this subsection include— 

5 ‘‘(A) a report to the parents on the stu6 dent’s academic achievement, and 

7 ‘‘(B) a report to each qualified scholarship 

8 granting organization that provides scholarships 

9 to students at the school, that includes the test 

10 results, in the aggregate and disaggregated by 

11 race or ethnicity and grade level, of the stu12 dents receiving such scholarships who are in 

13 grades 3 through 12 on a grade-appropriate na14 tionally norm-referenced standardized test. 

15 ‘‘(2) NO PERSONALLY IDENTIFIABLE INFORMA16 TION.—In preparing and submitting the report de17 scribed in paragraph (1)(B), a school shall not in18 clude any personally identifiable information regard19 ing a student. 

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

21 shall be allowed under any provision of this chapter for 

22 any expense for which a credit is allowed under this sec23 tion. 


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1 ‘‘(g) ELECTION.—This section shall apply to a tax2 payer for a taxable year only if such taxpayer elects to 

3 have this section apply for such taxable year. 

4 ‘‘(h) APPLICATION OF VOLUME CAP.—A contribution 

5 shall be taken into account under this section only if such 

6 contribution is recognized by the Secretary as applying 

7 against the volume cap established under section 5 of the 

8 USA Workforce Tax Credit Act.’’. 

9 (2) CLERICAL AMENDMENT.—The table of sec10 tions for subpart A of part IV of subchapter A of 

11 chapter 1 of such Code, as amended by this Act, is 

12 amended by inserting after the item relating to sec13 tion 25E the following new item: 

‘‘Sec. 25F. Qualified elementary and secondary education scholarships.’’. 

14 (b) CREDIT FOR CORPORATIONS.— 

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

16 subchapter A of chapter 1 of such Code, as amended 

17 by this Act, is amended by adding after section 45T 

18 the following: 

19 ‘‘SEC. 45U. CONTRIBUTIONS TO SCHOLARSHIP GRANTING 

20 ORGANIZATIONS. 

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

22 in the case of a corporation, the education scholarship 

23 credit determined under this section for the taxable year 

24 is the aggregate amount of qualified contributions for the 

25 taxable year. 


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1 ‘‘(b) LIMITATION.— 

2 ‘‘(1) INCOME LIMITATION.—The amount of the 

3 credit determined under this section for any taxable 

4 year shall not exceed the lesser of— 

5 ‘‘(A) 25 percent of the tax liability of the 

6 taxpayer for the taxable year, and 

7 ‘‘(B) $250,000. 

8 ‘‘(2) REDUCTION BASED ON STATE CREDIT.— 

9 The amount allowed as a credit under subsection (a) 

10 for a taxable year shall be reduced by the amount 

11 allowed as a credit on any State tax return of the 

12 individual for qualified contributions made by the 

13 taxpayer during the taxable year. 

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

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

16 meaning given such term under section 25F. 

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

18 shall be allowed under any provision of this chapter for 

19 any expense for which a credit is allowed under this sec20 tion. 

21 ‘‘(e) ELECTION.—This section shall apply to a tax22 payer for a taxable year only if such taxpayer elects to 

23 have this section apply for such taxable year. 

24 ‘‘(f) APPLICATION OF VOLUME CAP.—A contribution 

25 shall be taken into account under this section only if such 


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1 contribution is recognized by the Secretary as applying 

2 against the volume cap established under section 5 of the 

3 USA Workforce Tax Credit Act.’’. 

4 (2) CONFORMING AMENDMENTS.—Section 

5 38(b) of such Code, as amended by this Act, is 

6 amended by striking ‘‘plus’’ at the end of paragraph 

7 (32), by striking the period and inserting ‘‘, plus’’ 

8 at the end of paragraph (33), and by adding at the 

9 end the following new paragraph: 

10 ‘‘(34) the education scholarship credit deter11 mined under section 45U(a).’’. 

12 (3) CLERICAL AMENDMENT.—The table of sec13 tions for subpart D of part IV of subchapter A of 

14 chapter 1 of such Code, as amended by this Act, is 

15 amended by adding at the end the following new 

16 item: 

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

17 (c) EXCISE TAX ON FAILURE OF SCHOLARSHIP

18 GRANTING ORGANIZATIONS TO MAKE DISTRIBUTIONS.— 

19 (1) IN GENERAL.—Chapter 42 of such Code is 

20 amended by adding at the end the following new 

21 subchapter: 

22 ‘‘Subchapter I—Organizations Providing 

23 Workforce Development, Apprenticeship 

24 Training, or Scholarships 

‘‘Sec. 4969. Tax on failure to distribute receipts. 


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1 ‘‘SEC. 4969. TAX ON FAILURE TO DISTRIBUTE RECEIPTS. 

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

3 on the failure of a workforce development or apprentice4 ship training organization (as defined in section 25E) or 

5 a scholarship granting organization (as defined in section 

6 25F) to make distributions in any taxable year in an 

7 amount equal to or in excess of the required distribution 

8 amount before the distribution deadline relating to a tax9 able year. 

10 ‘‘(b) AMOUNT OF TAX.—The tax imposed by sub11 section (a) with respect to a taxable year shall be equal 

12 to 15 percent of the greater of— 

13 ‘‘(1) the required distribution amount with re14 spect to the taxable year, or 

15 ‘‘(2) the amount of receipts of the qualified 

16 scholarship granting organization for each taxable 

17 year which are distributed before the distribution 

18 deadline with respect to such receipts. 

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

20 ‘‘(1) REQUIRED DISTRIBUTION AMOUNT.— 

21 ‘‘(A) IN GENERAL.—The required distribu22 tion amount with respect to a taxable year is 

23 the amount equal to 100 percent of the total re24 ceipts of the scholarship granting organization 

25 for such taxable year— 


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1 ‘‘(i) reduced by the sum of such re2 ceipts that are retained for administrative 

3 expenses for the taxable year or are carried 

4 to the succeeding taxable year under sub5 paragraph (C), and 

6 ‘‘(ii) increased by the amount of the 

7 carryover under subparagraph (C) from 

8 the preceding taxable year. 

9 ‘‘(B) ADMINISTRATIVE EXPENSES.—For 

10 purposes of this paragraph, not more than 10 

11 percent of total receipts of a qualified workforce 

12 development organization, apprenticeship train13 ing organization or scholarship granting organi14 zation for a taxable year may be used for ad15 ministrative purposes. 

16 ‘‘(C) CARRYOVER.— 

17 ‘‘(i) QUALIFIED SCHOLARSHIP GRANT18 ING ORGANIZATION.—Receipts of a quali19 fied scholarship granting organization for a 

20 taxable year that are not awarded scholar21 ships for the taxable year or retained for 

22 administrative purposes for the taxable 

23 year shall be carried to the succeeding tax24 able year. The amount carried to a taxable 

25 year under the preceding sentence shall not 


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1 exceed 15 percent of total receipts of the 

2 qualified scholarship granting organization 

3 for the taxable year. 

4 ‘‘(ii) QUALIFIED WORKFORCE DEVEL5 OPMENT OR APPRENTICESHIP TRAINING

6 ORGANIZATION.—Receipts of a qualified 

7 workforce development or apprenticeship 

8 training organization that are not dis9 bursed for the taxable year or retained for 

10 administrative purposes for the taxable 

11 year shall be carried to the succeeding tax12 able year. The amount carried to the tax13 able year under the preceding sentence 

14 shall not exceed 15 percent of total re15 ceipts of the qualified workforce develop16 ment or apprenticeship training organiza17 tion for the taxable year. 

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

19 includes amounts which are formally committed but 

20 not distributed. A formal commitment described in 

21 the preceding sentence may include contributions set 

22 aside for eligible students or participants for more 

23 than one year. 

24 ‘‘(3) DISTRIBUTION DEADLINE.—The distribu25 tion deadline with respect to receipts for a taxable 


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1 year is the first day of the second taxable year fol2 lowing the taxable year in which such receipts are 

3 received by the scholarship granting organization. 

4 ‘‘(d) REASONABLE CAUSE EXCEPTION.—The tax im5 posed by subsection (a) shall not apply with respect to any 

6 failure to make required distributions before the distribu7 tion deadline which is not willful and is due to reasonable 

8 cause.’’. 

9 (2) ABATEMENT OF TAX.— 

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

11 section 4962 of such Code is amended by strik12 ing ‘‘or G’’ and inserting ‘‘G, or I’’. 

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

14 section 4963 of such Code is amended by in15 serting ‘‘4969,’’ after ‘‘4967,’’. 

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

17 section 4963 of such Code is amended by in18 serting ‘‘4969,’’ after ‘‘4967,’’. 

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

20 of section 4963(e)(2) of such Code is amended by in21 serting ‘‘or 4969’’ after ‘‘4942’’. 

22 (4) CLERICAL AMENDMENT.—The table of sub23 chapters for chapter 42 of such Code is amended by 

24 adding at the end the following new item: 

‘‘SUBCHAPTER I. ORGANIZATIONS PROVIDING WORKFORCE DEVELOPMENT, 

APPRENTICESHIP TRAINING, OR SCHOLARSHIPS’’. 


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1 SEC. 4. ORGANIZATIONAL AUTONOMY. 

2 A participating eligible organization or entity under 

3 the programs established pursuant to the USA Workforce 

4 Tax Credit Act are autonomous and not agents of the 

5 State or Federal Government and therefore— 

6 (1) a Federal or State agency may not in any 

7 way regulate the program of a participating entity 

8 that accepts a contribution or a scholarship under 

9 this Act; 

10 (2) the provision of tax credits under this Act 

11 does not expand the regulatory authority of the Fed12 eral Government, the State, its officers, or any 

13 school district to impose any additional regulation of 

14 an entity beyond those necessary to enforce the re15 quirements of this Act; and 

16 (3) participating eligible entities shall be given 

17 the maximum freedom to provide for the needs of 

18 their participants without government control. 

19 SEC. 5. VOLUME CAP. 

20 (a) AMOUNT.—The volume cap amount available for 

21 tax credits for purposes of this Act shall be 

22 $2,000,000,000 annually, beginning for taxable years be23 ginning in 2020 and for each succeeding calendar year 

24 thereafter. 

25 (b) APPLICATION FOR CREDITS.—The Secretary 

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1 mation in real time, regarding availability of tax credits 

2 to donors which will be available on a first-come, first3 serve basis. 

4 (c) DISTRIBUTION.—Fifty percent of the annual 

5 amount made available shall be allotted by the Secretary 

6 for donations to workforce development and apprentice7 ship training organizations and 50 percent for donations 

8 to scholarship granting organizations. 

9 SEC. 6. EFFECTIVE DATE. 

10 The amendments made by this Act shall apply to tax11 able years beginning after December 31, 2019. 

Æ 


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