I 

113TH CONGRESS 

1ST SESSION H. R. 422 

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 25, 2013 

Mr. FRANKS of Arizona (for himself, Mr. GOSAR, Mr. SCHWEIKERT, Mr. 

SALMON, Mr. MULVANEY, Mrs. BLACKBURN, Mr. MESSER, Mr. 

LAMALFA, Mr. HULTGREN, and Mr. WEBER of Texas) 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; FINDINGS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Children’s Hope Act of 2013’’. 


sroberts on DSK5SPTVN1PROD with BILLS
2 

•HR 422 IH

1 (b) FINDINGS.—Congress finds the following: 

2 (1) On April 4, 2011, the United States Su3 preme Court ruled that opponents of Arizona’s pri4 vate school scholarship tax credit program may not 

5 challenge the program on grounds that it violates 

6 the Establishment Clause of the First Amendment. 

7 (2) The Court ruled 5–4 in Garriott v. Winn 

8 and Arizona Christian School Tuition Organization 

9 v. Winn against a lawsuit by the Arizona chapter of 

10 the American Civil Liberties Union, which contested 

11 a tax credit program giving Arizona parents choices 

12 other than their neighborhood public schools. 

13 (3) The Children’s Hope Act of 2013 builds on 

14 the success of the Arizona private school scholarship 

15 tax credit program. Thus far, Arizona taxpayers 

16 have raised more than $430 million for scholarships 

17 since 1998. In 2011 alone, nearly 75,000 taxpayers 

18 awarded more than $47 million for 25,000 scholar19 ships to Arizona children. 

20 SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO EDUCATION 

21 INVESTMENT ORGANIZATIONS. 

22 (a) IN GENERAL.—Subpart B of part IV of sub23 chapter A of chapter 1 of the Internal Revenue Code of 

24 1986 (relating to other credits) is amended by inserting 

25 after section 30D the following new section: 


sroberts on DSK5SPTVN1PROD with BILLS
3 

•HR 422 IH

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

2 ORGANIZATIONS. 

3 ‘‘(a) IN GENERAL.—There shall be allowed as a cred4 it against the tax imposed by this chapter for the taxable 

5 year the aggregate amount of qualified contributions for 

6 the taxable year. 

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

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

9 $100 ($200 in the case of a joint return). 

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

11 this section— 

12 ‘‘(1) IN GENERAL.—The term ‘qualified con13 tribution’ means a charitable contribution (as de14 fined by section 170(c)) to an education investment 

15 organization. 

16 ‘‘(2) EDUCATION INVESTMENT ORGANIZA17 TION.—The term ‘education investment organiza18 tion’ means any organization described in section 

19 170(c)(2) if— 

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

21 the annual cash contributions to such organiza22 tion are disbursed in the form of grants to stu23 dents for qualified elementary and secondary 

24 education expenses, and 

‘‘(B) not less than 1 25 ⁄2 of such disburse26 ments are to students who are eligible for free 


sroberts on DSK5SPTVN1PROD with BILLS
4 

•HR 422 IH

1 or reduced-cost lunches under the school lunch 

2 program established under the Richard B. Rus3 sell National School Lunch Act. 

4 ‘‘(3) QUALIFIED ELEMENTARY AND SECONDARY

5 EDUCATION EXPENSES.—The term ‘qualified ele6 mentary and secondary education expenses’ has the 

7 meaning given such term by section 530(b)(3), ex8 cept that ‘child’ shall be substituted for ‘beneficiary’ 

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

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

11 subparagraph (A). 

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

13 ‘‘(A) No credit shall be allowed to a tax14 payer under this section for a taxable year un15 less, for the taxable year, the taxpayer is al16 lowed on the taxpayer’s State tax return the 

17 minimum State qualified scholarship tax credit 

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

19 Act of 2013). 

20 ‘‘(B) No credit shall be allowed to a tax21 payer under this section for such taxable year 

22 for any contributions that were taken into ac23 count for purposes of such State qualified 

24 scholarship tax credit. 

25 ‘‘(d) SPECIAL RULES.— 


sroberts on DSK5SPTVN1PROD with BILLS
5 

•HR 422 IH

1 ‘‘(1) DENIAL OF DOUBLE BENEFIT.—No deduc2 tion shall be allowed under any provision of this 

3 chapter for any expense for which a credit is allowed 

4 under this section. 

5 ‘‘(2) TIME WHEN CONTRIBUTIONS DEEMED

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

7 shall be deemed to have made a contribution to an 

8 education investment organization on the last day of 

9 the preceding taxable year if the contribution is 

10 made on account of such taxable year and is made 

11 not later than the time prescribed by law for filing 

12 the return for such taxable year (not including ex13 tensions thereof).’’. 

14 (b) SCHOLARSHIPS FROM EDUCATION INVESTMENT

15 ORGANIZATIONS EXCLUDED FROM INCOME.—Section 74 

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

17 by adding at the end the following new subsection: 

18 ‘‘(d) SCHOLARSHIPS FROM EDUCATION INVESTMENT

19 ORGANIZATIONS.—Gross income does not include 

20 amounts received as a scholarship from an education in21 vestment organization (as defined in section 30E(c)(2)) 

22 for qualified elementary and secondary education expenses 

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

24 not be taken into account for purposes of determining eli25 gibility for any Federal program.’’. 


sroberts on DSK5SPTVN1PROD with BILLS
6 

•HR 422 IH

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

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

3 relating to section 30D the following new item: 

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

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2012. 

7 SEC. 3. FEDERAL SCHOLARSHIP TAX CREDIT CONDITIONED 

8 ON STATE QUALIFIED SCHOLARSHIP TAX 

9 CREDIT. 

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

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

12 2 of this Act), a scholarship tax credit shall not be treated 

13 as a State qualified scholarship tax credit unless the re14 quirements of subsection (b) are met. 

15 (b) REQUIREMENTS RELATING TO STATE QUALIFIED

16 SCHOLARSHIP TAX CREDIT.— 

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

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

19 if— 

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

21 less than $250 per taxpayer and is allowed 

22 against the State income tax (property tax for 

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

24 amount of voluntary cash contributions made 

25 by the taxpayer during the taxable year to a 


sroberts on DSK5SPTVN1PROD with BILLS
7 

•HR 422 IH

1 school tuition organization described in para2 graph (2), 

3 (B) the excess of such credit over tax li4 ability may be carried forward for not more 

5 than five years, 

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

7 condition of the contribution, that the contribu8 tion must benefit a specific child, and 

9 (D) such credit is not allowable for direct 

10 donations to private schools. 

11 (2) SCHOOL TUITION ORGANIZATION.—For pur12 poses of paragraph (1), a school tuition organization 

13 is described in this paragraph if such organization— 

14 (A) is an organization operating in the 

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

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

17 Internal Revenue Code of 1986, 

18 (B) expends at least 90 percent of its an19 nual cash contributions for educational scholar20 ships or tuition grants to children to allow them 

21 to attend any qualified school chosen at the sole 

22 discretion of their parents, and 

23 (C) disburses at least 90 percent of its an24 nual cash contributions within one year of their 

25 receipt. 


sroberts on DSK5SPTVN1PROD with BILLS
8 

•HR 422 IH

1 (3) QUALIFIED SCHOOL.—For purposes of 

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

3 any elementary school or secondary school that is lo4 cated in the State in which the taxpayer resides and 

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

6 handicap, familial status, or national origin and that 

7 satisfies the requirements prescribed by State law 

8 for such schools as of December 31, 2010. 

9 (4) EDUCATIONAL SCHOLARSHIPS OR TUITION

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

11 tuition grant’’ means any scholarship or grant 

12 awarded for qualified elementary and secondary edu13 cation expenses (as defined in section 30E(c)(3) of 

14 the Internal Revenue Code of 1986). 

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

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

Æ 


sroberts on DSK5SPTVN1PROD with BILLS