I 

108TH CONGRESS 

1ST SESSION H. R. 611

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

income tax for amounts contributed to charitable organizations which 

provide elementary or secondary school scholarships and for contributions 

of, and for, instructional materials and materials for extracurricular 

activities. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 5, 2003

Mr. PAUL (for himself, Mr. BARTLETT of Maryland, Mrs. MUSGRAVE, and 

Mr. NORWOOD) 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 income tax for amounts contributed to 

charitable organizations which provide elementary or secondary school scholarships and for contributions of, and 

for, instructional materials and materials for extracurricular activities.

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 ‘‘Education Improve5 ment Tax Cut Act’’. 
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1 SEC. 2. CREDIT FOR CONTRIBUTIONS TO CHARITABLE OR2 GANIZATIONS WHICH PROVIDE ELEMENTARY 

3 OR SECONDARY SCHOOL SCHOLARSHIPS. 

4 (a) IN GENERAL.—Subpart A of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of 

6 1986 (relating to nonrefundable personal credits) is 

7 amended by inserting after section 25B the following new 

8 section: 

9 ‘‘SEC. 25C. CONTRIBUTIONS TO ORGANIZATIONS PRO10 VIDING ELEMENTARY OR SECONDARY 

11 SCHOOL SCHOLARSHIPS. 

12 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in13 dividual, there shall be allowed as a credit against the tax 

14 imposed by this chapter for the taxable year an amount 

15 equal to the qualified scholarship contributions of the tax16 payer for the taxable year. 

17 ‘‘(b) MAXIMUM CREDIT.—The credit allowed by sub18 section (a) for any taxable year shall not exceed $3,000 

19 ($1,500 in the case of a married individual (as determined 

20 under section 7703) filing a separate return). 

21 ‘‘(c) QUALIFIED SCHOLARSHIP CONTRIBUTION.—

22 For purposes of this section—

23 ‘‘(1) IN GENERAL.—The term ‘qualified schol24 arship contribution’ means, with respect to any tax25 able year, the amount which would (but for sub26 section (e)) be allowable as a deduction under sec-
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1 tion 170 for cash contributions to a school tuition 

2 organization. 

3 ‘‘(2) SCHOOL TUITION ORGANIZATION.—

4 ‘‘(A) IN GENERAL.—The term ‘school tui5 tion organization’ means any organization de6 scribed in section 170(c)(2) if the annual dis7 bursements of the organization for elementary 

8 and secondary school scholarships are normally 

9 not less than 90 percent of the sum of such or10 ganization’s annual gross income and contribu11 tions and gifts. 

12 ‘‘(B) ELEMENTARY AND SECONDARY

13 SCHOOL SCHOLARSHIP.—The term ‘elementary 

14 and secondary school scholarship’ means any 

15 scholarship excludable from gross income under 

16 section 117 for expenses related to education at 

17 or below the 12th grade. 

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

19 shall be allowed under this chapter for any contribution 

20 for which a credit is allowed under this section. 

21 ‘‘(e) ELECTION TO HAVE CREDIT NOT APPLY.—

22 ‘‘(1) IN GENERAL.—A taxpayer may elect to 

23 have this section not apply for any taxable year. 

24 ‘‘(2) TIME FOR MAKING ELECTION.—An elec25 tion under paragraph (1) for any taxable year may 
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1 be made (or revoked) at any time before the expira2 tion of the 3-year period beginning on the last date 

3 prescribed by law for filing the return for such tax4 able year (determined without regard to extensions). 

5 ‘‘(f) COST-OF-LIVING ADJUSTMENT.—In the case of 

6 any taxable year beginning in a calendar year after 2003, 

7 each dollar amount contained in subsection (b) shall be 

8 increased by an amount equal to—

9 ‘‘(1) such dollar amount, multiplied by 

10 ‘‘(2) the cost-of-living adjustment determined 

11 under section 1(f)(3) for the calendar year in which 

12 the taxable year begins, by substituting ‘calendar 

13 year 2002’ for ‘calendar year 1992’ in subparagraph 

14 (B) thereof. 

15 If any increase determined under the preceding sentence 

16 is not a multiple of $10, such increase shall be increased 

17 to the next highest multiple of $10. In the case of a mar18 ried individual (as determined under section 7703) filing 

19 a separate return, the preceding sentence shall be applied 

20 by substituting ‘$5’ for ‘$10’ each place it appears.

21 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

22 regulations to carry out this section, including regulations 

23 providing for claiming the credit under this section on 

24 Form 1040EZ.’’
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1 (b) CLERICAL AMENDMENT.—The table of sections 

2 for subpart A of part IV of subchapter A of chapter 1 

3 of such Code is amended by inserting after the item relat4 ing to section 25B the following new item:

‘‘Sec. 25C. Contributions to organizations providing elementary or 

secondary school scholarships.’’

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

6 this section shall apply to taxable years beginning after 

7 December 31, 2003. 

8 SEC. 3. CREDIT FOR CONTRIBUTIONS OF AND FOR IN9 STRUCTIONAL MATERIALS AND MATERIALS 

10 FOR EXTRACURRICULAR ACTIVITIES. 

11 (a) IN GENERAL.—Subpart A of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of 

13 1986 (relating to nonrefundable personal credits) is 

14 amended by inserting after section 25C the following new 

15 section: 

16 ‘‘SEC. 25D. CONTRIBUTIONS OF AND FOR INSTRUCTIONAL 

17 MATERIALS AND MATERIALS FOR EXTRA18 CURRICULAR ACTIVITIES. 

19 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in20 dividual, there shall be allowed as a credit against the tax 

21 imposed by this chapter for the taxable year an amount 

22 equal to the qualified school materials contributions of the 

23 taxpayer for the taxable year. 
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1 ‘‘(b) MAXIMUM CREDIT.—The credit allowed by sub2 section (a) for any taxable year shall not exceed $3,000 

3 ($1,500 in the case of a married individual (as determined 

4 under section 7703) filing a separate return). 

5 ‘‘(c) QUALIFIED SCHOOL MATERIALS CONTRIBU6 TION.—For purposes of this section—

7 ‘‘(1) IN GENERAL.—The term ‘qualified school 

8 materials contribution’ means, with respect to any 

9 taxable year, the amount which would (but for sub10 section (e)) be allowable as a deduction under sec11 tion 170 for—

12 ‘‘(A) any cash contribution to any elemen13 tary or secondary school if such contribution is 

14 designated to be used solely to acquire qualified 

15 school materials, 

16 ‘‘(B) any contribution of qualified school 

17 materials to any elementary or secondary 

18 school, and 

19 ‘‘(C) any cash contribution to a school ma20 terials organization. 

21 ‘‘(2) ELEMENTARY OR SECONDARY SCHOOL.—

22 The term ‘elementary or secondary school’ means 

23 any organization described in section 

24 170(b)(1)(A)(ii) which provides education solely at 

25 or below the 12th grade. 
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1 ‘‘(3) SCHOOL MATERIALS ORGANIZATION.—

2 ‘‘(A) IN GENERAL.—The term ‘school ma3 terials organization’ means any organization de4 scribed in section 170(c)(2) if—

5 ‘‘(i) the primary function of the orga6 nization is to raise funds for elementary or 

7 secondary schools, and 

8 ‘‘(ii) the annual disbursements of the 

9 organization for qualified school materials 

10 which are provided to elementary and sec11 ondary schools are normally not less than 

12 90 percent of the sum of such organiza13 tion’s annual gross income and contribu14 tions and gifts. 

15 ‘‘(B) QUALIFIED SCHOOL MATERIALS.—

16 The term ‘qualified school materials’ means—

17 ‘‘(i) instructional materials and equip18 ment, including library books and mate19 rials, computers, and computer software, 

20 and 

21 ‘‘(ii) materials and equipment for 

22 school-sponsored extracurricular activities. 

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

24 shall be allowed under this chapter for any contribution 

25 for which a credit is allowed under this section. 
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1 ‘‘(e) ELECTION TO HAVE CREDIT NOT APPLY.—

2 ‘‘(1) IN GENERAL.—A taxpayer may elect to 

3 have this section not apply for any taxable year. 

4 ‘‘(2) TIME FOR MAKING ELECTION.—An elec5 tion under paragraph (1) for any taxable year may 

6 be made (or revoked) at any time before the expira7 tion of the 3-year period beginning on the last date 

8 prescribed by law for filing the return for such tax9 able year (determined without regard to extensions). 

10 ‘‘(f) COST-OF-LIVING ADJUSTMENT.—In the case of 

11 any taxable year beginning in a calendar year after 2003, 

12 each dollar amount contained in subsection (b) shall be 

13 increased by an amount equal to—

14 ‘‘(1) such dollar amount, multiplied by 

15 ‘‘(2) the cost-of-living adjustment determined 

16 under section 1(f)(3) for the calendar year in which 

17 the taxable year begins, by substituting ‘calendar 

18 year 2002’ for ‘calendar year 1992’ in subparagraph 

19 (B) thereof. 

20 If any increase determined under the preceding sentence 

21 is not a multiple of $10, such increase shall be increased 

22 to the next highest multiple of $10. In the case of a mar23 ried individual (as determined under section 7703) filing 

24 a separate return, the preceding sentence shall be applied 

25 by substituting ‘$5’ for ‘$10’ each place it appears. 
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1 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

2 regulations to carry out this section, including regulations 

3 providing for claiming the credit under this section on 

4 Form 1040EZ.’’

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

6 for subpart A of part IV of subchapter A of chapter 1 

7 of such Code is amended by inserting after the item relat8 ing to section 25C the following new item:

‘‘Sec. 25D. Contributions of and for instructional materials and 

materials for extracurricular activities.’’

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

10 this section shall apply to taxable years beginning after 

11 December 31, 2002.

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