Children's Hope Act of 2013

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. Short title; findings (a) Short title This Act may be cited as the Children’s Hope Act of 2013 (b) Findings Congress finds the following: (1) On April 4, 2011, the United States Supreme Court ruled that opponents of Arizona’s private school scholarship tax credit program may not challenge the program on grounds that it violates the Establishment Clause of the First Amendment. (2) The Court ruled 5–4 in Garriott v. Winn and Arizona Christian School Tuition Organization v. Winn against a lawsuit by the Arizona chapter of the American Civil Liberties Union, which contested a tax credit program giving Arizona parents choices other than their neighborhood public schools. (3) The Children’s Hope Act of 2013 2. Tax credit for contributions to education investment organizations (a) In General Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to other credits) is amended by inserting after section 30D the following new section: 30E. Contributions to education investment organizations (a) In General There shall be allowed as a credit against the tax imposed by this chapter for the taxable year the aggregate amount of qualified contributions for the taxable year. (b) Limitation The amount allowed as a credit under subsection (a) for a taxable year shall not exceed $100 ($200 in the case of a joint return). (c) Qualified contributions For purposes of this section— (1) In general The term qualified contribution (2) Education investment organization The term education investment organization (A) normally not less than 90 percent of the annual cash contributions to such organization are disbursed in the form of grants to students for qualified elementary and secondary education expenses, and (B) not less than ½ National School Lunch Act (3) Qualified elementary and secondary education expenses The term qualified elementary and secondary education expenses child beneficiary a child the designated beneficiary of the trust (4) State credit must be taken first (A) No credit shall be allowed to a taxpayer under this section for a taxable year unless, for the taxable year, the taxpayer is allowed on the taxpayer’s State tax return the minimum State qualified scholarship tax credit (as defined in section 3 of the Children’s Hope Act of 2013 (B) No credit shall be allowed to a taxpayer under this section for such taxable year for any contributions that were taken into account for purposes of such State qualified scholarship tax credit. (d) Special Rules (1) Denial of double benefit No deduction shall be allowed under any provision of this chapter for any expense for which a credit is allowed under this section. (2) Time when contributions deemed made For purposes of this section, a taxpayer shall be deemed to have made a contribution to an education investment organization on the last day of the preceding taxable year if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof). . (b) Scholarships from education investment organizations excluded from income Section 74 of such Code (relating to prizes and awards) is amended by adding at the end the following new subsection: (d) Scholarships from education investment organizations Gross income does not include amounts received as a scholarship from an education investment organization (as defined in section 30E(c)(2)) for qualified elementary and secondary education expenses (as defined in section 30E(c)(3)). Such scholarship shall not be taken into account for purposes of determining eligibility for any Federal program. . (c) Clerical amendment The table of sections for such subpart B is amended by inserting after the item relating to section 30D the following new item: Sec. 30E. Contributions to education investment organizations. . (d) Effective Date The amendments made by this section shall apply to taxable years beginning after December 31, 2012. 3. Federal scholarship tax credit conditioned on State qualified scholarship tax credit (a) In general For purposes of section 30E(c)(4) of the Internal Revenue Code of 1986 (as added by section 2 of this Act), a scholarship tax credit shall not be treated as a State qualified scholarship tax credit unless the requirements of subsection (b) are met. (b) Requirements relating to State qualified scholarship tax credit (1) In general For purposes of subsection (a), the requirements of this subsection are met only if— (A) the tax credit is for an amount of not less than $250 per taxpayer and is allowed against the State income tax (property tax for those States that don’t have income tax) for the amount of voluntary cash contributions made by the taxpayer during the taxable year to a school tuition organization described in paragraph (2), (B) the excess of such credit over tax liability may be carried forward for not more than five years, (C) the taxpayer does not require, as a condition of the contribution, that the contribution must benefit a specific child, and (D) such credit is not allowable for direct donations to private schools. (2) School tuition organization For purposes of paragraph (1), a school tuition organization is described in this paragraph if such organization— (A) is an organization operating in the State and is described in section 501(c)(3), and is exempt from tax under section 501(a), (B) expends at least 90 percent of its annual cash contributions for educational scholarships or tuition grants to children to allow them to attend any qualified school chosen at the sole discretion of their parents, and (C) disburses at least 90 percent of its annual cash contributions within one year of their receipt. (3) Qualified school For purposes of paragraph (2), the term qualified school (4) Educational scholarships or tuition grants The term educational scholarship or a tuition grant section 30E(c)(3) (c) State For purposes of this section, the term State

Summary: Children's Hope Act of 2013 - Amends the Internal Revenue Code to allow a tax credit of up to $100 ($200 for joint returns) for charitable contributions to an education investment organization that disburses 90% of its contributions to provide grants to students for elementary and secondary education expenses, if at least 50% of such disbursements go to students who qualify for free or reduced-cost school lunches. Requires a taxpayer claiming such credit, as a condition of eligibility to receive it, to first claim a state qualified scholarship tax credit.