I 
109TH CONGRESS 
2D SESSION 
H. R. 4834 
To amend the Internal Revenue Code of 1986 to allow a business tax credit 
for contributions to education scholarship organizations. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 1, 2006 
Mr. ENGLISH of Pennsylvania (for himself and Mr. PICKERING) 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 
business tax credit for contributions to education scholar-
ship organizations. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Businesses Supporting 
Education Act of 2006’’. 
SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO EDUCATION 
SCHOLARSHIP ORGANIZATIONS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by 
adding at the end the following new section: 
‘‘SEC. 45N. CONTRIBUTIONS TO EDUCATION SCHOLARSHIP 
ORGANIZATIONS. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
in the case of a corporation, partnership, or trade or busi-
ness carried on as a sole proprietorship, the education 
scholarship credit determined under this section for the 
taxable year is the aggregate amount of qualified contribu-
tions for the taxable year. 
‘‘(b) LIMITATION.— 
‘‘(1) DOLLAR LIMITATION.—The amount of the 
credit determined under this section for any taxable 
year shall not exceed $100,000. 
‘‘(2) APPLICATION
TO
PARTNERSHIPS
AND
S 
CORPORATIONS.—In the case of a partnership, the 
limitations of paragraph (1) shall apply with respect 
to the partnership and with respect to each partner. 
A similar rule shall apply in the case of an S cor-
poration and its shareholders. 
‘‘(c) QUALIFIED CONTRIBUTIONS.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—The term ‘qualified con-
tribution’ means a charitable contribution (as de-
fined by section 170(c)) to an education scholarship 
organization. 
‘‘(2) 
EDUCATION
SCHOLARSHIP
ORGANIZA-
TION.—The term ‘education scholarship organiza-
tion’ means any organization which is described in 
section 170(c)(2) and exempt from tax under section 
501(a) and whose exclusive purpose is to provide 
scholarships for the qualified elementary and sec-
ondary education expenses of eligible students. 
‘‘(3) ELIGIBLE STUDENT.—The term ‘eligible 
student’ means an individual— 
‘‘(A) who is enrolled in an elementary or 
secondary school (within the meaning of section 
530(b)(4)(B)), 
‘‘(B) who is a member of a household with 
a total annual household income which does not 
exceed 250 percent of the Federal poverty 
guidelines (as determined by the Secretary of 
Health and Human Services), and 
‘‘(C) with respect to whom the taxpayer is 
entitled to a deduction for the taxable year 
under section 151. 
‘‘(4) QUALIFIED ELEMENTARY AND SECONDARY 
EDUCATION
EXPENSES.—The term ‘qualified ele-
mentary and secondary education expenses’ has the
meaning given such term by section 530(b)(4), ex-
cept that ‘child’ shall be substituted for ‘beneficiary’ 
and ‘a child’ shall be substituted for ‘the designated 
beneficiary of the trust’ in clauses (i) and (iii) of 
subparagraph (A) thereof. 
‘‘(5) SCHOLARSHIP.—The term ‘scholarship’ 
does not include any payment to fulfill or fund any 
obligation or project of any school or school system 
to provide a free, appropriate public education. 
‘‘(d) 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 sec-
tion. 
‘‘(e) ELECTION.—This section shall apply to a tax-
payer for a taxable year only if such taxpayer elects to 
have this section apply for such taxable year.’’. 
(b) EXCISE
TAX
ON
FAILURE
OF
EDUCATION 
SCHOLARSHIP
ORGANIZATIONS
TO
MAKE
DISTRIBU-
TIONS.— 
(1) IN GENERAL.—Chapter 42 of such Code 
(relating to private foundations and certain other 
tax-exempt organizations) is amended by adding at 
the end the following new subchapter:
‘‘Subchapter F—Education Scholarship 
Organizations 
‘‘Sec. 4966. Tax on failure to distribute receipts. 
‘‘SEC. 4966. TAX ON FAILURE TO DISTRIBUTE RECEIPTS. 
‘‘(a) TAX IMPOSED.—There is hereby imposed a tax 
on the failure of an education scholarship organization to 
make required distributions before the distribution dead-
line. 
‘‘(b) AMOUNT OF TAX.—The tax imposed by sub-
section (a) shall be equal to 15 percent of the excess (if 
any) of— 
‘‘(1) the required distribution amount with re-
spect to a taxable year, over 
‘‘(2) the amount of receipts of the education 
scholarship organization for such taxable year which 
are distributed before the distribution deadline with 
respect to such receipts. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) REQUIRED DISTRIBUTION AMOUNT.—The 
required distribution amount with respect to a tax-
able year is the amount equal to 90 percent of the 
total receipts of the education scholarship organiza-
tion for such taxable year.