Title: School Choice Now Act
Policy area: Taxation

Summary:
School Choice Now Act
This bill provides for emergency education freedom grants and allows individual and corporate taxpayers a tax credit for contributions to scholarship-granting organizations.
The bill directs the Department of the Treasury, in coordination with the Department of Education, to establish, host, and maintain a web portal that (1) lists all eligible scholarship-granting organizations; (2) enables contributions to such organizations; (3) provides information about the tax benefits of this bill; and (4) enables a state to submit and update information about its programs and scholarship-granting organizations, including information on student eligibility and allowable educational expenses.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8100 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                H. R. 8100

    To provide for emergency education freedom grants, to amend the 
  Internal Revenue Code of 1986 to establish tax credits to encourage 
 individual and corporate taxpayers to contribute to scholarships for 
 students through eligible scholarship-granting organizations, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            August 25, 2020

 Mr. Byrne (for himself, Mr. Lipinski, and Mr. Walker) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
 and in addition to the Committee on Education and Labor, for a period 
    to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
    To provide for emergency education freedom grants, to amend the 
  Internal Revenue Code of 1986 to establish tax credits to encourage 
 individual and corporate taxpayers to contribute to scholarships for 
 students through eligible scholarship-granting organizations, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``School Choice Now Act''.

              TITLE I--EMERGENCY EDUCATION FREEDOM GRANTS

SEC. 101. EMERGENCY EDUCATION FREEDOM GRANTS.

    (a) Definitions.--In this title:
            (1) Definitions from the internal revenue code of 1986.--
        The definitions in section 25E(c) of the Internal Revenue Code 
        of 1986, as added by section 201, shall apply to this section, 
        except as otherwise provided.
            (2) Eligible scholarship-granting organization.--The term 
        ``eligible scholarship-granting organization'' means--
                    (A) an organization that--
                            (i) is described in section 501(c)(3) of 
                        the Internal Revenue Code of 1986 and exempt 
                        from taxation under section 501(a) of such 
                        Code;
                            (ii) provides qualifying scholarships to an 
                        eligible student who--
                                    (I) resides in the State in which 
                                the eligible scholarship-granting 
                                organization is recognized; or
                                    (II) in the case of funds provided 
                                to the Secretary of the Interior, 
                                attending elementary schools or 
                                secondary schools operated or funded by 
                                the Bureau of Indian Education;
                            (iii) is identified by a Governor to 
                        receive an allotment under subsection (b);
                            (iv) agrees to allocate at least 95 percent 
                        of its allotment under subsection (c) to 
                        qualifying scholarships;
                            (v) implements robust policies and 
                        procedures to prevent waste, fraud, and abuse 
                        in the program that it administers; and
                            (vi) provides qualifying scholarships to--
                                    (I) more than 1 eligible student;
                                    (II) more than 1 eligible family; 
                                and
                                    (III) different eligible students 
                                attending more than 1 education 
                                provider; or
                    (B) an organization that--
                            (i) is described in section 501(c)(3) of 
                        the Internal Revenue Code of 1986 and exempt 
                        from taxation under section 501(a) of such 
                        Code;
                            (ii) pursuant to State law, was able, as of 
                        January 1, 2020, to receive contributions that 
                        are eligible for a State tax credit if such 
                        contributions are used by the organization to 
                        provide scholarships to individual elementary 
                        and secondary students, including scholarships 
                        for attending private schools;
                            (iii) agrees to allocate at least 95 
                        percent of its allotment under subsection (c) 
                        to qualifying scholarships;
                            (iv) implements robust policies and 
                        procedures to prevent waste, fraud, and abuse 
                        in the program that it administers; and
                            (v) provides qualifying scholarships to--
                                    (I) more than 1 eligible student;
                                    (II) more than 1 eligible family; 
                                and
                                    (III) different eligible students 
                                attending more than 1 education 
                                provider.
            (3) Emergency education freedom grant funds.--The term 
        ``emergency education freedom grant funds'' means the amount of 
        funds available under subsection (b) or (c)(1)(A).
            (4) Governor.--The term ``Governor'' means the Governor of 
        a State, the chief executive officer of the United States 
        Virgin Islands, Guam, American Samoa, and the Commonwealth of 
        the Northern Mariana Islands, and the Secretary of the 
        Interior.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.
            (6) State.--The term ``State'' means each of the 50 States, 
        the District of Columbia, and the Commonwealth of Puerto Rico.
    (b) Grants.--
            (1) Program authorized.--
                    (A) Reservations.--From any amounts appropriated 
                for section 18003 of division B of the CARES Act on or 
                after the date of enactment of this Act, the Secretary 
                shall reserve--
                            (i) of the amount reserved for the Outlying 
                        Areas in section 18001(a)(1) of Part B of the 
                        CARES Act on or after enactment, 10 percent for 
                        allotments for the United States Virgin 
                        Islands, Guam, American Samoa, and the 
                        Commonwealth of the Northern Mariana Islands, 
                        to be distributed among those outlying areas on 
                        the basis of their relative need, as determined 
                        by the Secretary, in accordance with the 
                        purpose of this title; and
                            (ii) of the amount reserved for the Bureau 
                        of Indian Education in section 18001(a)(2) of 
                        part B of the CARES Act on or after enactment, 
                        10 percent of such amounts for the Secretary of 
                        the Interior, acting through the Bureau of 
                        Indian Edu- cation, to be used to provide 
                        subgrants described in subsection (c) to 
                        eligible scholarship-granting organizations 
                        that serve students attending elementary 
                        schools or secondary schools operated or funded 
                        by the Bureau of Indian Education.
                    (B) State reservation.--From any amount 
                appropriated for section 18003 of division B of the 
                CARES Act on or after the date of enactment of this Act 
                that a State receives, a State shall reserve 10 percent 
                of those funds to award emergency education freedom 
                grant funds to eligible scholarship granting 
                organizations in the State.
    (c) Subgrants to Eligible Scholarship-Granting Organizations.--
            (1) In general.--A Governor shall use funds reserved under 
        subsection (b) to award subgrants to eligible scholarship-
        granting organizations in the State.
            (2) Initial timing.--
                    (A) States with existing tax credit scholarship 
                program.--
                            (i) By not later than 15 days after 
                        receiving an allotment from any amounts 
                        received for section 18003 of division B of the 
                        CARES Act under, a State with an existing, as 
                        of the date of enactment of this Act, tax 
                        credit scholarship program shall distribute not 
                        less than 50 percent of the allotment to award 
                        subgrants to eligible scholarship-granting 
                        organizations under subsection (a)(1)(B) in the 
                        State in proportion to the contributions 
                        received in calendar year 2019 that were 
                        eligible for a State tax credit if such 
                        contributions are used by the organization to 
                        provide scholarships to eligible students, 
                        including scholarships for attending private 
                        schools.
                            (ii) By not later than 60 days after 
                        receiving an allotment from any amount received 
                        for section 18003 of division B of the CARES 
                        Act, a Governor with an existing tax credit 
                        scholarship program shall use the balance of 
                        the total allotment to award subgrants to 
                        eligible scholarship-grant organizations under 
                        subsection (a)(1)(B).
                    (B) States without tax credit scholarship 
                programs.--
                            (i) By not later than 30 days after 
                        receiving an allotment from any amounts 
                        received for section 18003 of division B of the 
                        CARES Act, a State without a tax credit 
                        scholarship program shall distribute not less 
                        than 50 percent of the allotment to award 
                        subgrants to eligible scholarship-granting 
                        organizations in the State.
                            (ii) By not later than 90 days after 
                        receiving an allotment from any amounts 
                        received for section 18003 of division B of the 
                        CARES Act, a Governor in a State without an 
                        existing tax credit scholarship program shall 
                        use the balance of the allotment to award 
                        subgrants to eligible scholarship-grant 
                        organizations under subsection (a)(1)(A).
            (3) Uses of funds.--An eligible scholarship-granting 
        organization that receives a subgrant under this subsection--
                    (A) may reserve not more than 5 percent of the 
                subgrant funds for public outreach, student and family 
                support activities, and administrative expenses related 
                to the subgrant; and
                    (B) shall use not less than 95 percent of the 
                subgrant funds to provide qualifying scholarships for 
                qualified expenses only to eligible students who reside 
                in the State in which the eligible scholarship-granting 
                organization is recognized.
    (d) Reallocation.--A State shall return to the Secretary any 
amounts of the allotment reserved under this Act that the Governor does 
not award as subgrants under subsection (c) within 120 days of receipt 
of that allotment, and the Secretary shall reallocate such funds to the 
remaining eligible States.
    (e) Rules of Construction.--
            (1) Education providers that accept scholarship funds from 
        students under this section shall not, by reason of such 
        participation, be considered recipients of Federal financial 
        assistance, nor shall they, by reason of such participation, be 
        required to comply with provisions of federal law not otherwise 
        in effect as of the date of the passage of this Act.
            (2) The rules of construction under section 25E(d) of the 
        Internal Revenue Code of 1986, as added by section 201, shall 
        apply to this section in the same manner as such rules apply to 
        section 25E of such Code, as so added.

    TITLE II--TAX CREDITS FOR CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-
                         GRANTING ORGANIZATIONS

SEC. 201. TAX CREDITS FOR CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-
              GRANTING ORGANIZATIONS.

    (a) Credit for Individuals.--Subpart A of part IV of subchapter A 
of chapter 1 of the Internal Revenue Code of 1986 is amended by adding 
after section 25D the following new section:

``SEC. 25E. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-GRANTING 
              ORGANIZATIONS.

    ``(a) Allowance of Credit.--Subject to section 202(c) of the School 
Choice Now Act, in the case of an individual, there shall be allowed as 
a credit against the tax imposed by this chapter for the taxable year 
an amount equal to the sum of any qualified contributions made by the 
taxpayer during the taxable year.
    ``(b) Amount of Credit.--The credit allowed under subsection (a) 
for any taxable year shall not exceed 10 percent of the taxpayer's 
adjusted gross income for the taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible scholarship-granting organization.--The term 
        `eligible scholarship-granting organization' means--
                    ``(A) an organization that--
                            ``(i) is described in section 501(c)(3) and 
                        exempt from taxation under section 501(a),
                            ``(ii) provides qualifying scholarships to 
                        an eligible student who--
                                    ``(I) resides in the State in which 
                                the eligible scholarship-granting 
                                organization is recognized, or
                                    ``(II) in the case of the Bureau of 
                                Indian Education, are members of a 
                                federally recognized tribe,
                            ``(iii) a State identifies to the Secretary 
                        as an eligible scholarship-granting 
                        organization under section 202(c)(5)(B) of the 
                        School Choice Now Act,
                            ``(iv) allocates at least 90 percent of 
                        qualified contributions to qualifying 
                        scholarships on an annual basis,
                            ``(v) implements robust policies and 
                        procedures to prevent waste, fraud, and abuse 
                        in the program that it administers, and
                            ``(vi) provides qualifying scholarships 
                        to--
                                    ``(I) more than 1 eligible student,
                                    ``(II) more than 1 eligible family, 
                                and
                                    ``(III) different eligible students 
                                attending more than 1 education 
                                provider, or
                    ``(B) an organization that--
                            ``(i) is described in section 501(c)(3) and 
                        exempt from taxation under section 501(a),
                            ``(ii) pursuant to State law, was able, as 
                        of January 1, 2021, to receive contributions 
                        that are eligible for a State tax credit if 
                        such contributions are used by the organization 
                        to provide scholarships to individual 
                        elementary and secondary students, including 
                        scholarships for attending private schools,
                            ``(iii) agrees to allocate at least 905 
                        percent of its allotment under subsection (c) 
                        to qualifying scholarships on an annual basis,
                            ``(iv) implements robust policies and 
                        procedures to prevent waste, fraud, and abuse 
                        in the program that it administers, and
                            ``(v) provides qualifying scholarships to--
                                    ``(I) more than 1 eligible student,
                                    ``(II) more than 1 eligible family, 
                                and
                                    ``(III) different eligible students 
                                attending more than 1 education 
                                provider.
            ``(2) Eligible student.--The term `eligible student' 
        means--
                    ``(A) a child, as that term is defined in section 
                8101(3) of the Elementary and Secondary Education Act 
                of 1965, who comes from a family whose household income 
                is no more than 200 percent of the median household 
                income for that State, as determined by the Bureau of 
                the Census in compiling the most recent data for the 
                American Community Survey, or
                    ``(B) a child with a disability, as that term is 
                defined in section 602 of the Individuals with 
                Disabilities Education Act.
            ``(3) Qualified contribution.--The term `qualified 
        contribution' means a contribution of cash to any eligible 
        scholarship-granting organization.
            ``(4) Qualified expense.--The term `qualified expense' 
        means any educational expense that is--
                    ``(A) for an individual student's elementary or 
                secondary education, as recognized by the State, or
                    ``(B) for the secondary education component of an 
                individual elementary or secondary student's career and 
                technical education, as defined by section 3(5) of the 
                Carl D. Perkins Career and Technical Education Act of 
                2006 (20 U.S.C. 2302(5)).
            ``(5) Qualifying scholarship.--The term `qualifying 
        scholarship' means a scholarship granted by an eligible 
        scholarship-granting organization to an individual elementary 
        or secondary student for a qualified expense.
            ``(6) State.--The term `State' means each of the 50 States, 
        the District of Columbia, the Commonwealth of Puerto Rico, the 
        outlying areas (as defined in section 1121(c) of the Elementary 
        and Secondary Education Act of 1965 (20 U.S.C. 6331(c)), and 
        the Department of the Interior (acting through the Bureau of 
        Indian Education).
    ``(d) Rules of Construction.--
            ``(1) In general.--A qualifying scholarship awarded to a 
        student from the proceeds of a qualified contribution under 
        this section shall not be considered assistance to the school 
        or other educational provider that enrolls, or provides 
        educational services to, the student or the student's parents.
            ``(2) Exclusion from income.--Gross income shall not 
        include any amount received by an individual as a qualifying 
        scholarship and such amount shall not be taken into account as 
        income or resources for purposes of determining the eligibility 
        of such individual or any other individual for benefits or 
        assistance, or the amount or extent of such benefits or 
        assistance, under any Federal program or under any State or 
        local program financed in whole or in part with Federal funds.
            ``(3) Prohibition of control over nonpublic education 
        providers.--
                    ``(A)(i) Nothing in this section shall be construed 
                to permit, allow, encourage, or authorize any Federal 
                control over any aspect of any private, religious, or 
                home education provider, whether or not a home 
                education provider is treated as a private school or 
                home school under State law.
                    ``(ii) This section shall not be construed to 
                exclude private, religious, or home education providers 
                from participation in programs or services under this 
                section.
                    ``(B) Nothing in this section shall be construed to 
                permit, allow, encourage, or authorize an entity 
                submitting a list of eligible scholarship-granting 
                organizations on behalf of a State pursuant to section 
                202(c)(5) of the School Choice Now Act to mandate, 
                direct, or control any aspect of a private or home 
                education provider, regardless of whether or not a home 
                education provider is treated as a private school under 
                State law.
                    ``(C) No participating State or entity acting on 
                behalf of a State pursuant to section 202(c)(5) of the 
                School Choice Now Act shall exclude, discriminate 
                against, or otherwise disadvantage any education 
                provider with respect to programs or services under 
                this section based in whole or in part on the 
                provider's religious character or affiliation, 
                including religiously based or mission-based policies 
                or practices.
            ``(4) Parental rights to use scholarships.--No 
        participating State or entity acting on behalf of a State 
        pursuant to section 202(c)(5) of the School Choice Now Act 
        shall disfavor or discourage the use of qualifying scholarships 
        for the purchase of elementary and secondary education 
        services, including those services provided by private or 
        nonprofit entities, such as faith-based providers.
            ``(5) State and local authority.--Nothing in this section 
        shall be construed to modify a State or local government's 
        authority and responsibility to fund education.
    ``(e) Denial of Double Benefit.--The Secretary shall prescribe such 
regulations or other guidance to ensure that the sum of the tax 
benefits provided by Federal, State, or local law for a qualified 
contribution receiving a Federal tax credit in any taxable year does 
not exceed the sum of the qualified contributions made by the taxpayer 
for the taxable year.
    ``(f) Carryforward of Credit.--If a tax credit allowed under this 
section is not fully used within the applicable taxable year because of 
insufficient tax liability on the part of the taxpayer, the unused 
amount may be carried forward for a period not to exceed 5 years.
    ``(g) Election.--This section shall apply to a taxpayer for a 
taxable year only if the taxpayer elects to have this section apply for 
such taxable year.
    ``(h) Alternative Minimum Tax.--For purposes of calculating the 
alternative minimum tax under section 55, a taxpayer may use any credit 
received for a qualified contribution under this section.''.
    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 25D the 
following new item:

``Sec. 25E. Contributions to eligible scholarship-granting 
                            organizations.''.
    (c) Credit for Corporations.--Subpart D of part IV of subchapter A 
of chapter 1 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new section:

``SEC. 45U. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP-GRANTING 
              ORGANIZATIONS.

    ``(a) Allowance of Credit.--Subject to section 202(c) of the School 
Choice Now Act, for purposes of section 38, there shall be allowed as a 
credit against the tax imposed by this chapter for the taxable year an 
amount equal to the sum of any qualified contributions (as defined in 
section 25E(c)(2)) made by such corporation taxpayer during the taxable 
year.
    ``(b) Amount of Credit.--The credit allowed under subsection (a) 
for any taxable year shall not exceed 5 percent of the taxable income 
(as defined in section 170(b)(2)(D)) of the domestic corporation for 
such taxable year.
    ``(c) Additional Provisions.--For purposes of this section, any 
qualified contributions made by a domestic corporation shall be subject 
to the provisions of section 25E (including subsection (d) of such 
section), to the extent applicable.
    ``(d) Election.--This section shall apply to a taxpayer for a 
taxable year only if the taxpayer elects to have this section apply for 
such taxable year.''.
    (d) Credit Part of General Business Credit.--Section 38(b) is 
amended--
            (1) by striking ``plus'' at the end of paragraph (32);
            (2) by striking the period at the end of paragraph (33) and 
        inserting ``, plus''; and
            (3) by adding at the end the following new paragraph:
            ``(34) the credit for qualified contributions determined 
        under section 45U(a).''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

``Sec. 45U. Contributions to eligible scholarship-granting 
                            organizations.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2020.

SEC. 202. EDUCATION FREEDOM SCHOLARSHIPS WEB PORTAL AND ADMINISTRATION.

    (a) In General.--The Secretary of Treasury shall, in coordination 
with the Secretary of Education, establish, host, and maintain a web 
portal that--
            (1) lists all eligible scholarship-granting organizations;
            (2) enables a taxpayer to make a qualifying contribution to 
        one or more eligible scholarship-granting organizations and to 
        immediately obtain both a pre-approval of a tax credit for that 
        contribution and a receipt for tax filings;
            (3) provides information about the tax benefits under 
        sections 25E and 45U of the Internal Revenue Code of 1986; and
            (4) enables a State to submit and update information about 
        its programs and its eligible scholarship-granting 
        organizations for informational purposes only, including 
        information on--
                    (A) student eligibility;
                    (B) allowable educational expenses;
                    (C) the types of allowable education providers;
                    (D) the percentage of funds an organization may use 
                for program administration; and
                    (E) the percentage of total contributions the 
                organization awards in a calendar year.
    (b) Nonportal Contributions.--A taxpayer may opt to make a 
contribution directly to an eligible scholarship-granting organization, 
instead of through the web portal described in subsection (a), provided 
that the taxpayer, or the eligible scholarship-granting organization on 
behalf of the taxpayer, applies for, and receives pre-approval for a 
tax credit from the Secretary of Treasury in coordination with the 
Secretary of the Education.
    (c) National and State Limitations on Credits.--
            (1) National limitation.--For each fiscal year, the total 
        amount of qualifying contributions for which a credit is 
        allowed under sections 25E and 45U of the Internal Revenue Code 
        of 1986 shall not exceed $5,000,000,000.
            (2) Allocation of limitation.--
                    (A) Initial allocations.--For each calendar year, 
                with respect to the limitation under paragraph (1), the 
                Secretary of the Treasury, in consultation with the 
                Secretary of Education, shall--
                            (i) allocate to each State an amount equal 
                        to the sum of the qualifying contributions made 
                        in the State in the previous year; and
                            (ii) from any amounts remaining following 
                        allocations made under clause (i), allocate to 
                        each participating State an amount that bears 
                        the same relation to such remaining amount as 
                        the number of individuals aged 5 through 19 in 
                        the State, as determined by the Secretary of 
                        Education on the basis of the most recent 
                        satisfactory data, bears to the number of those 
                        individuals, as so determined, in all such 
                        States, as so determined.
                    (B) Minimum allocation.--Notwithstanding 
                subparagraph (A), no State receiving an allocation 
                under this section may receive less than one-half of 1 
                percent of the amount allocated for a fiscal year.
                    (C) Alternative allocation.--
                            (i) In general.--Not later than the end of 
                        the fifth year of the program or 1 year after 
                        the end of the first fiscal year for which the 
                        total amount of credits claimed under section 
                        25E and section 45U of the Internal Revenue 
                        Code of 1986 is $2,500,000,000 or more, 
                        whichever comes first, the Secretary of the 
                        Treasury, in consultation with the Secretary of 
                        Education, shall, by regulation, provide for an 
                        alternative allocation method that shall take 
                        effect beginning with the first fiscal year 
                        after such regulation takes effect.
                            (ii) Alternative allocation method.--The 
                        alternative allocation method shall be 
                        expressed as a formula based on a combination 
                        of the following data for each State, as 
                        reported by the State to the Secretary of 
                        Treasury:
                                    (I) The relative percentage of 
                                students in the State who receive an 
                                elementary or secondary scholarship 
                                through a State program that is 
                                financed through State tax-credited 
                                donations or appropriations and that 
                                permits the elementary or secondary 
                                scholarship to be used to attend a 
                                private school.
                                    (II) The total amount of all 
                                elementary and secondary scholarships 
                                awarded through a State program that is 
                                financed through State tax-credited 
                                donations or appropriations compared to 
                                the total amount of current State and 
                                local expenditures for free public 
                                education in the State.
                            (iii) Allocation formula.--For any fiscal 
                        year to which clause (i) applies, the Secretary 
                        of Treasury, in consultation with the Secretary 
                        of Education, shall--
                                    (I) for each State, allocate an 
                                amount equal to the sum of the 
                                qualifying contributions made in the 
                                State in the previous year;
                                    (II) allocate \2/3\ of the 
                                remaining amount (after application of 
                                subclause (I)) of the national 
                                limitation for that year using the 
                                alternative allocation method under 
                                clause (ii); and
                                    (III) allocate \1/3\ of the 
                                remaining amount (after application of 
                                subclause (I) and (II)) in accordance 
                                with subparagraph (A)(ii).
                            (iv) Ineligibility.--For any fiscal year to 
                        which clause (i) applies, a State that does not 
                        provide the Secretary of the Treasury with 
                        information described in clause (ii) is not 
                        eligible to receive an allocation through the 
                        alternative allocation method under such 
                        clause.
            (3) Allowable partnerships.--A State may choose to 
        administer the allocation it receives under paragraph (2) in 
        partnership with one or more States, provided that the eligible 
        scholarship-granting organizations in each partner State serve 
        students who reside in all States in the partnership.
            (4) Allocation and adjustments.--
                    (A) Initial allocation to states.--Not later than 
                November 1 of the year preceding a year for which there 
                is a national limitation on credits under paragraph (1) 
                (referred to in this section as the ``applicable 
                year''), or as early as practicable with respect to the 
                first year, the Secretary of the Treasury shall 
                announce the State allocations under paragraph (2) for 
                the applicable year.
                    (B) List of eligible scholarship-granting 
                organizations.--
                            (i) In general.--Not later than January 1 
                        of each applicable year, or as early as 
                        practicable with respect to the first year, 
                        each State shall provide the Secretary of the 
                        Treasury a list of eligible scholarship-
                        granting organizations, including a 
                        certification that the entity submitting the 
                        list on behalf of the State has the authority 
                        to perform this function.
                            (ii) Rule of construction.--Neither this 
                        section nor any other Federal law shall be 
                        construed as limiting the entities that may 
                        submit the list on behalf of a State.
                    (C) Reallocation of unclaimed credits.--The 
                Secretary of the Treasury shall reallocate a State's 
                allocation to other States, in accordance with 
                paragraph (2), if the State--
                            (i) chooses not to identify scholarship-
                        granting organizations under subparagraph (B) 
                        in any applicable year; or
                            (ii) does not have an existing eligible 
                        scholarship-granting organization.
                    (D) Reallocation.--On or after April 1 of any 
                applicable year, the Secretary of the Treasury may 
                reallocate, to one or more other States that have 
                eligible scholarship-granting organizations in the 
                States, without regard to paragraph (2), the allocation 
                of a State for which the State's allocation has not 
                been claimed.
    (d) Definitions.--Any term used in this section which is also used 
in section 25E of the Internal Revenue Code of 1986 shall have the same 
meaning as when used in such section.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated $50,000,000 to carry out section 202(a) of this Act.
                                 <all>