An Act To Create a Scholarship Grant Organization Tax Credit
Maine Legislature, Session 123, LD 1529
Committee: Taxation
Sponsors: SHERMAN, CLEARY, GIFFORD
Amends: 20-A MRSA §5815, 36 MRSA §5219-B

Legislative Document 
No. 1529 
S.P.552 
March 20, 2007 
An Act To Create a Scholarship Grant Organization Tax Credit 
Reference to the Committee on Taxation suggested and ordered printed. 
JOY J. O'BRIEN 
Secretary of the Senate 
Presented by Senator SHERMAN of Aroostook. 
Cosponsored by Representative CLEARY of Houlton and Representative: GIFFORD of 
Lincoln. 
Printed on rel.:yded paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 20-A MRSA §5815 is enacted to read: 
§5815. School tuition organization reporting 
A school tuition organization, as defined in Title 36, section 5219-BB, using 
voluntary donations provided pursuant to Title 36, section 5219-BB shall report annually 
by March 1 st to the Department of Administrative and Financial Services, Bureau of 
Revenue Services, in a form prescribed by the bureau, the following information: 
1. Name. The name, address and contact name of the school tuition organization; 
2. Number of contributions. The total number of contributions received during the 
previous calendar year; 
3. Amount of contributions. The total dollar amount of contributions received 
during the previous calendar year; 
4. 
Number of children. 
The total number of children awarded educational 
scholarships or tuition grants during the previous calendar year; 
5. 
Amount of scholarships or grants. The total dollar amount of educational 
scholarships and tuition grants awarded during the previous calendar year; and 
6. School information. For each school to which educational scholarships or tuition 
grants were awarded: 
A. The name and address of the school; 
B. The number of educational scholarships and tuition grants awarded during the 
previous calendar year; and 
C. The total dollar amount of educational scholarships and tuition grants awarded 
during the previous calendar year. 
Sec. 2. 36 MRSA §5219-BB is enacted to read: 
§5219-BB. Scholarship grant organization credit 
1. Definitions. As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. "Child with a disability" has the same meaning as in Title 20-A, section 7001, 
subsection I-B. 
B. "Eligible dependent" means a dependent of an individual, when the dependent is 
enrolled in a qualified school. 
C. 
"Private school" means an academy, seminary, institute or other private 
corporation or body formed for educational purposes covering kindergarten through 
grade 12 or any portion thereof. 
Page I - 123LRI728(Ol)-1 
I 
D. 
"Qualified school" means a private school for elementary and secondary 
education or a private preschool for a child with a disability that: 
(I) Is located in this State; 
(2) Does not discriminate on the basis of race, color, disability, familial status or 
national origin; and 
(3) Satisfies the requirements prescribed by law for private schools in this State 
on January I, 2007. 
E. "School tuition organization" means a charitable organization in this State that: 
(I) Is exempt from federal taxation under Section 50I(c)(3) of the Code; 
(2) Allocates at least 90% of its annual revenue for educational scholarships or 
tuition grants to children to allow them to attend any qualified school of their 
parents' choice; and 
(3) 
Provides educational scholarships or tuition grants to students without 
limiting availability of those scholarships or grants to students of a specific 
school. 
2. Amount. An individual is allowed a credit up to $1,200 per eligible dependent 
against the tax otherwise due under this Part in the amount of voluntary cash 
contributions made by the individual during the taxable year to a school tuition 
organization. 
3. Conditions. The credit allowed under subsection 2 is subject to the following 
conditions. 
A. A married couple who file separate returns for a taxable year in which they could 
have filed a joint return may each claim only 112 of the tax credit that would have 
been allowed for a joint return. 
B. Any part of the voluntary cash contribution that is used to reduce the individual's 
Maine tax liability except as provided in this section is ineligible for the credit 
provided pursuant to this section. 
C. 
The tax credit is not allowed if the individual designates the individual's 
contribution to the school tuition organization for the direct benefit of any dependent 
of the individual. 
D. The school tuition organization must meet the reporting requirements specified in 
Title 20-A, section 5815. 
4. Limitation; carry-forward. The credit under this section may not reduce the tax 
otherwise due under this Part to less than zero. An individual entitled to a credit under 
this section for any taxable year may carry over and apply to the tax liability for anyone 
or more of the next succeeding 5 taxable years the portion, as reduced from year to year, 
of any unused credits. 
Sec. 3. Application. This Act applies to tax years beginning on or after January 1, 
2007. 
SUMMARY 
This bill establishes a scholarship grant organization credit to provide a tax credit to 
individuals who donate to school tuition organizations. School tuition organizations are 
defined as organizations that provide grants or scholarships to private school students in 
kindergarten to grade 12 and to private preschools for children with disabilities. 
The maximum amount of the credit is $1,200 per year per child enrolled in a private 
school. 
School tuition organizations that receive such contributions are subject to 
reporting requirements. The credit is not available to a person who designates any part of 
the contribution for the direct benefit of a dependent of the person.