Illinois Administrative Code › Title 86 - REVENUE › Part 1000 - INVEST IN KIDS ACT › Section 1000.200 - Invest in Kids Act: Program Overview and Award of Credits

Current through Register Vol. 48, No. 28, July 12, 2024
a) Program Overview. The Act authorizes
			 taxpayers, subject to specific limitations and requirements, to receive an
			 income tax credit for qualified contributions made to scholarship granting
			 organizations. Taxpayers wishing to make qualified contributions must first
			 apply to the Department for approval to make qualified contributions. Once
			 approved, taxpayers are issued contribution authorization certificates by the
			 Department, which must be provided to scholarship granting organizations by
			 taxpayers when making their qualified contributions. A scholarship granting
			 organization must apply to the Department for approval before it can issue
			 certificates of receipt to taxpayers making qualified contributions.
			 Certificates of receipt issued to the taxpayer by an SGO may be used to
			 document the tax credit claimed by the taxpayer under subsection (b).
b) Award of Credits by the Department -
			 Requirements and Limitations.
The Department shall award credits
			 against the tax imposed under Section 201(a) and (b) of the Illinois Income Tax
			 Act to taxpayers who make qualified contributions. The credit shall be equal to
			 75% of the total amount of qualified contributions made by the taxpayer during
			 a taxable year, not to exceed a credit of $1,000,000 per taxpayer
(i.e., total qualified contributions made by a taxpayer for which a credit may
			 be obtained may not exceed $1,333,333 during a taxable year)
.
1)
The aggregate amount of all
			 credits the Department may award in any calendar year may not exceed
			 $75,000,000
(i.e., the total qualified contributions made by all
			 taxpayers for which credits may be obtained may not exceed $100,000,000 in the
			 aggregate during a taxable year)
.
2)
Contributions made by corporations
			 (including subchapter S corporations), partnerships, and trusts may not be
			 directed to a particular subset of schools, a particular school, a particular
			 group of students, or a particular student.
Contributions made by
			 corporations (including subchapter S corporations), partnerships, and trusts
			 must specify a region under subsection (b)(10) to which the contribution will
			 be directed. Contributions made to a scholarship granting organization without
			 conditions will satisfy the requirements of this subsection (b)(2). An SGO may
			 refuse contributions from corporations (including subchapter S corporations),
			 partnerships, and trusts that, if accepted, may damage the SGO's reputation,
			 cause the rescission of past contributions, or affect the SGO's ability to
			 obtain future contributions.
3)
Contributions made by individuals may be directed to a particular
			 subset of schools or a particular school but may not be directed to a
			 particular group of students or a particular student.
Contributions
			 made by individuals must specify a region under subsection (b)(10) to which the
			 contribution will be directed. An SGO may refuse contributions from individuals
			 that, if accepted, may damage the SGO's reputation, cause the rescission of
			 past contributions, or affect the SGO's ability to obtain future
			 contributions.
4) To comply or
			 remain in compliance with the requirements of this Part, SGOs are permitted to
			 return all or any part of a contribution to an individual contributor that has
			 made a contribution directed to a particular subset of schools or a particular
			 school. To avoid the possibility of the return of the taxpayer's contribution,
			 a taxpayer may, at the time of making the contribution or upon notification a
			 contribution will be returned to the taxpayer by the SGO, grant the SGO
			 additional options for use of the contribution. The taxpayer may allow the SGO,
			 for example, to:
A) use the contribution to
			 award scholarships to eligible students to attend an alternative school or
			 schools selected by the taxpayer in the same region;
B) use the contribution to award scholarships
			 to eligible students to attend any qualified school in the same
			 region;
C) transfer the funds to
			 another SGO in the region, with the permission of the Department;
D) on and after June 1, in addition to the
			 options in subsections (b)(4)(A) through (C):
i) use the contribution to award scholarships
			 to eligible students to attend an alternative school or schools selected by the
			 taxpayer in another region;
ii) use
			 the contribution to award scholarships to eligible students to attend any
			 qualified school in another region; or
iii) transfer the funds to an SGO in another
			 region, with the permission of the Department.
5) If an individual taxpayer has made a
			 contribution directed to a particular subset of schools or a particular school
			 and the individual taxpayer determines that the SGO has not received any
			 applications for scholarships for the particular subset of schools or a
			 particular school, or the SGO notifies the individual taxpayer that the SGO has
			 not received any applications for scholarships for the particular subset of
			 schools or a particular school, the taxpayer may:
A) request the return of the contribution,
			 provided that the SGO has not issued the taxpayer a COR;
B) permit the SGO to use the contribution to
			 award scholarships to eligible students to attend an alternative school or
			 schools in the same region selected by the taxpayer;
C) permit the SGO to use the contribution to
			 award scholarships to eligible students to attend any qualified school in the
			 same region;
D) authorize the SGO
			 to transfer the funds to another SGO in the region, with the permission of the
			 Department;
E) on and after June 1,
			 in addition to the options in subsections (b)(5)(A) through (D):
i) use the contribution to award scholarships
			 to eligible students to attend an alternative school or schools selected by the
			 taxpayer in another region;
ii) use
			 the contribution to award scholarships to eligible students to attend any
			 qualified school in another region; or
iii) authorize the SGO to transfer the funds
			 to an SGO in another region, with the permission of the Department.
6) If a taxpayer
			 rescinds all or part of an authorized contribution for any reason, the SGO
			 shall notify the Department of the name of the taxpayer who rescinded the
			 contribution and the amount of the contribution that was rescinded. (See
			 Section
			 1000.400(j).)
7)
Two individuals filing a joint
			 return
or members of a unitary business group filing a combined return
shall be considered one taxpayer for purposes of making qualified
			 contributions.
For instance, if two married individuals at the time of
			 applying for a CAC intend to file a joint return, the maximum CAC the two
			 individuals collectively can apply for is $1,333,333, and the maximum credit
			 allowed on the joint return is $1,000,000. If two married individuals each
			 contribute $1,333,333 intending at the time of the contribution to file
			 separate returns but subsequently file a joint return, the maximum credit
			 allowed on the joint return is $1,000,000.
8)
No credit shall be taken for any
			 qualified contribution for which the taxpayer claims any portion as a federal
			 income tax deduction.
EXAMPLE: A taxpayer makes a qualified contribution of $100,000.
				The taxpayer takes an Invest in Kids credit on his State tax return in the
				amount of $75,000. The taxpayer takes a federal income tax deduction for
				$25,000. The Invest in Kids tax credit of $75,000 will be disallowed.
9) A taxpayer that has received a
			 CAC may not direct a donor advised fund to make a contribution to an SGO on
			 behalf of the taxpayer. A donor advised fund is a charitable organization
			 exempt from income tax under Internal Revenue Code section 501(c)(3); a
			 taxpayer receives a charitable deduction at the time a contribution is made by
			 the taxpayer to the fund.
10)
Credits shall be awarded in a manner that is geographically
			 proportionate to enrollment in recognized non-public schools in
			 Illinois.
[35
			 ILCS 40/10 ] For purposes of awarding credits in a
			 manner that is geographically proportionate to enrollment in recognized
			 non-public schools, the State of Illinois shall be divided into 5 regions. See
			 Section 1000. APPENDIX A for a listing of counties in each region.
A) On or before December 1 of each year, the
			 State Board of Education shall provide the Department with a list of non-public
			 schools that are recognized under Section 2-3.25o of the School Code. Beginning
			 December 1, 2021, the list shall contain registered and recognized technical
			 academies. This list shall contain enrollment numbers for each recognized
			 non-public school, and shall be used by the Department to determine enrollment
			 in recognized non-public schools in each region for purposes of calculating the
			 geographic distribution of credits. The Department will not adjust the
			 geographic distribution of credits during a calendar year to reflect the
			 addition of non-public schools that are recognized under Section 2-3.25o of the
			 School Code by the State Board of Education after December 1.
B) For purposes of awarding credits in a
			 manner that is geographically proportionate to enrollment in recognized
			 non-public schools, the Department shall track the amount of qualified
			 contributions designated in each region by taxpayers. (See Section
			 1000.400(c)(3).)
C) If the $75,000,000 cap in aggregate
			 credits that can be awarded by the Department (i.e., $100,000,000 in qualified
			 contributions made by taxpayers) is not reached by June 1 of a given year, the
			 Department shall award contribution authorization certificates for the
			 remaining credits on a first-come, first-served basis, without regard to the
			 requirement that the credits be awarded in a manner that is geographically
			 proportionate to enrollment in recognized non-public
			 schools.
11)
Credits awarded for donations made to a technical academy shall be
			 awarded
without regard to subsection (b)(10)
, but shall not
			 exceed 15% of the annual statewide program cap. For the purposes of
			 this
subsection (b)(11)
, "technical academy" means a
			 technical academy that is registered with the Board
as of July 19,
			 2021
.