Tax Credit Program
I. Purpose
Act 48 of 2003 (the Act) amends the Public School Code to provide for the estab lish ment of the Educational Improve ment Tax Credit (EITC) and the Pre-Kinder garten (Pre-K) Tax Credit to be admin is tered by the Depart ment of Commu nity and Economic Devel op ment (the Depart ment). Act 48 autho rizes the award of tax credits to businesses that make contri bu tions to Schol ar ship Organi za tions and/or Educa tional Improve ment
Organi za tions and/or Pre-K Schol ar ship Organi za tions contained on a list published by the Depart ment, as setforth by the requirements of the Act.
II. Eligibility
Entities eligible to apply for EITC are businesses autho rized to do business in the Common wealth of Pennsylvania that are subject to the following taxes: Corpo rate Net Income Tax, Capital Stock Franchise Tax, Bank and Trust Company Shares Tax, Title Insur ance Companies Shares Tax, Insur ance Premiums Tax, or Mutual Thrift Insti tu tions Tax. To receive tax credits, businesses must be approved to make contri bu tions to Schol arship Organi za tions and/or Educa tional Improve ment Organi za tions and/or Pre-K Schol ar ship Organi za tions that are on the list of such organi za tions published by the Depart ment.
For purposes of the EITC, a "contri bu tion" from a business is a donation of cash, personal property or services the value of which is the net cost of the donation to the donor or the pro rata hourly wage, including benefits, of the individual performing the services. No tax credits shall be approved for activ i ties that are part of the appli cant business’s normal course of business.
III. Application and Approval
A. Business SO and EIO Application and Approval
Eligible businesses must submit to the Depart ment a completed appli ca tion form found in Appendix I of these guide lines, signed by the Chief Execu tive Officer or other officer capable of making commit ments for the business. A business may submit one or both appli ca tions, per type of organization that the business would like to make its contri bu tion. If both appli ca tions are submitted, the combined total may not exceed $200,000 in tax credits. The PDF format is recom mended when printing the appli ca tion from the website.
An eligible business that submits an appli ca tion to the Depart ment and that agrees to make a
contri bu tion to an organi za tion whose name is set forth on the current list of Schol ar ship Organizations or Educa tional Improve ment Organi za tions maintained by the Depart ment shall be awarded
Educa tional Improve ment Tax Credits to the extent that such tax credits remain avail able for the fiscal year in which appli ca tion is made.
A business will be approved for a tax credit equal to 75% of its contri bu tion(s) to listed organi za tion(s),up to a maximum of $200,000 per taxable year. The tax credit may be increased to 90% of the ontri bu tion(s) made, up to a maximum of $200,000 per taxable year, if the business agrees to provide the same amount of contri bu tion for two consec u tive tax years. In order to receive and retain the 90% taxcredit, the business must make the same amount of contri bu tion in each of the two consec u tive tax years.
Applications for tax credits for program fiscal year 2007-08 (July 1, 2007 through June 30, 2008) will be accepted beginning July 2, 2007. Tax credit applications will be processed on a
first-come-first-served basis by day submitted. All applications received on a specific day will be
processed on a random basis before moving on to the next day's applications. Applications will be
processed until the amount of available tax credits is exhausted.
A business that has been approved for tax credits and has agreed to make the same amount of
contri bu tion for two consec u tive tax years must submit its appli ca tion to receive its second year of tax credits to the Depart ment no later than June 29 of the first program fiscal year in order to be assured that tax credits will be avail able for the second year of the contri bu tion. Appli ca tions for the second year of a two-year commit ment will be accepted begin ning May 15 and, if received by the Depart menton or before June 29, will be processed prior to any other appli ca tions for tax credits received by the Department. Appli ca tions for the second year of a two-year commit ment that are not received on or before June 29 will be processed on a first-come-first-served basis by day submitted, along with all other business appli ca tions received by the Depart ment, with no assur ance that tax credits will remain avail able at the time of processing.
B. Business Pre-K Tax Credit Appli ca tion and Approval
Eligible businesses must submit to the Depart ment a completed appli ca tion form found in Appendix I - PKSO of these guidelines, signed by the chief executive officer or other officer capable of making
commitments for the business. The PDF format is recommended when printing the application from the website.
An eligible business that submits an application to the Department and that agrees to make a
contribution to an organization whose name is set forth on the current list of Pre-K Scholarship
Organizations maintained by the Department shall be awarded Pre-K Tax Credits to the extent that such tax credits remain available for the fiscal year in which the application is made.
A business may receive a tax credit equal to 100% of the first $10,000 contributed to a Pre-K
Scholarship Organization(s) during the taxable year, and may receive a tax credit equal to 90% of any additional amount contributed during the taxable year, up to a maximum of $100,000 of tax credits per taxable year.
Applications for tax credits for program fiscal year 2007-08 (July 1, 2007 through June 30, 2008) will be accepted beginning July 2, 2007. Tax credit applications will be processed on a
first-come-first-served basis by day submitted. All applications received on a specific day will be
processed on a random basis before moving on to the next day's applications. Applications will be
processed until the amount of available tax credits is exhausted.
IV. Earning of Tax Credits
Upon receipt of written notifi ca tion from the Depart ment that the business has been approved for tax credits, the business must make its contri bu tion(s) to a listed Schol ar ship Organi za tion(s) and/or Educa tional Improvement Organi za tion(s) and/or Pre-K Schol ar ship Organi za tion(s) within 60 days of the date of the letter, and must provide proof of the contri bu tion to the Depart ment within 90 days of the date of the approval letter. A business will only receive tax credits for donating to the type of organi za tion and amount that is speci fied in the application and approval letter. Proof of contri bu tion may be a copy of a written acknowl edg ment from the organization, in accor dance with EITC Program guide lines for organi za tions. For services donated to an organization but which will not be performed until after the 60-day period, the business must submit a copy of a letter sent by the business to the recip ient organi za tion, dated within 60 days of the date of the approval letter, commit ting the business to donate the services described and which must be signed and accepted by the recipient organi za tion. The Depart ment of Revenue will consider tax credits awarded under this program to be effective on the first day of the taxable year in which the contri bu tion was made.
If the Depart ment does not receive proof that the contri bu tion was made within 60 days of the date of the notifi ca tion letter, the approval of tax credits will be rescinded.
No tax credits shall be approved for activ i ties that are part of the appli cant business’s normal course of business.
V. Use of Tax Credits
Upon receipt of proof of contri bu tion, the Depart ment will notify the Depart ment of Revenue to apply the tax credits against the appro priate taxes identi fied by the business in its appli ca tion. The appli ca tion of tax credits approved may not exceed the tax liability of a business for the tax year in which the contri bu tion was made.
Additionally, a tax credit not used in the tax year the contri bu tion was made may not be carried forward or carried back and is not refund able or trans fer able.
The Depart ment of Revenue will consider tax credits awarded under this program to be effec tive on the first day of the taxable year in which the contri bu tion was made. The credit will then be used to offset (in full or part) the quarterly prepay ment require ments and the remainder of the tax due for that taxable year.
