School Choice Now Act

I 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 pur- poses. IN THE HOUSE OF REPRESENTATIVES AUGUST 25, 2020 Mr. BYRNE (for himself, Mr. LIPINSKI, and Mr. WALKER) introduced the fol- lowing 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 consider- ation 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 tax- payers to contribute to scholarships for students through eligible scholarship-granting organizations, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 8100 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘School Choice Now 2 Act’’. 3 TITLE I—EMERGENCY 4 EDUCATION FREEDOM GRANTS 5 SEC. 101. EMERGENCY EDUCATION FREEDOM GRANTS. 6 (a) DEFINITIONS.—In this title: 7 (1) DEFINITIONS FROM THE INTERNAL REV- 8 ENUE CODE OF 1986.—The definitions in section 9 25E(c) of the Internal Revenue Code of 1986, as 10 added by section 201, shall apply to this section, ex- 11 cept as otherwise provided. 12 (2) ELIGIBLE SCHOLARSHIP-GRANTING ORGANI- 13 ZATION.—The term ‘‘eligible scholarship-granting 14 organization’’ means— 15 (A) an organization that— 16 (i) is described in section 501(c)(3) of 17 the Internal Revenue Code of 1986 and ex- 18 empt from taxation under section 501(a) 19 of such Code; 20 (ii) provides qualifying scholarships to 21 an eligible student who— 22 (I) resides in the State in which 23 the eligible scholarship-granting orga- 24 nization is recognized; or 25 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 8100 IH (II) in the case of funds provided 1 to the Secretary of the Interior, at- 2 tending elementary schools or sec- 3 ondary schools operated or funded by 4 the Bureau of Indian Education; 5 (iii) is identified by a Governor to re- 6 ceive an allotment under subsection (b); 7 (iv) agrees to allocate at least 95 per- 8 cent of its allotment under subsection (c) 9 to qualifying scholarships; 10 (v) implements robust policies and 11 procedures to prevent waste, fraud, and 12 abuse in the program that it administers; 13 and 14 (vi) provides qualifying scholarships 15 to— 16 (I) more than 1 eligible student; 17 (II) more than 1 eligible family; 18 and 19 (III) different eligible students 20 attending more than 1 education pro- 21 vider; or 22 (B) an organization that— 23 (i) is described in section 501(c)(3) of 24 the Internal Revenue Code of 1986 and ex- 25 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 8100 IH empt from taxation under section 501(a) 1 of such Code; 2 (ii) pursuant to State law, was able, 3 as of January 1, 2020, to receive contribu- 4 tions that are eligible for a State tax credit 5 if such contributions are used by the orga- 6 nization to provide scholarships to indi- 7 vidual elementary and secondary students, 8 including scholarships for attending private 9 schools; 10 (iii) agrees to allocate at least 95 per- 11 cent of its allotment under subsection (c) 12 to qualifying scholarships; 13 (iv) implements robust policies and 14 procedures to prevent waste, fraud, and 15 abuse in the program that it administers; 16 and 17 (v) provides qualifying scholarships 18 to— 19 (I) more than 1 eligible student; 20 (II) more than 1 eligible family; 21 and 22 (III) different eligible students 23 attending more than 1 education pro- 24 vider. 25 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 8100 IH (3) EMERGENCY EDUCATION FREEDOM GRANT 1 FUNDS.—The term ‘‘emergency education freedom 2 grant funds’’ means the amount of funds available 3 under subsection (b) or (c)(1)(A). 4 (4) GOVERNOR.—The term ‘‘Governor’’ means 5 the Governor of a State, the chief executive officer 6 of the United States Virgin Islands, Guam, Amer- 7 ican Samoa, and the Commonwealth of the Northern 8 Mariana Islands, and the Secretary of the Interior. 9 (5) SECRETARY.—The term ‘‘Secretary’’ means 10 the Secretary of Education. 11 (6) STATE.—The term ‘‘State’’ means each of 12 the 50 States, the District of Columbia, and the 13 Commonwealth of Puerto Rico. 14 (b) GRANTS.— 15 (1) PROGRAM AUTHORIZED.— 16 (A) RESERVATIONS.—From any amounts 17 appropriated for section 18003 of division B of 18 the CARES Act on or after the date of enact- 19 ment of this Act, the Secretary shall reserve— 20 (i) of the amount reserved for the 21 Outlying Areas in section 18001(a)(1) of 22 Part B of the CARES Act on or after en- 23 actment, 10 percent for allotments for the 24 United States Virgin Islands, Guam, 25 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 8100 IH American Samoa, and the Commonwealth 1 of the Northern Mariana Islands, to be dis- 2 tributed among those outlying areas on the 3 basis of their relative need, as determined 4 by the Secretary, in accordance with the 5 purpose of this title; and 6 (ii) of the amount reserved for the 7 Bureau of Indian Education in section 8 18001(a)(2) of part B of the CARES Act 9 on or after enactment, 10 percent of such 10 amounts for the Secretary of the Interior, 11 acting through the Bureau of Indian Edu- 12 cation, to be used to provide subgrants de- 13 scribed in subsection (c) to eligible scholar- 14 ship-granting organizations that serve stu- 15 dents attending elementary schools or sec- 16 ondary schools operated or funded by the 17 Bureau of Indian Education. 18 (B) STATE RESERVATION.—From any 19 amount appropriated for section 18003 of divi- 20 sion B of the CARES Act on or after the date 21 of enactment of this Act that a State receives, 22 a State shall reserve 10 percent of those funds 23 to award emergency education freedom grant 24 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 8100 IH funds to eligible scholarship granting organiza- 1 tions in the State. 2 (c) SUBGRANTS TO ELIGIBLE SCHOLARSHIP-GRANT- 3 ING ORGANIZATIONS.— 4 (1) IN GENERAL.—A Governor shall use funds 5 reserved under subsection (b) to award subgrants to 6 eligible scholarship-granting organizations in the 7 State. 8 (2) INITIAL TIMING.— 9 (A) STATES WITH EXISTING TAX CREDIT 10 SCHOLARSHIP PROGRAM.— 11 (i) By not later than 15 days after re- 12 ceiving an allotment from any amounts re- 13 ceived for section 18003 of division B of 14 the CARES Act under, a State with an ex- 15 isting, as of the date of enactment of this 16 Act, tax credit scholarship program shall 17 distribute not less than 50 percent of the 18 allotment to award subgrants to eligible 19 scholarship-granting organizations under 20 subsection (a)(1)(B) in the State in pro- 21 portion to the contributions received in cal- 22 endar year 2019 that were eligible for a 23 State tax credit if such contributions are 24 used by the organization to provide schol- 25 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 8100 IH arships to eligible students, including 1 scholarships for attending private schools. 2 (ii) By not later than 60 days after 3 receiving an allotment from any amount 4 received for section 18003 of division B of 5 the CARES Act, a Governor with an exist- 6 ing tax credit scholarship program shall 7 use the balance of the total allotment to 8 award subgrants to eligible scholarship- 9 grant organizations under subsection 10 (a)(1)(B). 11 (B) STATES WITHOUT TAX CREDIT SCHOL- 12 ARSHIP PROGRAMS.— 13 (i) By not later than 30 days after re- 14 ceiving an allotment from any amounts re- 15 ceived for section 18003 of division B of 16 the CARES Act, a State without a tax 17 credit scholarship program shall distribute 18 not less than 50 percent of the allotment 19 to award subgrants to eligible scholarship- 20 granting organizations in the State. 21 (ii) By not later than 90 days after 22 receiving an allotment from any amounts 23 received for section 18003 of division B of 24 the CARES Act, a Governor in a State 25 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 8100 IH without an existing tax credit scholarship 1 program shall use the balance of the allot- 2 ment to award subgrants to eligible schol- 3 arship-grant organizations under sub- 4 section (a)(1)(A). 5 (3) USES OF FUNDS.—An eligible scholarship- 6 granting organization that receives a subgrant under 7 this subsection— 8 (A) may reserve not more than 5 percent 9 of the subgrant funds for public outreach, stu- 10 dent and family support activities, and adminis- 11 trative expenses related to the subgrant; and 12 (B) shall use not less than 95 percent of 13 the subgrant funds to provide qualifying schol- 14 arships for qualified expenses only to eligible 15 students who reside in the State in which the 16 eligible scholarship-granting organization is rec- 17 ognized. 18 (d) REALLOCATION.—A State shall return to the Sec- 19 retary any amounts of the allotment reserved under this 20 Act that the Governor does not award as subgrants under 21 subsection (c) within 120 days of receipt of that allotment, 22 and the Secretary shall reallocate such funds to the re- 23 maining eligible States. 24 (e) RULES OF CONSTRUCTION.— 25 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 8100 IH (1) Education providers that accept scholarship 1 funds from students under this section shall not, by 2 reason of such participation, be considered recipients 3 of Federal financial assistance, nor shall they, by 4 reason of such participation, be required to comply 5 with provisions of federal law not otherwise in effect 6 as of the date of the passage of this Act. 7 (2) The rules of construction under section 8 25E(d) of the Internal Revenue Code of 1986, as 9 added by section 201, shall apply to this section in 10 the same manner as such rules apply to section 25E 11 of such Code, as so added. 12 TITLE II—TAX CREDITS FOR 13 CONTRIBUTIONS TO ELIGI- 14 BLE SCHOLARSHIP-GRANT- 15 ING ORGANIZATIONS 16 SEC. 201. TAX CREDITS FOR CONTRIBUTIONS TO ELIGIBLE 17 SCHOLARSHIP-GRANTING ORGANIZATIONS. 18 (a) CREDIT FOR INDIVIDUALS.—Subpart A of part 19 IV of subchapter A of chapter 1 of the Internal Revenue 20 Code of 1986 is amended by adding after section 25D the 21 following new section: 22 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 8100 IH ‘‘SEC. 25E. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP- 1 GRANTING ORGANIZATIONS. 2 ‘‘(a) ALLOWANCE OF CREDIT.—Subject to section 3 202(c) of the School Choice Now Act, in the case of an 4 individual, there shall be allowed as a credit against the 5 tax imposed by this chapter for the taxable year an 6 amount equal to the sum of any qualified contributions 7 made by the taxpayer during the taxable year. 8 ‘‘(b) AMOUNT OF CREDIT.—The credit allowed under 9 subsection (a) for any taxable year shall not exceed 10 10 percent of the taxpayer’s adjusted gross income for the 11 taxable year. 12 ‘‘(c) DEFINITIONS.—For purposes of this section— 13 ‘‘(1) ELIGIBLE SCHOLARSHIP-GRANTING ORGA- 14 NIZATION.—The term ‘eligible scholarship-granting 15 organization’ means— 16 ‘‘(A) an organization that— 17 ‘‘(i) is described in section 501(c)(3) 18 and exempt from taxation under section 19 501(a), 20 ‘‘(ii) provides qualifying scholarships 21 to an eligible student who— 22 ‘‘(I) resides in the State in which 23 the eligible scholarship-granting orga- 24 nization is recognized, or 25 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 8100 IH ‘‘(II) in the case of the Bureau of 1 Indian Education, are members of a 2 federally recognized tribe, 3 ‘‘(iii) a State identifies to the Sec- 4 retary as an eligible scholarship-granting 5 organization under section 202(c)(5)(B) of 6 the School Choice Now Act, 7 ‘‘(iv) allocates at least 90 percent of 8 qualified contributions to qualifying schol- 9 arships on an annual basis, 10 ‘‘(v) implements robust policies and 11 procedures to prevent waste, fraud, and 12 abuse in the program that it administers, 13 and 14 ‘‘(vi) provides qualifying scholarships 15 to— 16 ‘‘(I) more than 1 eligible student, 17 ‘‘(II) more than 1 eligible family, 18 and 19 ‘‘(III) different eligible students 20 attending more than 1 education pro- 21 vider, or 22 ‘‘(B) an organization that— 23 VerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H8100.IH H8100 pbinns on DSKJLVW7X2PROD with BILLS 13 •HR 8100 IH ‘‘(i) is described in section 501(c)(3) 1 and exempt from taxation under section 2 501(a), 3 ‘‘(ii) pursuant to State law, was able, 4 as of January 1, 2021, to receive contribu- 5 tions that are eligible for a State tax credit 6 if such contributions are used by the orga- 7 nization to provide scholarships to indi- 8 vidual elementary and secondary students, 9 including scholarships for attending private 10 schools, 11 ‘‘(iii) agrees to allocate at least 905 12 percent of its allotment under subsection 13 (c) to qualifying scholarships on an annual 14 basis, 15 ‘‘(iv) implements robust policies and 16 procedures to prevent waste, fraud, and 17 abuse in the program that it administers, 18 and 19 ‘‘(v) provides qualifying scholarships 20 to— 21 ‘‘(I) more than 1 eligible student, 22 ‘‘(II) [Text truncated for display. Full text available on Congress.gov.]