AB364 - Revises provisions governing the Nevada Educational Choice Scholarship Program. (BDR 34-1082)

A.B. 364 - *AB364* ASSEMBLY BILL NO. 364–ASSEMBLYMEMBER ANDERSON MARCH 4, 2025 ____________ Referred to Committee on Revenue SUMMARY—Revises provisions governing the Nevada Educational Choice Scholarship Program. (BDR 34-1082) FISCAL NOTE: Effect on Local Government: No. Effect on the State: No. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to taxation; revising the pupils on whose behalf a scholarship organization is authorized to provide a grant under the Nevada Education Choice Scholarship Program; requiring a scholarship organization to notify the Department of Taxation if there are no pupils on whose behalf the scholarship organization is authorized to provide a grant; prohibiting the Department from approving applications for tax credits under the Program made by such a scholarship organization; requiring a scholarship organization to repay certain tax credits under certain circumstances; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Under existing law, financial institutions, certain mining businesses and other 1 employers are required to pay an excise tax (the modified business tax) on the 2 wages paid by them. (NRS 363A.130, 363B.160) Existing law establishes a credit 3 against the modified business tax paid by certain businesses equal to an amount 4 which is approved by the Department of Taxation and which must not exceed the 5 amount of any donation of money which is made by a taxpayer to a scholarship 6 organization that provides grants on behalf of pupils who are members of a 7 household with a household income which is not more than 300 percent of the 8 federally designated level signifying poverty to attend schools in this State, 9 including private schools, chosen by the parents or legal guardians of those pupils. 10 (NRS 363A.130, 363A.139, 363B.110, 363B.119, 388D.270) Section 1 of this bill: 11 (1) prohibits a scholarship organization from using a donation for which the donor 12 received a tax credit to provide a grant on behalf of a pupil unless the scholarship 13 organization also used a donation for which a donor received a tax credit to provide 14 – 2 – - *AB364* a grant on behalf of the pupil for the immediately preceding school year at the same 15 school; and (2) requires a scholarship organization to repay the amount of any tax 16 credit approved by the Department if the scholarship organization violates this 17 provision. Section 1 requires a scholarship organization to notify the Department if 18 there ceases to be any pupil on whose behalf the scholarship organization is 19 authorized to make a grant. Sections 2 and 3 of this bill prohibit the Department 20 from approving an application for a tax credit made by a scholarship organization 21 that has provided or is required to provide this notification. Section 1 requires a 22 scholarship organization which, at the time it is required to provide this 23 notification, has not expended all of the donations for which a tax credit was 24 received by a taxpayer to repay to the Department the tax credits received in an 25 amount equal to the amount of the unexpended donations. 26 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. NRS 388D.270 is hereby amended to read as 1 follows: 2 388D.270 1. A scholarship organization must: 3 (a) Be exempt from taxation pursuant to section 501(c)(3) of the 4 Internal Revenue Code, 26 U.S.C. § 501(c)(3). 5 (b) Not own or operate any school in this State, including, 6 without limitation, a private school, which receives any grant money 7 pursuant to the Nevada Educational Choice Scholarship Program. 8 (c) Accept donations from taxpayers and other persons and may 9 also solicit and accept gifts and grants. 10 (d) Not expend more than 5 percent of the total amount of 11 money accepted pursuant to paragraph (c) to pay its administrative 12 expenses. 13 (e) Provide grants on behalf of pupils who are members of a 14 household that has a household income which is not more than 300 15 percent of the federally designated level signifying poverty to allow 16 those pupils to attend schools in this State chosen by the parents or 17 legal guardians of those pupils, including, without limitation, private 18 schools. The total amount of a grant provided by the scholarship 19 organization on behalf of a pupil pursuant to this paragraph must not 20 exceed $7,755 for Fiscal Year 2015-2016. 21 (f) Not limit to a single school the schools for which it provides 22 grants. 23 (g) Except as otherwise provided in paragraph (e) [,] and 24 subsection 6, not limit to specific pupils the grants provided 25 pursuant to [that] paragraph [.] (e). 26 2. The maximum amount of a grant provided by the 27 scholarship organization pursuant to paragraph (e) of subsection 1 28 must be adjusted on July 1 of each year for the fiscal year beginning 29 that day and ending June 30 in a rounded dollar amount 30 – 3 – - *AB364* corresponding to the percentage of increase in the Consumer Price 1 Index (All Items) published by the United States Department of 2 Labor for the preceding calendar year. On May 1 of each year, the 3 Department of Education shall determine the amount of increase 4 required by this subsection, establish the adjusted amounts to take 5 effect on July 1 of that year and notify each scholarship organization 6 of the adjusted amounts. The Department of Education shall also 7 post the adjusted amounts on its Internet website. 8 3. A grant provided on behalf of a pupil pursuant to subsection 9 1 must be paid directly to the school chosen by the parent or legal 10 guardian of the pupil. 11 4. A scholarship organization shall provide each taxpayer and 12 other person who makes a donation, gift or grant of money to the 13 scholarship organization pursuant to paragraph (c) of subsection 1 14 with an affidavit, signed under penalty of perjury, which includes, 15 without limitation: 16 (a) A statement that the scholarship organization satisfies the 17 requirements set forth in subsection 1; and 18 (b) The total amount of the donation, gift or grant made to the 19 scholarship organization. 20 5. Each school in which a pupil is enrolled for whom a grant is 21 provided by a scholarship organization shall maintain a record of the 22 academic progress of the pupil. The record must be maintained in 23 such a manner that the information may be aggregated and reported 24 for all such pupils if reporting is required by the regulations of the 25 Department of Education. 26 6. A scholarship organization shall not use a donation for 27 which a taxpayer received a tax credit pursuant to NRS 363A.139 28 or 363B.119 to provide a grant pursuant to this section on behalf 29 of a pupil unless the scholarship organization used a donation for 30 which a taxpayer received a tax credit pursuant to NRS 363A.139 31 or 363B.119 to provide a grant pursuant to this section on behalf 32 of the pupil for the immediately preceding school year for the 33 same school. A scholarship organization that violates this 34 subjection shall repay to the Department of Taxation the amount 35 of the tax credit received by the taxpayer pursuant to NRS 36 363A.139 or 363B.119, as applicable. 37 7. If, pursuant to subsection 6, there ceases to be any pupil on 38 whose behalf a scholarship organization is authorized to provide a 39 grant, the scholarship organization shall notify the Department of 40 Taxation of that fact. If a scholarship organization has not, at that 41 time, expended all of the donations for which a taxpayer received 42 a tax credit pursuant to NRS 363A.139 or 363B.119, the 43 scholarship organization shall repay to the Department of 44 Taxation an amount of the tax credit received by taxpayers 45 – 4 – - *AB364* pursuant to NRS 363A.139 or 363B.119 which is equal to the 1 amount of such donations that were not expended by the 2 scholarship organization. 3 8. The Department of Education: 4 (a) Shall adopt regulations prescribing the contents of and 5 procedures for applications for grants provided pursuant to 6 subsection 1. 7 (b) May adopt such other regulations as the Department 8 determines necessary to carry out the provisions of this section. 9 [7.] 9. As used in this section, “private school” has the 10 meaning ascribed to it in NRS 394.103. 11 Sec. 2. NRS 363A.139 is hereby amended to read as follows: 12 363A.139 1. Any taxpayer who is required to pay a tax 13 pursuant to NRS 363A.130 may receive a credit against the tax 14 otherwise due for any donation of money made by the taxpayer to a 15 scholarship organization in the manner provided by this section. 16 2. To receive the credit authorized by subsection 1, a taxpayer 17 who intends to make a donation of money to a scholarship 18 organization must, before making such a donation, notify the 19 scholarship organization of the taxpayer’s intent to make the 20 donation and to seek the credit authorized by subsection 1. A 21 scholarship organization shall, before accepting any such donation, 22 apply to the Department of Taxation for approval of the credit 23 authorized by subsection 1 for the donation. The Department of 24 Taxation shall, within 20 days after receiving the application, 25 approve or deny the application and provide to the scholarship 26 organization notice of the decision and, if the application is 27 approved, the amount of the credit authorized. Upon receipt of 28 notice that the application has been approved, the scholarship 29 organization shall provide notice of the approval to the taxpayer 30 who must, not later than 30 days after receiving the notice, make the 31 donation of money to the scholarship organization. If the taxpayer 32 does not make the donation of money to the scholarship 33 organization within 30 days after receiving the notice, the 34 scholarship organization shall provide notice of the failure to the 35 Department of Taxation and the taxpayer forfeits any claim to 36 the credit authorized by subsection 1. 37 3. The Department of Taxation shall approve or deny 38 applications for the credit authorized by subsection 1 in the order in 39 which the applications are received. The Department of Taxation 40 shall not approve an application for the credit authorized by 41 subsection 1 made by a scholarship organization which has 42 provided or is required to provide the notice described in 43 subsection 7 of NRS 388D.270. 44 – 5 – - *AB364* 4. Except as otherwise provided in subsection 5, the 1 Department of Taxation may, for each fiscal year, approve 2 applications for the credit authorized by subsection 1 until the total 3 amount of the credits authorized by subsection 1 and approved by 4 the Department of Taxation pursuant to this subsection and 5 subsection 4 of NRS 363B.119 is $6,655,000. The amount of any 6 credit which is forfeited pursuant to subsection 2 must not be 7 considered in calculating the amount of credits authorized for any 8 fiscal year. 9 5. Except as otherwise provided in this subsection, in addition 10 to the amount of credits authorized by subsection 4 for Fiscal Years 11 2019-2020, 2020-2021 and 2021-2022, the Department of Taxation 12 may approve applications for the credit authorized by subsection 1 13 for each of those fiscal years until the total amount of the credits 14 authorized by subsection 1 and approved by the Department of 15 Taxation pursuant to this subsection and subsection 5 of NRS 16 363B.119 is $4,745,000. The provisions of subsection 4 do not 17 apply to the amount of credits authorized by this subsection and the 18 amount of credits authorized by this subsection must not be 19 considered when determining the amount of credits authorized for a 20 fiscal year pursuant to subsection 4. If, in Fiscal Year 2019-2020, 21 2020-2021 or 2021-2022, the amount of credits authorized by 22 subsection 1 and approved pursuant to this subsection and 23 subsection 5 of NRS 363B.119 is less than $4,745,000, the 24 remaining amount of credits pursuant to this subsection and 25 subsection 5 of NRS 363B.119 must be carried forward and made 26 available for approval during subsequent fiscal years until the total 27 amount of credits authorized by subsection 1 and approved pursuant 28 to this subsection and subsection 5 of NRS 363B.119 is equal to 29 $14,235,000. The amount of any credit which is forfeited pursuant 30 to subsection 2 must not be considered in calculating the amount of 31 credits authorized pursuant to this subsection. 32 6. If a taxpayer applies to and is approved by the Department 33 of Taxation for the credit authorized by subsection 1, the amount of 34 the credit provided by this section is equal to the amount approved 35 by the Department of Taxation pursuant to subsection 2, which must 36 not exceed the amount of the donation made by the taxpayer to a 37 scholarship organization. The total amount of the credit applied 38 against the taxes described in subsection 1 and otherwise due from a 39 taxpayer must not exceed the amount of the donation. 40 7. If the amount of the tax described in subsection 1 and 41 otherwise due from a taxpayer is less than the credit to which the 42 taxpayer is entitled pursuant to this section, the taxpayer may, after 43 applying the credit to the extent of the tax otherwise due, carry the 44 balance of the credit forward for not more than 5 years after the end 45 – 6 – - *AB364* of the calendar year in which the donation is made or until the 1 balance of the credit is applied, whichever is earlier. 2 8. As used in this section, “scholarship organization” has the 3 meaning ascribed to it in NRS 388D.260. 4 Sec. 3. NRS 363B.119 is hereby amended to read as follows: 5 363B.119 1. Any taxpayer who is required to pay a tax 6 pursuant to NRS 363B.110 may receive a credit against the tax 7 otherwise due for any donation of money made by the taxpayer to a 8 scholarship organization in the manner provided by this section. 9 2. To receive the credit authorized by subsection 1, a taxpayer 10 who intends to make a donation of money to a scholarship 11 organization must, before making such a donation, notify the 12 scholarship organization of the taxpayer’s intent to make the 13 donation and to seek the credit authorized by subsection [Text truncated for display. Full text available on LegiScan.]