AB441 - Revises provisions governing the Nevada Educational Choice Scholarship Program. (BDR 32-6)

- 83rd Session (2025) Assembly Bill No. 441–Assemblymember Monroe-Moreno CHAPTER.......... AN ACT relating to taxation; revising provisions governing the applications for a tax credit under the Nevada Educational Choice Scholarship Program; requiring a scholarship organization to use a donation for which a tax credit was received under the Program within a certain time after the application for the tax credit was approved; requiring a scholarship organization to be a domestic nonprofit corporation; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law imposes a payroll tax on: (1) financial institutions and on mining companies subject to the tax on the net proceeds of minerals, with the rate of the payroll tax set at 2 percent of the amount of the wages, as defined under existing law, paid by the financial institution or mining company during each calendar quarter in connection with its business activities; and (2) other business entities, with the rate of the payroll tax set at 1.475 percent of the amount of the wages, as defined under existing law but excluding the first $50,000 thereof, paid by the business entity during each calendar quarter in connection with business activities. (NRS 363A.030, 363A.130, 363B.110, 612.190) Existing law provides a credit against the payroll tax equal to an amount which must not exceed the amount of any donation of money which is made by a taxpayer to a scholarship organization that provides grants on behalf of pupils who are members of a household with a household income below a certain level to attend schools in this State, including private schools, chosen by the parents or legal guardians of those pupils. (NRS 363A.130, 363B.110, 388D.270) Existing law requires a scholarship organization, before accepting a donation on behalf of a taxpayer, to apply to the Department of Taxation for approval of the tax credit for the donation. Existing law requires the Department to approve or deny applications in the order in which the applications are received. (NRS 363A.139, 363B.119) Sections 1 and 2 of this bill require applications for approval of the tax credits to be made between May 1 and June 1 of each year and require the Department to review and approve applications on or before July 1 of each year. Sections 1 and 2 require each application to include certain information, including information about the number of pupils meeting certain criteria who have applied to the scholarship organization for a grant for the upcoming school year and the cost to provide a grant to each such pupil. Sections 1 and 2 require the Department to approve applications for the tax credit: (1) first, up to an amount that would allow every scholarship organization to make a grant to every pupil who applied for a grant and received a grant for the immediately preceding school year; (2) second, up to an amount that would allow every scholarship organization to make a grant to every pupil who applied for a grant and is the sibling of a pupil who received a grant for the immediately preceding school year; and (3) finally, up to an amount that would allow every scholarship organization to make a grant to every pupil who applied for a grant and is not in one of the previous two categories. If sufficient tax credits are not available to provide a grant to every pupil in a particular category, sections 1 and 2 require the tax credits to be allocated among the scholarship organizations on a pro rata basis – 2 – - 83rd Session (2025) according to the number of pupils in that category who applied to the scholarship organization. Sections 1 and 2 require a scholarship organization to expend the entire amount of any donation for which a taxpayer receives a tax credit not later than 24 months after the date on which the application for the tax credit was approved by the Department. Sections 1 and 2 require a scholarship organization that does not expend the entire amount of a donation within this time period to repay to the Department the tax credit that was allowed for the donation in an amount equal to the amount of the donation that was not expended. Existing law authorizes one or more natural persons to associate to establish a nonprofit corporation under the laws of this State. (Chapter 82 of NRS) Section 2.5 of this bill requires a scholarship organization to be a domestic nonprofit corporation. EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. NRS 363A.139 is hereby amended to read as follows: 363A.139 1. Any taxpayer who is required to pay a tax pursuant to NRS 363A.130 may receive a credit against the tax otherwise due for any donation of money made by the taxpayer to a scholarship organization in the manner provided by this section. 2. To receive the credit authorized by subsection 1, a taxpayer who intends to make a donation of money to a scholarship organization must, before making such a donation, notify the scholarship organization of the taxpayer’s intent to make the donation and to seek the credit authorized by subsection 1. A scholarship organization shall, before accepting any such donation, apply to the Department of Taxation for approval of the credit authorized by subsection 1 for the donation. [The] 3. Not earlier than May 1 and not later than June 1 of each year, a scholarship organization must submit to the Department of Taxation [shall, within 20 days after receiving the application, approve or deny the application and] any applications for approval of the credits authorized by subsection 1 for the subsequent fiscal year. Each application must include, without limitation: (a) The number of pupils who have applied for a grant from the scholarship organization for the upcoming school year: (1) On whose behalf a grant was awarded by the scholarship organization for the school year immediately preceding the upcoming school year. – 3 – - 83rd Session (2025) (2) Who are the siblings of a pupil on whose behalf a grant was awarded by the scholarship organization for the school year immediately preceding the upcoming school year. (3) Who are not a pupil described by subparagraph (1) or (2). (b) The total amount of money which would be required for the scholarship organization to award a grant on behalf of all the pupils who applied to the scholarship organization for a grant for the upcoming school year, stated separately for each category of pupil listed in subparagraphs (1), (2) and (3) of paragraph (a). (c) Such other information as the Department may require. 4. On or before July 1 of each year, the Department shall review all the applications submitted pursuant to subsection 3 and provide to [the] each scholarship organization which submitted an application notice of [the decision] whether the application was approved or denied and, if the application is approved, the amount of the credit authorized. If the total amount of credits for which approval is requested by all the applications submitted to the Department during the application period exceeds the amount of credits available for the fiscal year pursuant to this section and NRS 363B.119, applications must be approved according to the following order of priority: (a) Applications must be approved up to the amount necessary to allow each scholarship organization to provide a grant to every pupil described by subparagraph (1) of paragraph (a) of subsection 3. If the total amount of credits which the Department is authorized to approve is insufficient to allow each scholarship organization to provide a grant to every pupil described by subparagraph (1) of paragraph (a) of subsection 3, the Department must approve applications such that the credits are allocated among all the scholarship organizations which submitted applications on a pro rata basis according to the number of pupils in this category who applied to the scholarship organization for a grant. (b) If, after approving applications pursuant to paragraph (a), the Department has not authorized the full amount of the credits available for the fiscal year, the Department shall approve applications submitted by scholarship organizations up to the amount necessary to allow each scholarship organization to provide a grant to every pupil described by subparagraph (2) of paragraph (a) of subsection 3. If the total amount of credits which the Department is authorized to approve is insufficient to allow each scholarship organization to provide a grant to every pupil – 4 – - 83rd Session (2025) described by subparagraph (2) of paragraph (a) of subsection 3, the Department must approve applications such that the credits are allocated among all the scholarship organizations which submitted applications on a pro rata basis according to the number of pupils in this category who applied to the scholarship organization for a grant. (c) If, after approving applications pursuant to paragraphs (a) and (b), the Department has not authorized the full amount of the credits available for the fiscal year, the Department shall approve applications submitted by each scholarship organization up to the amount necessary to allow each scholarship organization to provide a grant to every pupil described by subparagraph (3) of paragraph (a) of subsection 3. If the total amount of credits which the Department is authorized to approve is insufficient to allow each scholarship organization to provide a grant to every pupil described by subparagraph (3) of paragraph (a) of subsection 3, the Department must approve applications such that the credits are allocated among all the scholarship organizations which submitted applications on a pro rata basis according to the number of pupils in this category who applied to the scholarship organization for a grant. 5. Upon receipt of notice that the application has been approved, the scholarship organization shall provide notice of the approval to the taxpayer who must, not later than 30 days after receiving the notice, make the donation of money to the scholarship organization. If the taxpayer does not make the donation of money to the scholarship organization within 30 days after receiving the notice, the scholarship organization shall provide notice of the failure to the Department of Taxation and the taxpayer forfeits any claim to the credit authorized by subsection 1. [3. The Department of Taxation shall approve or deny applications for the credit authorized by subsection 1 in the order in which the applications are received. 4.] 6. Except as otherwise provided in subsection [5,] 7, the Department of Taxation may, for each fiscal year, approve applications for the credit authorized by subsection 1 until the total amount of the credits authorized by subsection 1 and approved by the Department of Taxation pursuant to this subsection and subsection [4] 6 of NRS 363B.119 is $6,655,000. The amount of any credit which is forfeited pursuant to subsection 2 must not be considered in calculating the amount of credits authorized for any fiscal year. – 5 – - 83rd Session (2025) [5.] 7. Except as otherwise provided in this subsection, in addition to the amount of credits authorized by subsection [4] 6 for Fiscal Years 2019-2020, 2020-2021 and 2021-2022, the Department of Taxation may approve applications for the credit authorized by subsection 1 for each of those fiscal years until the total amount of the credits authorized by subsection 1 and approved by the Department of Taxation pursuant to this subsection and subsection [5] 7 of NRS 363B.119 is $4,745,000. The provisions of subsection [4] 6 do not apply to the amount of credits authorized by this subsection and the amount of credits authorized by this subsection must not be considered when determining the amount of credits authorized for a fiscal year pursuant to subsection [4.] 6. If, in Fiscal Year 2019-2020, 2020-2021 or 2021-2022, the amount of credits authorized by subsection 1 and approved pursuant to this subsection and subsection [5] 7 of NRS 363B.119 is less than $4,745,000, the remaining amount of credits pursuant to this subsection and subsection [5] 7 of NRS 363B.119 must be carried forward and made available for approval during subsequent fiscal years until the total amount of credits authorized by subsection 1 and approved pursuant to this subsection and subsection [5] 7 of NRS 363B.119 is equal to $14,235,000. The amount of any credit which is forfeited pursuant to subsection 2 must not be considered in calculating the amount of credits authorized pursuant to this subsection. [6.] 8. If a taxpayer applies to and is approved by the Department of Taxation for the credit authorized by subsection 1, the amount of the credit provided by this section is equal to the amount approved by the Department of Taxation pursuant to subsection 2, which must not exceed the amount of the donation made by the taxpayer to a scholarship organization. The total amount of the credit applied against the taxes described in subsection 1 and otherwise due from a taxpayer must not exceed the amount of the donation. [7.] 9. If the amount of the tax described in subsection 1 and otherwise due from a taxpayer is less than the credit to which the taxpayer is entitled pursuant to this section, the taxpayer may, after applying the credit to the extent of the tax otherwise due, carry the balance of the credit forward for not more than 5 years after the end of the calendar year in which the donation is made or until the balance of the credit is applied, whichever is earlier. [8.] 10. A scholarship organization shall expend the entire amount of any donation for which a taxpayer received a tax credit pursuant to this section not later than 24 months after the date on which the application for the tax credit was approved pursuant to – 6 – - 83rd Session (2025) subsection 2. A scholarship organization shall repay to the Department of Taxation the amount of any tax credit which was authorized and approved pursuant to this section and for which the underlying donation was not expended within the time required by this subsection. The amount of the credit which the scholarship organization is required to repay pursuant to this subsection shall be equal to the amount of the donation that was not expended within the time required. 11. As used in this section, “scholarship organization” has the meaning ascribed to it in NRS 388D.260. Sec. 2. NRS 363B.119 is hereby amended to read as fo [Text truncated for display. Full text available on LegiScan.]