New EITC Delay Law Means Less Donations for School Scholarships

April EITC Law Signed

2019 Individual SPE Donors PA Tax Refund Update

Senate Bill 841 signed by Governor Wolf April 2020 includes delays for existing donors in use of eitc awards.

Subchapter C - Educational Tax Credit
This subchapter provides that the requirement in the Public School Code that business firms make a contribution to a scholarship organization, prekindergarten scholarship organization, opportunity scholarship organization or educational improvement organization no later than 60 days following the approval of an application for an educational tax credit is extended until the end of the business firm’s applicable tax year. Proof of the contribution shall be provided to DCED within 30 days of the date the contribution was made. Business firms fulfilling year two of a two-year commitment shall be permitted to receive a tax credit of up to 90% of the amount contributed in year two. The department is prohibited from reducing the credit authorized in year one of the two-year commitment, if the year two contribution is less that the year one contribution.
These provisions are applicable only to the tax years affected by the COVID-19 disaster emergency.

For EITC donors this new law keeps them in the program at 90% and even with a tiny donation of $20 allows for future increased existing donor increases.  However any unused EITC tax credits are lost and cannot be reallocated in calendar year 2020.  With no new credits available to new donors the process of being a new EITC donor for 2020 is going to entirely rely on existing capacity and openness of special purpose entities like Central Pennsylvania Scholarship Fund and BLOCS to name the largest SPE groups.

If you have any questions about the new law for your existing EITC donor please reach out to us.

July is when you can begin requesting 2019 individual refunds from your SPE contributions and 2019 tax filing.  More patience may be required this year as Pa Department of Revenue employees are just returning to work after a long hiatus due to Covid.  All CPSF K-1s were mailed in February and 2019 1123s were processed by Pennsylvania.  The specific instructions for getting to top of Pa refund list have not changed and are available in July 2019 blog post.