SENATE BILL 113

50th legislature - STATE OF NEW MEXICO first session, 2011

INTRODUCED BY

Mark Boitano

AN ACT

RELATING TO TAXATION; PROVIDING A PERSONAL INCOME TAX CREDIT FOR CONTRIBUTIONS MADE TO CERTAIN ORGANIZATIONS THAT PROVIDE TUITION SCHOLARSHIPS FOR STUDENTS TO ATTEND NONGOVERNMENTAL SCHOOLS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of the Income Tax Act is enacted to read:

     "[NEW MATERIAL] TUITION SCHOLARSHIP TAX CREDIT.--

          A. A taxpayer who files an individual New Mexico income tax return and is not a dependent of another taxpayer may claim a credit for a contribution made to a school tuition organization if a receipt has been received from the organization certifying that the contribution will be used for educational scholarships or tuition grants for one or more children. The credit may be claimed in an amount equal to the total contributions made by the taxpayer during the taxable year for which the credit is claimed but shall not exceed five hundred dollars ($500) in a taxable year. The credit provided in this section may be referred to as the "tuition scholarship tax credit".

          B. The purpose of the tuition scholarship tax credit is to encourage individuals and businesses to contribute money to school tuition organizations that provide scholarships or grants for students to attend nongovernmental schools chosen by the students' parents.

          C. The tuition scholarship tax credit shall not be allowed for a contribution that is included in the taxpayer's itemized deductions, as defined in Section 63 of the Internal Revenue Code for the taxable year.

          D. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the tuition scholarship tax credit that would have been allowed on a joint return.

          E. The tuition scholarship tax credit may only be deducted from the taxpayer's New Mexico income tax liability for the taxable year in which the contribution was made.

          F. The department shall provide a standardized receipt to be issued by a school tuition organization to indicate the tuition scholarship tax credit value of a contribution to the school tuition organization. The department shall require a taxpayer claiming the tuition scholarship tax credit to submit a copy of the receipt with the taxpayer's claim for the credit.

          G. The department shall compile a report annually for the revenue stabilization and tax policy committee that sets forth the number of taxpayers approved to receive tuition scholarship tax credits, the aggregate amount of tuition scholarship tax credits approved and the average and median amounts of tuition scholarship tax credits approved. The department shall determine every four years beginning in 2015 whether the tuition scholarship tax credit is achieving the purpose for which it was created.

          H. Acceptance of the tuition scholarship tax credit is authorization to the department to disclose the amount of the tax credit claimed by the taxpayer as needed to report fully as required by this section to the revenue stabilization and tax policy committee of the legislature.

          I. As used in this section:

                (1) "nongovernmental school" means a not-for-profit or for-profit elementary, middle or secondary school;

                (2) "qualified school" means an accredited nongovernmental elementary, middle or secondary school in New Mexico;

                (3) "school tuition organization" means an organization that:

                     (a) demonstrates to the department that it has been granted exemption from the federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code;

                     (b) provides financial assistance for the education of children in the form of educational scholarships or tuition grants to students allowing them to attend any qualified school of their parents' choice; and

                     (c) expends one hundred percent of its tax-credit-qualifying revenues for educational scholarships or tuition grants for children enrolled in qualified schools; and

                (4) "tax-credit-qualifying revenue" means a contribution to a school tuition organization for which a receipt has been issued by the school tuition organization pursuant to this section to the donor of the contribution."

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