2023 -- H 5804

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO TAXATION -- TAX CREDITS FOR CONTRIBUTIONS TO SCHOLARSHIP

ORGANIZATIONS

     Introduced By: Representatives Rea, Hull, J. Brien, Casey, Edwards, Quattrocchi,
Newberry, Place, Nardone, and Chippendale

     Date Introduced: February 22, 2023

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 44-62-3 and 44-62-6 of the General Laws in Chapter 44-62 entitled

"Tax Credits for Contributions to Scholarship Organizations" are hereby amended to read as

follows:

     44-62-3. Application for the tax credit program.

     (a) Prior to the contribution, a business entity shall apply in writing to the division of

taxation. The application shall contain such information and certification as the tax administrator

deems necessary for the proper administration of this chapter. A business entity shall be approved

if it meets the criteria of this chapter; the dollar amount of the applied for tax credit is no greater

than one hundred thousand dollars ($100,000) in any tax year, and the scholarship organization that

is to receive the contribution has qualified under § 44-62-2.

     (b) Approvals for contributions under this section shall be made available by the division

of taxation on a first-come-first-serve basis consistent with § 44-62-3(f). The total aggregate

amount of all tax credits approved shall not exceed one million five hundred thousand dollars

($1,500,000) in a fiscal year; provided that, the total aggregate amount of all tax credits approved

shall not exceed five million dollars ($5,000,000) in fiscal year 2024 and shall thereafter increase

by fifteen percent (15%) following any fiscal year in which applications by eligible business entities

exceed approved contributions by ten percent (10%).

     (c) The division of taxation shall notify the business entity in writing within thirty (30)

days of the receipt of application of the division’s approval or rejection of the application.

     (d) Unless the contribution is part of a two-year plan, the actual cash contribution by the

business entity to a qualified scholarship organization must be made no later than one hundred

twenty (120) days following the approval of its application. If the contribution is part of a two-year

plan, the first year’s contribution follows the general rule and the second year’s contribution must

be made in the subsequent calendar year by the same date.

     (e) The contributions must be those charitable contributions made in cash as set forth in

the Internal Revenue Code.

     (f) Approvals shall be made available first to applications for the continued participation

of eligible students already attending qualified schools through the scholarship program described

in this section, provided that the division of taxation may treat any contribution amount from a

single business entity to support additional scholarships as a separate application.

     44-62-6. Definitions.

     The following words and phrases used in this chapter shall have the meanings given to

them in this section unless the context clearly indicates otherwise:

     (1) “Business entity” means an entity authorized to do business in this state and subject to

taxes imposed under chapters 44-11, 44-13, 44-14, 44-15 and 44-17 of the general laws. Business

entities also include Subchapter S Corporations, Limited Liability Partnerships, and Limited

Liability Corporations.

     (2) “Division of taxation” means the Rhode Island division of taxation.

     (3) "Eligible business entity" means any business entity whose application to make a

contribution to the program created by this section would be approved if said approval would not

exceed the limit described in § 44-62-3(b).

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- TAX CREDITS FOR CONTRIBUTIONS TO SCHOLARSHIP

ORGANIZATIONS

***

     This act would increase the total aggregate amount of tax credits for contributions to

scholarship organizations by a business entity meeting the requisite criteria to five million dollars

($5,000,000) in fiscal year 2024. This act would also include a new definition for an "eligible

business entity".

     This act would take effect upon passage.

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