The Pennsylvania Education Improvement Tax Credit (“EITC”) provides scholarships to low-income students and is funded through corporate contributions, for which businesses receive a tax credit.
Corporations may submit their applications for program fiscal year 2011-12 (July 1, 2011 through June 30, 2012) beginning July 1, 2011. Pass-through entities such as partnerships and S corporations may submit their applications beginning July 8.
Tax credit applications will be processed on a first-come-first-served basis by day submitted. All applications received on a specific day will be processed on a random basis before moving on to the next day's applications. Applications will be approved until the amount of available tax credits is exhausted.
Bills are currently under consideration by the state legislature to raise the EITC amount from $60 million this year to $100 million next year and $200 million in proceeding years. Even without the bill’s passage, the EITC’s cap will increase to $75 million as part of the state budget agreement.
Upon receipt of written notification from the Department that the business has been approved for tax credits, the business must make its contribution to a listed Scholarship Organization and/or Educational Improvement Organization and/or Pre-K Scholarship Organization within 60 days of the date of the letter, and must provide proof of the contribution in the form of a written acknowledgment from the organization, to the Department within 90 days of the date of the approval letter.
Entities eligible to apply for EITC are operating businesses authorized to do business in the Commonwealth of Pennsylvania that are subject to the following taxes: Corporate Net Income Tax, Capital Stock Franchise Tax, Bank and Trust Company Shares Tax, Title Insurance Companies Shares Tax, Insurance Premiums Tax or Mutual Thrift Institutions Tax.
A business will be approved for a tax credit equal to 75% of its contributions to listed organization, up to a maximum of $300,000 per taxable year. The tax credit may be increased to 90% of the contribution made, up to a maximum of $300,000 per taxable year, if the business agrees to provide the same amount of contribution for two consecutive tax years. In order to receive and retain the 90% tax credit, the business must make the same amount of contribution in each of the two consecutive tax years.
For more information or assistance with the PA Education Improvement Tax Credit application, please contact your Schneider Downs Representative.
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