Educational Improvement Tax Credit (EITC) & Opportunity Scholarship Tax Credit Program (OSTC)
There are two important changes to the EITC and OSTC programs that you need to be aware of as you complete the 2013 credit applications. First, business applicants who have fulfilled their two- year commitment for the 2012/2013 fiscal year and wish to renew their two-year commitment in the 2013/2014 fiscal year can now apply starting May 15. Previously any new applicants or applicants wishing to renew had to apply starting July 1. Secondly, the process to submit applications has changed. An online application is now required; no paper applications will be accepted.
May 15 continues to be the application date for a business in year two of their two year commitment. All other businesses must apply starting on July 1. This includes all EITC Pre-Kindergarten applications.
All credit applications must be submitted online using the Single Application for Assistance created by the Department of Community and Economic Development (DCED). The DCED created a step-by-step guide, with screen shots, for completing the online application, including log-in instructions. You will be required to register an online user name and password to complete the application. This is a one-time registration. This guide can be located by clicking on this link: http://newpa.com/sites/default/files/uploads/OSTC-EITC_Handbook2013.pdf. When completing the electronic single application only items marked with a red diamond are required to be completed. The link to the application can be found at: https://www.esa.dced.state.pa.us/Login.aspx.
A hard copy signature page must be printed from the online application, signed and submitted to the PA DCED within 15 days of submission in order for the application to be considered for tax credits. The signature page gets mailed to the following address:
Commonwealth Keystone Building
Attn: Customer Service Center
400 North Street, 4th Floor
Harrisburg, PA 17120-0225
Highlights of the tax credits are contained below:
A business can receive a PA tax credit equal to 90% of a qualifying contribution if the business agrees to provide the same amount of funding for two consecutive years. The tax credit is reduced to 75% of the qualifying contribution for a one year commitment.
EITC Pre-Kindergarten credits generate tax credits equal to 100% of the first $10,000 contributed and 90% of the remaining amount contributed up to the maximum credit allowed.
EITC and OSTC credits can be utilized to offset corporate net income tax, capital stock tax, the personal income tax of S-Corporation shareholders or partnership partners, and a few other state taxes.
Eligible entity types to donate to an EITC or OSTC organization include, Partnerships, LLCs (including single member LLCs), S Corporations and C Corporations. Sole proprietors and individuals are not eligible to utilize these credit programs.
The list of qualifying organizations to receive EITC contributions can be found at the following links:
Scholarship organization (SO): http://www.newpa.com/webfm_send/3143
Education improvement organization (EIO): http://www.newpa.com/webfm_send/3145
Pre-Kindergarten scholarship organization (Pre-K): http://www.newpa.com/webfm_send/3144
The Opportunity Scholarship Tax Credit (OSTC) provides tuition assistance in the form of scholarships to eligible students residing within the boundaries of a low achieving school to attend another public school outside their school district or a private school. A low achieving school is defined as a public elementary or secondary school ranking in the bottom 15% of their designation as an elementary or secondary school based on the combined math and reading PA System of School Assessment (PSSA) scores. A number of organizations qualified to receive OSTC contributions are the same qualifying organizations under the EITC but the funding is designated for slightly different purposes as just explained. The list of qualifying opportunity scholarship organizations can be found by following this link: http://www.newpa.com/webfm_send/3127.
Please contact your trusted Simon Lever LLP advisor if you have any questions pertaining to how these credits may benefit you or your business and to determine what amount to apply for.
You can also contact Michael Stoltzfus or Kurtis Groff at 717-569-7081 for additional assistance.