Do you pay corporate income tax to the state of Arizona? A revolutionary and exciting opportunity has been made available to you through a new provision in the Arizona state tax code! The Corporate Income Tax Credit Program has already given hope to so many children and continues to be an integral part of Arizona’s school choice movement. Consider this…
A Win-Win Opportunity
Did you know that Arizona is leading the nation in tuition tax credit opportunities for both individuals and corporations? In 2006, the Arizona Corporation School Tuition Tax Credit Law, A.R.S. Section 43-1183 was passed to allow corporations to receive a dollar-for-dollar tax credit against the state income tax they owe to help children in low income families receive a quality private education! Eligible corporations must pay corporate state income tax and the credit must be less than or equal to the actual amount they will pay to the state of Arizona. There is an annual state-wide cap of $17.28 million for the 2009-2010 school year that is allocated on a first-come-first-serve basis. There is no set maximum contribution for the corporation.
Taking the Credit
- Corporations interested in making a tax credit contribution should contact APESF directly at 480-699-8911 or helpdesk@apesf.org and complete the Corporate Tax Credit Contribution Form.
- APESF will submit an approval request for the contribution to the AZ Department of Revenue.
- If the state-wide cap has not been met, ADOR will respond within 20 days approving the contribution. Once APESF receives approval notification, the corporation will have 10 days to make payment to APESF. (If payment is not made within 10 days, the contribution will be taken out of the cap and the process must start all over again.)
- The corporation will take the credit on its next tax return, but may carry any unused credit forward for up to five years.
Who Benefits
The Corporate Tax Credit benefits low-income families (income must be below 185% of the federal reduced-priced lunch index). Scholarships are awarded to students switching from public to private school, starting Kindergarten or students who have received a corporate tax credit scholarship in the previous year.
The corporation may recommend a specific school but cannot recommend a specific student. If no eligible students make application to APESF from the recommended school or if the recommended school is not considered a qualified school under tax credit law, the funds will be awarded to eligible students in other qualified schools. The corporate tax cap will increase by 20% per year till 2011.
This is truly the easiest donation you can make…no net cost to the company and Arizona’s children reap the benefits for a lifetime!
Frequently Asked Questions
What corporations are eligible for the tax credit program?
Any corporation that pays Arizona corporate state income tax is eligible to take the credit. C corporations are eligible but not LLC’s and most Subchapter S businesses. Please consult your tax advisor for more information.
How much can a corporation take as a tax credit in a given tax year?
A corporation can take the full amount of the credit for as much as they will be paying in actual tax to the state of Arizona, provided they have the cash flow to make the donation.
How does the corporate tax credit program differ from the individual tax credit program?
Their are differences in the two such as the state-wide cap of $17.28 million from July 2009 – June 2010, making a pre-approval process necessary. There are also limitations as to which private schools and students are eligible and the scholarship amount a child can receive.
Can the corporation recommend a specific student or school?
The corporation can recommend a specific school but cannot recommend a specific student. If no eligible students make application to APESF from the recommended school or if the school is not considered a qualified school under tax credit law, the funds will be awarded to eligible students in other qualified schools.