1. Private School Tuition Tax Credit

2. History of Catholic Education Arizona
Formed in July 1998 under the name Catholic Tuition Organization of the Diocese of Phoenix (CTODP), becoming one of the first School Tuition Organizations in Arizona
Changed our name in July 2011 to Catholic Education Arizona (CEA)
Awarded over 96,000 scholarships worth more than $155MM
Fund 37 schools in the Diocese of Phoenix plus Boys Hope Girls Hope and St. Michael Indian School
Qualified IRS 501(c)(3) non-profit charitable organization

3. History of Catholic Education Arizona
Utilize 3rd party financial review (FAIR) to determine financial need
Have never accepted student recommendations for scholarships
We do accept school recommendations from individuals and corporations
Low overhead with a staff of under 6 people
Awarded over 94% of contributions for scholarships in

4. Overview of Private School Tuition Tax Credits
1997: Original Individual Tax Credit (ITC)
ARS §§ ; through 1605
2006: Low-Income Corporate Income Tax Credit (CTC)
ARS §§ ; through 1507; and
2009: Disabled / Displaced Students Tax Credit – Corporate
ARS §§ ; ; through 1507; and
2010: Contribution deadline moved from 12/31 to 4/15
2012: “Switcher” Individual Tax Credit (STC)
ARS §§

5. Overview of ITC First tax credit of its kind in the country
Original credit limits were $250 single / $500 married filing joint return
2016 limits are $545 single filer / $1090 married filer
Any student can qualify
70 participating School Tuition Organizations in Arizona receiving ITC funds
ITC allows student recommendations as one of the criteria for awarding a student
STOs must consider financial need when awarding scholarships and cannot make decisions based solely on donor recommendations
Upheld by U.S. Supreme Court arguing that money never received by the state does not belong to the state.

6. Overview of “Switcher” Tax Credit (STC)
2nd Tax Credit for Individuals passed in 2012
Taxpayers can contribute to both ITC & STC
Focused on students “switching” from public school to private school
2016 limits are $542 single filer / $1084 married
Student recommendations are allowed but cannot be the only criteria for approval

7. Benefits To Individual
Taxpayer chooses how their taxes are spent
Keeps tax $ in local community
Supporting their local Catholic school & parish
Satisfaction of providing a quality Catholic education to someone that could not afford it
Itemized deduction on Federal return

8. The Process – ITC / STC Individual determines amount of contribution
State tax liability
Maximum $1087 single filer / $2173 married
Contribution is made before:
December 31, 2016: state credit & federal deduction (itemized) are in 2016
April 15, 2017 : state credit is in 2016, federal deduction is in 2017
Detailed receipts from CEA are mailed listing tax forms (323 & 348) and amounts for each credit
Over payments can be carried forward as credits for up to 5 years

9. Overview of CTC
Enacted in 2006 to allow C-Corporations to contribute tax liability $ with NO LIMIT
Expanded in 2009 to allow insurance companies to redirect their state premium tax liability (2%)
Further expansion in July 2015 included S-Corps (minimum contribution is $5,000)
State total cap of $61.9MM in , increases by 20% each year
To qualify for a scholarship, household income cannot exceed 185% of Federal Reduced Price Lunch
Cannot recommend individual students, only schools
53% of families qualify statewide

10. Overview of Disabled / Displaced Tax Credit for Corporations
Passed in 2009 to provide scholarships for students with special needs (Section 504), students in foster care, and children of active military members stationed in Arizona
C-Corps, S-Corps, and Insurance companies all qualify
State cap is $5MM with no annual adjustments
No income requirements for families to qualify
Catholic Education Arizona does not participate

11. The Process – CTC Corporation determines amount of contribution
C-Corp = estimated corporate state tax liability for current year
Insurance company = estimated state premium tax liability
S-Corp = Owner’s estimated personal state tax liability
Commitment form is submitted to CEA before June 30
CEA submits applications to Department of Revenue July 1 at 12:00 AM
Department of Revenue notifies CEA of approved applications
Company has 20 calendar days to submit contribution
Company files Form 335 with end of year taxes
S-Corps with multiple owners split the credit based on % ownership

12. Benefits To Corporations
No-cost charitable giving opportunity and a Federal deduction
Meets most corporate giving initiatives (education, low-income community investment)
Provides for a strong workforce
S-Corp owners can potentially contribute their entire personal tax liability

13. Common Objections I don’t pay state taxes / I get a refund
I already donate to the Public School Tax Credit (or any other tax credit)
My company is a LLC
My company is based in another state
It sounds too good to be true

14. MYTH: It takes away money from the public schools
Program saves the state money and prevents overcrowding
99% of Catholic schools students graduate
97% continue to college
College graduate = $660,000 to the economy
Fewer high school dropouts = less social services