What is the Educational Improvement Tax Credit (EITC)?
Pennsylvania is one of sixteen states that awards tax credits to eligible businesses contributing to a scholarship organization, an educational improvement organization and/or a pre-kindergarten scholarship organization. Bishop Carroll receives EITC contributions through the Second Century Scholarship Fund, which supports Catholic schools in the Altoona-Johnstown Diocese.
How much has Pennsylvania set aside for this program?
The Commonwealth of PA has designated $60 million for approved scholarship organizations.
How do Bishop Carroll students benefit from your company’s support through the EITC program?
When you designate your contribution for Bishop Carroll, your EITC contribution is directly awarded to qualifying students in the form of financial aid to cover the cost of tuition.
How does the EITC program work?
A tax credit equal to 75 percent of the total contribution may be granted to a business providing proof of a donation during one taxable year. A tax credit equal to 90 percent of the total contribution may be granted if the business provides a written commitment to contribute the same amount for two consecutive years. In many cases, claiming both a PA State tax credit and Federal tax deduction could mean that your donation would result in a nearly 100 percent tax savings for your business for the amount donated. The credit cannot exceed $750,000 per business annually, and must be applied in the taxable year the contribution is made.
What does this mean dollar for dollar to your business?
• You get a unique opportunity to designate where your tax dollars go
• You qualify for state tax credits
• You can also claim a charitable contribution for your business
Can you carry this credit forward or backward?
No. Tax credits must be applied in the taxable year the contribution is made and gifts must be made within 60 days of DCED approval. An exception is made in the case of “pass-through” entities with the required completion of PA form REV-1123.
Is your business eligible?
Entities eligible to apply for EITC are operating business firms authorized to do business in the Commonwealth of Pennsylvania that are subject to the following taxes: Personal Income Tax, Capital Stock/Foreign Franchise Tax, Corporate Net Income Tax, Bank Shares Tax, Title Insurance & Trust Company Shares Tax, Insurance Premiums Tax (excluding surplus lines, unauthorized, domestic/foreign marine), Mutual Thrift Tax, Malt Beverage Tax or Retaliatory Fees under Section 212 of the Insurance Company Law of 1912.
Such business firms include pass-through entities and special purpose pass-through entities. Special purpose pass-through entities are created for the purpose of making contributions under Article XVII-F of the Tax Reform Code of 1971 and whose shareholders, partners or members are composed of owners or employees of other business firms.
You can get more specific details at: www.newpa.com/programs/educational-improvement-tax-credit-program-eitc
What do I need to do to apply?
Simply work with your finance manager or accountant to determine whether your business is eligible. A limited number of tax credits are available each year and not every business that applies is approved or eligible; and applications are processed on a first-come, first-served basis beginning July 1 (for new applicants; renewal applicants are accepted from May 15 to June 30). A Bishop Carroll representative will work with you to complete your application and make sure you meet the submission deadline.
Is there a lot of paperwork?
No. The application is short.
Businesses can either file their applications to the Department of Community and Economic Development (DCED) electronically through the single online application website. For a user guide on how to file the electronic application visit: www.paschoolchoice.org/wp-content/uploads/2014/03/OSTC-EITC_Handbook2013.pdf
The business application guide explains the process of applying.
Or you may request an application from Bishop Carroll’s Development Office at 814-472-7500 and allow us to apply on your behalf once your application is complete. When is the deadline for applications? The PA Department of Community Economic Development begins processing renewing applications May 15 and new applications on July 1 of each year. Applications received prior to July 1 are disqualified. But also remember, tax credits are awarded on a first-come, first-served basis and there are limited tax credits available for the program, so submitting your application as early as possible on July 1 is critical.
Is the timing of your application really that important?
Yes. Applications for businesses that are first time applicants will not be accepted before July 1. Any applications received before July 1 will be disqualified and the applicants will not be informed of the disqualification.
We urge all businesses applying for EITC to fax or e-mail their applications to Ellen Konkle for submission to Pennsylvania Department of Community and Economic Development.
What is the deadline for businesses that participated last year and are reapplying?
Applications for businesses that are renewing their participation in the program, regardless of whether they are year one of one or year two of two, are due on May 15. Renewal applications are due on May 15. Applications for renewal will be processed first. We urge all businesses re-applying for EITC to either submit their form directly on May 15 through the DCED web-site or provide your application directly to Bishop Carroll’s development team and we will submit it on your behalf.
What happens once your business is approved?
Once approved you will receive a letter from DCED. You must provide proof to DCED within 90 days of the notification letter that the contribution was made within 60 days of the notification letter.
If you do not make your contribution to Bishop Carroll within 60 days, your credits will be reallocated to another applicant.
Do in-kind donations qualify for this credit?
Yes, but only in specific situations. Speak with Bishop Carroll’s Development Office if you have questions about an in-kind donation.