Turn Your Business Tax Liability into Scholarships
For Virtually NO COST to Your Business
Through the Pennsylvania Educational Improvement Tax Credit Program for Students in Need
Sounds too good to be true? It isn’t! With both of these programs, businesses can receive a 75% state tax credit or a 90% state tax credit. In addition, business owners can claim a charitable deduction for the difference between the tax credit amount and the gift. For example, if you donate $5,000 to John W. Hallahan each year for two years, you receive a tax credit of $4,500 per year, plus the ability to claim $500 as a charitable deduction. You can donate any amount up to $750,000.
The Educational Improvement Tax Credit program (EITC) allows qualified businesses to fulfill their state tax burden while supporting financial aid at Hallahan. The Opportunity Scholarship Tax Credit program (OSTC) allows qualified businesses to fulfill their state tax burden while supporting low-income students who reside in low-achieving school districts in Pennsylvania. EITC supports the Hallahan financial aid budget; OSTC supports a specific child in need of resources to attend Hallahan.
WHAT IS THE EITC?
The Educational Improvement Tax Credit (EITC) provides companies with a 75% tax credit for donations to a non-profit scholarship or educational improvement organization. The tax credit increases to 90% if the company commits to making the same donations for two consecutive years. A business paying taxes in Pennsylvania can receive up to $300,000 in tax credits annually. EITC provides low-income children and families, who reside in Philadelphia, with much needed tuition assistance. Help to make a Hallahan education possible for more Philadelphia families!
WHAT IS THE OSTC?
Pennsylvania businesses can earn significant state-tax credits by contributing to education organizations registered with the Opportunity Scholarship Tax Credit (OSTC). Through the OSTC program, a qualified business can make a donation to John W. Hallahan (through an approved scholarship organization such as BLOCS) and receive tax credits equal to a percentage of their gift. The OSTC enables companies to support local schools, like Hallahan, instead of sending their tax dollars to Harrisburg. Large and small businesses are eligible to participate, with contributions ranging from a few hundred dollars to a maximum of $750,000.
Business contributions are then used by Hallahan to provide tuition assistance in the form of grants to eligible students residing within the boundaries of a low-achieving school to attend another public school outside of their district or nonpublic school. A low-achieving school is defined as a public elementary or secondary school ranking in the bottom 15 percent of their designation as an elementary or secondary school based upon combined math and reading Pennsylvania System of School Assessment (PSSA) scores.
IS MY BUSINESS ELIGIBLE?
If your business is authorized to operate in Pennsylvania and pays one of the following taxes, you can register to be eligible for the Pennsylvania Educational Improvement Tax Credit Program (EITC) and the Pennsylvania Opportunity Scholarship Tax Credit (OSTC).
- *Corporate Net Income Tax
- *Capital Stock Franchise Tax
- *Bank and Trust Company Share Tax
- *Title Insurance Companies Share Tax
- *Insurance Premiums Tax
- *Mutual Thrift Institutions Tax
- *Personal Tax of S corporation shareholders or Partnership partners
HOW CAN MY BUSINESS REGISTER?
The one-page application is now available on-line from the Pennsylvania Department of Community and Economic Development at www.newPA.com/EITC. The website provides further information on the program as well as the application form (EITC Business Guidelines). Additionally, you can call the Department of Community and Economic Development at (717) 787-7120 for a copy of the application.
Pennsylvania businesses can begin applying for Opportunity Scholarship Tax Credits through DCED’s electronic single application system, found here. The business application guide explains the process of applying. 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.
WHO DO I CONTACT WITH QUESTIONS?
Director of Annual Fund and Major Gifts
(215) 563-8930, ext 251
IMPORTANT ADDITIONAL INFORMATION
Once a business is eligible, the business has sixty (60) days to make its contribution to Hallahan. An approved company must provide proof to DCED within 90 days of the notification letter that the contribution was made within 60 days of the notification letter; Tax credits not used in the tax year the contribution was made may not be carried forward or carried back and is not refundable or transferable.
NOW IS THE BEST TIME TO ACT!!
Each year the Commonwealth of Pennsylvania budgets a certain amount of funds for the EITC program. Applications for the tax credits are accepted on July 1 of each year (earlier only if it is for the 2nd year of a two-year commitment). Because of the popularity of the program, businesses are encouraged to apply for the credit as early as possible. However, applications are encouraged throughout the year as unallocated credits usually become available.
2016-2017 deadlines for business applications:
May 15, 2016 – Business applications who have fulfilled their 2-year commitment and wish to reapply in FY 2016-2017 to renew their 2-year commitment.
May 15, 2016 – Businesses who are in the middle of their 2-year commitment.
July 1, 2016 – All other businesses including Pre-K business applications.
Pass-through entities, such as S-Corporations, Partnerships, LLCs, etc. can now apply the same day as C-Corporations. Applications must be submitted electronically using DCED’s Single Application for Assistance weblink. Paper business applications will no longer be accepted.
To start the application process, click the following link: www.esa.dced.state.pa.us/login.aspx