Once again this year, the state budget impasse has held up the popular Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs. Following a letter signed by 79 House Republicans to Governor Wolf, the Department of Community and Economic Development (DCED) began sending out approval letters the week of Oct. 9. As there are several thousand letters to be sent, the process will take a number of weeks for DCED to complete.
The process of approval will follow its normal course, which is:
- The first approval letters will be for applications filed for year 2 of a previously approved 2-year application;
- The next approval letters will be to those companies filing “initial” applications to launch another 2-year cycle that were eligible to file those applications on May 15 with the “preference”;
- If credits remained after June 30 in any of the various program categories (SO, EIO, Pre-K and OSTC), the final set of approval letters will go to those companies applying on or after July 1st until those individual categories of credits are exhausted.
As always, the requisite 60-day period for disbursements will be in effect, with the same 30-day “window” to provide proof to DCED of charitable gifts by forwarding them letters from any qualified charities to which businesses are making EITC or OSTC gifts. For businesses that intend to take credits on 2017 tax returns, and are on a calendar fiscal year, disbursements must be made on or before Dec. 31, irrespective of when approval letter(s) arrive. Businesses do not have to wait for the actual letter before making qualified gifts, which may be especially relevant for those in year two, as your credits are virtually guaranteed.