If you are a current or past participant in PA’s Educational Improvement Tax Credit (EITC) program or maybe filing for tax credits for the first time, we wanted to share with you some timely information as we approach the application deadline of Wednesday, July 1st, 2020. Hopefully, this will clarify what can sometimes be a confusing process. Please see below
If you are a current participant and you:
– Are entering year two of a two-year cycle, or
– Have just completed a two-year cycle and are applying for a new two-year cycle,
Your filing date for 2021 credits is Monday, May 17, 2021
(Normally, the early filing date is May 15th, but since that falls on a Saturday this year, DCED has extended the early filing date to Monday, May 17th.)
– Are entering the EITC program for the first time
– Have been past participants but have been knocked out of the program
– Are currently participating, but want to apply for additional tax credits above your current allocated amount,
Your filing date is Thursday, July 1, 2021
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. Click here for the business application guide.
You may not file before May 17 or July 1 (depending on your status), but you may fill out the application ahead of time, save it, and then submit it any time between 12:00 am – 11:59 pm on the appropriate date. It’s important to file on those exact days. Please don’t be late!
VERY IMPORTANT COVID-19 UPDATES
Since Governor Wolf’s COVID-19 Disaster Declaration is still in effect, the rules that were put in place by SB 841 due to the pandemic ARE CURRENTLY STILL IN PLACE. Here is a summary of these changes:
– The 60-day requirement for making a contribution after receiving approval from DCED is now extended until the end of the business firm’s applicable tax year. However, once contributions have been made for the approved amount, businesses still must submit proof of such contributions to DCED within 30-days, as always.
– Businesses fulfilling the second year of their two-year commitment that are impacted by the COVID-19 pandemic shall be permitted to receive a tax credit of up to 90% of the amount contributed in year two even if they are not able to contribute as much as the prior year. As part of this COVID-19 emergency relief, DCED is prohibited from reducing the credit authorized in year one of the two-year commitment if the year two contribution is less than that of year one.
The primary purpose of the legislation is to extend the timeframe in which to make a contribution and not penalize companies in Year Two of Two who cannot make the same contribution as in Year One due to the pandemic. We understand that many companies will have no idea of their tax liability this year, but we encourage you to still apply for credits. If you miss filing on May 17th, you risk being dropped from the program and losing your early filing status.
The Governor’s Disaster Declaration could be lifted at any time which would nullify SB 841 and return the EITC giving deadlines and contribution requirements to their normal parameters. However, this would most likely require legal action to determine how and when the normal pre-COVID EITC program could be phased back into its normal pre-COVID status.
As things develop, we will attempt to notify you of any changes as soon as they become available, but we encourage you to watch closely for the lifting of the Disaster Declaration and contact DCED personally to make sure you are fully aware of the changes. The key is to maintain your credits and early filing status.
For those of you who support Educational Improvement Organizations (EIOs) like the Foundation for Free Enterprise Education, you know that this side of the program has been oversubscribed for many years. Most likely, this means that if you are entering the program for the first time, applying to get back into the program, or applying for additional credits, the $37.5 million in available EIO tax credits may be exhausted by your filing date of July 1. However, we encourage you to still apply for EIO credits because businesses drop out of the program every year and there may be EIO credits available. There is no penalty or obligation for applying.
WHO IS ELIGIBLE TO RECEIVE TAX CREDITS?
All businesses authorized to do business in Pennsylvania and who are subject to one or more of 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 Premium Tax (excluding surplus lines, unauthorized, domestic/foreign marine)
• Mutual Thrift Tax
• Malt Beverage Tax
• Retaliatory Fees under section 212 of the Insurance Company Law of 1921
WHY SHOULD I APPLY?
When you donate to an approved EIO or Scholarship Organization (SO), you will receive a credit on your Pennsylvania tax liability in the current fiscal year. If you participate for one year, your tax credit is 75 percent of your contribution up to a maximum of $750,000 per taxable year. If you make a two-year commitment, your tax credit increases to 90 percent of your contribution, again up to $750,000 per year.
For contributions to Pre-Kindergarten Scholarship Organizations, a business may receive a tax credit equal to 100 percent of the first $10,000 contributed, and up to 90 percent of the remaining amount contributed up to a maximum credit of $200,000 annually.
If there are other people in your organization who manage the EITC program, please forward this email to them, and if possible, share their contact information with us so we can reach the proper people in the future.
WHAT PROGRAMS CAN BE IMPACTED?
Currently, The Foundation has the following Programs approved as an Education Improvement Organization (EIO):
• Classroom in the Hospital
• Classroom on Main Street
• What’s So Cool About Manufacturing
• STEM Magnet Program in partnership with Bloomsburg University
• Annual STEM Competition
• Tech Theatre in partnership with Bloomsburg Theatre Ensemble
• Educator in the Workplace
• Pennsylvania Free Enterprise Week (PFEW)
• PFEW’s Stock Market Game
• EVERFI Financial Literacy
We are currently developing additional programs for approval by PA DCED that include a youth leadership program and additional Classroom in the Workplace programs like Classroom in the Courtroom.
If there are other people in your organization who manage the EITC program, please forward this along to them, and if possible, share with us their contact information so we can reach the proper people in the future.
For more information on the EITC program, click here.
For the complete application guidelines, click here.
You can always call or email Jeff Emanuel, Director of The Foundation with questions at 570-784-2522 or [email protected]