Establishes the "Missouri Parental Choice Tax Credit Act" relating to a tax credit for certain educational expenses

(Universal School Choice, tax credit, Department of Revenue and Treasurer to promulgate the rules)

AN ACT To amend chapter 135, RSMo, by adding thereto one new section relating to a tax credit for certain educational expenses.

Be it enacted by the General Assembly of the state of Missouri, as follows: Section A. Chapter 135, RSMo, is amended by adding thereto one new section, to be 2 known as section 135.721, to read as follows: 135.721. 1. This section shall be known and may be cited as the "Missouri 2 Parental Choice Tax Credit Act". 3 2. As used in this section, the following terms mean: 4 (1) "Department", the Missouri department of revenue; 5 (2) "Eligible education expenses", in a given tax year the following costs a 6 qualified taxpayer incurs for the educational needs of a qualified student who is enrolled 7 in and attends a qualified school: 8 (a) Tuition and fees; 9 (b) Textbooks; 10 (c) Curriculum as defined under section 166.700; 11 (d) Other instructional materials including, but not limited to, computer 12 software, supplemental materials, or associated online instruction; 13 (e) Fees for nationally standardized norm-referenced achievement tests, 14 advanced placement examinations, or any examinations related to college or 15 university admission; 16 (f) Tutoring services;

EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language. HB 1911 2 17 (g) Fees for summer education programs and specialized after-school education 18 programs; 19 (h) Services provided by a qualified school including, but not limited to, 20 individual classes and extracurricular programs; 21 (i) Computer hardware or other technological devices that are used to help meet 22 the qualified student's educational needs; and 23 (j) Educational therapies or services from a licensed or accredited practitioner 24 or provider including, but not limited to, licensed or accredited paraprofessionals or 25 educational aides; 26 (3) "Public school", any public school in the state of Missouri, as such term is 27 defined under section 160.011, including, but not limited to, a charter school as defined 28 in section 160.400 or a public virtual school as described under section 161.670; 29 (4) "Qualified amount", for any qualified taxpayer in a given tax year, an 30 amount equal to one hundred percent of the total eligible education expenses incurred 31 by a qualified taxpayer in a given tax year per qualified student per tax year; 32 (5) "Qualified school", a home school as defined in section 167.031 or any of the 33 following entities that is incorporated in Missouri and that does not discriminate on the 34 basis of race, color, or national origin: 35 (a) A private school as defined under section 166.700; 36 (b) A private virtual school; 37 (c) A parochial school; or 38 (d) A parish school; 39 (6) "Qualified student", any resident individual of this state who: 40 (a) Is properly listed as a dependent of the qualified taxpayer on the qualified 41 taxpayer's state income tax return; 42 (b) Is the natural or adopted child of the qualified taxpayer or is an individual 43 for whom the qualified taxpayer has been court-appointed as a legal guardian or 44 custodian; and 45 (c) Is eligible to enroll in an elementary or secondary public school in this state, 46 but who is enrolled in or attending a qualified school as a full-time student; 47 (7) "Qualified taxpayer", any resident individual subject to the state income tax 48 imposed under chapter 143, excluding the withholding tax imposed under sections 49 143.191 to 143.265, who is not a dependent of another individual and is the biological or 50 adoptive parent, legal guardian, custodian, or other person with legal authority to act on 51 behalf of a qualified student; 52 (8) "Tax credit", a credit against the tax otherwise due under chapter 143, 53 excluding withholding tax imposed under sections 143.191 to 143.265. HB 1911 3 54 3. The following costs a qualified taxpayer incurs for the educational needs of a 55 qualified student shall not be deemed eligible education expenses under this section: 56 (1) Paper; 57 (2) Pens; 58 (3) Pencils; 59 (4) Markers; 60 (5) Erasers; 61 (6) Notebooks; 62 (7) Other similar consumable education supplies; or 63 (8) Costs incurred as a result of a qualified student's participation in academic, 64 athletic, social, or extracurricular activities provided or sponsored by: 65 (a) A public school as defined in section 160.011; 66 (b) A charter school as defined in section 160.400; or 67 (c) A public virtual school as described in section 161.670. 68 4. For all tax years beginning on or after January 1, 2025, a qualified taxpayer 69 shall be allowed to claim a tax credit against the qualified taxpayer's state tax liability 70 for a qualified student's eligible education expenses. The amount of each tax credit shall 71 not exceed the lesser of: 72 (1) The qualified taxpayer's qualified amount; or 73 (2) The state adequacy target, as defined under section 163.011. 74 5. If a qualified student was enrolled in a public school for part of a tax year, the 75 amount of the tax credit allowed under this section shall be prorated, based upon that 76 proportion of which the total number of school days the qualified student was enrolled 77 in or attending the qualified school for the tax year the credit is claimed. The 78 department may promulgate rules governing the calculation and proration under this 79 subsection. 80 6. A qualified taxpayer may claim a tax credit under this section at the time such 81 qualified taxpayer files a return. The qualified taxpayer shall submit with the qualified 82 taxpayer's return an itemized list of eligible education expenses incurred, identification 83 or other legal documents relating to a qualified student's dependency status, as well as 84 any other information required by the department, on a form to be developed by the 85 department. The qualified taxpayer shall retain all receipts of eligible education 86 expenses as proof of the amounts paid each tax year the credit is claimed and shall 87 submit them to the department upon request. 88 7. Qualified taxpayers claiming the credit shall: 89 (1) Claim the credit for only eligible education expenses as defined under this 90 section to provide an education for a qualified student;  HB 1911 4 91 (2) Ensure no other person is claiming a credit for the qualified student; 92 (3) Not claim the credit for a qualified student who enrolls as a full-time student 93 in a public school as defined under this section; and 94 (4) Comply with provisions of this section and the rules and requirements 95 established by the department for the administration of the tax credit. 96 8. A qualified taxpayer shall not be eligible to receive a tax credit under this 97 section if such qualified taxpayer is a participant in the Missouri empowerment 98 scholarship accounts program under sections 135.712 to 135.719 and sections 166.700 to 99 166.720 for the same qualified student. Before issuing the tax credit under this section, 100 the department shall verify with the state treasurer that the taxpayer is not a participant 101 in and does not have a pending application for the Missouri empowerment scholarship 102 accounts program for the same qualified student. 103 9. No tax credit claimed under this section shall be assigned, transferred, sold, or 104 otherwise conveyed. 105 10. (1) Tax credits issued under the provisions of this section shall be refundable. 106 No tax credit claimed under this section shall be carried forward to any subsequent tax 107 year. 108 (2) Any refunds issued from this tax credit shall be offset against a qualified 109 taxpayer's outstanding state tax liabilities or certain other debts as described under 110 section 143.611 and sections 143.781 to 143.790. 111 (3) The department shall have the authority to conduct an audit or contract for 112 the auditing of receipts for eligible education expenses submitted under this section. 113 (4) The department is authorized to recapture the tax credits otherwise 114 authorized under this section on a prorated basis if an audit conducted under the 115 provisions of this section finds that the qualified taxpayer claimed a student who no 116 longer attends a qualified school, has enrolled in a public school on a full-time basis, or 117 for other reasons that would make the qualified taxpayer no longer eligible for the tax 118 credit authorized under this section. 119 (5) The department may promulgate rules addressing recapture, reconciliation, 120 clerical errors, and any other provisions necessary to effectuate the program under this 121 section. 122 11. Notwithstanding any provision of section 105.1500 to the contrary, any 123 requirement to provide information, documents, or records under this section, and any 124 requirement established by the department to provide information, documents, or 125 records for the purpose of administering and enforcing this section, shall be exempt 126 from section 105.1500.  HB 1911 5 127 12. The department, in conjunction with the state treasurer, shall promulgate all 128 necessary rules and regulations for the administration of this section including, but not 129 limited to, rules relating to the verification of a taxpayer's qualified amount. Any rule 130 or portion of a rule, as that term is defined in section 536.010, that is created under the 131 authority delegated in this section shall become effective only if it complies with and is 132 subject to all of the provisions of chapter 536 and, if applicable, section 536.028. This 133 section and chapter 536 are nonseverable and if any of the powers vested with the 134 general assembly pursuant to chapter 536 to review, to delay the effective date, or to 135 disapprove and annul a rule are subsequently held unconstitutional, then the grant of 136 rulemaking authority and any rule proposed or adopted after August 28, 2024, shall be 137 invalid and void. 138 13. Under section 23.253 of the Missouri sunset act: 139 (1) The provisions of the new program authorized under this section shall 140 automatically sunset December thirty-first six years after the effective date of this 141 section unless reauthorized by an act of the general assembly; 142 (2) If such program is reauthorized, the program authorized under this section 143 shall automatically sunset December thirty-first twelve years after the effective date of 144 the reauthorization of this section; 145 (3) This section shall terminate on September first of the calendar year 146 immediately following the calendar year in which the program authorized under this 147 section is sunset; and 148 (4) The provisions of this subsection shall not be construed to limit or in any way 149 impair a qualified taxpayer's ability to redeem tax credits authorized on or before the 150 date the program authorized under this section expires.