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In 2009, the
Arizona legislature passed "Lexie's Law," a law that allows corporations to
redirect their tax liability to a state approved School Tuition Organization
(STO), such as ASCT, and receive dollar-for-dollar tax credits for their
contribution.
Lexie's Law, named after a special-needs student, is designed to provide
educational options for disabled and foster children in Arizona.
The passing legislation in 2009 also presented the opportunity for
insurance companies to become part of the educational solution by allowing them
to redirect their insurance premium tax liability to fund scholarships.
As a result, corporations with an Arizona corporate tax or insurance premium tax
liability can receive a 100 percent tax credit for redirecting their tax
liability to a state approved STO on behalf of Lexie's Law. These funds are then redistributed as
scholarships for disabled and displaced children to attend a private school.
Corporations can help students like Lexie Weck,
who at age 7 has autism, cerebral palsy and mild mental retardation. Lexie
relies on the
scholarship to attend a small private school that best meets her learning needs.
The statewide cap on corporate tax and insurance premium tax credits for
disabled and displaced student scholarships is $5 million. During the 2010-11
school year, nearly 150 students benefitted from this opportunity.
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The process for corporations to enroll is very simple, and ASCT can handle all
the paperwork for your corporation.
Information on eligibility is
available on the
Arizona Department of Revenue (ADOR).
For a corporation to take advantage of this unique opportunity to help
disadvantaged children, the corporation simply needs to contact ASCT and pledge
to make a contribution. From there, ASCT will complete an application that
is submitted to the ADOR on behalf of the corporation. As long as the tax
credit cap has not been met, the ADOR approves the request within 20 days.
Once the ADOR has approved the request, the corporation has 10 days to make the
contribution. The contribution may not be designated for any specific
student(s). The corporation takes the tax credit on tis tax return, but
may carry unused credit forward for up to five years.
The corporation may take either the federal deduction or the Arizona state
credit, but not both. To claim the credit for corporate income tax
redirections, the corporation lists the
credit on the standard 120 form, and files a
335 attached to the return.
To claim the credit for insurance premium tax redirections, the corporation
lists the credit on the Schedule STO within Form E-Tax.
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