EXTRA-CURRICULAR ACTIVITIES &TAX CREDIT Presented by: Sharon Flores Palominas School District Brittney Williams Heinfeld, Meech and Co., P.C.
Guidance and Resources • USFR Memorandum No. 214 • Arizona Department of Revenue Publication 707 • A.R.S. Section 15-342(24) • A.R.S. Section 43-1089.01 • Laws 2005, Ch. 272 • USFR Chart of Accounts • Recommendation • School Policies and Procedures
USFR Memorandum No. 214 • Summarization of all the rules and regulations. • If districts receive contributions that are not designated for a specific purpose, the site council for the school must determine how the contributions should be used at the school. • Districts should prepare and issue a pre-numbered cash receipt form to each contributor/taxpayer. The form should include the district number, school name, taxpayer name and address, amount received, date, and description of the activity for which the fee was paid.
Arizona Department of Revenue Publication 707 • Eligible Schools • Public and charter schools providing instruction for K-12. • Nongovernmental schools, preschools, community colleges, and universities do not qualify for the credit. • School Tax Credits defined – Generally, any educational or recreational activities that supplement the educational program of the school.
A.R.S. Section 15-342(24) • Extracurricular Activities Defined • Optional • Noncredit • Educational • School Sponsored • Enrolled Students • Fee based
A.R.S. Section 43-1089.01 • Allows for taxpayers to receive a credit for the amount of any fees or cash contributions made to a public school in the State for the support of extracurricular activities or character education programs. • G. For the purposes of this section: • 2. “Extracurricular activities” means: a. Band Uniforms b. Equipment or uniforms for varsity athletic activities c. Scientific laboratory materials d. In-state or out-of-state trips that are solely for competitive events. Extracurricular activities do not include any senior trips or events that are recreational, amusement or tourist activities.
Laws 2005, Ch. 272 • This law reduced the reporting requirements for school districts. • Districts required to file a report with the Arizona Department of Revenue (ADOR) by February 28 of each year (standardized form provided by ADOR). • Form number ADOR 05-5432 • Total number and dollar amount of fees and contributions received during the previous calendar year. • Total dollar amount of fees and contributions spent by the district during the previous calendar year.
USFR Chart of Accounts • Extracurricular Activities Fees Tax Credit Monies • May be recorded in the Auxiliary Operations Fund (F525) or in the Extracurricular Activities Fees Tax Credit Fund (F526). • Revenue object code 1790. • Expenditure code – will vary - subject to USFR Chart of Accounts.
School Policies and Procedures • District should have specified policies and procedures approved by the governing board to determine how the Extra-Curricular Activities Fees Tax Credit monies are handled. • The governing board should determine how the contributions should be used at the school. • Procedures for issuing a pre-numbered cash receipt form to each contributor/taxpayer.
On-Line Contributions • Allow taxpayer the ability to print out a receipt with all of their individual information. • Maintain records of all contributors and amount of contributions. • Copy of on-line donations to be maintained for auditor trail.
Contributions • An individual can contribute and receive a tax credit for any amount up to $200, or a couple filing jointly can contribute up to $400. • Any amount up to the $200 and $400 limit may be donated. • Payment can be made at one time or in installments during the calendar year.
Questions • Contributions: • Should a receipt be issued to the taxpayer? • YES! • Can a taxpayer make a contribution on behalf of their child? • YES! • Can a PTA, school foundation, school district or school club give funds or directly pay for extra-curricular activities or character education programs? • NO! • ARS 43-1089.01 requires that the fees be paid “to the public school”. Therefore, the payment must be made directly to the public school or district only.
Questions Cont’d. • Does the taxpayer have to specify which activity or program the contribution is intended for? • NO! • Does a taxpayer have to donate to the school within the boundaries of where they live? • NO! • Does the taxpayer have to have a child in school in order to make a contribution? • NO! • Can a taxpayer receive a refund of a contribution? • NO!
Questions Cont’d • Is the tax credit only available to parents with students in school? • No, this tax credit is available to any Arizona taxpayer, regardless of whether or not they have children in school. • Is a charter school considered to be a public school? • Yes, a charter school is eligible for this tax credit.
Questions Cont’d • Can I choose which extra-curricular activities my money should benefit? • Yes, you can indicate areas of allocation, such as a student club or activity. • Designation must be made at the time of donation. • Can a taxpayer make a contribution or pay fees to an organization (i.e. PTA, school foundation, or school club) which then gives the funds to the school and count this as a tax credit? • No. A.R.S. 43-1089.01 requires that fees be paid “to a public school”.
Questions Cont’d • What is the difference between a tax deduction and a tax credit? • A tax deduction allows you to subtract the amount of a contribution from the amount of your taxable income. • The credit allows you to subtract from the amount of taxes you owe dollar for dollar.
Questions Cont’d • Can you receive a refund of these credits? • The credits may only be used to the extent that they reduce a tax liability to zero. • Any unused amounts may, however, be carried forward for up to five consecutive taxable years.
Allowable Activities • Graduation items? • Chaperone on a field trip? • Fountain for the campus? • Trip to Costa Rica- Senior trip? • Trip to Costa Rica- Spanish Club? • Playground equipment?
Allowable Activities Cont’d • Bats and Balls? • Uniforms for the football team? • Activity that benefits only a select number of students? • Activity that benefits students and non-students? • Computers and laptops? • Salary for a coach/referee?
Truthfulness Responsibility Compassion Diligence Sincerity Trustworthiness Respect Attentiveness Obedience Orderliness Forgiveness Virtue Fairness Caring Citizenship Integrity Character Education- Instruction of at least 6 of the following traits
Proposed Tax Credit Legislation • HB 2070 • 43-1089.01 Tax credit: public school fees and contributions; definitions • A. A credit is allowed against the taxes imposed by this title for the amount of any fees or cash contributions by a taxpayer or on the taxpayer’s behalf pursuant to section 43-401, subsection I during the taxable year to a public school located in this state for the support of extracurricular activities, TUTORING PROGRAMS or character education programs of the public school….
Proposed Legislation Cont’d • “TUTORING PROGRAMS” means school sponsored tutoring programs that are provided for students in the subject area in which the student is performing at or below grade level and that select and compensate tutors based on policies that are developed by the school district governing board.
Proposed Legislation Cont’d • HB 2613 ….OR, FOR TAXABLE YEARS ENDING BEFORE DECEMBER 31, 2013, TEXTBOOKS, CLASSROOM TECHNOLOGY OR INSTRUCTION MATERIALS ..
Proposed Legislation Cont’d • A.R.S. Section 43-1089.01 • Allows for taxpayers to receive a credit for the amount of any fees or cash contributions made to a public school in the State for the support of extracurricular activities or character education programs. • G. For the purposes of this section: • 2. “Extracurricular activities” means: a. Band Uniforms b. Equipment or uniforms for varsity athletic activities c. Scientific laboratory materials d. In-state or out-of-state trips that are solely for competitive events. Extracurricular activities do not include any senior trips or events that are recreational, amusement or tourist activities.
THANK YOU!! • CONTACT INFORMATION • SHARON FLORES • 520-366-6204 x.4919 • firstname.lastname@example.org • BRITTNEY WILLIAMS • 520-742-2611 x.116 • email@example.com