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Last modified: 16-Dec-2011  

Pennsylvania Educational Improvement Tax Credit Program
EITC Frequently Asked Questions

What is the "Educational Improvement Tax Credit (“EITC”) Program?"

Officially known as Act 4 of 2001, this program amends the Pennsylvania Public School Code to authorize tax credits for businesses that make contributions to educational improvement organizations or scholarship organizations.  Pennsylvania's Department of Community and Economic Development (“DCED”) administers the program. 

What are "Educational Improvement Organizations?"

Educational Improvement Organizations (“EIO’s”) are non-profit organizations that have been approved by DCED for participation in the EITC program. To become an EIO, the non-profit must apply to the DCED to show how their programs improve the educational opportunities for children. The Upper Dublin Education Foundation (“UDEF”) has been designated as an eligible “Educational Improvement Organization.” 

Who is eligible to participate?  Any entity doing business in Pennsylvania that is subject to the following taxes:

- Corporate Net Income Tax

- Capital Stock Franchise Tax

- Bank and Trust Company Shares Tax

- Title Insurance Company Shares Tax

- Insurance Premiums Tax

- Mutual Thrift Institutions Tax

- Personal Income Tax of S Corporation Shareholders, or partners in a general or limited partnership.

Why should businesses participate?

Businesses can significantly reduce their tax liability while they support organizations like UDEF that enhance the educational opportunities for children.  Participation in the EITC program provides significant leverage to the contributions made by a corporation.  Your business can publicize and be proud of large donations that will cost you very little.  All donations to UDEF support public education and benefit the Upper Dublin Community. 

When does the tax credit program begin, and how much is available?

The program year is July 1 – June 30. In the past, a total of up to $25 million has been available for educational improvement organizations. Applications for tax credits are processed until the DCED funding budget is exhausted. The filing date for this year is July 1, 2009. 

How do businesses apply for the tax credit?

The process is simple. Businesses must complete a one page application stating what amount they plan to contribute.  UDEF will assist all businesses interested in completing the application. We also request that you submit the application to us. We will hand deliver all applications to DCED on July 1, 2009.  Click here to download the application. (See Appendix I – EIO on page 10 of the Adobe PDF.) 

When are Tax Credit applications due?

All applications are due in Harrisburg on precisely July 1, 2009 (not before and not after that date).  Please allow UDEF to hand deliver your application to the correct address.  All applications received on July 1, 2009 will be processed on a random basis until the amount of available tax credits is exhausted.

How do businesses know if and when they are approved?

The DCED will notify businesses in writing if their applications are approved.  After receiving approval, businesses have 60 days to make the pledged contribution to the approved Educational Improvement Organization. The business must also send the DCED a copy of the confirmation of contribution from the Educational Improvement Organization(s) to which the contribution was made.                                                                       

Is application approval guaranteed?

No. Unfortunately, in the past, there were more applications to the DCED than there was available funding. Because applications are randomly selected, there is no guarantee that each application will be approved before funding runs out.  However, it is still very much worthwhile to apply.  The amount of available funding for 2009 has not been released and it is our hope that more funds will be available this year to accommodate all applications.  

How many tax credits can a business apply for and how are they used?

Businesses can apply to have up to $300,000 in tax credits approved for donations. Businesses get a credit of 75 percent for one year donations and 90 percent credit for 2 year donations. Tax Credits may be applied against the tax liability of a business for the tax year in which the contribution was made. Click for one-year and two-year tax credit examples.  Eligible donations may not exceed $300,000 per taxable year.

Who can I contact if I am interested?

If you are interested in this program or would like more information, please contact Pam Ryan at 215.664.0308.

 

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UPPER DUBLIN EDUCATION FOUNDATION

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