Tax Commission expresses concerns about private school tax credits
Even though the legislature is moving full-steam ahead, the Oklahoma Tax Commission has concerns about the proposed private school tax credit.
OKLAHOMA CITY (KFOR) – Even though the legislature is moving full-steam ahead, the Oklahoma Tax Commission has concerns about the proposed private school tax credit.
In a fiscal impact statement dated May 3, the commission shared its thoughts on the plan.
“It is unclear how the OTC should administer advance credits claimed by multiple taxpayers for the same student, such as credits claimed by divorced parents who each pay a portion of qualified expenses,” said the commission, in the fiscal impact statement.
Advanced credits can be given to eligible families that make $75,000 or less.
The Commission also shared concerns about verifying certain students’ eligibility.
“The OTC may be required to review all public school student enrollment information to determine that a student who is claimed by a taxpayer receiving the credit is not enrolled in a public school,” stated the OTC.
Private school tax credits will be eligible only for private school parents. The new proposal breaks them down into five different family income brackets.
There is also a $1,000 tax credit for each student that is enrolled in home school instruction.
However, concerns arose with that provision as well.
“Information is not available to verify homeschool enrollment,” said OTC.
Financially, the commission showed how not all families will benefit from the program because of the state spending caps per year.
For tax year 2024, the credits shall not exceed $150,000,000.
The cap goes up by $50 million each year until 2026, where it is capped at $250,000,000 indefinitely.
“Potential estimated claims for private school expenses are expected to total approximately $276 million for tax year 2024,” said the OTC.
$276 million is more than the state’s cap for every tax year.
Given the extra work involved with maintaining the program, the Commission said an additional $1 million will need to be added to next year’s budget.
A spokesperson for the Tax Commission said Wednesday it is accustomed to tax credit programs with caps, saying each year it administers 30 different income tax credits.
“Many of those income tax credits require the OTC to implement statutory caps to ensure credit amounts claimed do not exceed these caps,” said Emily Haxton, OTC spokesperson.
Spokesperson for Senate Pro Tem Greg Treat said lawmakers are aware of the added cost to the budget and it “will be taken care of.”
The tax credit plan was passed by the Senate and the House, but it was held by Speaker Charles McCall while both chambers negotiated the public education spending package.
On Monday, Speaker McCall said now that leadership has agreed on a deal he expects to send the plan to the Governor’s desk.
The tax credit plan will begin next year and the Oklahoma Tax Commission is tasked with making the rules.
Despite the challenges, the OTC claims it will be ready.
“At the end of each legislative session, the OTC is tasked with implementing various types of legislation; HB 1934 is no different,” said Emily Haxton. “As with all new legislation, the OTC is confident it will successfully implement all provisions related to HB 1934.”