117 HR 889 IH: Education Freedom Scholarships and Opportunity Act
U.S. House of Representatives
2021-02-05
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EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.This Act may be cited as the Education Freedom Scholarships and Opportunity Act
.2.The purpose of this Act is to encourage individual and corporate taxpayers to contribute to scholarships for individual elementary and secondary students through eligible scholarship-granting organizations, as identified by States.<enum>I</enum><header>Amendments to the Internal Revenue Code of 1986</header><section id="HD1F64E93681E4457815B9C680FD4E8CD"><enum>101.</enum><header>References to the Internal Revenue Code of 1986</header><text display-inline="no-display-inline">Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.</text></section><section id="HC99748AF5A934433A184C9B324605B29"><enum>102.</enum><header>Tax credits for contributions to eligible scholarship-granting organizations</header><subsection id="H86AA1F7DA74645CD8E46F4DEAF9ED90E"><enum>(a)</enum><header>Credit for individuals</header><paragraph id="H9B9A1446937D43C78ACF996C41F9ABBE"><enum>(1)</enum><header>In general</header><text>Subpart A of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> is amended by adding after section 25D the following new section:</text><quoted-block display-inline="no-display-inline" id="H0E7C06B3F24343789495FC247DEF7F97" style="OLC"><section id="HD25E86C339084256A87E8D62AB3985DA"><enum>25E.</enum><header>Contributions to eligible scholarship-granting organizations</header><subsection id="H42666F7F8A1147B38F4E9D6BDFDB1F21"><enum>(a)</enum><header>Allowance of credit</header><text display-inline="yes-display-inline">In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of any qualified contributions made by the taxpayer during the taxable year.</text></subsection><subsection id="H02A5F5D4BDD5453BA03AFBA897DED3D0"><enum>(b)</enum><header>Amount of credit</header><text>The credit allowed under subsection (a) for any taxable year shall not exceed 10 percent of the taxpayer’s adjusted gross income for the taxable year.</text></subsection><subsection id="HA523D1032EE6487E855F48F56D190588"><enum>(c)</enum><header>Definitions</header><text>For purposes of this section—</text><paragraph id="HD35C2392DF4E4A94A8F90D3674682E97"><enum>(1)</enum><header>Qualified contribution</header><text>The term <term>qualified contribution</term> means a contribution of cash to any eligible scholarship-granting organization.</text></paragraph><paragraph id="H488458F4B1BE460C8633976C0E85BDAF"><enum>(2)</enum><header>Qualified expense</header><text>The term <term>qualified expense</term> means any educational expense that is—</text><subparagraph id="H3A8E4AB9F1B54F5F89FD5A2A975C388A"><enum>(A)</enum><text>for an individual student’s elementary or secondary education, as recognized by the State, or</text></subparagraph><subparagraph id="H099961EC822E4FF19E830E367B26D058"><enum>(B)</enum><text>for the secondary education component of an individual elementary or secondary student’s career and technical education, as defined by section 3(5) of the Carl D. Perkins Career and Technical Education Act of 2006 (<external-xref legal-doc="usc" parsable-cite="usc/20/2302">20 U.S.C. 2302(5)</external-xref>).</text></subparagraph></paragraph><paragraph id="HD6B84AA594D84F9D882AEB6CCAA13D21"><enum>(3)</enum><header>Secretary</header><text>The term <term>Secretary</term> means the Secretary of Education.</text></paragraph><paragraph id="HA975F2A5ED2B4BA8AD826E5C7273DECD"><enum>(4)</enum><header>Eligible scholarship-granting organization</header><text>The term <term>eligible scholarship-granting organization</term> means—</text><subparagraph id="HBE22D802A6894AD78216BE6434E075DC"><enum>(A)</enum><text>an organization that—</text><clause id="H9231D0F29F684B0DB82E862BD2263B5C"><enum>(i)</enum><text>is described in section 501(c)(3) and exempt from taxation under section 501(a);</text></clause><clause id="HDD064C6B53FF4158BE4EED5D257FB093"><enum>(ii)</enum><text>provides qualifying scholarships to individual elementary and secondary students who—</text><subclause id="H409B40E522714111A2E5FE8119C2E870"><enum>(I)</enum><text>reside in the State in which the eligible scholarship-granting organization is recognized; or</text></subclause><subclause id="HF13DC3247A904F43A32BE5DB4492B2AA"><enum>(II)</enum><text>in the case of the Bureau of Indian Education, are members of a federally recognized tribe;</text></subclause></clause><clause id="HC4C1013F4547400D8AE4D3FC39D74AD2"><enum>(iii)</enum><text>a State reports to the Secretary as an eligible scholarship-granting organization under subsection (e)(5)(B);</text></clause><clause id="H8EDE81EE9E4B4CE9A54746DB37FA4134"><enum>(iv)</enum><text>allocates at least 90 percent of qualified contributions to qualifying scholarships; and</text></clause><clause id="H38CB0FFFB22D4E0A9B3F1C1B78E9D228"><enum>(v)</enum><text>provides scholarships to—</text><subclause id="HC50A2238C66D49CFB696355D4F95573D"><enum>(I)</enum><text>more than 1 eligible student;</text></subclause><subclause id="HDDD7FB27F2864B7C96BBA533DCCD5552"><enum>(II)</enum><text>more than 1 eligible family; and</text></subclause><subclause id="HB007A7D0072F4A85BB1F9C7EB16AA9A8"><enum>(III)</enum><text>different eligible students attending more than one education provider; or</text></subclause></clause></subparagraph><subparagraph id="HB6BA816AA3C64EFDA10F2E66245DD6AB"><enum>(B)</enum><text>an organization that—</text><clause id="HC058BD920EB643049B613F92B4F3702D"><enum>(i)</enum><text>is described in section 501(c)(3) and exempt from taxation under section 501(a); and</text></clause><clause id="H8570AEDC9FFE4D0AA99CC50B1BED6702"><enum>(ii)</enum><text>pursuant to State law, was able, as of the date of the enactment of the <short-title>Education Freedom Scholarships and Opportunity Act</short-title>, to receive contributions that are eligible for a State tax credit if such contributions are used by the organization to provide scholarships to individual elementary and secondary students, including scholarships for attending private schools.</text></clause></subparagraph></paragraph><paragraph id="HDAB36671683E41AEB9CBD198EB905E8E"><enum>(5)</enum><header>Qualifying scholarship</header><text>The term <term>qualifying scholarship</term> means a scholarship granted by an eligible scholarship-granting organization to an individual elementary or secondary student under this section or section 45T.</text></paragraph><paragraph id="H55C3F1B2A6FA4AFDBC290F89C0550DC1"><enum>(6)</enum><header>State</header><text display-inline="yes-display-inline">The term <term>State</term> means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the outlying areas (as defined in section 1121(c) of the Elementary and Secondary Education Act of 1965), and the Department of the Interior (acting through the Bureau of Indian Education).</text></paragraph></subsection><subsection id="H66E0E38BBFDB4ED6B596F856045A64EC"><enum>(d)</enum><header>Rules of construction</header><paragraph id="H2D56AC252DB94A21A49B76C1B6B8AD4C"><enum>(1)</enum><header>In general</header><text>A scholarship awarded to a student from the proceeds of a qualified contribution under this section or section 45T shall not be considered assistance to the school or other educational provider that enrolls, or provides educational services to, the student or the student's parents.</text></paragraph><paragraph id="HE1D6B8DCEF9F48B8B84EBD91E06464A2"><enum>(2)</enum><header>Not treated as income</header><text>The amount of any such scholarship shall not be treated as income of the child or his or her parents for purposes of Federal tax laws or for determining eligibility for any other Federal program.</text></paragraph><paragraph id="HA12C155DBD234BE3B15C8E72EC7136CF"><enum>(3)</enum><header>Prohibition of control over nonpublic education providers</header><subparagraph id="H53DD42702E9F4C97AFA30EA0F8155115"><enum>(A)</enum><text>Nothing in this Act shall be construed to permit, allow, encourage, or authorize any Federal control over any aspect of any private, religious, or home education provider, whether or not a home education provider is treated as a private school or home school under State law. This Act shall not be construed to exclude private, religious, or home education providers from participation in programs or services under this Act.</text></subparagraph><subparagraph id="HA159D6F4A1C346268324B8B398BA232C"><enum>(B)</enum><text>Nothing in this Act shall be construed to permit, allow, encourage, or authorize an entity submitting a list of eligible scholarship-granting organizations on behalf of a State to mandate, direct, or control any aspect of a private or home education provider, regardless of whether or not a home education provider is treated as a private school under State law.</text></subparagraph><subparagraph commented="no" id="HF9B4FC15D42D44CA96B62B386EC745EF"><enum>(C)</enum><text display-inline="yes-display-inline">No participating State or entity acting on behalf of a State shall exclude, discriminate against, or otherwise disadvantage any education provider with respect to programs or services under this Act based in whole or in part on the provider’s religious character or affiliation, including religiously or mission-based policies or practices.</text></subparagraph></paragraph><paragraph id="H1A9B6064C33447F484845C682D11C374"><enum>(4)</enum><header>Parental rights to use scholarships</header><text>No participating State or entity acting on behalf of a State shall disfavor or discourage the use of such scholarships for the purchase of elementary and secondary education services, including those services provided by private or nonprofit entities, such as faith-based providers.</text></paragraph><paragraph id="H1EB03029A4AC43A6BCC5E3CF56B7305C"><enum>(5)</enum><header>State and local authority</header><text>Nothing in this section or section 45T shall be construed to modify a State or local government’s authority and responsibility to fund education.</text></paragraph></subsection><subsection id="HEBE76E26B677422A85F4D18C1B1DDF90"><enum>(e)</enum><header>Limitations</header><paragraph id="HD4EF28CDDF8C415388C87D37051F2524"><enum>(1)</enum><header>Tax liability</header><text>No credit allowed under this section or section 45T shall exceed the taxpayer’s Federal income tax liability for the taxable year.</text></paragraph><paragraph id="H1F108D5BB1D44DC7A2B1E1877E88BD45"><enum>(2)</enum><header>Prohibitions</header><text>A taxpayer is prohibited from selling or transferring any portion of a tax credit allowed under this section or section 45T.</text></paragraph><paragraph id="H7A425B817FC7444D874771C4B568B706"><enum>(3)</enum><header>Denial of double benefit</header><text>The Secretary of the Treasury shall prescribe such regulations or other guidance to ensure that the sum of the tax benefits provided by Federal, State, or local law for a qualified contribution receiving a Federal tax credit in any taxable year shall not exceed the sum of the qualified contributions made by the taxpayer for the taxable year.</text></paragraph></subsection><subsection id="HD2023BFD416940E99F428EC1ED52FF92"><enum>(f)</enum><header>Carryover of credit</header><text>If a tax credit allowed under this section or section 45T is not fully used within the applicable taxable year because of insufficient tax liability on the part of the taxpayer, the unused amount may be carried forward for a period not to exceed 5 years.</text></subsection><subsection id="HA42D63DBA7714AFF92A4B28545FE8DC5"><enum>(g)</enum><header>Election</header><text>This section shall apply to a taxpayer for a taxable year only if the taxpayer elects to have this section or section 45T apply for such taxable year.</text></subsection><subsection id="H6A80904EAFDB4255A1915D8EC8AE6707"><enum>(h)</enum><header>Alternative minimum tax</header><text>For purposes of calculating the alternative minimum tax under section 55, a taxpayer may use any credit received for a qualified contribution under this section.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></paragraph><paragraph id="H9694D748D0154A548AD7210AFDF2613C"><enum>(2)</enum><header>Clerical amendment</header><text>The table of sections for subpart A of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> is amended by inserting after the item relating to section 25D the following new item:</text><quoted-block id="HD0D20161E36343FBB6DE8389A913CD62" style="OLC"><toc><toc-entry idref="HD25E86C339084256A87E8D62AB3985DA" level="section">Sec. 25E. Contributions to eligible scholarship-granting organizations.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="H0236A0EB474E4C1BB7C430E8DDAB5F91"><enum>(b)</enum><header>Credit for corporations</header><paragraph id="H21F5452EE133497F9C54426E27F319D6"><enum>(1)</enum><header>In general</header><text>Subpart D of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> is amended by adding at the end the following new section:</text><quoted-block display-inline="no-display-inline" id="H377AAC34BF074C97B237716063DF5118" style="OLC"><section id="H6702DA007D9F40EF81E8D4A1441FCECA"><enum>45T.</enum><header>Contributions to eligible scholarship-granting organizations</header><subsection id="HFEA1780804C04DE59173D91AE28FE602"><enum>(a)</enum><header>Allowance of credit</header><text>For purposes of section 38, in the case of a domestic corporation, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of any qualified contributions (as defined in section 25E(c)(1)) made by such corporation taxpayer during the taxable year.</text></subsection><subsection id="HEF2DAED72B074F9BB2F342C1EA776E53"><enum>(b)</enum><header>Amount of credit</header><text>The credit allowed under subsection (a) for any taxable year shall not exceed 5 percent of the taxable income (as defined in section 170(b)(2)(D)) of the domestic corporation for such taxable year.</text></subsection><subsection id="H5DFBA18E01C340869175E3A869C3A396"><enum>(c)</enum><header>Additional provisions</header><text>For purposes of this section, any qualified contributions made by a domestic corporation shall be subject to the provisions of section 25E, to the extent applicable.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></paragraph><paragraph id="H1A4AB90D0C314CB1A3D8EE13AAEC1697"><enum>(2)</enum><header>Credit part of general business credit</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/38">Section 38(b)</external-xref> is amended—</text><subparagraph id="HD65F8B0084734A97983A36F7AD817434"><enum>(A)</enum><text>by striking <quote>plus</quote> at the end of paragraph (31),</text></subparagraph><subparagraph id="H1C9BD27B63E14D30BF4B14E57B4C8E76"><enum>(B)</enum><text>by striking the period at the end of paragraph (32) and inserting <quote>, plus</quote>, and</text></subparagraph><subparagraph id="H2B33E9CA99F74904A52D16EF542976A0"><enum>(C)</enum><text>by adding at the end the following new paragraph:</text><quoted-block display-inline="no-display-inline" id="HD34338D6F5ED437AA1412F8DEA776CCC" style="OLC"><paragraph id="H02BC677A8E9E46998C1A0E0F68E07592"><enum>(33)</enum><text>the credit for qualified contributions determined under section 45T(a).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="HA99A969A116B4FAD8C68B05D60B19534"><enum>(3)</enum><header>Clerical amendment</header><text>The table of sections for subpart D of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> is amended by adding at the end the following new item:</text><quoted-block id="HEBCD6DFC389F4FE9A14891A47E607D42" style="OLC"><toc><toc-entry idref="H6702DA007D9F40EF81E8D4A1441FCECA" level="section">Sec. 45T. Contributions to eligible scholarship-granting organizations.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection></section><enum>II</enum><header>Education Freedom Scholarships web portal and administration</header><section id="H08FE802A8A324BF4B72565341BE87B07"><enum>201.</enum><header>Education Freedom Scholarships web portal and administration</header><subsection id="H70F5F7D0D8EA4FE2B74739A3CB93BDA6"><enum>(a)</enum><header>In general</header><text>The Secretary of Education shall, in coordination with the Secretary of the Treasury, establish, host, and maintain a web portal that—</text><paragraph id="HB9342459C5814109851B89080DBB617B"><enum>(1)</enum><text>lists all scholarship-granting organizations that are eligible under section 25E or 45T of the Internal Revenue Code of 1986;</text></paragraph><paragraph id="H73755539D2CA4B56B8BF29CEF567C3B5"><enum>(2)</enum><text>enables a taxpayer to make a qualifying contribution to one or more eligible scholarship-granting organizations and to immediately obtain both a pre-approval of a tax credit for that contribution and a receipt for tax filings;</text></paragraph><paragraph id="HDFEE02DB527F4AE79F2F4836907BC4C4"><enum>(3)</enum><text>provides information about the tax benefits of Education Freedom Scholarships under the Internal Revenue Code of 1986; and</text></paragraph><paragraph id="HAF0E26C7233749EBA87C50906033082F"><enum>(4)</enum><text>enables a State to submit and update information about its programs and its eligible scholarship-granting organizations for informational purposes only, including information on—</text><subparagraph id="H4908B3865ACB458E9FCCD61C402A0464"><enum>(A)</enum><text>student eligibility;</text></subparagraph><subparagraph id="H1977F818958740C384B36C0368C1399D"><enum>(B)</enum><text>allowable educational expenses;</text></subparagraph><subparagraph id="HFED9D24BF0AE42DEB0934D0ECD0F7CE8"><enum>(C)</enum><text>the types of allowable education providers;</text></subparagraph><subparagraph id="H47AAE538A1E14966AD8C53387F238A47"><enum>(D)</enum><text>the percentage of funds an organization may use for program administration; and</text></subparagraph><subparagraph id="H47CC763093444858B08D5A96D8B96DDD"><enum>(E)</enum><text>the percentage of total contributions the organization awards in a calendar year.</text></subparagraph></paragraph></subsection><subsection id="HA194212E98834BE296685D300FF4F036"><enum>(b)</enum><header>Nonportal contributions</header><text>A taxpayer may opt to make a contribution directly to an eligible scholarship-granting organization, instead of through the web portal described in subsection (a), provided that the taxpayer, or the eligible scholarship-granting organization on behalf of the taxpayer, applies for, and receives pre-approval for a tax credit from the Secretary of Education in coordination with the Secretary of the Treasury.</text></subsection><subsection id="HF497CEB4C0104D7D8D88AF6054512756"><enum>(c)</enum><header>National and State caps on credits</header><paragraph id="HEB8955486E0441B8987703764497FC02"><enum>(1)</enum><header>National cap</header><text>There is a cap of $5,000,000,000 on the sum of the contributions that qualify for a credit under section 25E and <external-xref legal-doc="usc" parsable-cite="usc/26/45T">section 45T</external-xref> of the Internal Revenue Code of 1986 for each calendar year.</text></paragraph><paragraph id="HAF8D7FA7842846DD8B9765CF4D050B16"><enum>(2)</enum><header>Allocation of cap</header><subparagraph id="HED20A88F43AF4C208D450BB555CBA501"><enum>(A)</enum><header>Initial allocations</header><text>For each calendar year, the Secretary shall—</text><clause id="HBC575B578CB648D8B6D63B56FCC9F73F"><enum>(i)</enum><text>first reserve, for each State, an amount equal to the sum of the qualifying contributions made in the State in the previous year; and</text></clause><clause id="H930A49FC1E2D42B6A6D1784C95E1AC57"><enum>(ii)</enum><text>next, allocate the remaining amount among the participating States by allocating to each State the sum of—</text><subclause id="H9C0A57058928484BB351DF15037F17C1"><enum>(I)</enum><text>an amount that bears the same relationship to 20 percent of such remaining amount as the number of individuals aged 5 through 17 in the State, as determined by the Secretary on the basis of the most recent satisfactory data, bears to the number of those individuals in all such States, as so determined; and</text></subclause><subclause id="HE9345CE1B6D540F096C0A681809F644E"><enum>(II)</enum><text>an amount that bears the same relationship to 80 percent of such remaining amount as the number of individuals aged 5 through 17 from families with incomes below the poverty line in the State, as determined by the Secretary, on the basis of the most recent satisfactory data, bears to the number of those individuals in all such States, as so determined.</text></subclause></clause></subparagraph><subparagraph id="H8851382965CE4278B9E971BF1F529408"><enum>(B)</enum><header>Minimum allocation</header><text>Notwithstanding subparagraph (A), no State receiving an allotment under this section may receive less than one-half of one percent of the amount allotted for a fiscal year.</text></subparagraph><subparagraph id="HE4EC1DAE7536474CBD53C9077437FDCE"><enum>(C)</enum><header>Alternative allocation</header><clause id="H1BF18EFE44C44F1EAD6C66E9B4A54D97"><enum>(i)</enum><header>In general</header><text>Not later than the end of the fifth year of the program or one year after the end of the first fiscal year for which the total amount of credits claimed under section 25E and <external-xref legal-doc="usc" parsable-cite="usc/26/45T">section 45T</external-xref> of the Internal Revenue Code of 1986 is $2,500,000,000 or more, whichever comes first, the Secretary shall, by regulation, provide for an alternative allocation method that shall take effect beginning with the first fiscal year after the regulation takes effect.</text></clause><clause id="HBA6E8D55D2E94C38AD01481BCE4EA68E"><enum>(ii)</enum><header>Alternative allocation method</header><text>The alternative allocation method shall be expressed as a formula based on a combination of the following data for each State, as reported by the State to the Secretary:</text><subclause id="HE9609BE8100843079FB5B985D5960E5D"><enum>(I)</enum><text>The relative percentage of students in the State who receive a elementary or secondary scholarship through a State program that is financed through State tax-credited donations or appropriations and that permits the elementary or secondary scholarship to be used to attend a private school.</text></subclause><subclause id="H77DDFC39A6B64D7E99005565E82A24D1"><enum>(II)</enum><text>The total amount of all elementary and secondary scholarships awarded through a State program that is financed through State tax-credited donations or appropriations compared to the total amount of current State and local expenditures for free public education in the State.</text></subclause></clause><clause id="H93D1ECAC5134430FAAF043C8D4969708"><enum>(iii)</enum><header>Allocation formula</header><text>For any fiscal year to which clause (i) applies, the Secretary shall—</text><subclause id="H1B61265043B6470E93566AC770C64D4C"><enum>(I)</enum><text>first reserve, for each State, an amount equal to the sum of the qualifying contributions made in the State in the previous year;</text></subclause><subclause id="H201D6ECA786B422BBDDEE783E664F4F7"><enum>(II)</enum><text>next, allocate two-thirds of the remaining amount of the national cap for that year using the alternative allocation method in clause (ii); and</text></subclause><subclause id="H8166953017984C459A878FCFD699A523"><enum>(III)</enum><text>then, allocate one-third of the remaining amount in accordance with subparagraph (A)(ii).</text></subclause></clause><clause id="HD2C0A5C410874070B7D92E5DC7AD00BD"><enum>(iv)</enum><header>Ineligibility</header><text>For any fiscal year to which clause (i) applies, a State that does not provide the Secretary with information described in clause (ii) is not eligible to receive an allocation through the alternative allocation method under clause (ii).</text></clause></subparagraph></paragraph><paragraph id="H1402AE9638A6413A86EE5ADA42AC1AF3"><enum>(3)</enum><header>Allowable partnerships</header><text>A State may choose to administer the allocation it receives under paragraph (2) in partnership with 1 or more States, provided that the eligible scholarship-granting organizations in each partner State serve students who reside in all States in the partnership.</text></paragraph><paragraph id="H44C0FF5D0A0544B8A8CD711B1AFF24D7"><enum>(4)</enum><header>Total allocation</header><text>A State’s allocation, for any fiscal year, is the sum of the amount determined for it under subparagraphs (A) and (B) of paragraph (2), except as provided in paragraph (2)(C).</text></paragraph><paragraph id="H9E840FA46EAC4AB2A8CCF00B86050B78"><enum>(5)</enum><header>Allocation and adjustments</header><subparagraph id="H1BB2F09F7C9347A48BE47D9905E8802D"><enum>(A)</enum><header>Initial allocation to States</header><text>No later than November 1 of the year preceding a year for which there is a national cap on credits under paragraph (1) (hereafter in this section, the <quote>applicable year</quote>), or as early as practicable with respect to the first year, the Secretary shall announce the State allocations under paragraph (2) for the applicable year.</text></subparagraph><subparagraph id="H314A7B5ACB3C4EFBBE33BF74A927C032"><enum>(B)</enum><header>List of eligible scholarship-granting organizations</header><text>No later than January 1 of each applicable year, or as early as practicable with respect to the first year, each State shall provide the Secretary a list of eligible scholarship-granting organizations described in <external-xref legal-doc="usc" parsable-cite="usc/26/25E">section 25E(c)(4)(A)</external-xref> of the Internal Revenue Code of 1986, including a certification that the entity submitting the list on behalf of the State has the authority to perform this function. Neither this Act nor any other Federal law shall be construed as limiting the entities that may submit the list on behalf of a State.</text></subparagraph><subparagraph id="H0BB8735FF27744FC98C6E9F10D3AC36D"><enum>(C)</enum><header>Reallocation of unclaimed credits</header><text display-inline="yes-display-inline">The Secretary shall reallocate a State’s allocation to other States, in accordance with paragraph (2), if the State—</text><clause id="H105D08574F294CB8A6114823B37BE94D"><enum>(i)</enum><text>chooses not to identify scholarship-granting organizations under subparagraph (B) in any applicable year; or</text></clause><clause id="H857FEB0DA5714F36B0FEEEF85E7C00D2"><enum>(ii)</enum><text>does not have an existing eligible scholarship-granting organization (as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/25E">section 25E(c)(4)(B)</external-xref> of the Internal Revenue Code of 1986).</text></clause></subparagraph><subparagraph id="H9321B42BA6314288923279FD4C047CFC"><enum>(D)</enum><header>Reallocation</header><text>On or after April 1 of any applicable year, the Secretary may reallocate, to 1 or more other States that have eligible scholarship-granting organizations in the States, without regard to paragraph (2), the allocation of a State for which the State’s allocation has not been claimed.</text></subparagraph></paragraph></subsection><subsection id="HCA91491EDF194D30AE9299D10D40214D"><enum>(d)</enum><header>Definitions</header><text>The definitions of terms in <external-xref legal-doc="usc" parsable-cite="usc/26/25E">section 25E(c)</external-xref> of the Internal Revenue Code of 1986 apply to those terms as used in this title.</text></subsection></section>