<enum>I</enum><header>Ability of States to opt out of K–12 education grant programs</header> <section id="H37B4C42CED61410EA9504F7456AD68D0"><enum>101.</enum><header>Determinations by Secretary of Treasury as to which States are opt-out States</header> <subsection id="HE6E1241C6CD04D1CB3DDB240FFB8DD83"><enum>(a)</enum><header>Deadline</header><text>Not later than February 1 of each calendar year (hereinafter in this title referred to as the <quote>determination year</quote>), the Secretary of the Treasury shall determine which States, if any, are opt-out States for the calendar year (hereinafter in this title referred to as the <quote>opt-out year</quote>) that follows the determination year.</text> </subsection><subsection id="HAAD23F8C9A76462CB2B661CD4057C1F0"><enum>(b)</enum><header>Determination</header><text>The Secretary of the Treasury shall determine that a State is an opt-out State for an opt-out year under subsection (a) if, and only if, there is transmitted to the Secretary a copy of a law, in effect as of January 1 of the determination year, that can fairly be read to mean that the policy of the State is to not accept grant funds under the K–12 education grant programs, and thereby to not be bound by the requirements of those programs, for that opt-out year.</text> </subsection><subsection id="HDF09DB4DF672474CA5BCCC84855CFA8C"><enum>(c)</enum><header>Notification</header><text>Upon making a determination under subsection (a), the Secretary of the Treasury shall transmit that determination to the Secretary of Education and to Congress.</text> </subsection></section><section id="HD2EFE227B85B478DA74E5CD9D95DD21E"><enum>102.</enum><header>Amounts creditable to States</header> <subsection id="HD53A9057564448989349C0DE6ACF21A6"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">For purposes of determinations relating to the refundable opt-out State education credit under section 36B of the Internal Revenue Code of 1986, as early as practicable for a calendar year, the Secretary of Education shall, for each State, determine the amount creditable to that State for that calendar year and make available that determination.</text> </subsection><subsection id="HB4F9BE54047742C4BAF7110E54600B39"><enum>(b)</enum><header>Amount creditable</header><text>The Secretary shall determine the amount creditable to a State for a calendar year as follows:</text> <paragraph id="H1A2A5F0E6617429D917FA283ECB427D1"><enum>(1)</enum><text>If the State was not an opt-out State for the preceding calendar year, the amount creditable for the calendar year shall be equal to the aggregate K–12 funding (as determined under subsection (d)) for that State for that preceding calendar year.</text> </paragraph><paragraph id="H16DD5D329AA04A529340D6F1BA32632C"><enum>(2)</enum><text>If the State was an opt-out State for the preceding calendar year, the amount creditable for the calendar year shall be equal to—</text> <subparagraph id="H22D7D41F07334B6A88BA43D9F9DD174B"><enum>(A)</enum><text>the extrapolated amount (as determined under subsection (c)) for that preceding calendar year, plus</text> </subparagraph><subparagraph id="H8EEDBA2D1819401FBC2557F81771DD59"><enum>(B)</enum><text>the amount that results when the amount creditable for that preceding calendar year is subtracted from the extrapolated amount (as determined under subsection (c)) for that preceding calendar year.</text> </subparagraph></paragraph></subsection><subsection id="H7122E7D185A74AE5A18034AA5207891F"><enum>(c)</enum><header>Extrapolated amount</header> <paragraph id="H5C642B07F02242E2B957A0DC4F798F65"><enum>(1)</enum><header>In general</header><text>The Secretary of Education shall determine the extrapolated amount for a State for a calendar year. The determination shall be based on—</text> <subparagraph id="H847755D418154D659C955C075ABCA8E5"><enum>(A)</enum><text>the amount of grant funds that would have been received other than on a competitive basis, as direct grants, subgrants, or otherwise, under the K–12 education grant programs, by the State or any public educational entity in the State for that calendar year, had it elected not to be an opt-out State for that calendar year; plus</text> </subparagraph><subparagraph id="HE619108DF1024A25B4D036D3E6D4BC14"><enum>(B)</enum><text display-inline="yes-display-inline">the average annual amount of all grant funds that would have been received on a competitive basis, as direct grants, subgrants, or otherwise, under the K–12 education grant programs, by the State or any public educational entity in the State for that calendar year and the four preceding calendar years, had it elected not to be an opt-out State for those calendar years.</text> </subparagraph></paragraph><paragraph id="H41ECDCFFF75E4CD394463B8510E0F355"><enum>(2)</enum><header>Regulations</header><text>The Secretary shall prescribe regulations for making determinations required by this subsection. The initial regulations shall be prescribed not later than 6 months after the date of the enactment of this Act.</text> </paragraph></subsection><subsection id="H858DA72102E846A388C38A8F2067B43C"><enum>(d)</enum><header>Aggregate K–12 funding</header><text>The aggregate K–12 funding for a State for a calendar year shall be equal to—</text> <paragraph id="HFBF599C6C3734D22BD9279DF65ABA60F"><enum>(1)</enum><text>the amount of all grant funds received other than on a competitive basis, as direct grants, subgrants, or otherwise, under the K–12 education grant programs, by the State or any public educational entity in the State for that calendar year; plus</text> </paragraph><paragraph id="HBCA5CE2237AF4C5EA19CF6DB1DF547F2"><enum>(2)</enum><text>the average annual amount of all grant funds received on a competitive basis, as direct grants, subgrants, or otherwise, under the K–12 education grant programs, by the State or any public educational entity in the State for that calendar year and the four preceding calendar years.</text> </paragraph></subsection></section><section id="H9DDBD6DBEF31428EACBAC7679424ECFD"><enum>103.</enum><header>Opt-out States not eligible to receive grants under K–12 education grant programs</header> <subsection id="H8CADBC60F5784BCBBC38914F96876C8A"><enum>(a)</enum><header>In general</header><text>When a State is an opt-out State for a calendar year, neither the State nor any public educational entity in the State is eligible to receive, as direct grants, subgrants, or otherwise, any funds under any of the K–12 education grant programs for that calendar year.</text> </subsection><subsection id="HBC6449C1633A4F7C8F8FA77112B1D3DF"><enum>(b)</enum><header>Reallocation</header><text>Any funds under a K–12 education grant program that are not allocated to a State or public educational entity in the State by reason of subsection (a) shall be returned to the Treasury.</text> </subsection></section><section id="H774D273739A447F8B22C7A7480C1D841"><enum>104.</enum><header>Requirements of K–12 education grant programs do not apply to opt-out States</header><text display-inline="no-display-inline">When a State is an opt-out State for a calendar year, neither the State nor any public educational entity in the State is subject to any statutory or regulatory requirement of a K–12 education grant program for that calendar year.</text> </section><section id="H9140337664094EAA80220DE936DB08BC"><enum>105.</enum><header>Definitions</header><text display-inline="no-display-inline">In this title:</text> <paragraph id="H1122284F022A4C1586FAE16511234306"><enum>(1)</enum><text>The term <term>K–12 education grant program</term> means any grant program carried out under any title of the Elementary and Secondary Education Act of 1965, except for the following:</text> <subparagraph id="H92ECBBD9382E4A80872724CE6F4653B0"><enum>(A)</enum><header>Indian, Native Hawaiian, and Alaska Native Education</header><text>Title VII (20 U.S.C. 7401 et seq.).</text> </subparagraph><subparagraph id="H7670B1A5CF7540189A010B97EFA8ACB5"><enum>(B)</enum><header>Impact Aid</header><text>Title VIII (20 U.S.C. 7701 et seq.).</text> </subparagraph></paragraph><paragraph id="HAF31A3F0A7334B1C95FB3B3DCEAFABE5"><enum>(2)</enum><text>The term <term>public educational entity</term> means, with respect to a State, the State educational agency, any local educational agency in the State, or any public elementary or secondary school in the State.</text> </paragraph></section>

Short title; table of contents

(a)

Short title

This Act may be cited as the

Local Education Authority Returns Now Act

. (b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Title I—Ability of States to opt out of K–12 education grant programs

Sec. 101. Determinations by Secretary of Treasury as to which States are opt-out States.

Sec. 102. Amounts creditable to States.

Sec. 103. Opt-out States not eligible to receive grants under K–12 education grant programs.

Sec. 104. Requirements of K–12 education grant programs do not apply to opt-out States.

Sec. 105. Definitions.

Title II—Credit to taxpayers in opt-out State

Sec. 201. Refundable opt-out State education credit.

<enum>I</enum><header>Ability of States to opt out of K–12 education grant programs</header> <section id="H37B4C42CED61410EA9504F7456AD68D0"><enum>101.</enum><header>Determinations by Secretary of Treasury as to which States are opt-out States</header> <subsection id="HE6E1241C6CD04D1CB3DDB240FFB8DD83"><enum>(a)</enum><header>Deadline</header><text>Not later than February 1 of each calendar year (hereinafter in this title referred to as the <quote>determination year</quote>), the Secretary of the Treasury shall determine which States, if any, are opt-out States for the calendar year (hereinafter in this title referred to as the <quote>opt-out year</quote>) that follows the determination year.</text> </subsection><subsection id="HAAD23F8C9A76462CB2B661CD4057C1F0"><enum>(b)</enum><header>Determination</header><text>The Secretary of the Treasury shall determine that a State is an opt-out State for an opt-out year under subsection (a) if, and only if, there is transmitted to the Secretary a copy of a law, in effect as of January 1 of the determination year, that can fairly be read to mean that the policy of the State is to not accept grant funds under the K–12 education grant programs, and thereby to not be bound by the requirements of those programs, for that opt-out year.</text> </subsection><subsection id="HDF09DB4DF672474CA5BCCC84855CFA8C"><enum>(c)</enum><header>Notification</header><text>Upon making a determination under subsection (a), the Secretary of the Treasury shall transmit that determination to the Secretary of Education and to Congress.</text> </subsection></section><section id="HD2EFE227B85B478DA74E5CD9D95DD21E"><enum>102.</enum><header>Amounts creditable to States</header> <subsection id="HD53A9057564448989349C0DE6ACF21A6"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">For purposes of determinations relating to the refundable opt-out State education credit under section 36B of the Internal Revenue Code of 1986, as early as practicable for a calendar year, the Secretary of Education shall, for each State, determine the amount creditable to that State for that calendar year and make available that determination.</text> </subsection><subsection id="HB4F9BE54047742C4BAF7110E54600B39"><enum>(b)</enum><header>Amount creditable</header><text>The Secretary shall determine the amount creditable to a State for a calendar year as follows:</text> <paragraph id="H1A2A5F0E6617429D917FA283ECB427D1"><enum>(1)</enum><text>If the State was not an opt-out State for the preceding calendar year, the amount creditable for the calendar year shall be equal to the aggregate K–12 funding (as determined under subsection (d)) for that State for that preceding calendar year.</text> </paragraph><paragraph id="H16DD5D329AA04A529340D6F1BA32632C"><enum>(2)</enum><text>If the State was an opt-out State for the preceding calendar year, the amount creditable for the calendar year shall be equal to—</text> <subparagraph id="H22D7D41F07334B6A88BA43D9F9DD174B"><enum>(A)</enum><text>the extrapolated amount (as determined under subsection (c)) for that preceding calendar year, plus</text> </subparagraph><subparagraph id="H8EEDBA2D1819401FBC2557F81771DD59"><enum>(B)</enum><text>the amount that results when the amount creditable for that preceding calendar year is subtracted from the extrapolated amount (as determined under subsection (c)) for that preceding calendar year.</text> </subparagraph></paragraph></subsection><subsection id="H7122E7D185A74AE5A18034AA5207891F"><enum>(c)</enum><header>Extrapolated amount</header> <paragraph id="H5C642B07F02242E2B957A0DC4F798F65"><enum>(1)</enum><header>In general</header><text>The Secretary of Education shall determine the extrapolated amount for a State for a calendar year. The determination shall be based on—</text> <subparagraph id="H847755D418154D659C955C075ABCA8E5"><enum>(A)</enum><text>the amount of grant funds that would have been received other than on a competitive basis, as direct grants, subgrants, or otherwise, under the K–12 education grant programs, by the State or any public educational entity in the State for that calendar year, had it elected not to be an opt-out State for that calendar year; plus</text> </subparagraph><subparagraph id="HE619108DF1024A25B4D036D3E6D4BC14"><enum>(B)</enum><text display-inline="yes-display-inline">the average annual amount of all grant funds that would have been received on a competitive basis, as direct grants, subgrants, or otherwise, under the K–12 education grant programs, by the State or any public educational entity in the State for that calendar year and the four preceding calendar years, had it elected not to be an opt-out State for those calendar years.</text> </subparagraph></paragraph><paragraph id="H41ECDCFFF75E4CD394463B8510E0F355"><enum>(2)</enum><header>Regulations</header><text>The Secretary shall prescribe regulations for making determinations required by this subsection. The initial regulations shall be prescribed not later than 6 months after the date of the enactment of this Act.</text> </paragraph></subsection><subsection id="H858DA72102E846A388C38A8F2067B43C"><enum>(d)</enum><header>Aggregate K–12 funding</header><text>The aggregate K–12 funding for a State for a calendar year shall be equal to—</text> <paragraph id="HFBF599C6C3734D22BD9279DF65ABA60F"><enum>(1)</enum><text>the amount of all grant funds received other than on a competitive basis, as direct grants, subgrants, or otherwise, under the K–12 education grant programs, by the State or any public educational entity in the State for that calendar year; plus</text> </paragraph><paragraph id="HBCA5CE2237AF4C5EA19CF6DB1DF547F2"><enum>(2)</enum><text>the average annual amount of all grant funds received on a competitive basis, as direct grants, subgrants, or otherwise, under the K–12 education grant programs, by the State or any public educational entity in the State for that calendar year and the four preceding calendar years.</text> </paragraph></subsection></section><section id="H9DDBD6DBEF31428EACBAC7679424ECFD"><enum>103.</enum><header>Opt-out States not eligible to receive grants under K–12 education grant programs</header> <subsection id="H8CADBC60F5784BCBBC38914F96876C8A"><enum>(a)</enum><header>In general</header><text>When a State is an opt-out State for a calendar year, neither the State nor any public educational entity in the State is eligible to receive, as direct grants, subgrants, or otherwise, any funds under any of the K–12 education grant programs for that calendar year.</text> </subsection><subsection id="HBC6449C1633A4F7C8F8FA77112B1D3DF"><enum>(b)</enum><header>Reallocation</header><text>Any funds under a K–12 education grant program that are not allocated to a State or public educational entity in the State by reason of subsection (a) shall be returned to the Treasury.</text> </subsection></section><section id="H774D273739A447F8B22C7A7480C1D841"><enum>104.</enum><header>Requirements of K–12 education grant programs do not apply to opt-out States</header><text display-inline="no-display-inline">When a State is an opt-out State for a calendar year, neither the State nor any public educational entity in the State is subject to any statutory or regulatory requirement of a K–12 education grant program for that calendar year.</text> </section><section id="H9140337664094EAA80220DE936DB08BC"><enum>105.</enum><header>Definitions</header><text display-inline="no-display-inline">In this title:</text> <paragraph id="H1122284F022A4C1586FAE16511234306"><enum>(1)</enum><text>The term <term>K–12 education grant program</term> means any grant program carried out under any title of the Elementary and Secondary Education Act of 1965, except for the following:</text> <subparagraph id="H92ECBBD9382E4A80872724CE6F4653B0"><enum>(A)</enum><header>Indian, Native Hawaiian, and Alaska Native Education</header><text>Title VII (20 U.S.C. 7401 et seq.).</text> </subparagraph><subparagraph id="H7670B1A5CF7540189A010B97EFA8ACB5"><enum>(B)</enum><header>Impact Aid</header><text>Title VIII (20 U.S.C. 7701 et seq.).</text> </subparagraph></paragraph><paragraph id="HAF31A3F0A7334B1C95FB3B3DCEAFABE5"><enum>(2)</enum><text>The term <term>public educational entity</term> means, with respect to a State, the State educational agency, any local educational agency in the State, or any public elementary or secondary school in the State.</text> </paragraph></section><enum>II</enum><header>Credit to taxpayers in opt-out State</header> <section display-inline="no-display-inline" id="H15055AD9FB0D420F8DE2881BF810C658" section-type="subsequent-section"><enum>201.</enum><header>Refundable opt-out State education credit</header> <subsection id="HE35FDE945CDB4136AB495F014D90AEBC"><enum>(a)</enum><header>In general</header><text>Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 36A the following new section:</text> <quoted-block id="HE84766E64C864331B07A5932C672940D"> <section id="H1DD5CBACFCE64BC997E13FBC50F78E0F"><enum>36B.</enum><header>Opt-out State education credit</header> <subsection id="H2E179B6954084609A6089895CA06BEC6"><enum>(a)</enum><header>General rule</header><text display-inline="yes-display-inline">In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the opt-out State education amount.</text> </subsection><subsection id="H846764F74BD0426A8202DE16DA0E1CBC"><enum>(b)</enum><header>Opt-Out State education amount</header><text display-inline="yes-display-inline">For purposes of this section—</text> <paragraph id="H7C3DBC2A44F84CB6B16DE9F08591B44D"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">The term <term>opt-out State education amount</term> means, with respect to a taxpayer for a taxable year beginning in an opt-out year, the amount equal to—</text> <subparagraph id="H6E62515154774B2E8989C84A7539A2DA"><enum>(A)</enum><text display-inline="yes-display-inline">the amount creditable under section 102 of the <short-title>Local Education Authority Returns Now Act</short-title> to an opt-out State (determined under section 101 of such Act), multiplied by—</text> </subparagraph><subparagraph id="H8A9837963DDB432B9C5019FE03ADD5BB"><enum>(B)</enum><text>a fraction—</text> <clause id="HC71AAFE2105E42E98A56C18632876D85"><enum>(i)</enum><text>the numerator of which is the taxpayer’s household tax burden from such State for the opt-out year, and</text> </clause><clause id="H222AD5D9BBC14907A669BA6F922F74CE"><enum>(ii)</enum><text>the denominator of which is the total tax revenue of such State for the opt-out year.</text> </clause></subparagraph></paragraph><paragraph id="H007F035C6DEA4B29B1E1B85B04B3DCCF"><enum>(2)</enum><header>Household tax burden</header><text>The household tax burden from a State for an opt-out year is the sum of—</text> <subparagraph id="HBB0E37CA7B7849E886066DF507FEEF92"><enum>(A)</enum><text>the State real property taxes,</text> </subparagraph><subparagraph id="HBB849FE1EED949D18034E8FF52028376"><enum>(B)</enum><text display-inline="yes-display-inline">the State personal property taxes,</text> </subparagraph><subparagraph id="H3EE725E6C43541F6B7B5B4CF95F7E173"><enum>(C)</enum><text display-inline="yes-display-inline">the State income, war profits, and excess profits taxes, plus</text> </subparagraph><subparagraph id="HDFD031986B6C415FA25AF04EEC6CF4D4"><enum>(D)</enum><text display-inline="yes-display-inline">the State general sales taxes,</text> </subparagraph><continuation-text continuation-text-level="paragraph">for the calendar year in which the second preceding taxable year ends and within which paid or accrued by the taxpayer. For purposes of this section, terms used in the preceding sentence which are also used in section 164 shall have the respective meanings given such terms by section 164.</continuation-text></paragraph><paragraph id="H79FE28DD921148B3A64265BADEBDF338"><enum>(3)</enum><header>Total tax revenue</header><text>The total tax revenue of a State for an opt-out year is the amount determined by the Secretary to be the aggregate tax revenue of such State for the calendar year in which the second preceding taxable year ends.</text> </paragraph></subsection><subsection id="HA0EE727BCF934FBEAF38F6EF8F88A164"><enum>(c)</enum><header>Eligible individual</header><text>For purposes of this section—</text> <paragraph id="H9A000303D3994EE9B58ED60183177151"><enum>(1)</enum><header>In general</header><text>The term <term>eligible individual</term> means an individual whose principal place of abode (within the meaning of section 121) was in the opt-out State for the entire taxable year.</text> </paragraph><paragraph id="HA0C632DB1D044785B297E6BFB364A280"><enum>(2)</enum><header>Dependents</header><text display-inline="yes-display-inline">The term <term>eligible individual</term> does not include any individual if a deduction under section 151 with respect to such individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins.</text> </paragraph></subsection><subsection id="H9EA562662F68420BA7CE127CD98A13C9"><enum>(d)</enum><header>Opt-Out year</header><text>The term <term>opt-out year</term> means a calendar year for which the Secretary determines a State to be an opt-out State under section 101 of the <short-title>Local Education Authority Returns Now Act</short-title>.</text> </subsection><subsection id="HC20173AA97C54FC3B63868915A3DC7C0"><enum>(e)</enum><header>Amount of credit shall be determined under tables</header> <paragraph id="HAB7598E61F804275A9955CCE6EBDE53A"><enum>(1)</enum><header>In general</header><text>The credit under subsection (a) shall be determined under tables prescribed by the Secretary.</text> </paragraph><paragraph id="H4BE0297FC71848659F49B64D1E19F8FA"><enum>(2)</enum><header>Requirements for tables</header><text>The tables prescribed under paragraph (1) shall—</text> <subparagraph id="H4501A0C4DE3745F68EB98DBC25778B64"><enum>(A)</enum><text>reflect the provisions of this section, and</text> </subparagraph><subparagraph id="H7E21F86D68BB43DBB543908ECFBF6C4A"><enum>(B)</enum><text>take into account filing status, State of residence, and adjusted gross income.</text> </subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="HE6F96B06C9FF45B0B7B0E2245D350267"><enum>(b)</enum><header>Conforming amendments</header> <paragraph id="HAF347638F93F4377BAF73236E9A902D0"><enum>(1)</enum><text>Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting <quote>36B,</quote> after <quote>36A,</quote>.</text> </paragraph><paragraph id="HB3B103967120451E9BFCC215183D40C1"><enum>(2)</enum><text>The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36A the following new item:</text> <quoted-block display-inline="no-display-inline" id="H8BFAF8275E534BE98E12981B50D17DAB" style="OLC"> <toc container-level="quoted-block-container" idref="HE84766E64C864331B07A5932C672940D" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration"> <toc-entry idref="H1DD5CBACFCE64BC997E13FBC50F78E0F" level="section">Sec. 36B. Opt-out State education credit.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></subsection><subsection id="H569623C9998B44F2B193B372E4BBCC9A"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text> </subsection></section>