Special Purpose Entities (SPE)
Introduction
Q. What is a Special Purpose Entity (SPE) as it pertains to Pennsylvania education tax credits?
A. A Special Purpose Entity is a new class of pass-through partnerships that exists solely for the purpose of obtaining Education Improvement Credits (EITC/OSTC).
Q. What does this mean for Eden families and supporters?
A. QCS families and benefactors may be able to designate part of their Pennsylvania state tax liability for use by QCS to enhance financial assistance for qualifying families.
Educational Improvement Tax Credit Program (EITC)
Introduction
In 2001, the Pennsylvania Department of Revenue enacted the nation’s first educational tax credit aimed at corporations. House Bill 966 authorized awarding tax credits to businesses that contribute to a non-profit Scholarship Organization, an Educational Improvement Organization and/or a Pre-Kindergarten Scholarship Organization. For businesses, this significantly reduces their state tax liability.
Quakertown Christian School receives support from the EITC program through the Pennsylvania Mennonite Schools Organization (PAMSO) via the Mennonite Foundation. This support provides tuition assistance for students and families who demonstrate financial need. More information.
Eligibility
A business may apply for tax credits if they are subject to one or more of the following taxes:
- Corporate net income tax
- Capital stock franchise tax
- Bank and trust company shares tax
- Title insurance companies shares tax
- Insurance premiums tax
- Mutual thrift institution tax
- Insurance company law of 1921
- Personal income tax of S corporation shareholders or partnership partners
Tax credits may be applied against the tax liability of a business for the tax year in which the contribution was made.
Business application timeline
- May 15 – Business applicants who have fulfilled their 2-year commitment and wish to reapply in the current fiscal year to renew a 2-year commitment
- May 15 – Businesses who are in the middle of a 2-year commitment
- July 1 – All other businesses including Pre-K business applications
- Applications must be submitted electronically using DCED’s Electronic Single Application process.
- Review the Business Application Guide
- Tax credit applications will be processed on a first-come, first-served basis by day submitted. All applications received on a specific day will be processed on a random basis before moving on to the next day’s applications.
- Applications will be approved until the amount of available tax credits is exhausted.
Terms
Upon approval, businesses will receive a letter from the Department of Community and Economic Development (DCED). An approved business then has 60 days to mail their contribution to an approved Scholarship Organization such as Mennonite Foundation. Upon receipt of the contribution, the Scholarship Organization will mail a receipt letter to the business which can then be forwarded to the DCED in order for the business to receive their tax credits. The entire process must take no more than 90 days from the date of approval.
Contact information
The Mennonite Foundation
Attn. Nikki Shingle
960 E Main Street
Mount Joy, PA 17552
(717) 653-6662
Nikki.shingle@everence.com
