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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Barr, William: Files
Folder Title: Tuition Tax Credit Bill (15)
Box: 13
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
Amendments To Modify The Anti-Discrimination Provisions of the
Tuition Tax Credit Bill
1. New Eligibility Requirement
The amended bill would contain a provision requiring an
eligible school to publish a statement of its
nondiscriminatory policy in any published by-laws, brochures,
admissions materials, and other published materials.
2. Annual Statement Under Oath is retained
The amended bill would retain the original requirement that
each school file with the Secretary of the Treasury and send
to parents an annual statement under oath that the school has
not discriminated on the basis of race during the calendar
year.
3. Changes in the Triggering of the Declaratory Judgment
Procedure and Investigation by the Attorney General
The original bill provided that to trigger an investigation
by the Attorney General, a person who had been discriminated
against by a school had to file a complaint.
The amended provision would allow a petition to be filed by
any person, provided that person alleges with specificity:
(a) an act of discrimination, or
(b) a communication expressing a discriminatory policy.
The petition must be filed within one year of the act or
communication described in the petition.
Under the original bill, the Attorney General was authorized
to file a declaratory judgment action whenever he finds good
cause, upon investigation, to believe that a school follows a
racially discriminatory policy. Under the new bill, the
Attorney General would be authorized and directed to file
suit under such circumstances, within one year of receiving
the petition.
Once the Attorney General files suit, he must show that the
school is following a racially discriminatory policy, but
under the amended bill he is not bound or limited by the
allegations contained in the petition that triggered the
suit. The Attorney General must show actual evidence of
racial discrimination occurring within the two year period
preceding the filing of his complaint, not mere failure to
meet a quota or numerical standard. Under the original bill
the Attorney General was required to show that an act of
discrimination against a student has occurred. Under the
amended bill the Attorney General could also prevail upon
showing that a statement had been made communicating a
discriminatory policy or upon showing a pattern of conduct
evidencing intent to maintain a discriminatory policy.
The original bill contains a provision allowing the Attorney
General to enter into a settlement agreement with schools
2
against which complaints have been received. This provision
would be retained. Upon the violation of a settlement
agreement, the Attorney General would be authorized and
directed to seek a declaratory judgment against the school.
The amended bill would require regular reports by the
Attorney General to Congress concerning the disposition of
petitions and actions filed pursuant therto.
4. Reinstatement of Credits
Under the original bill, a school adjudged to be
discriminatory became automatically re-eligible for credits
after a three-year period of disallowance.
The amended bill would impose an indefinite period of
disallowance, which continues until the school shows in court
that it no longer discriminates.
The amended bill would provide that the school may not move
to reinstate its eligibility for credits until it has
maintained a clean record for at least one year following the
judgment against it.
The school must make a prima facie showing that it has ceased
its discriminatory policy, communicated its change in policy
to the community, and complied with various publication
requirements. The school's eligibility would then be
restored unless the Attorney General established that the
school's showing was false , or that the school was
continuing to follow a discriminatory policy.
5. Stay of Penalties Pending Exhaustion of Appeals
The original bill stayed the disallowance of credits until
all appeals have been exhausted. Under the amended bill,
credits would be disallowed immediately upon entry of
judgment by the district court against a school.
6. Commencement of Penalty Period
The original bill provided that disallowance of credits would
not be imposed until final appeal, but that when imposed it
would be retroactive to the year in which the complaint was
filed.
Under the amended bill, the disallowance period would begin
in the calendar year the district court judgment is entered.
Tax returns filed for previous years will generally not,
therefore, have to be reopened.
7. Enforcement Responsibility
The amended bill would direct the Secretary of the Treasury
to provide the Attorney General all information relevant to
the Attorney General's investigations and actions under the
bill. The Secretary of the Treasury would also enforce the
3
amended bill's new requirement disallowing eligibility for
schools failing to publicize their nondiscriminatory policy.
Exclusive responsibility to investigate and determine whether
a school is following a discriminatory policy under the
tuition tax credit bill, and to commence declaratory judgment
prodedings, will remain with the Attorney General.
8. Attorneys Fees
The amended bill would add a provision allowing the award of
reasonable attorneys fees for schools prevailing in a
declaratory judgment action brought by the Attorney General
under the bill.
9. Statute of Limitations
The statute of limitations for taxpayers to claim tax refunds
would be extended in the event a district court declaratory
judgment against a school was reversed on appeal.
The statute of limitations for assessing deficiencies against
individual taxpayers claiming credits would be extended in
the event that a district court entered a stay of its
declaratory judgment against a school pending appeal. In the
event a stay is entered and the decision is affirmed, the
period of disallowance would commence with the year the
district court judgment was entered.
30 NOV 1982
NATIONAL COALITION FOR TUITION TAX CREDITS
1435 G Street, N.W., Suite 854, Washington, D.C. 20005
Telephone: (202) 638-6469
November 23, 1982
The Honorable Robert Dole
Dirksen Senate Office Building #2213
Washington, D.C. 20510
Dear Senator Dole:
The Coalition for Tuition Tax Credits met on Tuesday, November
16, to discuss the future of legislation supportive of this
issue. At a previous meeting it had been decided that it was not
feasible to seek action in the "lame-duck" session. At the 11/16
meeting it was therefore decided that there are some options open
to us which we would like to discuss with you at the earliest
possible date. These options center around two basic areas: which
BILL to support, and what STRATEGY to follow to enact this
legislation.
The following is a brief outline of the options as we see them at
this time. We ask you to give them your thoughtful attention
prior to our meeting with you.
BILL OPTIONS
1. Original bill as presented by the White House.
(Pro- Leaves room for negotiations.)
(Con- Leaves open possibility of more dangerous amendments
being added.)
2. White House compromise to the Bradley amendments.
(Pro- Less possibility of dangerous amendments being added
because compromises have already been made.)
(Pro- Christian School Community will still accept this bill.)
(Con- No room for further negotiations.)
3. S 2673 as amended and reported out of the Senate Finance
Committee.
(Pro- Already passed by the Finance Committee.)
(Con- Unaccetable to conservative elements in the coalition
because of extensive government involvement, i.e. compulsory
attendance laws and holding the issue hostage to the Bob Jones
University case.)
STRATEGY OPTIONS:
1. Aggressively pursue enactment of legislation through normal
channels: Committee hearings in Senate and House, floor
action, conference committee, etc.
(Pro- Straight up/down vote on the issue itself.)
(Con- Speaker of the House could stall further action.)
(Con- A filibuster could kill the bill.)
2. Attach tuition tax credit legislation to a "must pass" bill on
the floor of the Senate.
(Pro- In 1981, President Reagan pledged to include TTC in the
second Administration tax bill.)
(Pro- Less possibility of a successful filibuster.)
(Pro- House Speaker cannot prevent floor action.)
(Pro- Bill's integrity can be assured in the Senate through
first and second degree amendments.)
(Con- May get bogged down with original bill.)
Thank you, Senator, for giving this matter your time and
consideration. We appreciate all that you have already done for
the cause of parents' rights in education.
Again, we think that it is important that we meet with you in -the
very near future, prior to our meeting with the Administration in
mid December. Please contact us through the Coalition number
given above.
Sincerely,
sister Rence Olines
Sister Renee- Oliver
on behalf of Members of the Coalition:
Coalitions for America
Citizens for Ed. Freedom
Pro-Family Coalition
Moral Majority
National Pro-Life PAC
Catholic League
Accelerated Christian Education
Knights of Columbus
United States
National Catholic
Catholic Conference
Education Association
Council on American
Assn. of Christian Schools
Private Education
International
CC: Edwin Meese
Nat. Christian Action
Donald Regan
Coalition
Terrel Bell
Charles O'Malley
Jack Burgess
CEF
CITIZENS FOR EDUCATIONAL FREEDOM
PARENTS
RIGHTS
IN
SUITE 854 WASHINGTON BUILDING
15TH STREET & NEW YORK AVE., N.W.
EDUCATION
WASHINGTON, D.C. 20005
AREA CODE 202-638-6423
The attached bill was originally drafted by Msgr. Spires but
has been rewritten to include changes suggested by Attorney
William Ball on December 23, 1982.
CEF
a non-sectarian, non-partisan national organization of citizens and supporting
groups dedicated to parents' rights, liberty and justice for all in education.
THE EDUCATIONAL OPPORTUNITY AND EQUITY ACT OF 1983
1. A bill to amend the Internal Revenue Code to provide a
tuition tax credit for one-half of tuition payments made to an
educational institution for the primary or secondary education
of taxpayer's dependents, up to a maximum per student of
$100.00 in 1983, $200.00 in 1984, $300.00 in 1985, and
thereafter.
2. The maximum credit shall be allowed only when the adjusted
gross income of the taxpayer does not exceed $40,000.00 for
the taxable year ($20,000.00 for a married individual filing a
separate return); one-half credit will be allowed when the
adjusted gross income is above $40,000.00 ($20,000.00 but not
greater than $60,000.00, $30,000.00); no credit is allowed
when the gross adjusted income exceeds $60,000.00).
3.
Tax credits claimed under this section shall not
constitute Federal financial assistance to educational
institutions or to the recipients of such credits.
4.
EDUCATIONAL INSTITUTION. The term "educational
institution" means a school that
(i) provides a full-time program for students in grades 1
through 12, or any part thereof, to children of compulsory
school attendance age.
(ii) is a privately operated, not-for-profit, day or
residential school;
(iii) is exempt from taxation under Section 501 (a) as an
organization described in Sections 501 (c) (3), including
church-operated schools to which subsections (a) and (b) of
Section 508 do not apply;
5. The amendments made by this Act shall not take effect
until the Attorney General certifies to the Secretary of the
Treasury that, pursuant to-
(1) an Act of Congress which has been enacted, or
(2) a final decision of the United States Supreme
Court,
the Internal Revenue Code of 1954 prohibits the granting of
tax exemption under section 501 (a) by reason of section
501 (c) (3) to private educational institutions maintaining a
racially discriminatory policy or practice as to students.
MEMORANDUM
THE WHITE HOUSE
WASHINGTON
January 24, 1983
FOR:
RICHARD G. DARMAN
THROUGH: EDWIN L. HARPER
FROM:
WILLIAM P. BARR
WPB
SUBJECT: Addition to Tuition Tax Credit Legislation
Attached is a clean copy of the tuition tax credit
legislation. It is identical to the version you circulated
Friday, except for the insertion of subsection (c) at the very
end of the bill -- the last 11 lines.
This provision was in the original bill as reported by the
Senate Finance Committee last Congress. Treasury first asked
that it be deleted from the bill to be transmitted this week, but
has now changed its mind and has asked that it be inserted again.
It is a technical change relating to the mechanics of claiming
the credit and has no significant policy implications.
" (d) Tax Credit Not Allowed for Amounts Paid to Racially
Discriminatory Institutions. --
(1) Racial Discrimination Prohibited. -- No credit
shall be allowed under subsection (a) for amounts paid to an
educational institution that is found, pursuant to the
procedures set forth in this sub-section, to follow a
racially discriminatory policy.
"(2) Definition. -- For purposes of this subsection, an
1
educational institution follows a 'racially discriminatory
policy' if it refuses, on account of race --
(A) to admit applicants as students;
(B) to admit students to the rights, privileges,
programs, and activities generally made available to
students by the educational institution; or
(C) to allow students to participate in its
scholarship, loan, athletic, or other programs.
A racially discriminatory policy shall not include failure to
pursue or achieve any racial quota, proportion, or representation
in the student body. The term 'race' shall include color or
national origin.
"(3) Declaratory Judgment Proceedings. -- If an
educational institution is declared to have followed a
racially discriminatory policy in an action brought pursuant
to section 7408, and such declaratory judgment is not stayed,
then no credit shall be allowed under subsection (a) for
amounts paid to such educational institution --
-1-
" (A) in the calendar year in which the
declaratory judgment under section 7408 was entered
against the educational institution, and
" (B) in succeeding calendar years until such time
as an order modifying the declaratory judgment and
reinstating credits is entered pursuant to subsection
(f) of section 7408.
(4) Required Annual Statements. -- No credit shall be
allowed under subsection (a) for amounts paid to an
educational institution during a calendar year unless, at the
end of such calendar year, the educational institution files
with the Secretary (in such manner and form as the Secretary
shall by regulation prescribe) a statement, subject to the
penalties for perjury, that
(A) attests that such institution has complied
with the requirements of sub-section (e) (1) (iv) during
such calendar year;
(B) declares that such institution has not
followed a racially discriminatory policy during such
calendar year; and
(C) indicates whether a declaratory judgment has
been entered against such institution under section 7408
and has not been vacated pursuant to sub-section (f) of
section 7408.
On or before January 31 of the calendar year following the
calendar year to which the statement relates, the institution
shall furnish a copy of the statement to all persons who paid
-2-
tuition expenses to the institution in the calendar year to
which the statement relates. No credit shall be allowed to a
taxpayer under subsection (a) for amounts paid to an
educational institution during a calendar year unless the
taxpayer attaches to the return on which the taxpayer claims
the credit with respect to such calendar year a copy of the
statement specified in this paragraph.
(5) Enforcement Responsibility. -- Under this section, the
Attorney General has exclusive authority to investigate and
/
to determine whether an educational institution is following
a racially discriminatory policy and to commence a
declaratory judgment action under section 7408. Upon request
of the Attorney General or upon his own motion, the Secretary
shall supply the Attorney General with all information in the
possession of the Secretary relevant to such investigation,
determination, or action.
" (e) Definitions. -- For purposes of this section --
" '(1) Educational Institution. -- The term 'educational
institution' means a school that
"(i) provides a full-time program of elementary
or secondary education;
"(ii) is a privately operated, not-for-profit,
day or residential school;
"(iii) is exempt from taxation under section
501 (a) as an organization described in section
n3n
501 (c) (3), including church-operated schools to which
subsections (a) and (b) of section 508 do not apply;
and
"(iv) to the extent it otherwise publishes
by-laws, advertisements, admission application forms
and other such publications, includes therein (as the
Secretary shall by regulation prescribe) a statement
that it does not discriminate against student
applicants or students on the basis of race.
" (2) Tuition Expenses. -- The term 'tuition expenses'
means tuition and fees paid for the full-time enrollment or
attendance of a student at an educational institution,
including required fees for courses, and does not include any
amount paid for
" (A) books, supplies, and equipment for courses
of instruction at the educational institution;
" (B) meals, lodging, transportation, or personal
living expenses;
" (C) education below the first-grade level, such
as attendance at a kindergarten, nursery school, or
similar institution; or
" (D) education above the twelfth-grade level.' "
SEC. 4. DECLARATORY JUDGMENT PROCEEDING.
Subchapter A of chapter 76 of the Internal Revenue Code of
1954 (relating to judicial proceedings) is amended by
redesignating section 7408 as section 7409 and by inserting after
section 7407 the following new section:
-4- -
"SEC. 7408. DECLARATORY JUDGMENT RELATING TO RACIALLY
DISCRIMINATORY POLICIES OF SCHOOLS.
(a) In General. -- Whenever the Attorney General receives a
petition in accordance with paragraph (b), the Attorney General
is authorized and directed, upon finding good cause to believe
that an educational institution is following a racially
discriminatory policy, to bring an action against the educational
institution in the United States district court in the district
in which the educational institution is located, seeking a
declaratory judgment that the educational institution has
followed a racially discriminatory policy.
(b) Petition. -- Any person may file a petition under
sub-section (a). The petition must allege with specificity that
(1) a named educational institution has, pursuant to a
racially discriminatory policy, discriminated against a named
student applicant or student within one year preceding the
filing of the petition; or
(2) the educational institution made a statement,
within one year preceding the filing of the petition, commun-
icating an intent to follow a racially discriminatory policy.
"(c) Notification and Opportunity to Comment. -- Upon
receipt of the petition, the Attorney General shall promptly
notify the educational institution in writing of such petition
and the allegations contained therein. Before filing an action,
the Attorney General shall give the institution a fair
opportunity to comment on allegations made against it and to show
that a racially discriminatory policy does not exist or has been
-5-
abandoned. Prior to and in lieu of filing an action, the
Attorney General may, at his discretion, enter into a settlement
agreement with the educational institution if he finds that the
institution has been acting in good faith and has abandoned its
racially discriminatory policy. No petition need be filed for
the Attorney General to initiate action to enforce the terms of
such settlement agreement.
(d) Required Showing. -- In an action under this section,
i
no finding that a school is following a racially discriminatory
policy shall be made unless the Attorney General establishes
(1) that the institution has, pursuant to such policy,
taken an action discriminating against a student applicant
or student within the two years preceding commencement of
the action; or
(2) that the institution has, within the two years
preceding commencement of the action, made a statement
communicating an intent to follow a racially discriminatory
policy against student applicants or students; or
(3) that the institution has engaged in a pattern of
conduct intended to implement a racially discriminatory
policy, and that some act in furtherance of this pattern of
conduct was committed within two years preceding
commencement of the action.
" (e) Reinstatement of Credits. --
(1) If a district court enters a declaratory judgment
against an educational institution under this section, the
district court shall retain jurisdiction of the case. After
-6-
one (1) year has elapsed from the date of judgment, and at
any time thereafter, the educational institution may file
with the district court a motion to reinstate credits. Such
motion shall contain affidavits --
(A) describing with specificity the ways in which the
educational institution has changed its previous racially
discriminatory policy;
(B) describing with specificity the ways in which the
educational institution has taken reasonable steps to
/
communicate its policy of non-discrimination to students, to
faculty, and school administrators, and to the public in the
area it serves;
(C) averring that the educational institution has not
discriminated against an applicant or student pursuant to a
racially discriminatory policy during the preceding year;
and
(D) averring that the educational institution has
complied with the requirements of section 44 H(e) (1) (iv).
(2) When an educational institution has filed a motion
complying with paragraph (1), the court shall enter an order
modifying the prior judgment against the institution and
reinstating credits for tuition payments to the educational
institution, unless the Attorney General establishes that
(A) the institution has not in fact stopped following
its previous discriminatory policy;
(B) the institution has discriminated against an
-7-
applicant or student pursuant to a racially discriminatory
policy within the preceding year;
(C) the institution has made statements communicating
an intent to follow a racially discriminatory policy within
the preceding year; or
(D) the institution has not, in fact, complied with the
publications requirements of sub-paragraphs (B) and (D) of
paragraph (1).
" (f) Attorneys Fees. -- If an educational institution
prevails in an action under this section, the court shall award
the institution costs and attorney's fees in such action.
W (g) Definitions. -- When used in this section, the terms
'educational institution' and 'racially discriminatory policy'
shall have the same meaning as assigned to such terms in section
44H. "
" (h) Statute of Limitations. -- If, for any reason, a
judgment of the district court against an educational institution
is stayed and is subsequently affirmed on appeal, credits allowed
for tuition payments to such institution for taxable years dating
back to the year in which the district court judgment was entered
shall be disallowed.
" (1) The period for assessing a deficiency
attributable to such disallowance of a credit shall not
expire before the expiration of 3 years from the date of the
appellate decision affirming the district court judgment.
Any such deficiency may be assessed before the expiration of
-8-
such 3-year period notwithstanding the provisions of any
other law or rule of law which would otherwise prevent such
assessment.
" (2) If a district court judgment against an
educational institution is reversed on appeal, taxpayers for
whom credits have been precluded by such judgment shall be
entitled to file amended returns for tax years dating back to
and including the year in which the district court judgment
was entered.
-9-
DRAFT
Letter to the President of the Senate and the Speaker of the
House Transmitting Proposed Legislation.
Dear Mr. President: (Mr. Speaker:)
I am herewith transmitting to the Senate (House of
Representatives) proposed legislation entitled "The Educational
Opportunity and Equity Act of 1983.' This bill would provide for
increased diversity in educational opportunity by providing tax
relief for parents who choose to send their children to nonpublic
schools. Substantially the same bill was favorably reported by
the Senate Finance Committee late in the 97th Congress. I call
upon the 98th Congress to give enactment of this legislation the
highest priority.
Diversity in educational opportunity has been one of the
great strengths of our nation. It is a foundation of our
pluralistic society and essential to a nation which places a high
value on individual freedom.
We are justly proud of our public schools, which now offer a
free education through the primary and secondary school levels to
all American children willing to take advantage of it. At the
same time, we must remember the important role that has been
played since the beginning of our nation by the diverse nonpublic
schools which also offer an education to American children. Now,
as they did prior to the establishment of our public school
system, parents cherish their ability to choose from a wide range
of educational opportunities for their children. It is of great
importance to the continued vitality of our society that parents
have a meaningful choice between public education and the many
forms of private education that are available.
It is also important that there be innovation and experi-
mentation in education. The existence of many private, as well
as public, schools assures that new and possibly more effective
teaching approaches will not go untested. It is also important
that the differing needs and demands of students and their
parents be met. Parents who, for whatever reason, are not
satisfied by the education available in their local public
schools should be able to seek an education better suited to
their children elsewhere. Furthermore, the existence of a viable
private alternative should maintain educational standards and
meet student needs.
As we are all aware, the cost of education, both public and
private, has risen dramatically in recent years. We all bear the
burden of the rising costs of public education through state and
local taxation, directly or indirectly. But those parents who
wish their children to attend nonpublic schools must also bear
the additional burden of paying private school tuition. This
additional cost has always severely limited the ability of
lower-income families to choose the nonpublic educational
alternative for their children. Rising costs are now putting
private schools beyond the reach of a growing number of middle-
income Americans as well. If we are to provide a meaningful
choice for those for whom it is in danger of becoming an
illusion, we must find a way to lighten the "double burden" these
families bear.
We must also bear in mind that private schools do more than
offer alternative educational choices to students and their
parents. Nonpublic schools also carry a significant part of the
burden of providing primary and secondary school education in
this country. It if becomes financially impossible for many of
the families now sending their children to nonpublic schools to
continue to do so, the resulting increase in public school
attendance will place large and unwelcome new tax burdens on
state and local taxpayers. The cost to taxpayers of offering
some tax relief to parents, so that they can afford to keep their
children in the private schools of their choice, is modest
compared to the cost of educating their children in the public
schools.
Thus, in order to promote diversity in education and the
freedom of individuals to take advantage of it, and to nurture
the pluralism in American society which this diversity fosters, I
am transmitting to Congress today a draft bill which provides
federal tax credits for the tuition expenses of children
attending nonpublic primary or secondary schools. Starting in
1983, the Education Opportunity and Equity Act of 1983, if
enacted, would allow a tax credit for the tuition expenses of
each student attending a private, non-profit primary or secondary
school. By 1985, when this new tuition tax credit would be fully
phased in, a credit equal to 50% of tuition expenses paid during
the year, but not to exceed $300, would be allowed for each
student.
While it would be desirable for the reasons I have already
mentioned to extend such tax relief for higher education tuition
expenses as well, the large losses in federal tax revenues which
would result make it impossible to recommend such legislation at
this time. Today's proposal makes an important start by
providing this relief where it is most necessary.
This Administration will not tolerate the use of tuition tax
credits to foster racial discrimination. Consequently, the bill
contains strong provisions to ensure that no credits will be
permitted for amounts paid to schools that follow racially
discriminatory policies. These provisions are identical to those
that were adopted by the Senate Finance Committee last Fall with
broad bipartisan support.
I ask that the Congress move as quickly as possible to enact
this much needed legislation.
Sincerely,
Ronald Reagan
A BILL
A bill to amend the Internal Revenue Code of 1954 to provide
a Federal income tax credit for tuition.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled.
SECTION 1. SHORT TITLE.
This Act may be cited as the "Educational Opportunity and
Equity Act of 1983".
SECTION 2. CONGRESSIONAL FINDINGS AND PURPOSES.
(a) Findings. -- The Congress finds that it is the policy of
the United States to foster educational opportunity, diversity,
and choice for all Americans. Therefore, this Act recognizes
that --
(1) pluralism is one of the great strengths of American
society, diversity in education is an important contributor
to that pluralism, and nonpublic schools play an
indispensable role in making that diversity possible;
(2) the existence and availability of alternatives to
public education tend to strengthen public education through
competition and to improve the educational opportunities of
all Americans;
(3) Americans should have equal opportunities to choose
between the education offered by public schools and available
in private educational systems and should not be compelled
because of economic circumstances to accept education
2
provided by government-created and government-operated school
systems, and to force such a selection is an unfair and
unjust discrimination against persons of lesser means;
(4) increasing numbers of American families are unable to
afford nonpublic school tuition in addition to the State and
local taxes that go to support public schools, and tax relief
for nonpublic school tuition expenses is necessary if
American families are to continue to have a meaningful choice
between public and private education at the elementary and
secondary levels;
(5) tax relief in the form of tuition tax credits is the
fairest way to extend a choice in education to a wide range
of individuals, tax relief in the form of tuition tax credits
creates the least possible danger of interference in the
lives of individuals and families consistent with achieving
these ends, and tax relief in the form of tuition tax credits
achieves these ends with a minimum of complexity SO that
those for whom the tax relief is intended will be able to
understand and take advantage of it;
(6) the tax revenue loss occasioned by a tuition tax
credit for a child would be small compared to the cost to
State and local taxpayers of educating the child at a public
school;
3
(7) equality of educational opportunity is the policy of
the United States, and the tax relief afforded by this
legislation should not be used to promote racial
discrimination.
The Congress finds that this Act will expand opportunities for
personal liberty, diversity, and pluralism that constitute
important strengths of education in America.
(b) Purpose. -- The primary purpose of this Act is to enhance
equality of educational opportunity, diversity, and choice for
Americans.
SECTION 3. CREDIT FOR TUITION EXPENSES.
(a) In General. -- Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1954 (relating to
credits allowable) is amended by inserting after section 44G the
following new section:
"SECTION 44H. CREDIT FOR TUITION EXPENSES.
"(a) General Rule. -- At the election 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 50 percent of the
qualified tuition expenses paid by such individual during the
taxable year for any qualified dependent.
"(b) Limitations. --
"(1) Maximum dollar amount per qualified dependent. ---
4
"(A) In general. -- The amount of the credit
allowable to the taxpayer under subsection (a) with
respect to any qualified dependent for any taxable year
shall not exceed the applicable amount.
"(B) Applicable amount. -- For purposes of this
paragraph, the term 'applicable amount' means the
excess, if any, of --
"(i) $300, over
"(ii) 1.5 percent (3 percent in the case of a
married individual who does not file a joint return)
of the amount, if any, by which the adjusted gross
income of the taxpayer for the taxable year exceeds
$40,000 ($20,000 in the case of such married
individual).
"(C) Transitional rule. -- For taxable years
beginning after December 31, 1982, and before January 1,
1985, subparagraph (B) shall be applied --
"(i) in taxable years beginning in 1983, by
substituting --
"(I) '$100" for '$300',
"(II) '0.5 percent' for '1.5 percent', and
"(III) 'l percent' for '3 percent', and
"(ii) in taxable years beginning in 1984, by
substituting --
5
"(I) '$200' for '$300',
"(II) '1 percent' for '1.5 percent', and
"(III) '2 percent' for '3 percent'.
"(2) Credit not to exceed tax liability. -- The credit
allowed by subsection (a) shall not exceed the tax imposed by
this chapter for the taxable year, reduced by the sum of the
credits allowable under a section of this subpart having a
lower number or letter designation than this section, other
than credits allowable by sections 31, 39, and 43.
"(c) Credit Denied for Amounts Paid to Racially Discriminatory
Institutions. --
"(1) Declaratory judgment entered. --
"(A) In general. -- No credit shall be allowed under
this section for any amount paid to an educational
institution during any taxable year if --
"(i) within the calendar year ending with or
within such taxable year or in any preceding calendar
year --
"(I) a judgment has been entered by a district
court of the United States under section 7408
(regardless of whether such judgment is appealed)
declaring that such educational institution
follows a racially discriminatory policy, or
6
"(II) an order by any United States Court of
Appeals has been made which, by its terms,
requires the district court to enter such a
judgment, and
"(ii) no order described in section 7408 f) (2)
with respect to such educational institution has been
entered which is in effect for the calendar year
ending with or within such taxable year.
"(B) Reversals of declaratory judgments or orders. --
"(i) In general. -- A judgment or order described
in subparagraph (A) (i) entered in an action brought
with respect to an educational institution shall not
be taken into account under subparagraph (A) for any
taxable year if, after all appeals in such action
have been concluded or the time for filing such
appeals has expired, the declaration contained in
such judgment, or required to be entered under the
terms of such order, that such institution has
followed a racially discriminatory policy is negated
(other than by reason of an order described in
section 7408(f)(2)).
"(ii) Waiver of limitations. -- Notwithstanding
section 6511 (a) or any other period of limitation or
lapse of time, a claim for credit or refund of
7
overpayment of the tax imposed by this chapter which
arises by reason of this subparagraph may be filed by
any person at any time within the 1-year period
beginning on the earlier of --
"(I) the date on which all appeals with
respect to the judgment or order described in
subparagraph (A)(i) have been concluded, or
"(II) the date on which the time for such
appeals has expired.
Sections 6511 (b) and 6514 shall not apply to any
claim for credit or refund filed under this
subparagraph within such 1-year period.
"(C) Stay of declaratory judgment. --
"(i) In general. -- Any judgment or order
described in subparagraph (A)(i) shall not be taken
into account under subparagraph (A) for any taxable
year if such judgment or order is stayed as of the
close of such taxable year.
"(ii) Removal of stay. -- If a stay entered
against a judgment or order described in subparagraph
(A) (i) is vacated --
"(I) this subparagraph shall not apply with
respect to such judgment or order for any taxable
8
year preceding the taxable year in which such
stay is vacated, and
"(II) notwithstanding any other provision of
this title or of any other law, the statutory
period for the assessment of a deficiency
attributable to the disallowance of any credit
under this section by reason of this clause shall
not expire before the date which is 3 years after
the close of the calendar year in which such stay
is removed.
"(D) Waiver of limitations if institution ceases to
discriminate. -- Notwithstanding section 6511 (a) or any
other period of limitation or lapse of time, a claim for
credit or refund of overpayment of the tax imposed by
this chapter which arises by reason of a reversal of any
order denying a motion under section 7408 ( f) (1) (A) may be
filed by any person at any time within the 1-year period
beginning on the date on which such reversal is made.
Sections 6511 (B) and 6514 shall not apply to any claim
for credit or refund filed under this subparagraph within
such 1-year period.
"(2) Required statements. --
"(A) Statements furnished by institutions to the
Secretary. -- No credit shall be allowed under subsection
9
(a) for amounts paid to any educational institution
during the taxable year if such educational institution
has not filed with the Secretary (in such manner and form
as the Secretary shall by regulation prescribe) within 30
days after the close of the calendar year ending with or
within such taxable year a verified statement which --
" (i) declares that such institution has not
followed a racially discriminatory policy during such
calendar year;
"(ii) indicates whether --
"(I) a declaratory judgment or order described
in paragraph (1)(A)(i) has been entered against
such institution in an action brought under
section 7408;
"(II) a stay against such judgment or order is
in effect; and
"(III) an order described in section
7408 ( f) (2) is in effect; and
"(iii) attests that such institution has complied
with the requirements of subsection (d) (3) (D) during
such calendar year.
"(B) Statements furnished to taxpayers. -- Except as
otherwise provided by regulations, within 30 days after
10
the close of the calendar year to which the statement
described in subparagraph (A) relates, the educational
institution shall furnish a copy of such statement to all
persons who paid tuition expenses to the institution in
the calendar year to which such statement relates.
"(c) Statements furnished by taxpayers to the
Secretary. -- No credit shall be allowed to a taxpayer
under subsection (a) for amounts paid to an educational
institution during the taxable year if the taxpayer does
not attach to the return on which the taxpayer claims the
credit the statement described in subparagraph (A) which
is furnished by such institution for the calendar year
ending with or within such taxable year of the taxpayer
"(3) Enforcement responsibility. -- The Attorney General
shall have exclusive authority under this subsection to
investigate and to determine whether an educational
institution is following a racially discriminatory policy.
"(4) Racially discriminatory policy. -- For purposes of
this subsection ---
"(A) In general. -- An educational institution follows
a racially discriminatory policy if such institution
refuses, on the basis of race, to --
11
"(i) admit applicants as students;
"(ii) admit students to the rights, privileges,
programs, and activities generally made available to
students by the educational institution; or
"(iii) allow students to participate in its
scholarship, loan, athletic, or other programs.
"(B) Quotas, etc. -- The term 'racially discriminatory
policy' shall not include failure of any educational
institution to pursue or achieve any racial quota,
proportion, or representation in the student body.
"(C) Race. -- The term 'race' shall include color or
national origin.
'(d) Definitions. -- For purposes of this section --
"(1) Qualified tuition expenses. -- The term 'qualified
tuition expenses' means the excess of --
"(A) the amount of tuition expenses paid by the
taxpayer during the taxable year to any eligible
educational institution for any qualified dependent of
such taxpayer, over
"(B) any scholarship or financial assistance paid
during such taxable year to such qualified dependent or
to the taxpayer with respect to such qualified dependent.
"(2) Qualified dependent. -- The term 'qualified
dependent' means any individual --
12
"(A) who is a dependent of the taxpayer (other than an
individual described in paragraph (4), (5), (7), or (8)
of section 152(a)),
"(B) who has not attained 20 years of age at the close
of the taxable year, and
'(C) with respect to whom a deduction under section
151 is allowable to the taxpayer for the taxable year.
"(3) Eligible educational institution. -- The term
'eligible educational institution' means an educational
institution --
"(A) which provides a full-time program of elementary
or secondary education;
"(B) which is a privately operated, not-for-profit,
day or residential school;
"(C) which is exempt from taxation under section
501 (a) as an organization described in section 501 (c) (3),
including church-operated schools to which subsections
(a) and (b) of section 508 do not apply; and
"(D) which includes in any published by-laws,
advertisements, admission application forms and other
such published materials, a statement (in such form and
manner as the Secretary may by regulations prescribe)
that it does not discriminate against student applicants
or students on the basis of race.
13
"(4) Tuition expenses. --
"(A) In general. -- The term 'tuition expenses' means
tuition and fees paid for the full-time enrollment or
attendance of a student at an educational institution,
including required fees for courses.
"(B) Certain expenses excluded. -- The term 'tuition
expenses' does not include any amount paid for --
"(i) books, supplies, and equipment for courses of
instruction;
"(ii) meals, lodging, transportation, or personal
living expenses;
"(iii) education below the first-grade level; or
"(iv) education above the twelfth-grade level.
"(5) Scholarship or financial assistance. -- The term
'scholarship or financial assistance' means --
"(A) a scholarship or fellowship grant (within the
meaning of section 117 (a) (1)) which is not includible in
gross income under section 117;
"(B) an educational assistance allowance under chapter
32, 34, or 35 of title 38, United States Code; or
"(C) other financial assistance which --
"(i) is for educational expenses, or attributable
to attendance at an educational institution,
14
"(ii) is exempt from income taxation by any law of
the United States (other than a gift, bequest,
devise, or inheritance within the meaning of section
102(a)). .
"(e) Election. -- The election provided under subsection (a)
shall be made at such time and in such manner as the Secretary
shall by regulations prescribe.
(b) Disclosure of Information to Attorney General. --
Subsection (h) of section 6103 of such Code (relating to
disclosure to certain Federal officers and employees for tax
administration purposes) is amended by adding at the end thereof
the following new paragraph:
"(6) Certain investigations and proceedings regarding
racially discriminatory policies. -- Upon the request of the
Attorney General or the Secretary's own motion, the Secretary
shall disclose any return or return information which is
relevant to --
"(A) any investigation conducted by the Attorney
General under section 44H(c) with regard to whether an
educational institution is following a racially
discriminatory policy (within the meaning of section
44H(c)(4)), or
"(B) any proceeding which may be brought under section
7408,
15
to any officer or employee of the Department of Justice who
is directly and personally involved in such investigation or
in preparation for such a proceeding "
(c) Conforming Amendment. --
"(1) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 44G the
following:
"Sec. 44H. Tuition expenses 11
.
"(2) Section 6504 of such Code (relating to cross
references with respect to periods of limitation) is amended
by adding at the end thereof the following new paragraph:
"(12) For disallowance of tuition tax credits because
of a declaratory judgment that a school follows a
racially discriminatory policy, see section 44H (c) .".
SECTION 4. DECLARATORY JUDGMENT PROCEEDING.
(a) In General. -- Subchapter A of chapter 76 of the Internal
Revenue Code of 1954 (relating to judicial proceedings) is
amended by redesignating section 7408 as section 7409 and by
inserting after section 7407 the following new section:
"SEC. 7408. DECLARATORY JUDGMENT RELATING TO RACIALLY
DISCRIMINATORY POLICIES OF SCHOOLS.
"(a) In General. -- Upon filing of an appropriate pleading by
the Attorney General under subsection (b), the district court of
16
the United States for the district in which an educational
institution is located may make a declaration with respect to
whether such institution follows a racially discriminatory
policy. Any such declaration shall have the force and effect of
a final judgment of the district court and shall be reviewable as
such.
"(b) Filing of Pleading. --
"(1) In general. -- The Attorney General is authorized
and directed to seek a declaratory judgment under subsection
(a) against any educational institution upon --
"(A) receipt by the Attorney General within the
previous 1-year period of any allegation of
discrimination against such institution, and
"(B) a finding by the Attorney General of good cause.
"(2) Allegation of discrimination. -- For purposes of this
section, the term 'allegation of discrimination' means an
allegation made in writing by any person which alleges with
specificity that --
"(A) a named educational institution has committed a
racially discriminatory act against a named student
applicant or student within one year preceding the date
on which such allegation is made to the Attorney General,
or
17
"(B) the educational institution made a communication,
within one year preceding such date, expressing that the
institution follows a racially discriminatory policy.
"(3) Notice of allegations of discrimination. -- Upon
receipt of any allegation of discrimination made against an
educational institution, the Attorney General shall promptly
give written notice of such allegation to such institution.
"(4) Opportunity to comment. -- Before any action may be
filed against an educational institution by the Attorney
General under subsection (a), the Attorney General shall give
the institution a fair opportunity to comment on all
allegations made against it and to show that the alleged
racially discriminatory policy does not exist or has been
abandoned.
"(5) Availability of certain information to complainant. ---
"(A) In general. -- If an allegation of discrimination
against an educational institution is made to the
Attorney General and the Attorney General --
"(i) declines to bring an action under subsection
(a) against such institution, or
"(ii) enters into a settlement agreement with
such institution under subsection (d) before such an
action is brought,
18
the Attorney General shall make available to the person
who made such allegation the information upon which the
Attorney General based the decision not to bring such an
action or to enter into such settlement agreement. The
Attorney General shall promptly give written notice to
such person that such information is available for his
inspection.
"(B) Privacy laws. -- Nothing in this paragraph shall
be construed to authorize or require the Attorney General
to disclose any information if such disclosure would
violate any applicable State or Federal law relating to
privacy.
'(c) Requirements for a Finding of Following a Racially
Discriminatory Policy. -- A district court may declare that an
educational institution follows a racially discriminatory policy
in an action brought under subsection (a) only if the Attorney
General establishes in such action that --
"(1) the institution has, pursuant to such policy,
committed a racially discriminatory act against a student
applicant or student within the two years preceding
commencement of such action;
"(2) the institution has, within the two years preceding
commencement of such action, made a communication expressing
19
that it follows a racially discriminatory policy against
student applicants or students; or
"(3) the institution has engaged in a pattern of conduct
intended to implement a racially discriminatory policy, and
that some act in furtherance of this pattern of conduct was
committed within two years preceding commencement of such
action.
"(d) Settlements. --
"(1) In general. -- Prior to, and in lieu of, filing an
action under subsection (a), the Attorney General may, at his
discretion, enter into a settlement agreement with the
educational institution against which an allegation of
discrimination has been made if the Attorney General finds
that the institution has been acting in good faith and has
abandoned its racially discriminatory policy.
"(2) Violation of settlement agreement. -- If the Attorney
General has entered into a settlement agreement with an
educational institution under paragraph (1) and the Attorney
General finds that such institution is in violation of such
agreement, the Attorney General may --
"(A) notwithstanding subsection (b) (1) (A), bring an
action under subsection (a) without having received any
allegation of discrimination against such institution, or
20
"(B) bring an action to enforce the terms of such
agreement.
"(3) Copy of settlement agreement to complainant. -- The
Attorney General shall give a copy of any settlement
agreement which is entered into with any educational
institution under paragraph (1) to any person from whom the
Attorney General has received an allegation of discrimination
against such institution.
"(e) Retention of Jurisdiction. -- Any district court which
makes a declaration under subsection (a) that an educational
institution follows a racially discriminatory policy shall retain
jurisdiction of such case.
"(f) Discontinuance of Racially Discriminatory Policy. --
"(1) Motion. --
"(A) In general. -- At any time after the date which
is 1 year after the date on which a judgment is entered
in an action brought under subsection (a) declaring that
an educational institution follows a racially
discriminatory policy, such institution may file with the
district court a motion to modify such judgment to
include a declaration that such institution no longer
follows a racially discriminatory policy.
"(B) Affidavits. -- Any motion filed under
subparagraph (A) shall contain affidavits --
21
"(i) describing with specificity the ways in which
the educational institution has abandoned its
previous racially discriminatory policy;
"(ii) describing with specificity the ways in
which such institution has taken reasonable steps to
communicate its policy of nondiscrimination to
students, to faculty, to school administrators, and
to the public in the area it serves;
"(iii) averring that such institution has not,
during the preceding year --
"(I) committed a racially discriminatory act
against a student applicant or student pursuant
to a racially discriminatory policy,
"(II) made a communication expressing that it
follows a racially discriminatory policy against
student applicants or students; or
"(III) engaged in a pattern of conduct
intended to implement a racially discriminatory
policy, and committed some act in furtherance of
this pattern of conduct; and
"(iv) averring that such institution has complied
with the requirements of section 44H(d) (3) (D).
"(2) Order. -- If a motion is made under paragraph (1),
the district court shall issue an order modifying the
22
judgment entered in the action to include a declaration that
the educational institution no longer follows a racially
discriminatory policy unless the Attorney General establishes
that --
"(A) any affidavit provided by the institution under
paragraph (1) (B) is false;
"(B) the institution has, during the preceding year,
committed any act, made any communication, or engaged in
any pattern of conduct described in paragraph
(1)(B)(iii); or
"(c) the institution has not, in fact, complied with
the requirements of clauses (ii) and (iv) of paragraph
(1) (B).
"(3) Appeal of orders. -- Any order of the district court
granting or denying a motion made under paragraph (1) shall
be reviewable.
"(g) Attorneys' Fees. -- If an educational institution
prevails in an action under this section, the court may award the
institution costs and reasonable attorneys' fees in such action.
"(h) Definitions. -- For purposes of this section --
"(1) Racially discriminatory policy. -- The term 'racially
discriminatory policy' has the meaning given to such term by
section 44H (c) (4).
"(2) Racially discriminatory act. --
23
"(A) In general. -- An educational institution commits
a racially discriminatory act if such institution
refuses, on the basis of race, to --
"(i) admit any applicant as a student;
'(ii) admit any student to the rights, privileges,
programs, and activities generally made available to
students by the educational institution; or
"(iii) allow any student to participate in its
scholarship, loan, athletic, or other programs,
"(B) Quotas, etc. -- The term 'racially discriminatory
act' shall not include the failure of such institution to
pursue or achieve any racial quota, proportion, or
representation in the student body.
"(C) Race. -- The term 'race' shall include color or
national origin.
"(i) Report. -- Within 90 days of the close of each calendar
year, the Attorney General shall submit a report to the Congress
concerning the disposition during such calendar year of --
"(1) any allegations of discrimination received by the
Attorney General, and
"(2) any actions brought under this section. "
.
(b) Conforming Amendments. --
(1) The table of sections for subchapter A of chapter 76
of such Code (relating to civil actions by the United States)
24
is amended by striking out the item relating to section 7408
and inserting in lieu thereof:
"Sec. 7408. Declaratory judgment relating to
racially discriminatory policies of
schools.
"Sec. 7409. Cross references. "
(2) Section 2201 of title 28, United States Code
(relating to creation of declaratory judgment remedy) is
amended by striking out "section 7428" and inserting in lieu
thereof "section 7408 or 7428".
SECTION 5. TAX CREDITS ARE NOT FEDERAL FINANCIAL ASSISTANCE.
Tax credits claimed under section 44H of the Internal Revenue
Code of 1954 shall not constitute Federal financial assistance to
educational institutions or to the recipients of such credits.
SECTION 6. EFFECTIVE DATE; SPECIAL RULE.
(a) Certification Required. -- The amendments made by this
Act shall not take effect until the Attorney General certifies to
the Secretary of the Treasury that, pursuant to --
(1) an Act of Congress which has been enacted, or
(2) a final decision of the United States Supreme Court,
the Internal Revenue Code of 1954 prohibits the granting of tax
exemption under section 501 (a) by reason of section 501 (c) (3) to
private educational institutions maintaining a racially
discriminatory policy or practice as to students.
25
(b) Application When Certification is Made. --
(1) In general. -- If the certification described in
subsection (a) is made to the Secretary of the Treasury --
(A) except as provided in paragraph (2), the
amendments made by section 3 shall apply with respect to
expenditures made after the date on which such
certification is made to the Secretary of the Treasury in
taxable years beginning after December 31, 1982, and
ending after such date, and
(B) the amendments made by section 4 shall take
effect on the date on which such certification is made to
the Secretary of the Treasury.
(2) No application before July 31, 1983. -- In no event
shall the amendments made by section 3 apply with respect to
expenditures made before August 1, 1983.