Arizona Official Testifies On Loopholes In Tuition Tax Credit Law

Even though the 9th Circuit has stuck down as unconstitutional Arizona's program that grants tax credits to fund private-- mostly religious-- school scholarships (see prior posting), the state's attorney general and legislature are moving ahead on several fronts as if the program is still operational. The Arizona Republic reported yesterday that the attorney general is considering suing some of the non-profit School Tuition Organizations because they have not distributed 90% of the donations they have received, as required by the law. Assistant Attorney General Susan Myers also told a House legislative hearing on Thursday that some loopholes in the law should be closed. She urged barring donors from recommending who should receive scholarships from the funds they donate, requiring unspent funds to go to the state, setting income eligibility for scholarships, and requiring independent audits of School Tuition Organizations. Also a state legislator has asked the Internal Revenue Service to explore whether School Tuition Organizations violate the requirements of Section 501(c)(3) of the Internal Revenue Code. Meanwhile the Institute for Justice says it will ask the U.S. Supreme Court to review the 9th Circuit's invalidation of the scholarship program.