Section 1000.500 Scholarship Granting Organizations: Issuance of Certificates of Receipt

Section 1000.500  Scholarship Granting Organizations:

Issuance of Certificates of Receipt

a)

No scholarship granting organization shall issue a

certificate of receipt for any qualified contribution made by a taxpayer under

the Act unless that scholarship granting organization has been approved to

issue certificates of receipt pursuant to Section 15 of the Act.

(See

Section 1000.300.)

b)

No scholarship granting organization shall issue a

certificate of receipt for a contribution made by a taxpayer unless the

taxpayer has been issued a contribution authorization certificate by the

Department

and the SGO has received a copy of the contribution

authorization certificate.  The contribution must be made by the person whose

name appears on the contribution authorization certificate.  If a check or

credit card is used to make a contribution to the SGO, the name that appears on

the check or credit card must be the name of the person whose name appears on

the contribution authorization certificate.  If a contribution is made using

stock or negotiable securities, the stock or negotiable securities must be in the

name of, or held in the name of, the person whose name appears on the contribution

authorization certificate.

EXAMPLE 1:  Individual

A is the beneficiary of a trust. The trust obtains a CAC from the Department.

The individual instructs the trust to make a contribution to an SGO in the

amount of $1,000. The SGO must issue the COR in the name of the trust.

EXAMPLE 2:  Individual

A is the beneficiary of a trust. Individual A obtains a CAC from the

Department.  The trust makes a contribution to an SGO in the amount of $1,000.

The SGO shall not issue a COR to the trust because the CAC is in the name of

Individual A.  The SGO shall not issue the COR to the individual because the

contribution was made by the trust. The individual must make the contribution

to receive the COR

s the beneficiary of a trust. Individual A obtains a CAC from the

Department.  The trust makes a contribution to an SGO in the amount of $1,000.

The SGO shall not issue a COR to the trust because the CAC is in the name of

Individual A.  The SGO shall not issue the COR to the individual because the

contribution was made by the trust. The individual must make the contribution

to receive the COR.

c)         Written Certificate of Receipt

1)

If a taxpayer makes a contribution to a scholarship

granting organization on or before the date by which the authorized

contribution is required to be made

(see Section 1000.400(h)(3))

, the

scholarship granting organization shall, within 30 days after receipt of the

authorized contribution, issue to the taxpayer a written certificate of

receipt.

For purposes of determining the 30-day period for issuing a COR,

the SGO shall use one the following dates as the receipt date:

A)        the date of receipt by the SGO if the contribution is

physically delivered to the SGO by the taxpayer;

B)        the postmark date, if deposited in the U.S. Mail; or

C)        the date the contribution was received by, or deposited with, a

common carrier for delivery to the SGO.

2)

Upon the issuance of a certificate of receipt, the issuing

scholarship granting organization shall, within 10 days after issuing the

certificate of receipt, provide the Department with notification of the

issuance of the certificate.

SGOs shall issue CORs to taxpayers by means

of electronically completing a COR on the Department's website, but only after

payment is confirmed (e.g., the payment has cleared).  Online completion of the

COR on the Department's website satisfies both the requirement to issue the COR

to the taxpayer and to provide the Department with notification of the issuance

of the COR

e of the certificate.

SGOs shall issue CORs to taxpayers by means

of electronically completing a COR on the Department's website, but only after

payment is confirmed (e.g., the payment has cleared).  Online completion of the

COR on the Department's website satisfies both the requirement to issue the COR

to the taxpayer and to provide the Department with notification of the issuance

of the COR.

d)

Each certificate of receipt shall state:

1)

the name and address of the issuing scholarship granting

organization;

2)

the taxpayer's name and address;

3)

the date of each qualified contribution;

4)

the amount of each qualified contribution;

5)

the total qualified contribution amount;

6)         the unique identifier for the CAC provided to the SGO for the

qualified contribution; and

7)         the region for which the COR is issued.

e)

The notification to the Department

shall include:

1)

the taxpayer's name and address;

2)

the date of the issuance of a certificate of receipt;

3)

the date or dates on which the qualified contribution was

made and the amounts contributed on those dates

(see subsection (c))

;

4)

the total qualified contribution listed on the

certificates;

5)

the issuing scholarship granting organization's name and

address;

6)         the unique identifier for the CAC provided to the SGO for the

qualified contribution; and

7)         the region for which the COR was issued.

f)

If a taxpayer fails to make all or a portion of an

authorized contribution on or before the date by which the authorized

contribution is required to be made

(see Section 1000.400(h)(2))

, the

taxpayer shall not be entitled to a certificate of receipt for that portion of

the authorized contribution not made.

In other words, each COR issued by

an SGO may only be issued in the amount of the authorized contribution actually

made by the taxpayer on or before the 60-day deadline.  (See Section

1000.400(h)(2).)

EXAMPLE:  A

CAC in the amount of $1000 is issued by the Department to the taxpayer on

January 20

e entitled to a certificate of receipt for that portion of

the authorized contribution not made.

In other words, each COR issued by

an SGO may only be issued in the amount of the authorized contribution actually

made by the taxpayer on or before the 60-day deadline.  (See Section

1000.400(h)(2).)

EXAMPLE:  A

CAC in the amount of $1000 is issued by the Department to the taxpayer on

January 20.  The taxpayer has 60 days from the date of the CAC to make the

authorized contribution.  On January 21, the taxpayer sends the CAC and a check

in the amount of $500 to an SGO.  The SGO receives the check on January 23.

The SGO must provide a COR to the taxpayer in the amount of $500 no later than

February 22.  On February 25, the taxpayer sends a check in the amount of $250

to the same SGO.  The SGO receives the check on February 27.  The SGO must

provide a COR to the taxpayer in the amount of $250 no later than March 29.  On

March 23, the taxpayer sends a check in the amount of $250 to the SGO.   The

SGO cannot issue the taxpayer a COR for the $250 payment because the payment

was made more than 60 days after the issuance of the CAC.

g)

Any portion of a contribution that a taxpayer fails to make

by the date indicated on the contribution authorization certificate shall no

longer be deducted from the caps prescribed in Section 10 of the Act.

[35

ILCS 40/30] (See Section 1000.200.)

The Department will restore the

amounts previously deducted after the last date has passed by which the SGO

must notify the Department of the issuance of the COR for any given CAC.

h)         Taxpayers can make, and SGOs can receive, contributions in the

form of cash, stocks, and negotiable securities.  If an SGO receives a

contribution in stock or negotiable securities, the SGO must convert the stock

and negotiable securities to cash and receive the cash proceeds prior to

issuing the COR to the taxpayer

notify the Department of the issuance of the COR for any given CAC.

h)         Taxpayers can make, and SGOs can receive, contributions in the

form of cash, stocks, and negotiable securities.  If an SGO receives a

contribution in stock or negotiable securities, the SGO must convert the stock

and negotiable securities to cash and receive the cash proceeds prior to

issuing the COR to the taxpayer.  The amount of the COR issued to the taxpayer

shall not exceed the net amount received in cash from the sale and available to

the SGO for awarding scholarships to eligible students.  The SGO must receive

the proceeds from a sale from the broker before the SGO may issue a COR to the

taxpayer. If an SGO maintains a brokerage account dedicated to receiving,

selling and receiving the proceeds from the sale of stock and negotiable

securities received from taxpayers as contributions, the funds are received

when the proceeds from the sale of the stock or negotiable securities are

placed in the dedicated brokerage account.  Prior to making a contribution to

an SGO with stock or negotiable securities, the taxpayer must acknowledge that,

if the amount received by the SGO from the sale of the stock or negotiable

securities exceeds the amount of the CAC issued to the taxpayer by the

Department, the SGO will issue a COR to the taxpayer in the amount of the CAC,

the SGO will use the excess funds for a charitable purpose, and the taxpayer

will not receive a tax credit under the Act for the excess funds.  The SGO must

notify the taxpayer of the amount that exceeds the CAC.

EXAMPLE 1:  A

taxpayer has a CAC to contribute $100,000 to an SGO.  The taxpayer owns 100

shares of XYZ stock valued at $95 per share on the day the shares are

contributed to the SGO.  The SGO has 30 days to issue a COR to the taxpayer.  (See

subsection (c).)  On Day 28, the SGO's broker sells the stock.  After deducting

his commission, he remits $90,000 to the SGO on Day 29

exceeds the CAC.

EXAMPLE 1:  A

taxpayer has a CAC to contribute $100,000 to an SGO.  The taxpayer owns 100

shares of XYZ stock valued at $95 per share on the day the shares are

contributed to the SGO.  The SGO has 30 days to issue a COR to the taxpayer.  (See

subsection (c).)  On Day 28, the SGO's broker sells the stock.  After deducting

his commission, he remits $90,000 to the SGO on Day 29.  The SGO issues the COR

to the taxpayer in the amount of $90,000 on Day 30.

EXAMPLE 2:  A

taxpayer has a CAC to contribute $100,000 to an SGO.  The taxpayer owns 100 shares

of XYZ stock valued at $95 per share on the day the shares are contributed to

the SGO.  The SGO has 30 days to issue a COR to the taxpayer.  (See subsection

(c).)  On Day 17, the SGO's broker sells the stock.  After deducting his

commission, he remits $105,000 to the SGO on Day 19.  The amount of the COR to

be issued by the SGO to the taxpayer cannot exceed $100,000.  The SGO must

notify the taxpayer that it received $5000 more than the CAC from the sale of

the stock, that it will use the excess funds for a charitable purpose, and that

the taxpayer will not receive a tax credit under the Act for the excess funds.

EXAMPLE 3:  A

taxpayer has a CAC to contribute $100,000 to an SGO.  The taxpayer owns 100

shares of XYZ stock valued at $95 per share on the day the shares are

contributed to the SGO.  The SGO has 30 days to issue a COR to the taxpayer. (See

subsection (c).)  On Day 30, the SGO's broker sells the stock.  After deducting

his commission, he remits $90,000 to the SGO on Day 31.  The CAC has lapsed and

the SGO cannot issue a COR to the taxpayer for any amount realized from the

sale of the stock.

i)          If a taxpayer makes a contribution to an SGO using a credit

card and the credit card company charges the SGO a processing fee, the SGO

shall issue a COR to the taxpayer

in the amount of the

contribution to the SGO, less the amount of the processing fee

on Day 31.  The CAC has lapsed and

the SGO cannot issue a COR to the taxpayer for any amount realized from the

sale of the stock.

i)          If a taxpayer makes a contribution to an SGO using a credit

card and the credit card company charges the SGO a processing fee, the SGO

shall issue a COR to the taxpayer

in the amount of the

contribution to the SGO, less the amount of the processing fee

.  If an SGO

is unable to determine the amount of the processing fee prior to issuing a COR

to the taxpayer for the contribution, the SGO may use a reasonable method of

allocating processing fees to contributions.

1)         The SGO may collect an amount equal to the processing fee from

the taxpayer. If the SGO collects the amount of the processing fee from the

taxpayer, the SGO may issue the taxpayer a COR in the amount of the

contribution received from the taxpayer.

EXAMPLE:

The taxpayer has a CAC in the amount of $1,000 and makes a

contribution of $1,000 using his credit card.  The credit card company remits

$970 to the SGO.

The taxpayer subsequently pays $30 to the SGO to cover the

processing fees.  The SGO can issue CORs in the amount of $970 and $30 to the

taxpayer. The taxpayer may treat the amount paid to the SGO in excess of $1,000

(e.g., the $30) to cover the cost of the processing fee as a regular charitable

contribution.

2)         The SGO may issue a COR to the taxpayer in the amount of the

contribution and treat the processing fees as an administrative expense.

EXAMPLE: The taxpayer has a CAC in the amount of $1,000 and

makes a contribution of $1,000 using his credit card.  The credit card company

remits $970 to the SGO.  The SGO uses 95% of the funds ($950) for

scholarships.  It uses 5% for administrative costs ($50) and pays the $30

processing fee out of the 5%. The SGO may issue a COR to the taxpayer in the

amount of $1,000

dministrative expense.

EXAMPLE: The taxpayer has a CAC in the amount of $1,000 and

makes a contribution of $1,000 using his credit card.  The credit card company

remits $970 to the SGO.  The SGO uses 95% of the funds ($950) for

scholarships.  It uses 5% for administrative costs ($50) and pays the $30

processing fee out of the 5%. The SGO may issue a COR to the taxpayer in the

amount of $1,000.

j)          Without the consent of a taxpayer, an SGO may not disclose to

any person the contents of a taxpayer's contribution authorization certificate,

the amount of contributions made to the SGO by the taxpayer, and the contents

of a certificate of receipt issued to the taxpayer by the SGO.