HB1474: HB1474 Supporting Early Education and Development (SEED) Act; enact

26 LC 59 0389 House Bill 1474 By: Representatives Park of the 107th, Hugley of the 141st, Miller of the 62nd, Gisler of the 121st, Campbell of the 35th, and others A BILL TO BE ENTITLED AN ACT To amend Article 1 of Chapter 1A of Title 20 of the Official Co de of Georgia Annotated,1 relating to general provisions relative to early care and learn ing, so as to provide for the2 annual publication of a map identifying geographic areas where the demand for organizations3 that provide care for children between the ages of zero and five exceeds available licensed4 slots by a ratio of at least three to one; to amend Article 2 o f Chapter 7 of Title 48 of the5 Official Code of Georgia Annotated, relating to imposition, rate, computation, exemptions,6 and credits relative to state income taxes, so as to provide fo r an income tax credit for7 contributions to childcare organizations; to provide for an ann ual limit on such credits; to8 provide for preapproval procedures and timelines; to provide fo r required expenditure of9 funds received by childcare organizations; to provide for rules and regulations; to provide10 for reporting; to provide for an annual audit; to provide for r elated matters; to provide for11 legislative findings; to provide for definitions; to provide fo r an effective date and12 applicability; to repeal conflicting laws; and for other purposes.13 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:14 H. B. 1474 - 1 - 26 LC 59 0389 SECTION 1.15 The Act shall be known and may be cited as the "Supporting Earl y Education and16 Development (SEED) Act."17 SECTION 2.18 The General Assembly finds that:19 (1) Access to high quality early childhood education is the primary "workforce behind the20 workforce," enabling parents to participate in Georgia's economy while ensuring this state's21 future prosperity;22 (2) Ninety percent of a child's brain development occurs before the age of five, with the23 most rapid growth occurring from birth to age three, during which the brain forms 1 million24 neural connections per second;25 (3) Third-grade reading proficiency is a definitive predictor of future success, yet nearly26 two-thirds of Georgia's third graders are not reading at a proficient level, due in no small27 part to impediments to brain development occurring before such third graders reach the age28 of five;29 (4) Every $1.00 invested in high quality birth to five programs yields up to a $9.00 return30 to this state through increased lifetime earnings and reduced e xpenditures on remedial31 education and public safety; and32 (5) Childcare related workforce disruptions currently cost the Georgia economy an33 estimated $2.52 billion annually in lost productivity and $131. 7 million in lost state tax34 revenue.35 SECTION 3.36 Article 1 of Chapter 1A of Title 20 of the Official Code of Geo rgia Annotated, relating to37 general provisions relative to early care and learning, is amended in Code Section 20-1A-4,38 relating to department powers and duties, by striking "and" at the end of paragraph (13), by39 H. B. 1474 - 2 - 26 LC 59 0389 replacing the period at the end of paragraph (14) with "; and", and by adding a new paragraph40 to read as follows:41 "(15) To publish on the home page of the department's website a map to be updated no42 later than November 1 of each calendar year identifying geograp hic areas where the43 demand for organizations that provide care for children between the ages of zero and five44 exceeds available licensed slots by a ratio of at least three to one."45 SECTION 4.46 Article 2 of Chapter 7 of Title 48 of the Official Code of Geor gia Annotated, relating to47 imposition, rate, computation, exem ptions, and credits relative to state income taxes, is48 amended by adding a new Code section to read as follows:49 "48-7-40.19.50 (a) As used in this Code section, the term:51 (1) 'Childcare desert' means geographic areas where the demand for organizations that52 provide care for children between the ages of zero and five exc eeds available licensed53 slots by a ratio of at least three to one, as identified on a m ap published on the54 Department of Early Care and Learning's website.55 (2) 'Childcare organization' means an organization that provid es care for children56 between the ages of zero and five that is tax exempt under Sect ion 501(c)(3) of the57 Internal Revenue Code and Quality Rated by the Department of Early Care and Learning.58 (3) 'Qualified childcare organization expense' or 'qualified c ontribution' means the59 contribution of funds by an individual or corporate taxpayer to a childcare organization60 for the direct benefit of such organization during the tax year for which a credit is claimed61 under this Code section.62 (b) An individual taxpayer shall be allowed a credit against the tax imposed by this chapter63 for qualified childcare organization expenses as follows:64 (1) In the case of a single individual or a head of household, the actual amount expended;65 H. B. 1474 - 3 - 26 LC 59 0389 (2) In the case of a married couple filing a joint return, the actual amount expended; or66 (3) In the case of an individual who is a member of a limited liability company duly67 formed under state law, a shareholder of a Subchapter 'S' corpo ration, or a partner in a68 partnership, the actual amount expended; provided, however, that tax credits pursuant to69 this paragraph shall be allowed only for the portion of the income on which such tax was70 actually paid by such individual.71 (c) An individual taxpayer shall be limited in his or her qualified childcare organization72 expenses allowable for credit under this Code section, and the commissioner shall not73 approve qualified childcare organization expenses which exceed the following limits:74 (1) In the case of a single individual or a head of household, $5,000.00;75 (2) In the case of a married couple filing a joint return, $10,000.00; or76 (3) In the case of an individual who is a member of a limited liability company duly77 formed under state law, a shareholder of a Subchapter 'S' corpo ration, or a partner in a78 partnership, $25,000.00.79 (d) A corporation or other entity shall be allowed a credit against the tax imposed by this80 chapter for qualified childcare organization expenses in an amount not to exceed the actual81 amount expended or 75 percent of the corporation's income tax liability, whichever is less.82 (e) In no event shall the total amount of the tax credit under this Code section for a taxable83 year exceed the taxpayer's income tax liability. Any unused tax credit shall be allowed the84 taxpayer against the succeeding ten years' tax liability. No such credit shall be allowed the85 taxpayer against any prior years' tax liability.86 (f)(1) In no event shall the a ggregate amount of tax credits a llowed under this Code87 section exceed $100 million per taxable year.88 (2) From January 1 to June 30 each taxable year, the commissioner shall only preapprove89 credits for qualified contributions to childcare organizations that are located in childcare90 deserts or dedicated to expanding childcare capacity for children between the ages of zero91 and three. From July 1 to December 31 each taxable year, subject to the aggregate limit92 H. B. 1474 - 4 - 26 LC 59 0389 in paragraph (1) of this subsection, the commissioner shall approve credits for qualified93 contributions to other childcare organizations.94 (3) For purposes of paragraphs (1) and (2) of this subsection, a childcare organization95 shall notify a taxpayer considering making a qualified contribution of the requirements96 of this Code section. Before making a qualified contribution to a childcare organization,97 the taxpayer shall electronically notify the department, in a m anner specified by the98 department, of the total amount of the qualified contribution t o such childcare99 organization. The commissioner shall preapprove or deny the re quested amount or a100 portion of such amount within 30 days after receiving the reque st and shall provide101 written notice to the taxpayer and childcare organization of su ch preapproval or denial102 which shall not require any signed release or notarized approval by the taxpayer. In order103 to receive a tax credit under this Code section, a taxpayer pre approved by the104 commissioner on or before September 30 shall make the qualified contribution to the105 childcare organization within 180 days after receiving notice o f preapproval from the106 commissioner, but not later than October 31. A taxpayer preapp roved by the107 commissioner after September 30 shall make the qualified contribution to the childcare108 organization on or before December 31. If the taxpayer does no t comply with this109 paragraph, the commissioner shall not include such preapproved contribution amount110 when calculating the limit prescribed in paragraph (1) of this subsection.111 (4)(A) The commissioner shall preapprove qualified contributions solely based on the112 availability of tax credits subject to the aggregate total limi t established under113 paragraph (1) of this subsection.114 (B) Upon a childcare organization's confirmation of receipt of qualified contributions115 that have been preapproved by the commissioner, a taxpayer prea pproved by the116 commissioner pursuant to subsection (c) of this Code section who made such qualified117 contribution shall receive the full benefit of the income tax c redit established by this118 Code section even if the childcare organization to which such taxpayer made a qualified119 H. B. 1474 - 5 - 26 LC 59 0389 contribution does not properly comply with the reports or filings required by this Code120 section.121 (5) Notwithstanding any laws to the contrary, the department shall not take any adverse122 action against taxpayers who contribute to childcare organizations if the commissioner123 preapproved a qualified contribution for a tax credit prior to the date a childcare124 organization falls out of compliance with any of the requiremen ts provided under this125 Code section, and all such qualified contributions shall remain as preapproved tax credits126 subject only to the contributors' compliance with paragraph (3) of this subsection.127 (g) In order for a taxpayer to claim the tax credit under this Code section, a letter of128 confirmation of donation issued by the childcare organization t o which the qualified129 contribution was made shall be attached to such taxpayer's tax return. However, in the130 event such taxpayer files an electronic return, such confirmation shall only be required to131 be electronically attached to the return if the Internal Revenu e Service allows such132 attachments when the return is transmitted to the department. In the event the taxpayer133 files an electronic return and such confirmation is not attache d because the Internal134 Revenue Service does not, at the time of such electronic filing , allow electronic135 attachments to the Georgia return, such confirmation shall be maintained by the taxpayer136 and made available upon request by the commissioner. The lette r of confirmation of137 qualified contribution shall contain the taxpayer's name, address, tax identification number,138 the amount of qualified contribution, the date of such contribution, and the amount of the139 credit.140 (h) No credit shall be allowed under this Code section with re spect to any amount141 deducted from taxable net income by the taxpayer as a charitabl e contribution to a bona142 fide charitable organization qualified under Section 501(c)(3) of the Internal Revenue143 Code.144 (i) At least 60 percent of the qualified contributions received by childcare organizations145 for which a taxpayer received a tax credit under the provisions of this Code section must146 H. B. 1474 - 6 - 26 LC 59 0389 be used by such childcare organizations for teacher salary supp lements and retention147 bonuses. Remaining qualified contribution funds may be used fo r capital expansions of148 classrooms for children between the ages of zero and five. Any childcare organization that149 fails to use qualified contribution funds as specified under this subsection shall be issued150 a notice of noncompliance from the department that provides such childcare organization151 90 days to cure such noncompliance with retroactive teacher sal ary supplements or152 retention bonuses. Any childcare organization that fails to cure such noncompliance within153 the 90-day period shall not be eligible to receive qualified co ntributions for which154 taxpayers may receive income tax credits pursuant to the provisions of this Code section155 in any subsequent taxable year.156 (j) The commissioner shall be authorized to promulgate any rul es and regulations157 necessary to implement and administer the provisions of this Code section.158 (k) The department shall post the following information in a p rominent location on its159 website:160 (1) All pertinent timelines relating to the tax credit, including, but not limited to the:161 (A) Beginning date when qualified contributions can be submitted for preapproval by162 donors for the January 1 to June 30 period;163 (B) Ending date when qualified contributions can be submitted for preapproval by164 donors for the January 1 to June 30 period;165 (C) Beginning date when qualified contributions can be submitted for preapproval by166 donors for the July 1 to December 31 period;167 (D) Ending date when qualified contributions can be submitted for preapproval by168 donors for the July 1 to December 31 period; and169 (E) Date by which preapproved qualified contributions are required to be sent to the170 childcare organization;171 (2) A monthly progress report including:172 (A) Total preapproved qualified contributions to date by childcare organization;173 H. B. 1474 - 7 - 26 LC 59 0389 (B) Total qualified contributions received to date by childcare organization;174 (C) Total aggregate amount of preapproved qualified contributions made to date; and175 (D) Aggregate amount of tax credits available.176 (l) The Department of Audits and Accounts shall annually condu ct an audit of the tax177 credit program established under this Code section, including t he amount and recipient178 childcare organization of all qualified contributions made and all tax credits received by179 individual and corporate donors."180 SECTION 5.181 This Act shall become effective on July 1, 2026, and shall be a pplicable to taxable years182 beginning on or after January 1, 2027.183 SECTION 6.184 All laws and parts of laws in conflict with this Act are repealed.185 H. B. 1474 - 8 -