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Corporate FAQ

What Is The Arizona Corporate Tax Credit?

In 2006 and 2008, the Arizona State Legislature respectively passed into law, the Low-Income Corporate Tax Credit Program A.R.S. 43-1183 and the Disabled/Displaced Corporate Income Tax Credit Program A.R.S. 43-1184, which allow a corporation to make a contribution to a qualified State Tuition Organization (STO) like Arizona Private School Tuition Organization (APSTO) and receive a dollar-for-dollar state tax credit up to the total amount of its tax liability.

When your company participates in this program, you enable us to turn your tax liability into scholarships, providing much needed assistance for low income or disabled and displaced children attending private schools in Arizona.

Because this is a dollar-for-dollar credit against taxes your company already must pay to the state, it will not take away from your bottom line or other philanthropic programs you are involved with. In other words, the net cost to your company is zero, but priceless to a child.

What Is The Difference Between The Two Corporate Tax Credits?

Corporations receive a 100% credit against their Arizona corporate tax liability for donating towards either of tax credit programs. The differences between them are the size of the statewide donation caps as well as which students are eligible to receive the scholarships.

Who Can Participate?

C-Corporations

C-Corporations may donate up to their state income tax liability for the given tax year, provided the amount does not exceed the entire statewide cap for the year. If a corporation donates more than their tax liability, it can be carried forward for up to 5 years. A.R.S. 43-1183.

S-Corporations

S-Corporations and LLC’s filing as an S- Corporation may donate up to their state income tax liability for the given tax year, with a minimum donation of $5,000 and then pass the tax credit on to its shareholders proportionately. Statewide cap applies. If a corporation donates more than their tax liability, it can be carried forward for up to 5 years. A.R.S. 43-1089.04.

Please click here for additional S-Corporation and individual shareholder reporting requirements.

Insurance Companies

Insurance Companies that pay premium tax may donate up to their state tax liability for the given tax year, provided the amount does not exceed the entire statewide cap for the year. If a corporation donates more than their tax liability, it can be carried forward for up to 5 years. A.R.S. 43-1183.

Corporations do not have to be based in Arizona to participate in this program. The only requirement is that they have an Arizona state income tax liability.

How Does A Corporation Enroll In The Program?

If you have any questions please call, we are always here to help.

How Much Can A Corporation Donate?

Corporations may donate up to their state income tax liability for the given tax year, provided the statewide cap has not been met or exceeded by the contribution. If a corporation donates more than their tax liability, it can be carried forward for up to 5 years.

What Is The Statewide Cap?

There is no set maximum a corporation can redirect and donate to receive a dollar-for-dollar tax credit. Instead, the Arizona Department of Revenue (ADOR) imposes an annual statewide donation cap that all corporate donors combined can contribute to this program.

Each year, the ADOR sets the aggregate cap for both corporate tax programs. The annual limit for the Low-Income Corporate Tax Credit increases 20% each year, while the Disabled/Displaced Corporate Tax Credit donation limit remains constant at $6M.

For fiscal year 2021, the statewide cap for Low-Income Corporate is $135M.

The statewide cap opens the first week of July each year and remains open until the cap is met. The cap is usually met quickly, sometimes within minutes of opening.

The Low-Income Corporate Cap has not been met, APSTO is still taking Donation Requests. The Disabled/Displaced Cap has been met and is closed for the 2021 tax year.

Due to the aggregate cap, all donations must go through an approval process. This program is available to corporations on a first come, first serve basis, so it is important to understand the process and timelines.

What If The Donation Request Is Greater Than The Remaining Cap?

In the event a request is received for an amount greater than the remaining cap, ADOR will only approve the remaining amount. For example, if $500,000 is left under the cap and your request is for a greater amount, ADOR shall approve only $500,000.

What Is The Program Process Timeline?

First:
1
Identify your company’s corporate income tax liability and determine how much you would like to donate vs pay to the state this fiscal year.
2
Complete the Donation Request Form online, by printable form, or call for assistance 480-256-1001.
3
Submit the Donation Request Form to APSTO no later than June 30th if you would like your Approval Request submitted as soon as the cap opens in July.
If you use our printable form, please email it to info@APSTO.org or call 480-256-1001 for assistance. We are always available to help.
Then:
1
APSTO will submit a Donation Approval Request to the ADOR.
2
ADOR will respond to the request for pre-approval within 20 days. The request will be approved if the state cap has not yet been met. If the cap has been met, ADOR will create a waitlist based on the order the requests are received.
3
APSTO will notify your company of their approval the same day ADOR sends its approval. Your company will have 20 calendar days from approval date to submit the credit donation to APSTO.
4
Once APSTO receives your donation funds ADOR will be notified and APSTO can provide your company a receipt to claim your tax credit.
5
APSTO issues tuition scholarships to qualifying students.

How Do Corporations Claim These Tax Credits?

You or your tax advisor will need to file an Arizona tax Form 335 or 341 with your corporate return (Form 120) to claim the credit. Depending on your corporate structure, the designation chosen for the donation (Low-income A.R.S 43-1183 or Displaced Students/Students with Disabilities A.R.S. 43-1184) will determine the form(s) to file with your return. You may visit the Arizona Department of Revenue site to obtain these forms or go to Claim Your Credit on our site. All 335 and 341 forms for each corporate structure are provided with the needed instructions.

Who Receives The Scholarships?

If your company designates the Low-Income Corporate Tax Credit for your donation, the funds are dedicated exclusively to support the tuition costs for low income or underserved students. If your company designates the Disabled/Displaced Corporate Tax Credit for your donation, the funds are awarded to students who have been identified as having a disability (physical, learning, or emotional), or students who are or have been in the Arizona foster care system.

Can Corporations Recommend A Student Or School To Receive Scholarships?

Due to state law, a corporation cannot designate a specific student, but it can recommend a specific school or multiple schools.

APSTO is not tied to any single school, denomination, or organization. We will work with every qualified school in the state of Arizona.

Questions? Call 480-256-1001 or email info@APSTO.org