Educational Improvement Tax Credit Program (EITC)
Local Businesses Can Support SCASD Students with Tax Credits
SCASD Foundation has been approved to receive contributions through Pennsylvania’s Education Improvement Tax Credit (EITC) program. EITC allows PA-based businesses to earn tax credits in exchange for charitable giving to approved entities.
How does the EITC program work?
Tax credits equal to 75% of their total charitable contribution are available to businesses with proof of a donation during a taxable year; tax credits equal to up to 90% are available to those committed to contribute the same amount for two consecutive years.
How can you apply?
Annual EITC tax credits availability and eligibility are limited. Applications are accepted starting July 1, on a first-come, first-served basis. Any applications received before July 1 are disqualified. For more details, contact.
Paul Olivett, Executive Director
SCASD Education Foundation
(814) 883-8067
pgo11@scasd.org
Individuals and Small Business Owners Can Support SCASD Students Through Special Purpose Entities
An expansion of the EITC program, specifically created for high-income individuals and small business owners, Special Purposes Entities allow those qualified to earn tax credits in conjunction with charitable giving.
What are the limitations?
Tax credits cannot exceed $750,000 per business each year, and credits must be used in the same year that the donation is given.
Who can invest in a Special Purpose Entity?
Accredited investors (i.e. $200,000 income or $1,000,000 net worth), with at least a $3,500 Pennsylvania income tax liability, are ideal candidates to invest in a Special Purpose Entity. Individuals with income solely from a sole proprietorship or employment with a non-profit organization (e.g. Penn State University, Mt. Nittany Medical Center, etc.) are not eligible for the EITC program’s tax credits and should not invest in an SPE.
What are the tax benefits of joining a Special Purpose Entity?
Members of a Special Purpose Entity can receive an EITC tax credit to apply against their Pennsylvania state income tax equal to 90% of the contribution to the Special Purpose Entity. In addition, the contribution to the Special Purpose Entity qualifies for a charitable income tax deduction on the member’s federal income tax return.
For example, if a member contributes $5,000 to a Special Purpose Entity, the member will get a $4,500 tax credit and a $1,400 reduction in federal income tax liability (assuming 28% federal AMT tax rate), which is a $5,900 tax reduction on a $5,000 investment or an 18% return on the $5,000 investment.
| Without Contribution to SPE | With Contribution to SPE |
| Gross Income $200,000 | Gross Income $200,000 |
| Charitable Contribution $0 | Charitable Contribution ($5,000) |
| Taxable Income $200,000 | Taxable Income $195,000 |
| Federal Income Tax (28%) $56,000 | Federal Income Tax (28%) $54,600 |
| Pennsylvania Income Tax (3%) $6,000 | Pennsylvania Income Tax (3%) $6,000 |
| EITC Credit $0 | EITC Credit ($4,500) |
| Net Pennsylvania Income Tax $6,000 | Net Pennsylvania Income Tax $1,500 |
| Total Tax $62,000 | Total Tax $56,100 |
| Tax Savings $5,900 |
Does the SCASD Education Foundation manage a Special Purpose Entity?
No. The SCASD Education Foundation has neither the staff nor the skills necessary to effectively manage a Special Purpose Entity. However, the SCASD Education Foundation will accept EITC from any Special Purpose Entity.
Is there a local Special Purpose Entity I can join?
Tyrone CPA Randy Tarpey created the Central Pennsylvania Special Purpose Entity Two LLC for the sole purpose of participating in the EITC tax credit programs. Central Pennsylvania Special Purpose Entity Two LLC memberships are now available to individuals and entities which meet its investment requirements and can commit a minimum of $3,500 annually for two consecutive years.
Is there a local Special Purpose Entity I can join?
Individuals interested in joining Central Pennsylvania Special Purpose Entity Two LLC should review, complete, and submit the signed Joinder to Limited Liability Company Agreement of Central Pennsylvania Special Purpose Entity Two LLC to Randy Tarpey. Please see Randy’s contact information below. Memberships in Central Pennsylvania Special Purpose Entity Two LLC are only available until it has been fully subscribed. Randy and his team manage partnership agreements and member compliance tax documentation and will forward member-designated contributions to the SCASD Education Foundation.
Please contact the following individuals for questions about Central Pennsylvania Special Purpose Entity Two LLC and/or SCASD Education Foundation:
Randy Tarpey
Sickler, Tarpey & Associates
(814) 684-4640
randytarpey@hksickler.com
Paul Olivett, Executive Director
SCASD Education Foundation
(814) 883-8067
pgo11@scasd.org
Douglas C. Loviscky, President
SCASD Education Foundation
(814) 231-1391
doug@lovisckylaw.com
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before investing in a Special Purpose Entity.
