S.Amdt. 4123

SA 4123, submitted by Ms. Hirono, aims to change Section 25F of the Internal Revenue Code of 1986 within the bill H.R. 4016.

The amendment adds and changes the following:

• Covered State Definition: It defines a covered State as one that voluntarily elects to participate, identifies scholarship granting organizations, and agrees to make specific payments to the Secretary.

• Fraud Exception and Clawback: A State is not considered a covered State if it identified a scholarship granting organization that the Treasury Inspector General for Tax Administration determined committed fraud in the preceding calendar year. In these cases, the State must pay the Secretary an amount equal to the total qualified contributions the fraudulent organization received during any year fraud was determined.

• Oversight and Reporting: It creates a new subsection requiring the Treasury Inspector General for Tax Administration to:

  • Submit annual reports to applicable Congressional committees regarding the amount of qualified contributions received by each scholarship granting organization in each State.
  • Investigate fraud committed by these organizations or their employees and submit annual reports on those cases.

• Congressional Committees: The applicable Congressional committees are identified as the Senate Committees on Finance and Health, Education, Labor, and Pensions, and the House Committees on Ways and Means and Education and the Workforce.

• Effective Date: These changes apply to taxable years starting after December 31, 2026.