Form Rev-1123 Ct - Educational Improvement/opportunity Scholarship Tax Credit Election Form Page 3
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3REV-1123 CT (02-13)
Use of Educational Improvement Tax Credits
Upon receipt of proof of a contribution, the Department of Community and Economic Development will notify the
Department of Revenue to apply the Educational Improvement Tax Credit (EITC)/Opportunity Scholarship Tax
Credit (OSTC) against the appropriate taxes identified by the business in its application.
A business, including a pass-through entity, granted an EITC/OSTC is entitled to a credit in the taxable year in
which the contribution is made. The definition of a pass-through entity includes: (1) an unincorporated entity that
is classified as a partnership for federal income tax purposes; (2) a single-member limited liability company that
is classified as a disregarded entity for federal income tax purposes; and (3) a Pennsylvania S corporation. A pass-
through entity may choose to pass through the credit to shareholders, members or partners (owners) in the fol-
lowing manner:
•
Make an irrevocable election in writing to pass through the entire EITC/OSTC to its owners, in proportion to
the entity’s distributive income share to which owners are entitled in the taxable year in which the contri-
bution is made, or in the taxable year immediately following.
•
Apply all or a portion of the EITC/OSTC to the entity’s tax liability for use in the taxable year in which the
contribution is made and make an irrevocable election in writing to pass through the remaining
EITC/OSTC to its owners, in proportion to the entity’s distributive income share to which owners are enti-
tled in the taxable year in which the contribution is made.
•
Apply all or a portion of the EITC/OSTC to the entity’s tax liability for use in the taxable year in which the
contribution is made and make an irrevocable election in writing to pass through the remaining
EITC/OSTC through to its owners, in proportion to the entity’s distributive income share to which own-
ers are entitled in the taxable year immediately following the year in which the contribution was made.
IMPORTANT: Married couples with joint ownership in pass-through entities must identify husband and wife sep-
arately on the entities’ pass through of credit requests in order for credit to be applied to each individual.
Example: Husband and wife Jim and Jane jointly own a 50 percent interest of a partnership, and their son John
owns the other 50 percent. All income is distributed according to the ownership percentages. The request to pass
through credit must identify Jim’s and Jane’s tax numbers separately, each receiving 25 percent of the credit, and
identify the other 50 percent to be passed through to John under his tax number. This method must be followed
even though the partnership reports Jim and Jane’s income together on the same RK-1 or NRK-1.
An election to pass through an EITC/OSTC must be made by the pass-through entity on or before
the tax report due date for the year in which the contribution is made. A separate election must be
submitted for each year. If an election is not made to pass through any unused EITC/OSTC to the owners, the
EITC/OSTC will expire.
An EITC/OSTC granted for any one taxable year may not exceed the combined tax liability of the entity and its
owners. Additionally, an EITC/OSTC not used in the taxable year in which the contribution was made may not be
carried forward or carried back, nor is it refundable or transferable, except for an approved election to apply
unused EITC/OSTC to the tax liability of the owners in the taxable year immediately following the year in which
the contribution is made. A pass-through EITC/OSTC can be applied to all classes of income earned by the owners.
Return the election form to:
PA DEPARTMENT OF REVENUE
BUREAU OF CORPORATION TAXES
PO BOX 280701
HARRISBURG PA 17128-0701
RETURN TO PAGE 1
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