Florida ~ Corporate Income Tax, Practice and Procedure: Florida Tax Credit Scholarship Program Not Unconstitutional

CCH Tax Day Report

A Florida appellate court dismissed a group of taxpayer’s claim that the Florida Tax Credit Scholarship Program (Program) is unconstitutional. The taxpayers argued that the Program violated the Florida Constitution because it was taking public funds from Florida’s public schools and giving the funds to religiously affiliated schools to provide private-school scholarships. The taxpayers further argued that the Program created a parallel and non-uniform school system with taxpayer funds. The taxpayers argued that they had standing to bring their claim based on their allegation of special injury.

The issue facing the appellate court was whether the taxpayers had standing to challenge the Program. The court determined that they did not have standing because they were unable to demonstrate that they suffered or will suffer a special injury, distinct from other members of the community at large. In fact, the taxpayers failed to allege any concrete injury whatsoever.

The appellate court determined that no funds under the Program are appropriated from the state treasury or from the budget for Florida’s public schools. All the funds received by private schools under the Program come from private, voluntary contributions to scholarship funding organizations (SFOs), after a parent or guardian has chosen to enroll their child in a private school.

The taxpayers had argued that if the tax credits offered in exchange for contributions to SFOs were not available, the taxpayers would remit their full tax liability to Florida, Florida revenues would increase, and the Legislature would appropriate those revenues to fund the public school system, in some manner that would benefit the taxpayers. The court rejected this argument and stated that tax credits received by taxpayers who have contributed to SFOs were not the equivalent of revenues remitted to the state treasury. The authorization of tax credits and the payment of private funds to private schools via scholarships authorized under the Program, did not involve any appropriation from the public treasury. The program is fully funded by voluntary, private donations by individual and corporate taxpayers. Therefore, the complaint was properly dismissed.

McCall v. Scott, Governor of Florida, District Court of Appeal of Florida, First District, No. 1D15-2752, August 16, 2016, ¶206-209

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