Share Hope and Receive a Tax Credit

“The Children’s Promise Act” provides a dollar for dollar TAX CREDIT to businesses that give to an approved Educational Services Charitable Organization (ESCO).  An ESCO organization is defined by its work with children with disabilities and/or are in foster care.  Magnolia Speech School is approved by the Mississippi Department of Revenue. 

Act now!  The total funding available is $9 Million, but it is first-come-first-serve.

MSDOR Application

Complete the MSDOR application for tax credit allocation – APPLICATION FORTHCOMING.

FAQ’s about the Children’s Promise Act Tax Credit:

This information is not intended to give tax advice.  Please consult with your tax professional about your specific tax questions.

– What is the Children’s Promise Act?
– What does the Children’s Promise Act allow my business organization to do?
– What is an ESCO?
– If my business organization would like to file an application for a tax credit against our Mississippi tax liability, to give a contribution to Magnolia Speech School, when do I need to file the application for tax year 2024?
– When do I pay the contribution to Magnolia Speech School?
– How much of an approved Children’s Promise Act tax credit can be used by my business organization in tax year 2023?
– Will I receive notice from the Mississippi Department of Revenue of the tax credit approval for my business organization?
– What if I’d like to make an application for a Children’s Promise Act tax credit for my business organization and contribute to Magnolia Speech School in future years beyond 2024?

What is the Children’s Promise Act?

The Mississippi Children’s Promise Act is a Mississippi law that was passed by the Mississippi legislature in 2019 that allows Mississippi individuals and business organizations to file an application for a tax credit against their Mississippi personal or corporate income tax, insurance premium tax or insurance retaliatory tax, with the amount of tax credit approved by Mississippi Department of Revenue then contributed to an approved Eligible Charitable Organization.

What does the Children’s Promise Act allow my business organization to do?

Under this new law, Mississippi Corporations and Insurance companies that have Mississippi corporate income, insurance premium or insurance retaliatory tax liability to fill out an application for a tax credit against the taxes owed to the Mississippi Department of Revenue.  This tax credit is capped for corporations and insurance companies at an aggregate of $9 million per year and is allocated to the Mississippi business organization on a first come, first serve basis.  The tax credit is only available to those organizations that fill out and submit an application for the tax credit to the Mississippi Department of Revenue.  The Department assesses and approves the applications and gives the approved corporation an allocation of the $9 million available, on a first come, first serve basis.

Upon receiving an approved tax credit allocation, the approved Mississippi business organization reduces its tax paid during the tax year.  The amount of tax credit allocation approved for the business organization is then paid to the ECO that was designated in the tax credit application.

What is an ESCO?

An ESCO, or Educational Services Charitable Organization, is an 501c3 charitable organization that has sought the ESCO designation and been approved for that designation by the Mississippi Department of Revenue.  These ESCO organizations as defined in the law work with children with disabilities and/or are in foster care.  The ESCO must demonstrate for the Department of Revenue that they meet the definition restrictions as outlined in the law in order to receive an ESCO designation letter.  Only approved and designated ESCO’s may receive the charitable proceeds associated with the tax credits allocated through the Children’s Promise Act.

Magnolia Speech School has sought and received approval as a designated ESCO by the Mississippi Department of Revenue, and a copy of Magnolia’s approval letter is in this packet for your review.

If my business organization would like to file an application for a tax credit against our Mississippi tax liability, to give a contribution to Magnolia Speech School, when do I need to file the application for tax year 2023?

To receive a tax credit allocation award for the Children’s Promise Act program, a corporation or insurance company operating in Mississippi and having Mississippi tax liability would need to prepare an application that designates Magnolia Speech School as the ESCO, and submit the application to the Mississippi Department of Revenue for approval on January 1, 2023.  We would be happy to assist your organization with this process including making the physical submission of the application as soon as the Mississippi Department of Revenue will accept the application.

When do I pay the contribution to Magnolia Speech School?

By law, after a corporation or insurance company operating in Mississippi receive their approval of their application for a specified tax credit allocation, the approved individual, corporation or insurance company operating in Mississippi has 60 days to pay the ESCO, Magnolia Speech School, the charitable contribution amount equal to the amount of the tax credit allocation amount approved by the Department of Revenue. 

How much of an approved Children’s Promise Act tax credit can be used by my business organization in tax year 2023?

If a corporation or insurance company operating in Mississippi receives an approval on its application for a tax credit that approved amount – after it has been contributed to the ESCO – can be reduced from the amount of tax owed to the Mississippi Department of Revenue for the calendar year of approval.  The reduced amount can be up to half of the tax liability owed in that calendar year.  If the approved tax credit allocation amount is greater than half of the tax liability owed in the calendar year, there is a five (5) year carry forward of the approved tax credit allocation amount, so the corporation or insurance company with an approved tax credit allocation can use an unused portion of the approved tax credit in successive tax years where they have a Mississippi tax liability.

Will I receive notice from the Mississippi Department of Revenue of the tax credit approval for my business organization?

Yes, when the corporation or insurance company operating in Mississippi makes an application for a Children’s Promise Act tax credit with the Mississippi Department of Revenue, then after review of the application the Mississippi Department of Revenue will issue a letter to the corporation or insurance company making the application that will outline the approval or denial of the tax credit, and if approved the amount of the tax credit allocation awarded that may be used by the tax payer making the application.

This amount of tax credit allocation designated in the letter by the Mississippi Department of Revenue is also the minimum amount of charitable contribution that the corporation or insurance company operating in Mississippi will be required to contribute to the designated ESCO within 60 days or receipt of the approval letter.   If the tax credit application is denied by the Mississippi Department of Revenue, the corporation or insurance company is under no legal obligation to make the charitable contribution by virtue of the Children’s Promise Act, but if they wish may still make any charitable contribution they wish under the usual tax deduction laws as they have in previous years.

What if I’d like to make an application for a Children’s Promise Act tax credit for my business organization and contribute to Magnolia Speech School in future years beyond 2023?

If a corporation or insurance company operating in Mississippi wishes to make a contribution to Magnolia Speech School using the Children’s Promise Act tax credit in years beyond 2024, they may do so by filing an application for the tax credit on January 1 of 2025.  The Children’s Promise Act expires in the law on January 1 of 2025. 

If your organization would like to commit to make those future applications as well, for planning purposes, we’d like to know so that we may assist your organization with the future applications at the appropriate time.

 

2020 – 2022 Children’s Promise Act Participants