EXTRA-CURRICULAR
ACTIVITIES &TAX
CREDIT
Presented by:
Sharon Flores
Palominas School District
Brittney Williams
Heinfeld, Meech and Co., P.C.
Guidance and Resources
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USFR Memorandum No. 214
Arizona Department of Revenue Publication
707
A.R.S. Section 15-342(24)
A.R.S. Section 43-1089.01
Laws 2005, Ch. 272
USFR Chart of Accounts
Recommendation
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School Policies and Procedures
USFR Memorandum No. 214
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Summarization of all the rules and regulations.
If districts receive contributions that are not
designated for a specific purpose, the site council
for the school must determine how the contributions
should be used at the school.
Districts should prepare and issue a pre-numbered
cash receipt form to each contributor/taxpayer. The
form should include the district number, school
name, taxpayer name and address, amount
received, date, and description of the activity for
which the fee was paid.
Arizona Department of
Revenue Publication 707
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Eligible Schools
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Public and charter schools providing instruction
for K-12.
Nongovernmental schools, preschools,
community colleges, and universities do not
qualify for the credit.
School Tax Credits defined – Generally, any
educational or recreational activities that
supplement the educational program of the
school.
A.R.S. Section 15-342(24)
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Extracurricular Activities Defined
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Optional
Noncredit
Educational
School Sponsored
Enrolled Students
Fee based
Determination Chart
Tax Credit Eligible Expenditures
Determination Chart
Ask yourself the following questions:
A.R.S. §43-1089.01 defines when the tax credit can be claimed for an
extracurricular activity
1
Is the activity school-sponsored?
2
Is the school charging a fee? (Note 1)
3
Is the activity for enrolled students?
4
Is the activity educational?
A.R.S. §15-342 (24) defines an extracurricular activity
5
Is the activity optional?
6
Is the activity noncredit?
Yes
No
Yes
No
A.R.S. Section 43-1089.01
Allows for taxpayers to receive a credit for the amount of any
fees or cash contributions made to a public school in the State
for the support of extracurricular activities or character education
programs.
 G. For the purposes of this section:
 2. “Extracurricular activities” means:
a. Band Uniforms
b. Equipment or uniforms for varsity athletic
activities
c. Scientific laboratory materials
d. In-state or out-of-state trips that are solely for competitive
events.
Extracurricular activities do not include any senior trips or
events that are recreational, amusement or tourist activities.
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Laws 2005, Ch. 272
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This law reduced the reporting requirements
for school districts.
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Districts required to file a report with the Arizona
Department of Revenue (ADOR) by February 28
of each year (standardized form provided by
ADOR).
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Form number ADOR 05-5432
Total number and dollar amount of fees and contributions
received during the previous calendar year.
Total dollar amount of fees and contributions spent by the
district during the previous calendar year.
USFR Chart of Accounts
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Extracurricular Activities Fees Tax Credit
Monies
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May be recorded in the Auxiliary Operations Fund
(F525) or in the Extracurricular Activities Fees Tax
Credit Fund (F526).
Revenue object code 1790.
Expenditure code – will vary - subject to USFR
Chart of Accounts.
School Policies and
Procedures
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District should have specified policies and
procedures approved by the governing board
to determine how the Extra-Curricular
Activities Fees Tax Credit monies are
handled.
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The governing board should determine how the
contributions should be used at the school.
Procedures for issuing a pre-numbered cash
receipt form to each contributor/taxpayer.
On-Line Contributions
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Allow taxpayer the ability to print out a receipt
with all of their individual information.
Maintain records of all contributors and
amount of contributions.
Copy of on-line donations to be maintained
for auditor trail.
Contributions
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An individual can contribute and receive a tax
credit for any amount up to $200, or a couple
filing jointly can contribute up to $400.
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Any amount up to the $200 and $400 limit may be
donated.
Payment can be made at one time or in
installments during the calendar year.
Questions
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Contributions:
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Should a receipt be issued to the taxpayer?
 YES!
Can a taxpayer make a contribution on behalf of their
child?
 YES!
Can a PTA, school foundation, school district or school
club give funds or directly pay for extra-curricular activities
or character education programs?
 NO!
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ARS 43-1089.01 requires that the fees be paid “to the public
school”. Therefore, the payment must be made directly to the
public school or district only.
Questions Cont’d.
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Does the taxpayer have to specify which activity or
program the contribution is intended for?
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Does a taxpayer have to donate to the school within
the boundaries of where they live?
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NO!
Does the taxpayer have to have a child in school in
order to make a contribution?
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NO!
NO!
Can a taxpayer receive a refund of a contribution?
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NO!
Questions Cont’d
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Is the tax credit only available to parents with
students in school?
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No, this tax credit is available to any Arizona
taxpayer, regardless of whether or not they have
children in school.
Is a charter school considered to be a public
school?
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Yes, a charter school is eligible for this tax credit.
Questions Cont’d
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Can I choose which extra-curricular activities my
money should benefit?
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Yes, you can indicate areas of allocation, such as a student
club or activity.
Designation must be made at the time of donation.
Can a taxpayer make a contribution or pay fees to
an organization (i.e. PTA, school foundation, or
school club) which then gives the funds to the
school and count this as a tax credit?
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No. A.R.S. 43-1089.01 requires that fees be paid “to a
public school”.
Questions Cont’d
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What is the difference between a tax
deduction and a tax credit?
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A tax deduction allows you to subtract the amount
of a contribution from the amount of your taxable
income.
The credit allows you to subtract from the amount
of taxes you owe dollar for dollar.
Questions Cont’d
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Can you receive a refund of these credits?
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The credits may only be used to the extent that
they reduce a tax liability to zero.
Any unused amounts may, however, be carried
forward for up to five consecutive taxable years.
Allowable Activities
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Graduation items?
Chaperone on a field trip?
Fountain for the campus?
Trip to Costa Rica- Senior trip?
Trip to Costa Rica- Spanish Club?
Playground equipment?
Allowable Activities Cont’d
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Bats and Balls?
Uniforms for the football team?
Activity that benefits only a select number of
students?
Activity that benefits students and nonstudents?
Computers and laptops?
Salary for a coach/referee?
Character Education- Instruction
of at least 6 of the following traits
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Truthfulness
Responsibility
Compassion
Diligence
Sincerity
Trustworthiness
Respect
Attentiveness
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Obedience
Orderliness
Forgiveness
Virtue
Fairness
Caring
Citizenship
Integrity
Proposed Tax Credit
Legislation
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HB 2070
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43-1089.01 Tax credit: public school fees and
contributions; definitions
A. A credit is allowed against the taxes imposed by
this title for the amount of any fees or cash
contributions by a taxpayer or on the taxpayer’s behalf
pursuant to section 43-401, subsection I during the
taxable year to a public school located in this state for
the support of extracurricular activities, TUTORING
PROGRAMS or character education programs of the
public school….
Proposed Legislation Cont’d
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“TUTORING PROGRAMS” means school
sponsored tutoring programs that are
provided for students in the subject area in
which the student is performing at or below
grade level and that select and compensate
tutors based on policies that are developed
by the school district governing board.
Proposed Legislation Cont’d
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HB 2613
….OR, FOR TAXABLE YEARS ENDING
BEFORE DECEMBER 31, 2013,
TEXTBOOKS, CLASSROOM
TECHNOLOGY OR INSTRUCTION
MATERIALS ..
Proposed Legislation Cont’d
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A.R.S. Section 43-1089.01
Allows for taxpayers to receive a credit for the amount of any fees or cash
contributions made to a public school in the State for the support of
extracurricular activities or character education programs.
 G. For the purposes of this section:
 2. “Extracurricular activities” means:
a. Band Uniforms
b. Equipment or uniforms for varsity athletic
activities
c. Scientific laboratory materials
d. In-state or out-of-state trips that are solely for competitive
events.
Extracurricular activities do not include any senior trips or events that are
recreational, amusement or tourist activities.
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More Questions?
THANK YOU!!
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CONTACT INFORMATION
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SHARON FLORES
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520-366-6204 x.4919
floress@palominas.k12.az.us
BRITTNEY WILLIAMS
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520-742-2611 x.116
brittneyw@heinfeldmeech.com