On June 21, the Alabama Department of Revenue (“ADOR” or “Department”) released proposed rules interpreting the landmark Alabama Accountability Act of 2013 (“AAA” or “Act”), Acts of Alabama 2013-64, as amended by Acts of Alabama 2013-265. The AAA, which Governor Bentley signed into law earlier this year, provides state income tax credits both to individuals who incur creditable costs in sending their child to a non failing public school or to a qualifying private school and to individuals or corporations that make cash donations to a qualifying scholarship-granting organization (“SGO”). The proposed rules provide essential guidance to taxpayers interested in taking advantage of the new income tax credits the AAA created and should be reviewed carefully.

There will be a public hearing on August 8 to discuss these proposed rules and entertain written comments. This SALT Alert will focus on qualifying SGOs, including the criteria for qualification, how to make gifts to these organizations and who can do so, and the SGOs’ scope of responsibilities. But first, a quick overview of the proposed rules for the parents or guardians of children in one of the 78 listed “failing schools.”