South Carolina Tax Authorities Investigate Private School Choice Group

South Carolina tax officials are in the process of investigating a sate nonprofit, Palmetto Kids. Palmetto Kids’ mission includes raising money to help families of children with disabilities pay for private school by awarding tuition grants to worthy recipients. The investigation stems from allegations that Palmetto Kids was soliciting donations, which qualify for state tax credits, in exchange for private school tuition grants. If there is, in fact, a quid pro quo between Palmetto Kids and some of its donors, the donors would be ineligible to receive the tax credits. Palmetto Kids has refused demands by state tax officials to disclose the names of grant recipients; according to a spokesperson for Palmetto Kids, the nonprofit is not at liberty to disclose the names of grant recipients—not even to state tax officials.

Does the fact that a grant recipient may also be a donor mean that the donor’s contribution is not a “gift”? Could better counseling have prevented this inquest by state tax officials? If so, what should Palmetto Kids have done? What should it do going forward?  Read more here.

DAB