Comment from My Church SGO

See attached file(s)These comments are being submitted in response to Notice 2025-70 regarding the implementation of the new nonrefundable tax credit under IRC section 25F for qualified cash contributions to Scholarship Granting Organizations (SGOs). My Church SGO strongly supports this program, which will empower families by expanding access to quality elementary and secondary education options for low- and middle-income students starting in 2027. The purpose of this letter is to bring potential issues to light and offer My Church SGO recommendations for solving those issues. Highlights include: Recommendation on Credit Limitation for Married Couples Filing Jointly: Section 25F(b)(1) limits the credit to $1,700 for any taxpayer in a taxable year. To enhance the program's effectiveness, the Treasury and IRS should, in forthcoming proposed regulations, clarify or interpret this limitation to allow $1,700 per spouse when married individuals file a joint return, for a potential maximum credit of $3,400 per household. Many federal tax benefits are structured on a per-person basis to reflect family realities. For example, the standard deduction and certain other credits effectively double for joint filers. Treating married couples as a single "taxpayer" unit for this cap (limiting them to $1,700 total) would disproportionately disadvantage families compared to single taxpayers or unmarried couples, who could each claim up to $1,700 separately. Alternative Recommendation on Minimum Administrative Allowance: If the Total Revenue Rule is adopted and the Treasury and IRS determine that the 90%/10% requirement must apply to all SGO revenue, then proposed regulations should at least provide a reasonable minimum administrative allowance to support startup and small SGOs. Specifically, SGOs should be permitted a fixed minimum administrative budget such as $25,000 in their first year of operations and $15,000 annually thereafter, regardless of total contributions received. Recommendation on Accounting and Expenditure Periods: For the 90% requirement, to simplify compliance and enable effective program administration, proposed regulations should adopt a consistent annual testing period for qualified income received by an SGO during a calendar year. A rule should be adopted so that all qualified income received by an SGO during a calendar year (2027)should be distributed no later than December 31st of the following calendar year (2028). Recommendation on Coordination with State Scholarship Tax Credits: Section 25F(b)(2) appropriately reduces the federal credit by the amount of any state tax credit allowed for the same qualified contributions, preventing double benefits on identical donations. To maximize the program's effectiveness and encourage broader donor participation, the IRS should issue clear guidance confirming that taxpayers may make separate contributions to qualified SGOs to qualify for both the state and federal scholarship tax credits.