Comment from Stand For Schools

On behalf of Stand For Schools, OpenSky Policy Institute, OutNebraska, and the ACLU of Nebraska, we submit the following comments regarding Notice 2025-70 and forthcoming regulatory guidance under Internal Revenue Code §25F. Our organizations represent a broad coalition of Nebraska parents, students, educators, school leaders, civil rights advocates, and policy experts committed to advancing educational fairness and adequacy, protecting civil liberties, and ensuring that public resources are administered transparently, accountably, and in a manner consistent with federal and state law. We appreciate Treasury’s and the Internal Revenue Service’s efforts to ensure that the implementation of §25F adheres to statutory intent and preserves program integrity. 1. Definition of “Located in a State.” We recommend a definition requiring SGOs to (a) maintain a physical presence within the electing State; (b) operate state-specific, segregated accounts; (c) maintain state-specific governance structures; and (d) document state-specific scholarship operations. These standards are necessary to ensure enforceability and prevent the aggregation or reallocation of contributions across State lines. 2. Safeguards Against Donor Direction and Disqualified Person Conflicts. We support the adoption of strong prohibitions on donor recommendations, donor influence, affiliated-school SGOs, and indirect routing of scholarships. Clear rules analogous to private foundation regulations will reduce enforcement burdens through consistent application and uphold statutory prohibitions on earmarking. Moreover, donors and SGOs should be prohibited from discriminating in awarding scholarship money, and should further be prohibited from allowing the use of scholarship money for tuition or payments for education providers that do not follow anti-discrimination provisions as enshrined in federal law. 3. State Certification and Oversight. We recommend requiring States to conduct documented, substantive reviews before certifying SGOs. SGOs should be subject to periodic audits, mandatory reporting requirements, and immediate removal upon noncompliance. Such measures are essential for program integrity and administrative stability. Further, as the program was structured to allow maximum respect for state-level decision-making in the opt-in/opt-out process, States should similarly be entrusted to oversee and impose additional duties on SGOs as they see fit. This extends to an affirmation within federal regulations that states may ask SGOs to direct some or all of their spending to support students who attend public schools. 4. Coordination with State Tax Benefits and Charitable Deduction Rules. We support firm prohibitions on duplicative tax benefits. Contributions used to claim §25F credits should not qualify for charitable deductions or overlapping state credits. Clear standards will guard against tax arbitrage and maintain fiscal balance. Conclusion. We appreciate the opportunity to provide these comments and welcome continued engagement as Treasury develops proposed regulations under §25F. Well-defined and enforceable rules will protect program integrity and ensure that §25F operates in accordance with statutory requirements.