Comment from Christian Brothers Conference

Christian Brothers Conference (CBC), representing the Lasallian Region of North America, submits these comments in support of Notice 2025-70 regarding implementation of the Federal Scholarship Tax Credit (FSTC). CBC strongly supports the FSTC and its legislative intent to expand educational opportunity for students nationwide while respecting parental choice, institutional autonomy, and religious liberty. CBC urges Treasury to ensure that final regulations adhere closely to statutory text and congressional intent. In particular, regulations should provide a streamlined electronic process for state opt-in and submission of Scholarship Granting Organization (SGO) lists, while requiring states to list all SGOs that meet federal requirements without discretion to exclude qualified organizations. The statute does not assign states a verification or certification role, and Treasury should instead permit SGOs to attest directly to the IRS. If states are assigned any verification role, regulations must include an appeals process and protect SGOs from unnecessary state intrusion. Regulations should clearly preserve the autonomy of SGOs and participating schools and prevent federal or state interference in their governance, mission, or religious character. Treasury should also clarify that eligible educational expenses may not be excluded based on the religious nature of a school or program, consistent with Section 530 (Coverdell) standards. CBC further recommends defining “located in a state” as being registered to do business and compliant with state law, without requiring physical headquarters in the state. The requirement that SGOs spend at least 90 percent of income on scholarships should apply only to income derived from FSTC-eligible contributions, with allowance for multi-year averaging to accommodate start-up and operational realities. Multi-state SGOs should be permitted to operate across states on a state-by-state compliance basis, including segregated accounts and in-state scholarship distribution. Treasury should also clarify that married couples filing jointly may each claim the credit, allowing a total contribution of $3,400, consistent with longstanding tax principles and avoiding an unintended marriage penalty. Finally, CBC encourages Treasury to permit donors to spread contributions over the course of a taxable year without repeated certification and to explore payroll withholding mechanisms that facilitate broad participation. CBC respectfully urges Treasury to incorporate these principles in the final regulations so that the FSTC may be implemented effectively, equitably, and in full fidelity to congressional intent. The attached full comment letter provides additional detail and legal rationale in support of these recommendations.