Complaint on Tax Irregularities

in Georgia's Tax Credit Scholarship Program

for Private Schools

Complaint on Tax Irregularities in Georgia's Tax Credit Scholarship Program for Private Schools

2013 – The report and complaint filed by SEF to the Georgia Department of Revenue finds that tens of millions of taxpayer dollars in Georgia have probably been diverted from the state treasury illegally through the private school scholarship program.

The report and complaint asks the Office of Special Investigations and the State Revenue Commissioner to initiate a statewide investigation into Georgia’s tax credit scholarship program that permits private citizens and corporations to divert tax dollars annually to private student scholarship organizations (SSOs) for private school scholarships. The program, which began in 2008, is virtually unregulated and unaccountable for how more than $170 million of tax funds have been spent since the program’s inception.

SEF’s report includes over 300 pages of documentation showing how the largest SSOs and affiliated private schools in Georgia have assisted parents, friends, and family members to use a wide variety of schemes by which to divert their own tax dollars to finance scholarships for specifically-designated students – often their own children – in violation of the Georgia tax code, Georgia law, and federal regulations.

The tax credit scholarship law was passed to permit low-income students in persistently under-performing public schools to transfer to high-performing private schools through diverted tax funds. Instead, it has been used often to direct public money to support students already attending private schools. SSOs have encouraged and assisted private schools to designate who receives the tax credit scholarship. These practices violate state regulations and laws and probably involve tens of millions of illegal tax contributions that are owed to the state treasury.

SEF calls on the Department of Revenue to enforce the current law and renews its call for Georgia’s leaders to end – or vastly mend – this costly failed experiment.

This follows a 2011 SEF report, A Failed Experiment: Georgia’s Tax Credit Scholarships for Private Schools, which uncovered a widespread failure to serve low-income students through the tax credit scholarships and an absence of accountability and transparency in the tax credit scholarship program.