Advised Podcast Ep 003: PA Tax Credits | The ABCs of EITC with Tami Clark

I sat down with Tami Clark, the Executive Director of the Central Pennsylvania Scholarship Fund to uncover a hidden gem for PA tax payers, and especially Small Business Owners.  We discuss how this program works, who it is best for and some common misconceptions you may find when doing your own research.  If you are a PA resident and love to support your local community, This is a MUST LISTEN !  Tami is a great resource on all things Educational Improvement Tax Credit related.  

Listen above or read the transcript below, and let us know what you think of the episode!

Rick Luchini (00:00):

If you're a small business owner, you probably aren't even still listening to this because you turn it off and started making phone calls right away. But if you are still listening to this, this is a no-brainer to dive deeper into today's discussion is on an underutilized and not so well-known tax planning opportunity for PA residents. This is something that everybody should be aware of, but is especially a big value add for our small business owners. I'm excited to have our guest, Tami Clark here in the office and to help shed some light on this little hidden gem. Tami, welcome.

Tami Clark (00:39):

Thank you so much for having me. I appreciate it.

Rick Luchini (00:41):

Why don't you give us your 20 second elevator pitch and tell us who you are.

Tami Clark (00:45):

Sure. I'm Tami Clark. I am the executive director of the Central Pennsylvania Scholarship Fund, which is located in Tyrone, Pennsylvania. We were founded by Randy Taree, who is a C P A, also in Tyrone. And we are a 5 0 1 C three charitable organization that's registered with the state, and we provide educational improvement tax credits for individuals, small business owners and C corporations in order to have them get a tax credit for donations to private school education pre-K through 12th grade, all across the state of Pennsylvania.

Rick Luchini (01:17):

Okay, and that is the E I T C Educational Improvement tax credit? Yes.

Tami Clark (01:23):

We have two different EIT CS in Pennsylvania. Yes. But we are the educational improvement tax credit earned income, not your child tax credit. Right?

Rick Luchini (01:30):

Yes. Okay. So we're talking about the educational improvement tax credit. Tell us what that is and why we should care about it.

Tami Clark (01:40):

Well, the educational improvement tax credit is a way for the donor, the taxpayer, to redirect their taxes from going to Harrisburg to a tuition-based school of their choice in their local area. We do support pre-K through 12th grade, so Bishop Gilfoyle in our local area, holy Trinity, St. Matthews, and Tyrone. So any of those local schools as well as pre-K organizations like Tipton Baptist or Mount Laurel Academy and Laurel Academy and Bellwood, the bonus for the taxpayer is they receive a 90% state tax credit for that donation. Okay. So if they donate $10,000, they receive a $9,000 credit for that on their state taxes. And then the additional, if they do itemize on their taxes, the additional 10% can be used as a federal charitable donation deduction.

Rick Luchini (02:30):

Let's unpack that a little bit. Yes. Okay, so let's slow down. I owe the state of Pennsylvania $5,000, and at this point in the conversation, it doesn't matter. It I am a W two employee, small business owner, whatever. Correct. Okay. I owe the state of Pennsylvania $5,000, and instead of giving them that $5,000, I give it to you and say, I love what Tipton Baptist is doing. Love those guys. They're great. I want that money to go there. Right. You handle everything. And I get a tax credit for 90% of that. Correct.

Tami Clark (03:24):

So $4,500.

Rick Luchini (03:26):

So $4,500 in a scenario where I don't want to pay the state anything. Can I give you $5,500? 110%? Let's say now my 90%, I don't want to get too math here, but my 90% actually is a hundred percent of what my, is your

Tami Clark (03:46):

Full

Rick Luchini (03:47):

Liability of what my full liability is. So I gave that extra money instead of that extra money going to the state, I gave it to the school of my choice, basically go for whatever.

Tami Clark (03:57):

Correct.

Rick Luchini (03:58):

Okay. Now, how is that different for a business owner? Because that I think is something that really is a huge value add.

Tami Clark (04:10):

Sure. Well, as a business owner, particularly a pass through entity owner, obviously everything's going to go onto your social security number. However, you have a business account that you can write your checks out of your owner's draws. So if you as a business owner write the check on your behalf, so if your business writes the check personally for you personally on your behalf, you can use that as a hundred percent charitable donation deduction for your business side, not your personal side. You received the 90% credit, but your business gets to use a hundred percent of it as a charitable donation deduction

Rick Luchini (04:45):

On the federal side. On the federal side. And that is a big distinction. Correct. So on the state side, I'm getting a credit.

Tami Clark (04:52):

Correct.

Rick Luchini (04:54):

And on the federal side, I'm getting a deduction. Correct? Correct. Okay. So in that same example, I'm now a small business owner and I give you 110% of my tax liability, which is $5,500. Okay. I get a 90% deduction or credit, I'm sorry, from the state. Right. Follow with me here. And that means I owe the state of Pennsylvania $0. Correct. I did a good thing for one of these schools. They know about it. By the way, if you're somebody that likes a pat on the back, put your name on it, they'll send you a card, whatever. But on the federal side, now I get to take that $5,500 as a charitable deduction, which more than makes up for the extra $500 that I paid. Correct. And that's where the big hidden gem is for

Tami Clark (05:54):

Particularly small business owners,

Rick Luchini (05:55):

Particularly for small business owners, because what's happening now is if I'm in a 10%, if my federal bracket or effective rate, I should say is 10%, I'm breaking even. So I did a good thing, I got to direct my dollars and keep them local. So they don't go to Philadelphia to fix a bridge. They go to the school of my choice locally. In addition to that, I don't pay that extra. I net out zero on that extra 10% because I save that on my federal taxes, but most small business owners probably are paying higher than 10% on the federal side. So in those instances, I'm actually to the good. Is that correct? Correct. Yeah. So I'm going to give you, in that example, I'm going to give you $5,500, the state of Pennsylvania zero, because I got my tax credit from them. Correct. I take that $5,500, deduct it from my federal side. Excuse me. And on a, I'm just going to pull up my calculator so I don't misspeak here. Let's say I take a $5,500 deduction on the federal side. If I'm in a 20% effective rate, I just saved $1,100 on my federal taxes.

(07:24):

I'm actually to the good tax wise. Correct. And similar, our small business owners are probably laughing because they paid much higher than that, but you can do your own math, and obviously if it was 10,000, do the math. It's just on the percentage side. So this is a no-brainer for small businesses. Why aren't people doing it?

Tami Clark (07:45):

It's one of those programs that it is too good to be true type programs. You always hear about the two good to be true type programs, and it does seem like that. If you are telling me that I'm going to write you a $5,500 check and you're going to get 90% of that money back. Yeah. Right. Okay, sure.

Rick Luchini (08:04):

In that example I just said, I mean, when it's all said and done, $6,100 back. Yes,

Tami Clark (08:11):

Exactly. So of course people are like, no way. No way. And also, there's one downside to the program. If you're a W two employee and you're waiting for that refund because you double paid, I double pay. I double pay my taxes, they take forever. They're still processing refunds. They normally don't start until July 1st. So that is another deterrent from people who need the money to redo

Rick Luchini (08:34):

Their donation policy. So let's unpack that a little bit. I'm a W two employee. My employer is withholding the 3.6% or whatever it is. I then have to go write you that check. Correct. For four grand or whatever I owe. Yes. In addition to what my employer withheld, and then I wait for the state to pay me back.

Tami Clark (08:57):

Correct. That 90%.

Rick Luchini (08:59):

The 90% correct. Whereas if I'm a business owner, I simply just don't pay my quarterlies Correct. Because I know I'm writing you the check. So again, everyone needs to pay attention to this and talk to Tami or your accountant about your specific situation, but it's a real big win for the small businesses.

Tami Clark (09:26):

It

Rick Luchini (09:26):

Really, really is so much. I'm writing the check anyways. I just write it to you. I'm not double paying because I just withhold my quarterlies. But again, if you are a W two employee, and this is of interest to you, talk to your accountant, work it out, talk to Tami. She can consult on how it applies to you, what the timeframe is, all that stuff. If you're a small business owner, if you better be listening by now because all those things she just discussed don't really apply to you. No. You're just changing your quarterlies. And I don't want to get too into the weeds about it, but when do I write you that? When do I write you that check? I'm a small business owner. I owe 5,000 bucks to the state of Pennsylvania. I did not pay my quarter lease knowing that I was going to do this. When do I write that check to you?

Tami Clark (10:18):

Sometime in October or November. Pretty consistently

Rick Luchini (10:21):

Every year. Okay. So as a small business owner, think about this too. This is not the reason to do it, but an additional benefit that a W two employee doesn't get. I have that money in my business account, whether it's earning interest or whether it's leveraged to do something else for a prorated amount of 11 months longer than had I paid the state of Pennsylvania, my quarterly taxes also of working capital longer. Am I missing something here? No, you're not. No, you're

Tami Clark (11:03):

Not. It is a very simple program, and we have two different rounds, and I'm not going to get into the nitty gritty of the rounds, but my small business owners, their favorite round is my spring round. Do your taxes by March 15th. Normally, unless you get an extension. But a lot of my business owners get their stuff done between March 15th and April 15th, so they know what their taxes are for the current year. They have their estimates in their hand, so they know that $7,500 is what they have to pay beginning in April. So they're like, Tam, I have 7,500 for you. What can we get me in? Yes, absolutely. And then if they want to write their check right now, I get them in my spring round. If they want to wait until October, then they wait until October. But like you said, it's planned. They already know. They're not stressing about making those quarterly payments. They're not stressed about, are we going to have this money for here? Because they were already planning on paying it.

Rick Luchini (12:01):

They were already planning. And it just goes back to interest loans, that sort of thing. I mean, when you think about everybody getting excited about their tax return, I'm not excited if people are getting tax returns because you just gave the government an interest free loan. In this instance, it's actually the opposite. Instead of me having to pay my quarterlies, I get to keep that money in my account, do something different with it, even if it's just look at it every day where I Exactly. And then pay that liability at the end, know that I did a good thing, and then also get to deduct it on my federal side. So I have a couple scenarios for you that I don't know the answer to. Okay. But I'm trying to think of, I'll see what I can do. Trying to think of who else this could really benefit. Who should be perking up right now? Sure. Okay. Small business owner. Anybody

Tami Clark (12:56):

With a liability?

Rick Luchini (12:57):

Small business owner, state of Pennsylvania. This is it. Yes. W two employee

Tami Clark (13:04):

Still fantastic. You just have to wait a little longer. I

Rick Luchini (13:06):

Wait a little bit longer. Okay. Now what if we combine those two things? Let's just say my wife is a high wage earner, W two employee. She's creating the bulk of the tax liability, and I have a whatever Etsy shop, or I'm an Uber driver, and it doesn't matter if it's whatever, I technically have a income, a small business. Correct. But the high wage earning spouse is creating the bulk of the tax liability. But because we file jointly, I know that we can make the deduction and get the credit on the state. But can I take that whole liability against our federal taxes because one of us has a sole prop or a L L C or something like that?

Tami Clark (14:11):

That would probably be a better discussion for an accountant. I don't want to give any tax advice on it. In theory, yes, in theory it would be, but if you can't do something like extraordinarily over what your liability is, so you know what I mean? It would be the same as if you donate to the state. If your liability is $5,000, you don't want to donate 10.

Rick Luchini (14:34):

Right. But in deduction wise, but if my household income, yes, is high, but the actual business is low, the liability is $10,000.

Tami Clark (14:53):

Are you writing the check from the business account?

Rick Luchini (14:56):

Well, we would have to make that work

Tami Clark (14:57):

Then. That

Rick Luchini (14:59):

Right.

Tami Clark (14:59):

Then that's how it would

Rick Luchini (15:00):

Work. Oh, there's your answer. Yeah. Okay. So that's interesting too. I mean, that's a lot of people's situation. The husband's at work, the wife has a Etsy shop or daycare on the side or whatever. Absolutely. Vice versa. There's no gender rules there. But that isn't something to not go and do based off of this conversation. Right. Ly. But ask your accountant to dive into that a little bit deeper. Absolutely. Because an opportunity there where you're not thinking, well, some people don't even think of that as a small business. Oh, exactly. It's just their side gig or something. But on your taxes, it technically is. And if you plan ahead and structure things the right way, and like you said, sometimes it's as simple as writing the check out of the right account. It could save you money, if not at least allow you to be empowered to direct your money to where you want it to go. Absolutely. So I have another question for you, which I don't know the answer to because knowing you were coming on, I looked some of this stuff up. You guys do the private school scholarship side of this? Correct. But there is another side, correct. Which is, I have my notes here. Educational Improvement organization for public

Tami Clark (16:29):

Schools. Correct. It's public schools, but it's also more community centers and things like that. So yes, it is Public school foundation,

Rick Luchini (16:37):

All these same things, the tax credit, all the stuff we just talked about. But instead of me pledging my money to one of the private schools, I can have it go to Tyrone or something else

Tami Clark (16:55):

In theory. Correct. Okay. Correct. Unfortunately, we don't do that.

Rick Luchini (16:57):

You don't do it. But in short, how does someone do it if that's of interest to them?

Tami Clark (17:02):

They have to find an organization that has those types of credits. Unfortunately, the e I O block is very small. There's four different types of credits. They're all letters. Everything is letters. P K S O, which is pre-K, so which is scholarship organization, which is every student that financially qualifies in any private school qualifies for those dollars. And then O S T C, which is opportunity scholarship tax Credits. And those are for schools that are kind of underperforming schools. So if your public school is an underperforming school, Johnstown schools, for example, if those public schools are underperforming, those students that go to private schools have accessibility to different kinds of funding to support them going to private schools of their choice. So we do three p k, SS, o s o, and O S T C because they're all scholarship based. E i o is a very small bucket educational improvement

Rick Luchini (17:58):

Organization. Why do you think that is?

Tami Clark (17:59):

Because this was built as a private school institution type program. To be honest, I don't even know when the e I O branch came a part of it. Somebody desperately wanted public schools because public school already receives state funding. So this was more for, and I think they built it more for community centers, libraries, things like that. But public school foundations are definitely involved in it.

Rick Luchini (18:26):

So my kids go to Tyrone. That's not a hypothetical. They actually go to Tyrone. We love it. It's a great school. I wanted to participate in this, but I want the dollars to go to Tyrone. I have to find a organization like yours that participates in the alphabet soup of whatever the hell. Right. I just ask someone,

Tami Clark (18:52):

Oh, it's ridiculous. The amount of letters involved in this

Rick Luchini (18:54):

Organization. That's the process. Yes, exactly. Exactly. So let's go a different direction for a second. We talked about the tax planning monetary side. Why does somebody want to do this? How does it affect the schools, the kids, what's end result or what's the goal here? And then you don't have to list them all, but what are some of the, I know you already did a little bit, but what are some of the local schools that participate with you guys that might get somebody thinking like, oh yeah, I didn't even think of that. You said Tipton Baptist, by the way, I've never considered them as a private. My kids went there for pre-K. And until you said that, it didn't even click for me. Yep.

Tami Clark (19:53):

Pre-Ks are probably the smallest bucket that people don't think of.

Rick Luchini (19:56):

They don't. So what are some of the ones around here that people should be thinking about or that are a little bit more popular, and what happens to my dollar? What's it used for and what's the impact in the community? Sure.

Tami Clark (20:13):

Well, we work with, I'm going to forget some of the schools we work with about 650 across the state.

Rick Luchini (20:20):

Okay. Don't list them all. I'm not.

Tami Clark (20:21):

I wouldn't be able to. And I know,

Rick Luchini (20:23):

Just give me a couple of locals to jog some people's memory. Well, we

Tami Clark (20:26):

Definitely have St. Matthews and Tyrone, the new Tyrone Christian Academy. Tyrone. We work with Bishop Gilfoyle and Holy Trinity in Altoona. Bishop McCort in Johnstown, learning lamp in Bedford, kind of saint. And then every saint you can think of around here. So in St. Pat's in Bedford. So we kind of work with a little bit of everybody, but I also, my kiddos go to Bellwood and they've been in Bellwood and they went to Laurel Academy in Bellwood. So pre-K is kind of where I like to go. That's where my dollars are supported. They support Laurel Academy because pre-Ks are kind of the ones people don't think about, but people that want to donate to Tyrone School District, I push them to the pre-Ks because while we can't give to the school district, those pre-K dollars will assist the kiddos at St. Matthew's who may eventually go to the Tyrone School District, things like that. I know what my kids learned at Laurel Academy, and they were ready when they went to kindergarten. So pre-Ks are extraordinarily

Rick Luchini (21:37):

Important. So what's that dollar do?

Tami Clark (21:39):

That dollar goes strictly to scholarships, strictly to tuition assistance. So a $5,500 donation could cover tuition for two full kids for a year. I mean, pre-K, that's probably three kids for a whole year. And it opens the budget for schools who give in-house scholarships. They no longer have to give those in-house scholarships because they're receiving those E I T

Rick Luchini (22:07):

C tax credit. So even the non-scholarship kids, like my kid isn't going to get the scholarship, but indirectly is still going to benefit from it because that school's spending more money on other things. Correct. Because they're not using their own money to give the in-house scholarships. Correct. So who's eligible for the in-house scholarships and who's getting these scholarships and why?

Tami Clark (22:33):

Well, believe it or not, the financial bracket to receive a scholarship is high. So a household earning of, I believe it's like 121,000 a year with one kid.

Rick Luchini (22:46):

For private school. For

Tami Clark (22:46):

Private school.

Rick Luchini (22:49):

And that goes up. That goes up every year. Well, it goes up every kid too.

Tami Clark (22:53):

Yeah, it does. It goes up $18,000 per kid.

Rick Luchini (22:56):

Right. You have three family with three kids. Household income is what, less than 160,000? Give or take, roughly, yes. Would still be eligible

Tami Clark (23:10):

To receive a scholarship. To

Rick Luchini (23:11):

Receive a scholarship. Okay. And so how do they go about doing, because I think that might surprise.

Tami Clark (23:18):

Oh, it definitely

Rick Luchini (23:19):

Surprises me. It might surprise some people listening that already have their kids in private school and are making less than that, but they

Tami Clark (23:31):

Don't think that they would qualify.

Rick Luchini (23:33):

Exactly. Oh yeah, definitely. So how do they go about qualifying or applying, I should say? Well,

Tami Clark (23:41):

We all work directly with the schools, so the funding comes into me. So you as a donor decide you're going to donate to this private school? Yeah, we do not take any unallocated donations, none. Everybody has to tell me where their money goes. Okay. We are on strict rules just for us. A hundred percent of our money that comes in has to go out. We don't take a fee at all. Got it. So your $5,500 donation comes to me and goes to the school. I don't keep a penny of it. Got it. So what they do is they contact their school. A lot of schools around here work with either fax or simple tuition solutions. It's basically just an online application that you fill out, has your income, you upload your W two done. That's taken care of. Pre-K organizations, they fill out scholarship applications and they send them to me with the first two pages of their tax return goes on, your gross income is the number that we base your qualifications on. And then I do the qualifying. I say, yes, this family's qualified. I get the list of the pre-K.

Rick Luchini (24:40):

Now you're the gatekeeper.

Tami Clark (24:41):

I am. However, I do not determine how much a kiddo earns in scholarships. I do not. That is all in the school. I do not want that responsibility.

Rick Luchini (24:50):

Mainly because the school decides that. The

Tami Clark (24:52):

School decides that.

Rick Luchini (24:52):

Let's go over a few key points here, because at the beginning, and that's just the way I work. I start doing the math side of it. So in the interest of not confusing anybody, if you are anyone in the state of Pennsylvania that has a tax liability at or over $3,500, right? That's your minimum. Correct. At your minimum though, that's not the minimum. That

Tami Clark (25:25):

Is not the minimum. We do have one of the lowest in the state, but that is our minimum.

Rick Luchini (25:29):

Okay. So $3,500 tax bill regularly, which probably makes your household income somewhere in the low hundred thousands. Is that fair?

Tami Clark (25:38):

Yeah, it's right around one 10.

Rick Luchini (25:40):

Okay. So that sounds like you take the next step and either talk to somebody like Tami or your accountant and get more detail to decide how it affects your specific situation. You might be walking around thinking, well, I make one 10, but your taxes don't look like you make one 10, and your liability is only $1,500 something. So do some more digging. If you're a small business owner, you probably aren't even still listening to this because you turned it off and started making phone calls right away. But if you are still listening to this, this is a no-brainer to dive deeper into, talk to your accountant, talk to Tami, talk to somebody about how it applies to your specific situation. And it's really important to take that next step to do it. Right.

Tami Clark (26:36):

Correct.

Rick Luchini (26:37):

Right. Correct. Do it right, because we're talking about federal deductions, and although it is not complicated, if you do it incorrectly, you're not going to get those deductions right. And so you need to know what you're doing and you need to document what you're doing. Tami can help you with that. Your accountant should be able to help you with that 90% tax credit from the state, which means, although you don't have to, likely you should. I don't want to say should because we're not giving tax advice, but likely you will be interested in donating 110% of your tax liability so that the school gets more money. You as the small business owner, then likely recoup at least that extra 10% or more as a federal deduction on the other side of the bracket. Correct. And if that sounds like you start making some phone calls, I mean, seriously. Absolutely. It's absolutely. If that sounds like me, and I'm still listening to this thing, what do I do? Do I call my accountant? Do I call you? What's the next step in getting started?

Tami Clark (28:05):

Definitely call your accountant. Okay. Put your accountant on the radar in this area. In our area, a lot of accountants know this program. A lot of accountants know Randy Taree. So they're going to know this program and they're going to either say, yes, you absolutely. This is

Rick Luchini (28:21):

Something, if I'm hearing this for the first time, yes. My accountant didn't bring it to my attention.

Tami Clark (28:27):

They did not.

Rick Luchini (28:28):

They did not. Okay. I called my

Tami Clark (28:30):

Account, but not necessarily because they don't like the program, but just because maybe they didn't know that you were such a huge supporter of Bishop Gilfoyle or something like that. That would be something that would be interest. They

Rick Luchini (28:41):

Think I like federal income tax. I don't know. Maybe. How hard is it to apply, donate? What's the steps? I talk to my account. We sit down, everybody's on board. We're all happy. We're going to do this thing. How do I actually execute it?

Tami Clark (29:01):

Get ahold of me. Okay. Get ahold of me. Call me at cps f I'll email you a joinder, which I brought

Rick Luchini (29:07):

With me. I don't know what that is.

Tami Clark (29:08):

This is a joinder. Okay. It is a simple one-page piece of

Rick Luchini (29:11):

Me. Let's call that an application. Yep.

Tami Clark (29:13):

Application. Perfect. I use it. I call it a reservation. However, and this is why, because I don't get a check When I get this back. All I want is this back. I put you in a queue. As of right now, I don't have any credits for you, but I will.

Rick Luchini (29:28):

Yes. But when you get to the end of, so if you're like a late latecomer, you might not be able to do it, is what you're saying, because there's only so many of these tax credits to go around. Absolutely. And the people that know about it are jumping on it early. Yes.

Tami Clark (29:43):

Okay. And we do have a wait list. Obviously we have people that are

Rick Luchini (29:47):

Already sitting on, I fill that form out. I give it back to you, then what?

Tami Clark (29:51):

Then you wait. Right? You just sit and wait for me. And then sometime October, November timeframe, you'll get a either letter in the mail for me, or you'll get in a letter emailed to you, and that is your check request. And it simply states, here is proof that I have credits for you pay me. And you get a copy of the letter I get from the state saying, here's credits for you. Here's where you're going, your money's going to, here's where you write your check. Now, this is just one of my LLCs. We have 58 different LLCs that we manage. They all have really strange names. So you might be donating to, let's say, Tipton Baptist. We do not have an L L C that's called Tipton Baptist, LLL C. Yeah, I understand. But you might write your check to a Christian School Association of Greater Harrisburg.

Rick Luchini (30:33):

To my understanding, the reason why is that you guys are using those LLCs to pool the funds and pass it through so that it meets the state's requirements.

Tami Clark (30:44):

Correct? Correct. And each L L C is limited to a little bit more than $2 million per L L C. Yeah. So we are almost an $80 million charity at this point.

Rick Luchini (30:56):

It doesn't matter to me as the donor, how you're making the sausage. You're actually doing that so that I don't have to do all these complicated things to make my donation eligible. Correct. You're doing it for me. Correct. I fell out a one pager. I wait to hear back from you. You tell me. Yeah, we're good. Make the check out to this. And for this much, I write you a check.

Tami Clark (31:22):

You mail it to me.

Rick Luchini (31:23):

I get my K one. Give it to my accountant.

Tami Clark (31:27):

We're done. You're

Rick Luchini (31:27):

Done. We're done. You're done. It's easy.

Tami Clark (31:30):

And then you just hear from me every year until you tell me not to. Now, everybody will, if they Google this program, there's going to be some things on that Google search that are not quite the same as what ccp, s F does.

Rick Luchini (31:43):

Two year commitment to your commitment. It's the first thing that I notice. Yes.

Tami Clark (31:45):

We do not require a two year commitment. I will tell you, it's a lifetime commitment. You'll hear from me until you tell me you're not going to hear from me anymore. Because it only makes sense once you're in, if you have the liability, it's going to benefit you. It's going to benefit the school. Just do it. It just makes sense.

Rick Luchini (32:03):

But it is an important distinction that that is not a requirement, because you will read that online. And the reason why that is important to me as a small business owner is I might have the liability this year, and I might not next year, or I might not meet your minimum next year. Correct. For a whole host of reasons. We invested back in the business, we had a net loss. We hired employees, whatever the thing is, I might have a big liability this year and a very small one next year. And a lot of small business owners are shaking their head right now. Yes. And so by you guys taking that two year commitment off the table is less scary, I think, for a small business to step into the pool. And is that because that two year commitment still exists, but it's for your L L C for

Tami Clark (32:58):

Our LLCs,

Rick Luchini (32:59):

Correct. Right. Not me as the individual. And that's another way that you're taking some of those restrictions or paperwork off the table for the end user, correct.

Tami Clark (33:08):

Well, and the LLCs make the two year commitment, and I turn people away every year. We always turn donors away. It's never that we turn dollars back in. Never. We have never ever done that. We always just turn people away.

Rick Luchini (33:19):

So you have more donors than you do credits, correct? Correct. And that's important if you're listening to this because we have much more demand. Don't drag your feet. Yeah. Yes.

Tami Clark (33:27):

So if you don't get into it this year, I'm never going to just kick you out. I never contact you again. And you hear from me every year.

Rick Luchini (33:35):

That's important to know that too, because a lot of people, if they come in and they get turned away because all the credits are gone, I think the initial reaction for some folks would be like, well, all the big businesses are getting the bubble. Woe was me. And they never come back. And you're saying, no, no, no. We're going to put you right at the top of the list. So you definitely get it next year. Absolutely. And these other folks are going to have to come in behind you. Correct. Yeah. That's great. Absolutely. So what are some of the other things, the two year, I brought that one up because it's something that I noticed and wanted to ask you about, but what are some of the other things that people might read online that don't necessarily apply to what you're doing?

Tami Clark (34:20):

Well, the two year thing, obviously, which I love, we also, you can change your donation amount every single year. Increase, decrease, as long as you're over my 3,500 and under my a hundred thousand dollars max. We do have a max of a hundred thousand dollars, just mainly because we want as many people as possible to be able to

Rick Luchini (34:40):

Participate in. So if you have more than a hundred thousand dollars state tax bill, call me and then call tm. Yeah. Yes. Okay. Got it. And I

Tami Clark (34:51):

Have other organizations that I work with that I would take a hundred thousand of it, and then I would help you find another organization that could help you with the rest. That is my limitation.

Rick Luchini (35:00):

Probably not the majority of our listeners.

Tami Clark (35:03):

No.

Rick Luchini (35:04):

Correct. What are some of the other,

Tami Clark (35:06):

The fact that we do not take a fee that is extraordinarily unique for a scholarship organization and because people are like, yeah, right. How do they have staff of four full-time and two

Rick Luchini (35:19):

Part-time? Yeah. How you

Tami Clark (35:20):

We run on bank interest. We run on the float essentially. So you write your check in October, the schools get to take it in February. That gives me a three month float for the check to be deposited. I get interest for three months, and that's how we pay my

Rick Luchini (35:35):

Salary. You're keeping the delta on those dollars.

Tami Clark (35:38):

And we partner with several local banks. That's

Rick Luchini (35:41):

Interesting.

Tami Clark (35:42):

Which is wonderful. A couple not so local banks that really fought for us. I manage a lot of banks, E I T C tax credits, which is wonderful. So that's kind of got us in that. So that's probably the two biggest distinctions from my organization to other organizations is the no two year commitment and the no fee from the school for the schools.

Rick Luchini (36:05):

So the dollar, if I give you $1, $1 goes to the school, not 90 cents, not 85 cents to pay for the administration and your salary and the building that you're in and all that other stuff. Correct. That's important distinction too. Yes.

Tami Clark (36:22):

And it's huge, and it does make a big difference. That is why we work with 650 schools, because we are a very unique organization in that. Right. That we don't do that. Almost all of our employees are women. Randy is the only employee as our president that is a man, and he is part-time. But the C F O is a woman. The executive director is a woman, and my other three employees are women. So we're a woman run, which I think is really interesting. It is. I think Randy really trusted me when he brought me on board as kind of a freshly graduated college adult. I went to college so late when I finally got my degree, and he really trusted me with bringing this to the forefront. It was $2 million when I started in 2016.

Rick Luchini (37:12):

It is what now?

Tami Clark (37:12):

And now we're almost at 80 million. Wow. It's a pretty cool

Rick Luchini (37:16):

Thing. Press the applause button in the background we'll have a little applause for That's amazing.

Tami Clark (37:20):

It's huge. And because we're a small organization, that also is huge because you talk to a human and you call me.

Rick Luchini (37:29):

So did you say 80 million? 80? Is that a year? Yeah.

Tami Clark (37:35):

And it increases every year.

Rick Luchini (37:36):

So that 80 million, I have two questions on that. Okay. So that's how, this is not a question, but it's just doing the math in my head. That's how you survive on the float. Correct. And that's genius, by the way, because it allows you to

(38:00):

Keep a hundred percent of those dollars going where they ought go. But still, sorry to say, nonprofits need good people and good people need paid. So you still need money. Right? It's not a volunteer program. It's different than a nonprofit organization is a full-time job. So that was a genius structure there. But the question is, do you get to go to the state every year and say, I turned away 11 million. I need more, and they're going to take credits from somebody that turned back in 2 million. Or is it just a schedule where everybody gets a certain percentage increase? Or is it based on volume? You get rewarded for more volume. Those,

Tami Clark (38:54):

It's a lottery, ironically. So we do apply. So May 15th, all of the LLCs that have had credits, we reapply for all of those credits. So we can guarantee to receive those credits again. And then July 1st or

Rick Luchini (39:08):

Roughly. But how do you go from 2 million to 80 million? How'd you get the credits? I guess functionally is

Tami Clark (39:13):

Lottery. We won them in this lottery, so

Rick Luchini (39:16):

Yes. Leave it to the state.

Tami Clark (39:17):

Yeah. Most of our LLCs, we had taken over management from other organizations that no longer wanted to or could no longer support the mission. With that L L C, we created 10, no one. So on July 1st, we applied for credits for every one of those 10. I see. Okay. And we just

Rick Luchini (39:31):

Hope for the best. I see. So the lottery aspect is for the L L C. So the more LLCs you create, the more credits you have the ability to get as long as you can fund them. Okay. Correct. By the way, none of that matters. That's just my own curiosity. The whole point is that your organization has taken all that complexity, has taken the regulation and the L L C filing and all that stuff away from the W two employee and the small business owner, and turned it into a one page application and a check. And I think that's the important distinction here. I'm asking some of the more technical questions because of my own curiosity, but that doesn't actually affect the listener. The listener just needs to know that they meet the minimum requirement, talk to their accountant. Their accountant says, yeah, this sounds like a great idea. Let's get ahold of Tami. Tami gives me the one pager. She gets back and says, cut me a check. Done. Okay. If somebody is interested in moving forward with this, how do they get ahold of you or learn more?

Tami Clark (40:41):

Sure. They can call me. The number is (814) 942-4406. Myself or Kimberly Dean, they will be the ones that answer the phone. They can get ahold of them that way, or they can email me. My website is Pennsylvania eitc.org. The email's on there, or it's my first name, T mi@cpsfcharity.org. Get in touch with me. That way I can send you a joinder agreement. The one thing that I did think of, another thing that you could Google and you'll see is it's going to tell you that you have to either work for a for-profit or own a for-profit business in the state of Pennsylvania to qualify. That's not necessarily the case anymore. A few years back, we discovered that nonprofit employees and retirees can also participate in the program if they have the tax liability as long as they own one share of stock in any business that operates in the state of Pennsylvania. So personally, I own a m C stock in A M C, the movie theaters, just to make sure that I qualify because I'm single and I work for a nonprofit, so I had to have that one share of stock. Probably not the smartest stock that you could buy, but that's what I did, is I bought that share of stock. And so

Rick Luchini (41:54):

Operates in the state of Pennsylvania,

Tami Clark (41:55):

Operate. So that could be Starbucks, that could be Pepsi, anybody, Pepsi, anybody. Pretty much anybody that if you drive on the corner and you see a Dunking Donuts, you can have a shared stock in Dunking Donuts. So it just has to operate so it doesn't have to be house.

Rick Luchini (42:09):

So my retirees can pass that test just by owning one share of stock that has

Tami Clark (42:16):

A, and a lot of people that use Vanguard have it.

Rick Luchini (42:20):

Okay. Yeah. Well, right. I can own that. I can pass that test through a mutual fund or E T F. Okay.

Tami Clark (42:31):

Usually I just downloaded the Robinhood app for myself just to kind of prove that this is how simple it was. 10 minutes later, I qualified myself.

Rick Luchini (42:39):

Right. But if you're sitting at home and you have a portfolio that maybe doesn't have individual stocks, but has ETFs, if you own, I mean, one of them is going to have it, but let's just say you own the s and p 500 that's going to have more than one stock in it, that one of those companies operates in the state of Pennsylvania passes the test. So now that just opened you up to this availability. So retirees are now available and nonprofit employees are now available. So everyone,

Tami Clark (43:17):

Essentially, everyone that has a liability essentially in the state.

Rick Luchini (43:20):

I love it. Thanks for coming by. Thanks for having me. I mean, this is something that apparently a lot of people do know about it, 80 million, but I think there's a lot more that don't. Correct. And again, particularly in our local area, everybody, my W twos, retirees, but if you're a small business owner, ask your accountant. Everybody's situation's different. Neither of us give tax advice, absolutely not. But tax planning is important, and this is a big opportunity. Thanks again.

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