Arizona’s Corporate STO Program Window Still Open

Don't miss out. You can still apply to donate to an STO.

IMPORTANT UPDATE: The original cap of approximately $107 million for Corporate STO dollars has not been reached, but it will be soon. There is still a limited window to follow the steps below and apply for this tax credit.

At Sunflower Bank, we’re here to help our clients address a wide spectrum of financial needs. Our intent is to provide you with the tools and knowledge to support your financial success and enhance our local community. If you have a need that’s out of the traditional banking realm, we will help you address it with a professional network of relevant subject matter experts. We draw from the full set of resources of our organization that includes specialized industry expertise such as Wealth Management advisory services.

Right now, we want to help make sure that Arizona business owners don’t miss out on the limited corporate tax credit window that opens on July 1, 2019.

If your business anticipates having a state tax liability for 2019 you may consider using the Arizona Student Tuition Organization (STO) Tax Credit Program.

An important feature of the corporate STO Program is that corporations may recommend a school to receive their donations. The donated funds are then used for vital tuition scholarships for qualifying students. Providing much needed support to local schools and encouraging academic achievement in our youth is a mission of Sunflower Bank.

To support educational opportunities in our state, we’re pleased to share overview information on the Arizona STO Program. We encourage you to discuss all the implications with your CPA or tax advisor. If you have questions about the STO Program or are interested in learning more about Sunflower Bank’s comprehensive services for business owners, we are here for a conversation and to make the right connections.

Corporate STO Tax Credit Program - Overview

• The state has a cap of $106,993,207 in low income and $5 million dollars in Disabled Displaced corporate donations for the 2019 tax year.
• The window to take advantage of these tax credits opens July 1, 2019 and may close down quickly once the cap is met. Most STOs recommend having paperwork filled out and ready to turn in by June 15.
• Corporations may choose to recommend a school to receive their donations. However, the Corporation’s shareholders may not directly benefit from the donation.

How the Arizona Tax Credit Program Works

• Minimum donation of $5,000.
• Tax credit is available to S-Corps as defined in Section 1361 of the Internal Revenue Code. LLCs taxed as S-Corps for Federal and State purposes are eligible to make a donation for the tax credit.
• The donation must be made from the S-Corp to the STO.
• Donated funds are used to provide tuition scholarships for low income and disabled/displaced families attending K-12 private schools in Arizona. The state has specific guidelines and regulations surrounding the distribution of these funds.
• Visit the Arizona Department of Revenue for further information https://azdor.gov/tax-credits/credits-contributions-certified-school-tuition-organizations(Opens in a new window)

If you are ready to take advantage of the Corporate STO Tax Credit Program, don’t delay.
You’ll need to:

1.  Identify your company’s corporate income tax liability

2. Determine how much you would like to donate versus pay to the state this fiscal year

3. Decide and contact an STO in Arizona.

There are steps to take before July 1— by starting today you can improve your financial situation and make a difference in the education of Arizona’s youth. If you have questions about the process, your Sunflower Bank relationship manager can help.

Taxes can also have a significant impact on your personal financial portfolio. We’ve built a state-of-the-art platform that tax-optimizes our clients’ financial plans, while also managing risk and expenses to add to your total return. Contact us if you are interested in reviewing at your full financial picture.