Local business owners got a lesson on how to contribute to their community while cutting their taxes at St. John Neumann Regional School on Tuesday.

Palmerton’s Chamber of Commerce held a luncheon at the school, with guest speaker Stephanie Schweder-Kratzer, director of school development for the Diocese of Allentown Office of Education, explaining the benefits of some lucrative tax credits.

The luncheon started off with greetings from Chamber President Peter Kern and St. John Neumann’s Sister Virginia Stephanie, who gave a brief background on the school, which could easily benefit from the tax programs promoted by Schweder-Kratzer.

“Eastern Pennsylvania Scholarship Foundation is a scholarship organization that is run through the diocese,” Schweder-Kratzer said. “It’s a scholarship organization that can take gifts and turn them into tax credits for the donors.”

Local businesses can utilize either the Educational Improvement Tax Credit or the Opportunity Scholarship Tax Credit through the Foundation, allowing them to help local Diocese students in need.

“The way that this works with EITC and OSTC is they provide tax credits to companies who make state-approved donations to approved organizations. Eastern Pennsylvania Scholarship Foundation is an approved scholarship organization, so we can accept those,” Schweder-Kratzer said.

Schweder-Kratzer illustrated the process with an example referencing a classic fake company from the Looney Toons cartoons.

“So, the ACME company decides they want to make a gift. They decide on a $10,000 gift, which they send to EPSF. EPSF can then turn that gift back to the school, so the $10,000 will come back here to St. John Neumann’s or a school of their choice, and all of that money goes to students in need,” Schweder-Kratzer said.

The foundation would simultaneously report the donation to the PA Department of Community and Economic Development, an agency focused on bolstering business investment opportunities and helping to improve the quality of life for state residents.

Eligibility for the program is determined by the school, and based is upon household income.

Schweder-Kratzer pointed out that while 80 businesses donated to the Foundation last year, the $2 million-plus in donations was spread among 42 schools in five counties, making for a slimmer contribution to each school. This leaves plenty of room to expand, she said.

Any businesses paying Pennsylvania taxes is eligible to participate in the program. Businesses that sign on for one year of the program receive a 75 percent tax credit, while those that opt for two years receive a 90 percent credit. So, if ACME signed up for two years and sent $10,000 to the Foundation for St. John Neumann’s, they would receive a $9,000 tax credit.

In addition, there is a Pre-K EITC program that provides a 100 percent tax credit for the first $10,000 donated, and a 90 percent rate for any amount in excess.

Another option, the Opportunity Scholarship Tax Credit, allows for students residing within the boundaries of the 15 percent of lowest performing schools in the state to attend a Diocese school through donations, though this criteria is currently inapplicable in Carbon County.

The foundation is also exploring the possibility of accepting donations from wealthy benefactors through a program called Special Purpose Entities. Schweder-Kratzer said that the foundation has created four LLCs, and if they are approved for the program, they can pursue donations from individuals. Individual donors have to qualify as credited investors, with an income of $200,000. Couples have a minimum income level of $300,000. Anyone with a net worth in excess of $1 million, minus their primary residence, can also qualify. This program would offer a 90 percent tax credit for a $5,000 minimum, with a two year requirement.

Chamber members and local business owners came away from the luncheon with a newfound understanding of the program, and many exhibited an interest in contributing to the cause.

“I was absolutely surprised,” Shea’s Hardware owner Bernie Shea said. “I had no knowledge of this, and it seems like a wonderful, wonderful program. It’s a community focused program, and I was born and raised in Palmerton, and I went to school here as a child. It’s a benefit to the community, it’s a benefit to the schools, and it’s a wonderful program.”

Businesses interested in the programs can sign up at www.newpa.com. Once they receive a confirmation letter from Department of Community and Economic Development, the business has 60 days to send their donation to the Foundation, and then the Foundation sends an acknowledgment letter to the donor. After that, the business sends an acknowledgment letter to the department, and then the department issues a tax credit to the PA Department of Revenue, where it is applied.

Though it seems rather complex, Schweder-Kratzer said it essentially boils down to local companies directing their tax dollars in their local community, instead of going to the coffers in Harrisburg.

“You have to pay your taxes anyway, so why not keep it here?” Schweder-Kratzer said.