HOUSE BILL No. 4836 September 21, 1999, Introduced by Rep. Dennis and referred to the Committee on Tax Policy. A bill to amend 1967 PA 281, entitled "Income tax act of 1967," by amending section 261 (MCL 206.261), as amended by 1996 PA 484. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 261. (1) For the 1989 tax year and each tax year after 2 1989 and subject to the limitations in subsections (2) to (6), a 3 taxpayer may credit against the tax imposed by this act 50% of 4 the amount the taxpayer contributes during the tax year to an 5 endowment fund of a community foundation or for the 1992 tax year 6 and each tax year after 1992 and subject to the limitations in 7 subsections (2), (3), and (5), a taxpayer may credit against the 8 tax imposed by this act 50% of the cash amount the taxpayer 9 contributes during the tax year to a shelter for homeless 10 persons, food kitchen, food bank, or other entity located in this 00904'99 RJA 2 1 state, the primary purpose of which is to provide overnight 2 accommodation, food, or meals to persons who are indigent if a 3 contribution to that entity is tax deductible for the donor under 4 the internal revenue code. 5 (2) For a taxpayer other than a resident estate or trust, 6 the credit allowed by this section for a contribution to a commu- 7 nity foundation shall not exceed $100.00, or $200.00 for a hus- 8 band and wife filing a joint return, FOR TAX YEARS BEFORE THE 9 1999 TAX YEAR AND $150.00, OR $300.00 FOR A HUSBAND AND WIFE 10 FILING A JOINT RETURN, FOR THE 1999 TAX YEAR AND EACH TAX YEAR 11 AFTER THE 1999 TAX YEAR. For the 1992 tax year and each tax year 12 after 1992, a taxpayer may claim an additional credit under this 13 section not to exceed $100.00, or $200.00 for a husband and wife 14 filing a joint return, for total cash contributions made in the 15 tax year to shelters for homeless persons, food kitchens, food 16 banks, and, except for community foundations, other entities 17 allowed under subsection (1). For a resident estate or trust, 18 the credit allowed by this section for a contribution to a commu- 19 nity foundation shall not exceed 10% of the taxpayer's tax 20 liability for the tax year before claiming any credits allowed by 21 this act or $5,000.00, whichever is less. For the 1992 tax year 22 and each tax year after 1992, a resident estate or trust may 23 claim an additional credit under this section not to exceed 10% 24 of the taxpayer's tax liability for the tax year before claiming 25 any credits allowed by this act or $5,000.00, whichever is less, 26 for total cash contributions made in the tax year to shelters for 27 homeless persons, food kitchens, food banks, and, except for 00904'99 3 1 community foundations, other entities allowed under subsection 2 (1). For a resident estate or trust, the amount used to calcu- 3 late the credits under this section shall not have been deducted 4 in arriving at federal taxable income. 5 (3) The credits allowed under this section are nonrefundable 6 so that a taxpayer shall not claim under this section a total 7 credit amount that reduces the taxpayer's tax liability to less 8 than zero. 9 (4) As used in this section, "community foundation" means an 10 organization that applies for certification on or before April 1 11 of the tax year for which the taxpayer is claiming the credit and 12 that the department certifies for that tax year as meeting all of 13 the following requirements: 14 (a) Qualifies for exemption from federal income taxation 15 under section 501(c)(3) of the internal revenue code. 16 (b) Supports a broad range of charitable activities within 17 the specific geographic area of this state that it serves, such 18 as a municipality or county. 19 (c) Maintains an ongoing program to attract new endowment 20 funds by seeking gifts and bequests from a wide range of poten- 21 tial donors in the community or area served. 22 (d) Is publicly supported as defined by the regulations of 23 the United States department of treasury, 26 24 C.F.R. 1.170A-9(e)(10). 25 (e) Is not a supporting organization as defined under sec- 26 tion 509(a)(3) of the internal revenue code and the regulations 00904'99 4 1 of the United States department of treasury, 26 C.F.R. 1.509(a)-4 2 and 1.509(a)-5. 3 (f) Meets the requirements for treatment as a single entity 4 contained in the regulations of the United States department of 5 treasury, 26 C.F.R. 1.170A-9(e)(11). 6 (g) Is incorporated or established as a trust before 7 September 1 of the year immediately preceding the tax year for 8 which the credit is claimed. 9 (5) An entity other than a community foundation may request 10 that the department determine if a contribution to that entity 11 qualifies for the credit under this section. The department 12 shall make a determination and respond to a request no later than 13 30 days after the department receives the request. 14 (6) On or before July 1 of each year, the department shall 15 report to the house committee on tax policy and the senate 16 finance committee the total amount of tax credits claimed under 17 this section and under section 38c of the single business tax 18 act,Act No. 228 of the Public Acts of 1975, being19section 208.38c of the Michigan Compiled Laws1975 PA 228, MCL 20 208.38C, for the immediately preceding tax year. 00904'99 Final page. RJA