HOUSE BILL No. 4922 September 30, 1999, Introduced by Reps. Switalski, Hansen, Wojno, Spade, Frank, Schauer, Price, Lockwood, Quarles, Van Woerkom, Dennis, Garcia, Garza, Gieleghem, Faunce, Clarke, Bovin, Minore and Lemmons 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 APPLICABLE limitations in 3subsections (2) to (6)THIS SECTION, a taxpayer may credit 4 against the tax imposed by this act 50% of the amount the tax- 5 payer contributes during the tax year to an endowment fund of a 6 community foundation or for the 1992 tax year and each tax year 7 after 1992 and subject to the APPLICABLE limitations in 8subsections (2), (3), and (5)THIS SECTION, a taxpayer may 9 credit against the tax imposed by this act 50% of the cash amount 10 the taxpayer contributes during the tax year to a shelter for 03936'99 RJA 2 1 homeless persons, food kitchen, food bank, or other entity 2 located in this state, the primary purpose of which is to provide 3 overnight accommodation, food, or meals to persons who are indi- 4 gent if a contribution to that entity is tax deductible for the 5 donor under the internal revenue code. 6 (2) For a taxpayer other than a resident estate or trust, 7 the credit allowed by this section for a contribution to a commu- 8 nity foundation shall not exceed $100.00, or $200.00 for a hus- 9 band and wife filing a joint return, FOR TAX YEARS BEFORE THE 10 1999 TAX YEAR, AND $200.00, OR $400.00 FOR A HUSBAND AND WIFE 11 FILING A JOINT RETURN, FOR THE 1999 TAX YEAR AND TAX YEARS AFTER 12 THE 1999 TAX YEAR. For the 1992 tax year and each tax year after 13 1992, a taxpayer may claim an additional credit under this sec- 14 tion not to exceed $100.00, or $200.00 for a husband and wife 15 filing a joint return, FOR TAX YEARS BEFORE THE 1999 TAX YEAR, 16 AND $200.00, OR $400.00 FOR A HUSBAND AND WIFE FILING A JOINT 17 RETURN, FOR THE 1999 TAX YEAR AND TAX YEARS AFTER THE 1999 TAX 18 YEAR, for total cash contributions made in the tax year to shel- 19 ters for homeless persons, food kitchens, food banks, and, except 20 for community foundations, other entities allowed under subsec- 21 tion (1). For a resident estate or trust, the credit allowed by 22 this section for a contribution to a community foundation shall 23 not exceed 10% of the taxpayer's tax liability for the tax year 24 before claiming any credits allowed by this act or $5,000.00, 25 whichever is less. For the 1992 tax year and each tax year after 26 1992, a resident estate or trust may claim an additional credit 27 under this section not to exceed 10% of the taxpayer's tax 03936'99 3 1 liability for the tax year before claiming any credits allowed by 2 this act or $5,000.00, whichever is less, for total cash contri- 3 butions made in the tax year to shelters for homeless persons, 4 food kitchens, food banks, and, except for community foundations, 5 other entities allowed under subsection (1). For a resident 6 estate or trust, the amount used to calculate the credits under 7 this section shall not have been deducted in arriving at federal 8 taxable income. 9 (3) The credits allowed under this section are nonrefundable 10 so that a taxpayer shall not claim under this section a total 11 credit amount that reduces the taxpayer's tax liability to less 12 than zero. 13 (4) As used in this section, "community foundation" means an 14 organization that applies for certification on or before April 1 15 of the tax year for which the taxpayer is claiming the credit and 16 that the department certifies for that tax year as meeting all of 17 the following requirements: 18 (a) Qualifies for exemption from federal income taxation 19 under section 501(c)(3) of the internal revenue code. 20 (b) Supports a broad range of charitable activities within 21 the specific geographic area of this state that it serves, such 22 as a municipality or county. 23 (c) Maintains an ongoing program to attract new endowment 24 funds by seeking gifts and bequests from a wide range of poten- 25 tial donors in the community or area served. 03936'99 4 1 (d) Is publicly supported as defined by the regulations of 2 the United States department of treasury, 26 3 C.F.R. 1.170A-9(e)(10). 4 (e) Is not a supporting organization asdefined underAN 5 ORGANIZATION IS DESCRIBED IN section 509(a)(3) of the internal 6 revenue code and the regulations of the United States department 7 of treasury, 26 C.F.R. 1.509(a)-4 and 1.509(a)-5. 8 (f) Meets the requirements for treatment as a single entity 9 contained in the regulations of the United States department of 10 treasury, 26 C.F.R. 1.170A-9(e)(11). 11 (g) Is incorporated or established as a trust before 12 September 1 of the year immediately preceding the tax year for 13 which the credit is claimed. 14 (5) An entity other than a community foundation may request 15 that the department determine if a contribution to that entity 16 qualifies for the credit under this section. The department 17 shall make a determination and respond to a request no later than 18 30 days after the department receives the request. 19 (6) On or before July 1 of each year, the department shall 20 report to the house committee on tax policy and the senate 21 finance committee the total amount of tax credits claimed under 22 this section and under section 38c of the single business tax 23 act,Act No. 228 of the Public Acts of 1975, being24section 208.38c of the Michigan Compiled Laws1975 PA 228, MCL 25 208.38C, for the immediately preceding tax year. 03936'99 Final page. RJA