HOUSE BILL No. 4460

 

March 22, 2011, Introduced by Reps. Segal, Tlaib, Santana, Bauer, Lindberg, Oakes and Liss and referred to the Committee on Tax Policy.

 

      A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 527a (MCL 206.527a), as amended by 2004 PA

 

335.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

 1        Sec. 527a. (1) For tax years 1985 through 1994, a claimant

 

 2  may claim a credit against the state income tax for heating fuel

 

 3  costs for the claimant's homestead in this state. For the 1996

 

 4  tax year and each tax year after the 1996 tax year and subject to

 

 5  subsections (18) and (19), a claimant may claim a credit for

 

 6  heating fuel costs for the claimant's homestead in this state. An

 

 7  adult foster care home, nursing home, home for the aged, or

 

 8  substance abuse center is not a homestead for purposes of this

 

 9  section. The credit shall be determined in the following manner:

 

10        (a) For the 1988 tax year through the 1994 tax year and,


 

 1  subject to subsections (18) and (19), for the 1996 tax year and

 

 2  each tax year after the 1996 tax year, the following table shall

 

 3  be used for the computation of a credit as computed under

 

 4  subdivision (c):

 

 

Exemptions     0 or 1   2     3     4     5        6 or more

Credit           $272  $326  $379  $450  $525  $601 + $76 for each

                                               exemption over 6

 

 

 8        (b) For tax years after the 1988 tax year, the amounts in

 

 9  the table in subdivision (a) shall be adjusted each year as

 

10  necessary by the department so that a claimant with a household

 

11  income less than 110% of the federal poverty income standards as

 

12  defined and determined annually by the United States office of

 

13  management and budget is not denied a credit.

 

14        (c) A claimant shall receive the greater of the credit

 

15  amount as determined in subparagraph (i) or (ii):

 

16        (i) Subtract 3.5% of the claimant's household income from the

 

17  amount specified in subdivision (a) that corresponds with the

 

18  number of exemptions claimed in the return filed under this act,

 

19  except that the number of exemptions for purposes of this

 

20  subdivision shall not exceed the actual number of persons living

 

21  in the household plus the additional personal exemptions allowed

 

22  under section 30, and any dependency exemptions for a person or

 

23  persons living in the household under a custodial arrangement,

 

24  even if the exemptions may not be claimed for other income tax

 

25  purposes. For a claimant whose heating costs are included in his

 

26  or her rent, multiply the result of the preceding calculation by


 

 1  50%.

 

 2        (ii) Subject to subsection (2), for a claimant whose

 

 3  household income does not exceed the maximum specified in the

 

 4  following table, as adjusted, that corresponds with the number of

 

 5  exemptions claimed in the return filed under this act, subtract

 

 6  11% of claimant's household income from the total cost incurred

 

 7  by a claimant for heating fuel from a heating fuel provider

 

 8  during the 12 consecutive monthly billing periods ending in

 

 9  October of the tax year, and multiply the resulting amount by

 

10  70%:

 

 

11 Exemptions     0 or 1    2        3        4         5      For each

12                                                              exemption

13                                                                over 5,

14                                                                 add

15                                                              $2,441.00

16                                                                to the

17                                                              maximum

18                                                                income

19 Maximum                                                     

20 Income         $7,060  $9,501   $11,943  $14,382   $16,824  

 

 

21        (d) For the 1988 tax year for the purposes of subdivision

 

22  (c), the total cost incurred by a claimant for heating fuel from

 

23  a heating fuel provider shall not exceed $1,190.00. For tax years

 

24  after the 1988 tax year, the maximum cost incurred by a claimant

 

25  for heating fuel during a tax year shall be adjusted by

 

26  multiplying the maximum cost for the immediately preceding tax

 

27  year by the percentage by which the average all urban Detroit


 

 1  consumer price index for fuels and other utilities for the 12

 

 2  months ending August 31 of the tax year for which the credit is

 

 3  claimed exceeds that index's average for the 12 months ending on

 

 4  August 31 of the previous tax year, but not more than 10%. That

 

 5  product shall be added to the maximum cost of the immediately

 

 6  preceding tax year and then rounded to the nearest whole dollar.

 

 7  That dollar amount is the new maximum cost for the current tax

 

 8  year. If the claimant received any credits to his or her heating

 

 9  bill during the tax year, as provided for in subsection (6), the

 

10  credits shall be treated as costs incurred by the claimant.

 

11        (e) For tax years after the 1988 tax year, the maximum

 

12  income amounts specified in subdivision (c)(ii) shall be adjusted

 

13  by multiplying the respective maximum income amounts for the

 

14  immediately preceding tax year by the percentage by which the

 

15  average all urban Detroit consumer price index for all items for

 

16  the 12 months ending August 31 of the tax year for which the

 

17  credit is claimed exceeds that index's average for the 12 months

 

18  ending on August 31 of the immediately preceding tax year, but

 

19  not more than 10%. That product shall be added to the immediately

 

20  preceding tax year's respective maximum income level and then

 

21  rounded to the nearest whole dollar. That dollar amount is the

 

22  new maximum income level for the then current tax year.

 

23        (2) An enrolled heating fuel provider shall notify each of

 

24  its customers, not later than December 15 of each year or, for

 

25  1995 only, not later than January 10, 1996 or for 1996 only, not

 

26  later than January 15, 1996, of the availability, upon request,

 

27  of the information necessary for determining the credit under


 

 1  this section. For a claimant for whom, at the time of filing, the

 

 2  family independence agency department of human services is making

 

 3  direct vendor payments to an enrolled heating fuel provider, the

 

 4  enrolled heating fuel provider that accepts the direct payments

 

 5  shall provide the information necessary to determine the credit

 

 6  before February 1 of each year. If an enrolled heating fuel

 

 7  provider refuses or fails to provide to a customer the

 

 8  information required to determine the credit, or if the claimant

 

 9  is not a customer of an enrolled heating fuel provider, a

 

10  claimant may determine the credit provided in subsection

 

11  (1)(c)(ii) based on his or her own records.

 

12        (3) A credit claimed on a return that covers a period of

 

13  less than 12 months shall be calculated based on subsection

 

14  (1)(c)(i) and shall be reduced proportionately.

 

15        (4) The allowable amount of the credit under this section

 

16  shall be remitted to the claimant, other than a claimant whose

 

17  heating costs are included in his or her rent, in the form of an

 

18  energy draft that states the name of the claimant and is issued

 

19  by the department. For a claimant for whom, at the time of

 

20  filing, the family independence agency department of human

 

21  services has identified the enrolled heating fuel provider or is

 

22  making direct vendor payments to an enrolled heating fuel

 

23  provider, the department shall send the energy draft directly to

 

24  the claimant's enrolled heating fuel provider, as identified by

 

25  the claimant. If the department establishes a program or pilot

 

26  program for the direct payment of energy drafts to enrolled

 

27  heating fuel providers, enrolled heating fuel providers may


 

 1  submit to the department, in a manner prescribed by the

 

 2  department, the names of their customers who are claimants. If a

 

 3  claimant whose name has been submitted meets the standards

 

 4  established by the department, the department shall send that

 

 5  claimant's energy draft directly to the claimant's enrolled

 

 6  heating fuel provider. If the enrolled heating fuel provider

 

 7  submits names of claimants who are not its customers and the

 

 8  energy drafts of any of those claimants are sent to the enrolled

 

 9  heating fuel provider, the enrolled heating fuel provider shall

 

10  return the energy drafts or pay the value of the energy drafts to

 

11  the department plus interest on the amount of the energy drafts

 

12  at the rate calculated under section 23 of 1941 PA 122, MCL

 

13  205.25, for deficiencies in tax payments. Except as provided in

 

14  subsection (5), after July 31, a refundable credit for a prior

 

15  tax year may be paid in the form of a negotiable warrant. The

 

16  energy draft shall be negotiable only through the claimant's

 

17  enrolled heating fuel provider upon remittance by the claimant.

 

18        (5) If a claimant received home heating assistance from the

 

19  family independence agency, department of human services, a

 

20  governmental agency, or a nonprofit organization 12 months prior

 

21  to remitting an energy draft to the claimant's enrolled heating

 

22  fuel provider and the amount of the energy draft is greater than

 

23  the total of outstanding bills incurred by the claimant with the

 

24  enrolled heating fuel provider as of the date that the energy

 

25  draft was remitted to the enrolled heating fuel provider, the

 

26  enrolled heating fuel provider shall first apply the full amount

 

27  of the energy draft to the claimant's outstanding bills and then


 

 1  apply any remaining amount to subsequent bills of the claimant

 

 2  until the full amount of the energy draft is used up or the

 

 3  expiration of 9 months after the date on which the energy draft

 

 4  was first applied to cover the claimant's outstanding bills. If

 

 5  there is any remaining energy draft amount at the end of the 9-

 

 6  month period, or if before the end of the 9-month period the

 

 7  claimant is no longer a customer of the enrolled heating fuel

 

 8  provider, the enrolled heating fuel provider shall remit the

 

 9  remaining amount to the claimant in the form of a fully

 

10  negotiable check within 14 days after the end of the 9-month

 

11  period or 14 days after the termination of services, whichever

 

12  occurs sooner. If the claimant did not receive home heating

 

13  assistance from the family independence agency, department of

 

14  human services, a governmental agency, or a nonprofit

 

15  organization 12 months prior to remitting an energy draft, the

 

16  claimant, by checking the appropriate box to be included on the

 

17  energy draft or application for participation with an enrolled

 

18  heating fuel provider, may request from the enrolled heating fuel

 

19  provider a payment equal to the amount of the energy draft less

 

20  the amount of the outstanding bills. The enrolled heating fuel

 

21  provider shall issue the payment within 14 days after the

 

22  claimant's request. For purposes of this subsection, home heating

 

23  assistance does not include the credit allowed under this

 

24  section.

 

25        (6) If a claimant whose energy draft exceeds his or her

 

26  outstanding bills does not request a payment from an enrolled

 

27  heating fuel provider under subsection (5), an energy draft


 

 1  remitted to an enrolled heating fuel provider shall be applied

 

 2  upon receipt to the claimant's designated account. The energy

 

 3  draft may be used to cover outstanding bills that the claimant

 

 4  has incurred with the enrolled heating fuel provider and to cover

 

 5  subsequent heating costs until the full amount of the energy

 

 6  draft is used or until 1 year after the date on which the energy

 

 7  draft is first applied to the claimant's designated account. If a

 

 8  credit amount remains from this energy draft after the 1-year

 

 9  period, or if prior to the end of the 1-year period a claimant is

 

10  no longer a customer of the enrolled heating fuel provider, the

 

11  heating fuel provider shall remit the remaining unused portion to

 

12  the claimant in the form of a fully negotiable check within 14

 

13  days after the end of the 1-year period or within 14 days after

 

14  termination of service, whichever is sooner.

 

15        (7) A claimant who is no longer a resident of this state,

 

16  who is not a customer of an enrolled heating fuel provider, or

 

17  whose heating fuel provider refuses to accept an energy draft

 

18  shall return the energy draft to the department and request the

 

19  issuance of a negotiable warrant. A claimant may return an energy

 

20  draft to the department and request issuance of a negotiable

 

21  warrant if the energy draft is impractical because the claimant

 

22  has already purchased his or her energy supply for the year and

 

23  does not have an outstanding obligation to an enrolled heating

 

24  fuel provider. The department may honor that request if it agrees

 

25  that the use of the energy draft is impractical. The department

 

26  shall issue the warrant within 14 days after receiving the energy

 

27  draft from the claimant.


 

 1        (8) The enrolled heating fuel provider shall bill the

 

 2  department for credit amounts that have been applied to claimant

 

 3  accounts pursuant to subsection (6), and the department shall pay

 

 4  the bills within 14 days of receipt. The billing shall be

 

 5  accompanied by the energy drafts for which reimbursement is

 

 6  claimed.

 

 7        (9) A claimant whose heating fuel is provided by a utility

 

 8  regulated by the Michigan public service commission is protected

 

 9  against the discontinuance of his or her heating fuel service

 

10  from the date of filing a claim for the credit under this section

 

11  through the date of issuance of an energy draft and during a

 

12  period beginning December 1 of the tax year for which the credit

 

13  is claimed and ending March 31 of the following year if the

 

14  claimant participates in the winter protection program set forth

 

15  in R 460.2174 460.148 of the Michigan administrative code or if

 

16  the utility accepts the claimant's energy draft. The acceptance

 

17  of an energy draft by a utility is considered a request by the

 

18  claimant for the winter protection program. The energy draft

 

19  shall be coded by the department to denote claimants who are 65

 

20  years of age or older. If the claimant is a claimant whose

 

21  heating cost is included in his or her rent payments, the amount

 

22  of the claim not used as an offset against the state income tax,

 

23  after examination and review, shall be approved for payment,

 

24  without interest, to the claimant.

 

25        (10) If an enrolled heating fuel provider does not issue a

 

26  payment or a negotiable check within 14 days or as otherwise

 

27  provided in subsection (5) or (6), beginning on the fifteenth day


 

 1  or the fifteenth day after the expiration of the 9-month period

 

 2  under subsection (5), the amount due to the claimant is increased

 

 3  by adding interest computed on the basis of the rate of interest

 

 4  prescribed for delayed refunds of excess tax payments in section

 

 5  30(3) of 1941 PA 122, MCL 205.30. The enrolled heating fuel

 

 6  provider shall pay the interest and shall not bill the interest

 

 7  to or be reimbursed for the interest by the department.

 

 8        (11) Only the renter or lessee shall claim a credit on

 

 9  property that is rented or leased as a homestead. Only 1 credit

 

10  may be claimed for a household. The credit under this section is

 

11  in addition to other credits to which the claimant is entitled

 

12  under this act. A person who is a full-time student at a school,

 

13  community college, or college or university and who is claimed as

 

14  a dependent by another person is not eligible for the credit

 

15  provided by this section. A claimant who shares a homestead with

 

16  other eligible claimants shall prorate the credit by the number

 

17  of claimants sharing the homestead.

 

18        (12) A claimant who is eligible for the credit provided by

 

19  this section shall be referred by the department to the

 

20  appropriate state agency for determination of eligibility for

 

21  home weatherization assistance and shall accept weatherization

 

22  assistance if eligible and if assistance is available. A heating

 

23  fuel provider that is required by the Michigan public service

 

24  commission to participate in the residential conservation

 

25  services home energy analysis program shall annually contact each

 

26  claimant to whom it provides heating fuel, and whose usage

 

27  exceeds 200,000 cubic feet of natural gas or 18,000 kilowatt


 

 1  hours of electricity annually, and shall offer to provide a home

 

 2  energy analysis at no cost to the claimant. A heating fuel

 

 3  provider that is not required to participate in the residential

 

 4  conservation services program shall not be required to conduct a

 

 5  home energy analysis for its customers.

 

 6        (13) If an enrolled heating fuel provider is regulated by

 

 7  the Michigan public service commission, the Michigan public

 

 8  service commission may use an enforcement method authorized by

 

 9  law or rule to enforce the requirements prescribed by this

 

10  section on the enrolled heating fuel provider. If an enrolled

 

11  heating fuel provider is not regulated by the Michigan public

 

12  service commission, the family independence agency department of

 

13  human services may use an enforcement method authorized by law or

 

14  rule to enforce the requirements prescribed by this section on

 

15  the enrolled heating fuel provider.

 

16        (14) The department shall mail a home heating credit return

 

17  to every person who received assistance through family

 

18  independence programs the department of human services pursuant

 

19  to the social welfare act, 1939 PA 280, MCL 400.1 to 400.119b,

 

20  during the tax year.

 

21        (15) The department shall complete a study by August 1 of

 

22  1985, and of each subsequent year, of the actual heating costs of

 

23  each claimant who received a credit from the department under

 

24  this section for the immediately preceding tax year.

 

25        (16) The department may promulgate rules necessary to

 

26  administer this section pursuant to the administrative procedures

 

27  act of 1969, 1969 PA 306, MCL 24.201 to 24.328.


 

 1        (17) The department shall provide a simplified procedure for

 

 2  claiming the credit under this section for claimants for whom, at

 

 3  the time of filing, the family independence agency department of

 

 4  human services is making direct vendor payments to an enrolled

 

 5  heating fuel provider.

 

 6        (18) For the 2001 tax year and each tax year after the 2001

 

 7  tax year, the credit under this section is allowed only if there

 

 8  has been a federal appropriation for the federal fiscal year

 

 9  beginning in the tax year of federal low income home energy

 

10  assistance program block grant funds of any amount. If the amount

 

11  of federal low income home energy assistance program block grant

 

12  funds available for the home heating credit is less than the full

 

13  home heating credit amount, each individual credit claimed under

 

14  this section shall be reduced by multiplying the credit amount by

 

15  a fraction, the numerator of which is the amount available for

 

16  the home heating credit and the denominator of which is the full

 

17  home heating credit amount. As used in this subsection, "amount

 

18  available for the home heating credit" means the sum of the

 

19  federal low income home energy assistance program block grant

 

20  allotment for this state for the federal fiscal year beginning in

 

21  the tax year and the amount as certified by the director of the

 

22  family independence agency department of human services carried

 

23  forward from the immediately preceding fiscal year for the low

 

24  income home energy assistance program block grant minus the sum

 

25  of the amount certified by the director of the family

 

26  independence agency department of human services for

 

27  administration of the low income home energy assistance program


 

 1  block grant, the amount certified by the director of the family

 

 2  independence agency department of human services for crisis

 

 3  assistance programs, and the amount certified by the director of

 

 4  the family independence agency department of human services for

 

 5  weatherization. Except as otherwise provided in this subsection,

 

 6  the amount used for weatherization each fiscal year shall not

 

 7  exceed $9,000,000.00 less the amount used for weatherization from

 

 8  the emergency contingency funds received in the immediately

 

 9  preceding year. For the 2004-2005 state fiscal year only, the

 

10  amount used for weatherization shall not exceed $9,000,000.00 and

 

11  shall not be reduced by the amount used for weatherization from

 

12  the emergency contingency funds received in the immediately

 

13  preceding year. For the 2011-2012 fiscal year and each fiscal

 

14  year thereafter, the amount used for weatherization each fiscal

 

15  year shall not be less than $5,000,000.00 of the total federal

 

16  low income home energy assistance program block grant funds

 

17  received and shall not be reduced by the amount used for

 

18  weatherization from the emergency contingency funds received in

 

19  the immediately preceding year. The amounts under this subsection

 

20  that require certification by the director of the family

 

21  independence agency department of human services or by the state

 

22  treasurer and the director of the department of technology,

 

23  management, and budget shall be certified on or before December

 

24  30 of the tax year for the 1996 tax year, and on or before

 

25  November 1 of the tax year for the 1997 tax year and each tax

 

26  year after the 1997 tax year thereafter. As used in this

 

27  subsection, "full home heating credit amount" means the amount


 

 1  certified by the state treasurer and the director of the

 

 2  department of technology, management, and budget to be the

 

 3  estimated amount of the credits that would have been provided

 

 4  under this section for the tax year if no reduction as provided

 

 5  in this subsection were made for that tax year.

 

 6        (19) For tax years after the 1994 tax year, a claimant who

 

 7  claims a credit under this section shall not report the credit

 

 8  amount on the claimant's income tax return filed under this act

 

 9  as an offset against the tax imposed by this act, but shall claim

 

10  the credit on a separate form prescribed by the department. For

 

11  tax years after the 1995 tax year, a credit claimed under this

 

12  section shall not be allowed unless the claim for the credit is

 

13  filed with the department on or before the September 30

 

14  immediately following the tax year for which the credit is

 

15  claimed.

 

16        (20) The state treasurer shall notify all of the following

 

17  each state fiscal year that the federal low income home energy

 

18  assistance program block grant allotment for this state for that

 

19  fiscal year is less than the full home heating credit amount:

 

20        (a) The chairpersons and vice-chairpersons of the senate and

 

21  house of representatives appropriations committees.

 

22        (b) The senate and house of representatives committees on

 

23  taxation and finance related issues.

 

24        (c) The senate and house of representatives committees on

 

25  energy and technology related issues.

 

26        (21) Notwithstanding section 30a of 1941 PA 122, MCL

 

27  205.30a, the credit allowed under this section is exempt from


 

 1  interception, execution, levy, attachment, garnishment, or other

 

 2  legal process to collect a debt. No portion of the credit allowed

 

 3  or any rights existing under this section shall be applied as an

 

 4  offset to any liability of the claimant under section 30a of 1941

 

 5  PA 122, MCL 205.30a, or any arrearage or other debt of the

 

 6  claimant.

 

 7        (22) The department shall meet with interested parties

 

 8  including enrolled heating fuel providers and advocacy groups to

 

 9  identify and implement methods of improving the processing of

 

10  claims for the credit allowed under this section and payments

 

11  attributable to those credits.

 

12        (23) As used in this section:

 

13        (a) "Claimant whose heating costs are included in his or her

 

14  rent" means a claimant whose rent includes the cost of heat at

 

15  the time the claim for the credit under this section is filed.

 

16        (b) "Enrolled heating fuel provider" means a heating fuel

 

17  provider that is enrolled with the family independence agency

 

18  department of human services as a heating fuel provider.

 

19        (c) "Heating fuel provider" means an individual or entity

 

20  that provides a claimant with heating fuel or electricity for

 

21  heating purposes.