HOUSE BILL No. 5169

December 17, 2015, Introduced by Reps. Poleski, Brett Roberts, Pagel, Bumstead and Forlini and referred to the Committee on Tax Policy.

 

      A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending sections 506 and 520 (MCL 206.506 and 206.520), section

 

506 as amended by 1996 PA 484 and section 520 as amended by 2015 PA

 

179; and to repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

 1        Sec. 506. "Eligible serviceperson", "eligible veteran", and

 

 2  "eligible widow or widower" means mean a serviceperson, veteran, or

 

 3  widow or widower, whose income as defined in this chapter is not

 

 4  more than $7,500.00 per year unless the serviceperson, veteran, or

 

 5  widow or widower receives compensation paid by the veterans

 

 6  administration or the armed forces of the United States for service

 

 7  incurred disabilities and who meets the requirements of the


 1  following schedule:

 

 

 2   War         Person            Service in   Disability %  Taxable

 3                                    War                      Value

 4                                                           Allowance

 5  

 6 Indian        Veteran or        3 months, or      No      $3,500.00

 7 Civil         veteran's widow   1 day with    requirement

 8 Spanish-      or widower        discharge

 9 American                        for service-

10 Mexican                         connected

11                                 disability

12  

13 World War I   Widow or widower  3 months, or     No       $2,500.00

14 World War II  of nondisabled    1 day with   requirement

15 Korean        or nonpensioned   discharge

16               veteran           for service-

17                                 connected

18                                 disability

19  

20 All wars or   Pensioned veteran     Any          No       $3,500.00

21 presidential  or veteran's                   requirement

22 executive     widow or widower

23 order or

24 presidential

25 proclamation

26  

27 All wars or   Veteran with          Any             10-50 $3,500.00


 1 presidential  service-connected

 2 executive     disability or

 3 order or      veteran's widow

 4 presidential  or widower

 5 proclamation

 6  

 7 All wars or   Veteran with          Any  60-70-80         $4,000.00

 8 presidential  service-connected

 9 executive     disability or

10 order or      veteran's widow

11 presidential  or widower

12 proclamation

13  

14 All wars or   Veteran with          Any    90-100         $4,500.00

15 presidential  service-connected

16 executive     disability or

17 order or      veteran's widow

18 presidential  or widower

19 proclamation

20  

21 All wars or   Widow or widower     Any           No       $4,500.00

22 presidential  of veteran dying               requirement

23 executive     in service

24 order or

25 presidential

26 proclamation

27  


 1 Current       Serviceperson or     Any           No       $3,500.00

 2 service       serviceperson's                requirement

 3               widow or widower

 

 

 4        Sec. 520. (1) Subject to the limitations and the definitions

 

 5  in this chapter, a claimant may claim against the tax due under

 

 6  this part for the tax year a credit for the property taxes on the

 

 7  taxpayer's homestead deductible for federal income tax purposes

 

 8  pursuant to section 164 of the internal revenue code, or that would

 

 9  have been deductible if the claimant had not elected the zero

 

10  bracket amount or if the claimant had been subject to the federal

 

11  income tax. The property taxes used for the credit computation

 

12  shall not be greater than the amount levied for 1 tax year. An

 

13  owner, other than an owner who is a veteran with a service-

 

14  connected disability of 100% or that veteran's widow or widower, is

 

15  not eligible for a credit under this section if the taxable value

 

16  of his or her homestead excluding the portion of a parcel of real

 

17  property that is unoccupied and classified as agricultural for ad

 

18  valorem tax purposes in the year for which the credit is claimed is

 

19  greater than $135,000.00 through the 2021 tax year. Beginning with

 

20  the 2021 tax year and each tax year after 2021, the taxable value

 

21  cap under this subsection for the immediately preceding tax year

 

22  shall be adjusted by the percentage increase in the United States

 

23  consumer price index for the immediately preceding calendar year

 

24  and rounded to the nearest $100.00 increment. The department shall

 

25  annualize the amount in this subsection as necessary. As used in

 

26  this subsection, "taxable value" means that value determined under

 

27  section 27a of the general property tax act, 1893 PA 206, MCL


 1  211.27a.

 

 2        (2) A person who rents or leases a homestead may claim a

 

 3  similar credit computed under this section and section 522 based

 

 4  upon 20% of the gross rent paid for tax years before the 2018 tax

 

 5  year or 23% of the gross rent paid for tax years after the 2017 tax

 

 6  year. A person who rents or leases a homestead subject to a service

 

 7  charge in lieu of ad valorem taxes as provided by section 15a of

 

 8  the state housing development authority act of 1966, 1966 PA 346,

 

 9  MCL 125.1415a, may claim a similar credit computed under this

 

10  section and section 522 based upon 10% of the gross rent paid.

 

11        (3) If the credit claimed under this section and section 522

 

12  exceeds the tax liability for the tax year or if there is no tax

 

13  liability for the tax year, the amount of the claim not used as an

 

14  offset against the tax liability shall, after examination and

 

15  review, be approved for payment, without interest, to the claimant.

 

16  In determining the amount of the payment under this subsection,

 

17  withholdings and other credits shall be used first to offset any

 

18  tax liabilities.

 

19        (4) If the homestead is an integral part of a multipurpose or

 

20  multidwelling building that is federally aided housing or state

 

21  aided housing, a claimant who is a senior citizen entitled to a

 

22  payment under subsection (2) may assign the right to that payment

 

23  to a mortgagor if the mortgagor reduces the rent charged and

 

24  collected on the claimant's homestead in an amount equal to the tax

 

25  credit payment provided in this chapter. The assignment of the

 

26  claim is valid only if the Michigan state housing development

 

27  authority, by affidavit, verifies that the claimant's rent has been


 1  so reduced.

 

 2        (5) Only the renter or lessee shall claim a credit on property

 

 3  that is rented or leased as a homestead.

 

 4        (6) A person who discriminates in the charging or collection

 

 5  of rent on a homestead by increasing the rent charged or collected

 

 6  because the renter or lessee claims and receives a credit or

 

 7  payment under this chapter is guilty of a misdemeanor.

 

 8  Discrimination against a renter who claims and receives the credit

 

 9  under this section and section 522 by a reduction of the rent on

 

10  the homestead of a person who does not claim and receive the credit

 

11  is a misdemeanor. If discriminatory rents are charged or collected,

 

12  each charge or collection of the higher or lower payment is a

 

13  separate offense. Each acceptance of a payment of rent is a

 

14  separate offense.

 

15        (7) A person who received aid to families with dependent

 

16  children, state family assistance, or state disability assistance

 

17  pursuant to the social welfare act, 1939 PA 280, MCL 400.1 to

 

18  400.119b, in the tax year for which the person is filing a return

 

19  shall have a credit that is authorized and computed under this

 

20  section and section 522 reduced by an amount equal to the product

 

21  of the claimant's credit multiplied by the quotient of the sum of

 

22  the claimant's aid to families with dependent children, state

 

23  family assistance, and state disability assistance for the tax year

 

24  divided by the claimant's total household resources. The reduction

 

25  of credit shall not exceed the sum of the aid to families with

 

26  dependent children, state family assistance, and state disability

 

27  assistance for the tax year. For the purposes of this subsection,


 1  aid to families with dependent children does not include child

 

 2  support payments that offset or reduce payments made to the

 

 3  claimant.

 

 4        (8) For tax years before the 2018 tax year, a credit under

 

 5  subsection (1) or (2) shall be reduced by 10% for each claimant

 

 6  whose total household resources exceed the minimum total household

 

 7  resources amount of $41,000.00 and by an additional 10% for each

 

 8  increment of $1,000.00 of total household resources in excess of

 

 9  $41,000.00. Except as otherwise provided under this subsection, for

 

10  the 2018 tax year and each tax year after 2018, the minimum total

 

11  household resources amount is $51,000.00. For the 2018 tax year and

 

12  each tax year after 2018, a credit under subsection (1) or (2)

 

13  shall be reduced by 10% for each claimant whose total household

 

14  resources exceed the minimum total household resources amount

 

15  established under this subsection and by an additional 10% for each

 

16  increment of $1,000.00 of total household resources in excess of

 

17  the minimum total household resources amount for that tax year. For

 

18  the 2021 tax year and each tax year after 2021, the minimum total

 

19  household resources threshold amount established under this

 

20  subsection for the immediately preceding tax year shall be adjusted

 

21  by the percentage increase in the United States consumer price

 

22  index for the immediately preceding calendar year and rounded to

 

23  the nearest $100.00 increment. This subsection does not apply to a

 

24  claimant who is a veteran with a service-connected disability of

 

25  100% or that veteran's widow or widower.

 

26        (9) If the credit authorized and calculated under this section

 

27  and section 522 and adjusted under subsection (7) or (8) does not


 1  provide to a senior citizen who rents or leases a homestead that

 

 2  amount attributable to rent that constitutes more than 40% of the

 

 3  total household resources of the senior citizen, the senior citizen

 

 4  may claim a credit based upon the amount of total household

 

 5  resources attributable to rent as provided by this section.

 

 6        (10) A senior citizen whose gross rent paid for the tax year

 

 7  is more than the percentage of total household resources specified

 

 8  in subsection (9) for the respective tax year may claim a credit

 

 9  for the amount of rent paid that constitutes more than the

 

10  percentage of the total household resources of the senior citizen

 

11  specified in subsection (9) and that was not provided to the senior

 

12  citizen by the credit computed pursuant to this section and section

 

13  522 and adjusted pursuant to subsection (7) or (8).

 

14        (11) The department may promulgate rules to implement

 

15  subsections (9) to (15) and may prescribe a table to allow a

 

16  claimant to determine the credit provided under this section and

 

17  section 522 in the instruction booklet that accompanies the

 

18  respective income tax or property tax credit forms used by

 

19  claimants.

 

20        (12) A senior citizen may claim the credit under subsections

 

21  (9) to (15) on the same form as the property tax credit permitted

 

22  by subsection (2). The department shall adjust the forms

 

23  accordingly.

 

24        (13) A senior citizen who moves to a different rented or

 

25  leased homestead shall determine, for 2 tax years after the move,

 

26  both his or her qualification to claim a credit under subsections

 

27  (9) to (15) and the amount of a credit under subsections (9) to


 1  (15) on the basis of the annualized final monthly rental payment at

 

 2  his or her previous homestead, if this annualized rental is less

 

 3  than the senior citizen's actual annual rental payments.

 

 4        (14) For a return of less than 12 months, the claim for a

 

 5  credit under subsections (9) to (15) shall be reduced

 

 6  proportionately.

 

 7        (15) For tax years before the 2018 tax year, the total credit

 

 8  allowed by this section and section 522 shall not exceed $1,200.00

 

 9  per year. Except as otherwise provided under this subsection, for

 

10  the 2018 tax year and each tax year after 2018, the total credit

 

11  allowed by this section and section 522 shall not exceed $1,500.00

 

12  per year. Beginning with the 2021 tax year and each tax year after

 

13  2021, the maximum amount of the credit allowed under this section

 

14  and section 522 for the immediately preceding tax year shall be

 

15  adjusted by the percentage increase in the United States consumer

 

16  price index for the immediately preceding calendar year. The

 

17  department shall round the amount to the nearest $100.00 increment.

 

18        (16) As used in this section, "United States consumer price

 

19  index" means the United States consumer price index for all urban

 

20  consumers as defined and reported by the United States Department

 

21  of Labor, Bureau of Labor Statistics.

 

22        Enacting section 1. Section 7b of the general property tax

 

23  act, 1893 PA 206, MCL 211.7b, is repealed effective December 31,

 

24  2015.