SENATE BILL No. 55

 

 

January 23, 2019, Introduced by Senators RUNESTAD, ZORN, ALEXANDER, BIZON,  MCMORROW, DALEY, MACDONALD, WOJNO, BULLOCK, JOHNSON, LUCIDO, BARRETT, BAYER, HOLLIER, HORN, CHANG and HERTEL and referred to the Committee on Finance.

 

 

 

     A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

(MCL 206.1 to 206.713) by adding section 261.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 261. (1) For tax years beginning on and after January 1,

 

2019 and subject to the applicable limitations in this section, a

 

taxpayer may credit against the tax imposed by this part an amount

 

equal to 50% of the sum of the cash amount and, if food items are

 

contributed in conjunction with a program in which a vendor makes a

 

matching contribution of similar items, the value of those food

 

items the taxpayer contributes during the tax year to a shelter for

 

homeless persons, food kitchen, food bank, or other entity located

 

in this state, the primary purpose of which is to provide overnight

 

accommodation, food, or meals to persons who are indigent if a

 


contribution to that entity is tax deductible for the donor under

 

the internal revenue code.

 

     (2) For tax years beginning on and after January 1, 2019, a

 

taxpayer may claim an additional credit against the tax imposed by

 

this part for the tax year an amount, subject to the applicable

 

limitations under this section, equal to 50% of the amount the

 

taxpayer contributes during the tax year to a community foundation.

 

For a taxpayer other than a resident estate or trust, the credit

 

allowed under this subsection shall not exceed $100.00, or $200.00

 

for a joint return. For a resident estate or trust, the credit

 

allowed under this subsection shall not exceed 10% of the

 

taxpayer's tax liability for the tax year before claiming any

 

credits allowed by this part or $5,000.00, whichever is less. For a

 

resident estate or trust, the amount used to calculate the credits

 

under this section shall not have been deducted in arriving at

 

federal taxable income.

 

     (3) The maximum credit allowed under subsection (1) for total

 

contributions made, including the value of food items contributed

 

in conjunction with a program in which a vendor makes a matching

 

contribution of similar items in the tax year to shelters for

 

homeless persons, food kitchens, food banks, and, except for

 

community foundations, other entities is as follows:

 

     (a) For a taxpayer other than a resident estate or trust, the

 

credit shall not exceed $100.00, or $200.00 for a joint return.

 

     (b) For a resident estate or trust, the credit shall not

 

exceed 10% of the taxpayer's tax liability for the tax year before

 

claiming any credits allowed by this part or $5,000.00, whichever


is less.

 

     (4) If the amount of the credits allowed under this section

 

exceeds the tax liability of the taxpayer for the tax year, the

 

portion that exceeds the tax liability shall not be refunded.

 

     (5) An entity other than a community foundation may request

 

that the department determine if a contribution to that entity

 

qualifies for the credit under this section. The department shall

 

make a determination and respond to a request no later than 30 days

 

after the department receives the request.

 

     (6) A taxpayer may claim a credit under this section for

 

contributions to a community foundation made before the expiration

 

of the 18-month period after a community foundation was

 

incorporated or established during which the community foundation

 

must build an endowment value of $100,000.00 as provided in

 

subsection (8)(g). If the community foundation does not reach the

 

required $100,000.00 endowment value during that 18-month period,

 

contributions to the community foundation made after the date on

 

which the 18-month period expires shall not be used to calculate a

 

credit under this section. At any time after the expiration of the

 

18-month period under subsection (8)(g) that the community

 

foundation has an endowment value of $100,000.00, the community

 

foundation may apply to the department for certification under this

 

section.

 

     (7) On or before July 1 of each year, the department shall

 

report to the house committee on tax policy and the senate finance

 

committee the total amount of tax credits claimed under this

 

section for the immediately preceding tax year.


     (8) As used in this section, "community foundation" means an

 

organization that applies for certification on or before May 15 of

 

the tax year for which the taxpayer is claiming the credit and that

 

the department certifies for that tax year as meeting all of the

 

following requirements:

 

     (a) Qualifies for exemption from federal income taxation under

 

section 501(c)(3) of the internal revenue code.

 

     (b) Supports a broad range of charitable activities within the

 

specific geographic area of this state that it serves, such as a

 

municipality or county.

 

     (c) Maintains an ongoing program to attract new endowment

 

funds by seeking gifts and bequests from a wide range of potential

 

donors in the community or area served.

 

     (d) Is publicly supported as defined by the regulations of the

 

United States Department of Treasury, 26 CFR 1.170A-9(f)(10). To

 

maintain certification, the community foundation shall submit

 

documentation to the department annually that demonstrates

 

compliance with this subdivision.

 

     (e) Is not a supporting organization as described in section

 

509(a)(3) of the internal revenue code and the regulations of the

 

United States Department of Treasury, 26 CFR 1.509(a)-4 and

 

1.509(a)-5.

 

     (f) Meets the requirements for treatment as a single entity

 

contained in the regulations of the United States Department of

 

Treasury, 26 CFR 1.170A-9(f)(11).

 

     (g) Except as provided in subsection (6), is incorporated or

 

established as a trust at least 6 months before the beginning of


the tax year for which the credit under this section is claimed and

 

has an endowment value of at least $100,000.00 before the

 

expiration of 18 months after the community foundation is

 

incorporated or established.

 

     (h) Has an independent governing body representing the general

 

public's interest and that is not appointed by a single outside

 

entity.

 

     (i) Provides evidence to the department that the community

 

foundation has, before the expiration of 6 months after the

 

community foundation is incorporated or established, and maintains

 

continually during the tax year for which the credit under this

 

section is claimed, at least 1 part-time or full-time employee.

 

     (j) For community foundations that have an endowment value of

 

$1,000,000.00 or more only, the community foundation is subject to

 

an annual independent financial audit and provides copies of that

 

audit to the department not more than 3 months after the completion

 

of the audit. For community foundations that have an endowment

 

value of less than $1,000,000.00, the community foundation is

 

subject to an annual review and an audit every third year.

 

     (k) In addition to all other criteria listed in this

 

subsection for a community foundation that is incorporated or

 

established after June 22, 2000, operates in a county of this state

 

that was not served by a community foundation when the community

 

foundation was incorporated or established or operates as a

 

geographic component of an existing certified community foundation.