HOUSE BILL No. 4022
January 8, 1997, Introduced by Rep. Schauer 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 1994 PA 256. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 261. (1) For the 1989 through 1997 tax years and 2 subject to the limitations in subsections (2) to (6), a taxpayer 3 may credit against the tax imposed by this act 50% of the amount 4 the taxpayer contributes during the taxable year to an endowment 5 fund of a community foundation or for the 1992 through 1997 6 1998 tax years and subject to the limitations in subsections (2), 7 (3), and (5), a taxpayer may credit against the tax imposed by 8 this act 50% of the cash amount the taxpayer contributes during 9 the taxable year to a shelter for homeless persons, food kitchen, 10 food bank, or other entity, the primary purpose of which is to 01046'97 RJA 2 1 provide overnight accommodation, food, or meals to persons who 2 are indigent if a contribution to that entity is tax deductible 3 for the donor under the internal revenue code. 4 (2) For a taxpayer other than a resident estate or trust, 5 the credit allowed by this section for a contribution to a commu- 6 nity foundation shall not exceed $100.00, or $200.00 for a hus- 7 band and wife filing a joint return. For the 1992 tax year and 8 each tax year after 1992, a taxpayer may claim an additional 9 credit under this section not to exceed $100.00, or $200.00 for a 10 husband and wife filing a joint return, for total cash contribu- 11 tions made in the tax year to shelters for homeless persons, food 12 kitchens, food banks, and, except for community foundations, 13 other entities allowed under subsection (1). For a resident 14 estate or trust, the credit allowed by this section for a contri- 15 bution to a community foundation shall not exceed 10% of the 16 taxpayer's tax liability for the tax year before claiming any 17 credits allowed by this act or $5,000.00, whichever is less. For 18 the 1992 tax year and each tax year after 1992, a resident estate 19 or trust may claim an additional credit under this section not to 20 exceed 10% of the taxpayer's tax liability for the tax year 21 before claiming any credits allowed by this act or $5,000.00, 22 whichever is less, for total cash contributions made in the tax 23 year to shelters for homeless persons, food kitchens, food banks, 24 and, except for community foundations, other entities allowed 25 under subsection (1). 26 (3) The credits allowed by this section are nonrefundable so 27 that a taxpayer shall not claim under this section a total credit 01046'97 3 1 amount that reduces the taxpayer's tax liability to less than 2 zero. 3 (4) As used in this section, "community foundation" means an 4 organization that applies for certification on or before April 1 5 of the tax year for which the taxpayer is claiming the credit and 6 that the department certifies for that tax year as meeting all of 7 the following requirements: 8 (a) Qualifies for exemption from federal income taxation 9 under section 501(c)(3) of the internal revenue code. 10 (b) Supports a broad range of charitable activities within 11 the specific geographic area of this state that it serves, such 12 as a municipality or county. 13 (c) Maintains an ongoing program to attract new endowment 14 funds by seeking gifts and bequests from a wide range of poten- 15 tial donors in the community or area served. 16 (d) Is publicly supported as defined by the regulations of 17 the United States department of treasury, 26 18 C.F.R. 1.170A-9(e)(10). 19 (e) Is not a supporting organization as defined under sec- 20 tion 509(a)(3) of the internal revenue code and the regulations 21 of the United States department of treasury, 26 C.F.R. 1.509(a)-4 22 and 1.509(a)-5. 23 (f) Meets the requirements for treatment as a single entity 24 contained in the regulations of the United States department of 25 treasury, 26 C.F.R. 1.170A-9(e)(11). 01046'97 4 1 (g) Is incorporated or established as a trust before 2 September 1 of the year immediately preceding the tax year for 3 which the credit is claimed. 4 (5) An entity other than a community foundation may request 5 that the department determine if a contribution to that entity 6 qualifies for the credit under this section. The department 7 shall make a determination and respond to a request no later than 8 30 days after the department receives the request. 9 (6) On or before July 1 of each year, the department shall 10 report to the house committee on taxation and the senate commit- 11 tee on finance the total amount of tax credits claimed under this 12 section and under section 38c of the single business tax act, 13 Act No. 228 of the Public Acts of 1975 1975 PA 228, MCL 14 208.38C, for the immediately preceding tax year. 01046'97 Final page. RJA