TAX CHECK-OFF LIMITATIONS H.B. 5232 (H-1):
COMMITTEE SUMMARY
House Bill 5232 (Substitute H-1 as passed by the House)
Sponsor: Representative Jeff Farrington
CONTENT
The bill would amend Section 435 of the Income Tax Act, which provides for voluntary contributions to various funds (tax check-offs), to do the following:
-- Limit the number of separate check-offs to 10 in a single tax year.
-- Require the Department of Treasury to discontinue a check-off that failed to raise $50,000 in a tax year for two consecutive tax years.
-- Require money appropriated to a fund from a check-off to be distributed within one year, and prohibit the money from being used to administer the fund.
-- Require the department responsible for administering a fund to designate one local representative or agency to distribute contributions, if the fund were used for donations to multiple organizations.
-- Identify factors the Legislature would have to consider in determining whether to add check-offs to the schedule.
-- Delete references to funds that are no longer on the schedule.
Section 435 allows an individual to designate on his or her annual tax return that contributions of $5, $10, or more of his or her State income tax refund (or additional tax liability) be credited to any of the funds specified in the Act. The Department must create a schedule of the specified check-offs to be included with an annual income tax return.
Under the bill, the schedule could not include more than 10 separate contribution designations in any single year.
Currently, the Department may discontinue a contribution designation if it fails to raise $100,000 in any tax year for two consecutive tax years. The bill, instead, would require the Department to discontinue a check-off that failed to raise $50,000 in any tax year for two consecutive tax years.
The bill would require money appropriated from contributions made under Section 435 to be distributed as provided in each fund within one year. None of the money appropriated could be used for the purpose of administering the fund.
If a fund were to be used for donations to multiple organizations located in the State, the department responsible for administering that fund would have to designate one local representative or agency of that organization to administer and distribute the money to other similar organizations in the State, as provided in the act that created the fund.
The bill would require the Legislature to consider all of the following factors, when determining whether to amend the State individual income tax return to include additional check-offs on the contributions schedule:
-- Whether the organization served multiple regions throughout the State.
-- Whether the organization demonstrated that it was capable of raising more than $50,000 in the State during the tax year through means other than the tax check-off.
-- Whether the organization spent 30% or more of its money to cover administrative and fund-raising costs.
-- Whether the organization had previously been included on the contributions schedule within the last three years and was removed because it failed to raise a sufficient amount of money through the check-off.
-- Whether the organization received any other State funds or other type of financial assistance from the State.
-- Whether the organization was associated with a nonprofit charitable organization.
The 2011 contributions schedule includes the following: the Animal Welfare Fund, the Children of Veterans Tuition Grant Program, the Children's Trust Fund, the Girl Scouts of Michigan Fund, the Military Family Relief Fund, and the United Way Fund. (Other than check-off for the Military Family Relief Fund, which is required by Section 438 of the Act, these check-offs are listed in Section 435.) The bill would delete references to other funds that are no longer on the schedule.
MCL 206.435 Legislative Analyst: Suzanne Lowe
FISCAL IMPACT
The bill would simplify the administration of the funds that receive donations through individual income tax returns. This would reduce the administrative costs of the Department of Treasury by an unknown amount. Table 1 below shows the donations collected for the 2009 tax year. Many of these funds did not meet the required revenue threshold and were no longer on the tax form in 2011. Table 2 lists the revenue through April 22, 2012, for the funds listed on the tax form in 2011.
Table 1
Estimated Income Tax Check-Off Donations
Tax Year 2009
|
|
On Form in 2011 |
Number of Donations |
Total Donation |
|
Amanda's Fund for Breast Cancer |
No |
3,754 |
$37,818 |
|
Animal Welfare Fund |
Yes |
7,854 |
100,862 |
|
Children's Hospital of MI Fund |
No |
5,661 |
61,186 |
|
Children's Miracle Network Fund |
No |
3,432 |
35,357 |
|
Children's Trust Fund |
Yes |
17,244 |
185,407 |
|
Children of Veterans Tuition Grant Program |
Yes |
15,225 |
126,531 |
|
Foster Care Trust Fund |
No |
2,407 |
24,123 |
|
Michigan Military Relief Fund |
Yes |
22,432 |
273,428 |
|
Michigan Council for the Arts Fund |
No |
2,598 |
27,978 |
|
Michigan Housing and Community Development Fund |
No |
1,618 |
17,415 |
|
Michigan Law Enforcement Memorial Fund |
No |
2,492 |
27,457 |
|
Prostate Cancer Research |
No |
2,920 |
29,319 |
|
Renewable Fuels Fund |
No |
2,157 |
18,247 |
|
United Way Fund |
Yes |
5,736 |
241,797 |
|
Total |
|
|
$1,206,925 |
|
Source: Michigan Department of Treasury |
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Table 2
Estimated Income Tax Check-Off Donations
Tax Year 2011
Collections through April 22, 2012
|
|
Number of Donations |
Total Donation |
|
Animal Welfare Fund |
10,800 |
$125,636 |
|
Children's Trust Fund |
8,499 |
88,839 |
|
Children of Veterans Tuition Grant Program |
5,878 |
70,374 |
|
Girl Scouts of Michigan Fund |
3,500 |
44,163 |
|
Military Family Relief Fund |
9,463 |
134,757 |
|
United Way Fund |
5,574 |
163,937 |
|
Total |
|
$627,706 |
|
Source: Michigan Department of Treasury |
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Fiscal Analyst: Elizabeth Pratt
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.