HOUSE BILL NO. 4038

January 15, 2019, Introduced by Reps. Elder, Hope, Pohutsky, Brixie, Kennedy, Witwer, Cherry, Pagan, Koleszar, Chirkun, Jones, Cynthia Johnson and Lasinski and referred to the Committee on Tax Policy.

"Income tax act of 1967,"

(MCL 206.1 to 206.713) by adding sections 277 and 677.

the people of the state of michigan enact:

Sec. 277. (1) For tax years beginning on and after January 1, 2019, a qualified taxpayer that donates edible agricultural products to a hunger-relief charitable organization located in this state may claim a credit against the tax imposed by this part in an amount equal to 50% of the aggregate value of the edible agricultural products, as determined under subsection (2), that the qualified taxpayer donated to a hunger-relief charitable organization located in this state during the tax year or $3,000.00, whichever is less.

(2) At the time of the donation, the qualified taxpayer shall provide to the hunger-relief charitable organization the estimated value of the donated edible agricultural products. The qualified taxpayer shall determine the value of the donated edible agricultural products as follows:

(a) If there was a previous sale of the edible agricultural products to a buyer, the qualified taxpayer shall determine the value of the donated edible agricultural products based on an invoice or other statement identifying the price received by the qualified taxpayer for those edible agricultural products of comparable grade or quality.

(b) If there is no previous sale to a buyer, the qualified taxpayer shall, on the date of the donation, determine the value of the donated edible agricultural products based on the fair market value as determined by average weekly regional produce auction prices or United States Department of Agriculture prices for meat, fish, and dairy products.

(3) The hunger-relief charitable organization shall provide to the donor, on a form prescribed by the department, a signed and dated statement containing, at a minimum, all of the following:

(a) The type and quantity of product donated.

(b) The name, address, and taxpayer identification number of the donor.

(d) The estimated value of the donated edible agricultural products, as provided by the donor.

(4) A qualified taxpayer shall attach the form prescribed under subsection (3) to the annual return filed under this part on which a credit under this section is claimed. If the amount of the credit allowed under this section exceeds the tax liability of the qualified taxpayer for the tax year, that portion of the credit that exceeds the tax liability of the taxpayer for the tax year shall not be refunded.

(5) As used in this section:

(a) "Donor" means a qualified taxpayer that donates edible agricultural products to a hunger-relief charitable organization.

(b) "Edible agricultural products" means fruits, vegetables, grains, beef, poultry, pork, fish, or any other edible product raised or grown in this state that is intended for and fit for human consumption. Edible agricultural products include any fruits, vegetables, grains, beef, poultry, pork, fish, or any other edible product raised or grown in this state and processed in this state by the donor for human consumption.

(c) "Hunger-relief charitable organization" means a surplus food collection and distribution program that is operated and established to collect donated food for redistribution to persons in need and that is recognized as exempt from federal taxation under section 501(c)(3) of the internal revenue code. Hunger-relief organization includes 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 accommodations, 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.

(d) "Qualified taxpayer" means a taxpayer that files a schedule F with the taxpayer's federal income tax form 1040 for the same tax year for which a credit is claimed under this section.

Sec. 677. (1) For tax years beginning on and after January 1, 2019, a qualified taxpayer that donates edible agricultural products to a hunger-relief charitable organization located in this state may claim a credit against the tax imposed by this part in an amount equal to 50% of the aggregate value of the edible agricultural products, as determined under subsection (2), that the qualified taxpayer donated to a hunger-relief charitable organization located in this state during the tax year or $3,000.00, whichever is less.

(3) The hunger-relief charitable organization shall provide to the donor, on a form prescribed by the department, a signed and dated statement containing, at a minimum, all of the following:

(a) The type and quantity of product donated.

(b) The name, address, and taxpayer identification number of the donor.

(d) The estimated value of the donated edible agricultural products, as provided by the donor.

(5) As used in this section:

(a) "Donor" means a qualified taxpayer that donates edible agricultural products to a hunger-relief charitable organization.

(d) "Qualified taxpayer" means a taxpayer that reports the income or loss from regular farming operations federal income tax form 1120 for the same tax year for which a credit is claimed under this section.