SENATE BILL NO. 967

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.847) by adding sections 279, 679, and 821.

the people of the state of michigan enact:

Sec. 279. (1) Subject to subsection (2), for tax years that begin on and after January 1, 2027, a qualified taxpayer may claim a state low-income housing tax credit against the tax imposed under this part in an amount equal to the amount allocated to the taxpayer for the tax year as provided on the eligibility certificate and reported on the allocation form. The qualified taxpayer must attach a copy of the allocation form for that calendar year to the annual return filed under this part for the same tax year on which a credit under this section is being claimed. A qualified taxpayer is not eligible to claim a credit under this section for any tax year unless that taxpayer and the amount of the credit allocated to that taxpayer is listed on the allocation form attached to the annual return for that tax year.

(2) If any portion of the federal credit allocated to a qualified project for which a state low-income housing credit is also claimed under this section, is recaptured under section 42(j) of the internal revenue code, 26 USC 42, or is otherwise disallowed, the department, in consultation with the authority, shall recapture a proportionate amount of the tax credit claimed under this section in connection with the same qualified project. If the department, in consultation with the authority, determines to recapture the tax credit, the department and authority shall determine the taxpayer or taxpayers that claimed the credit, the tax against which the credit was claimed, and the amount to be recaptured from each respective taxpayer and have that recaptured amount added back to the tax liability of those taxpayers under this part. The statute of limitations on assessments under this act does not bar an assessment made under this subsection.

(3) The credit allowed under this section must be claimed after all other credits allowed under this part. If the credit allowed under this section for the tax year and any unused carryforward of the credit allowed by this section exceed the qualified taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year must not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first. If a qualified taxpayer has an unused carryforward of a credit under this section, the amount otherwise added under subsection (2) to the qualified taxpayer's tax liability may instead be used to reduce the qualified taxpayer's carryforward under this section.

(4) As used in this section:

(a) "Allocation form" means the form submitted by the designated reporter under 22e(11) of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

(b) "Authority" means the Michigan state housing development authority created under section 21 of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1421.

(c) "Designated reporter", "eligibility certificate", "equity owner", and "project owner" mean those terms as defined under section 22e of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

(d) "Qualified taxpayer" means a taxpayer that is the project owner or an equity owner that has been allocated a state low-income housing tax credit.

(e) "State low-income housing tax credit" means a credit reserved under section 22e of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

Sec. 679. (1) Subject to subsection (2), for tax years that begin on and after January 1, 2027, a qualified taxpayer may claim a state low-income housing tax credit against the tax imposed under this part in an amount equal to the amount allocated to the taxpayer for the tax year as provided on the eligibility certificate and reported on the allocation form. The qualified taxpayer must attach a copy of the allocation form for that calendar year to the annual return filed under this part for the same tax year on which a credit under this section is being claimed. A qualified taxpayer is not eligible to claim a credit under this section for any tax year unless that taxpayer and the amount of the credit allocated to that taxpayer is listed on the allocation form attached to the annual return for that tax year.

(2) If any portion of the federal credit allocated to a qualified project for which a state low-income housing credit is also claimed under this section is recaptured under section 42(j) of the internal revenue code, 26 USC 42, or is otherwise disallowed, the department, in consultation with the authority, shall recapture a proportionate amount of the tax credit claimed under this section in connection with the same qualified project. If the department, in consultation with the authority, determines to recapture the tax credit, the department and authority shall determine the taxpayer or taxpayers that claimed the credit, the tax against which the credit was claimed, and the amount to be recaptured from each respective taxpayer and have that recaptured amount added back to the tax liability of those taxpayers under this part. The statute of limitations on assessments under this act does not bar an assessment made under this subsection.

(3) The credit allowed under this section must be claimed after all other credits allowed under this part. If the credit allowed under this section for the tax year and any unused carryforward of the credit allowed by this section exceed the qualified taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year must not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first. If a qualified taxpayer has an unused carryforward of a credit under this section, the amount otherwise added under subsection (2) to the qualified taxpayer's tax liability may instead be used to reduce the qualified taxpayer's carryforward under this section.

(4) As used in this section:

(a) "Allocation form" means the form submitted by the designated reporter under 22e(11) of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

(b) "Authority" means the Michigan state housing development authority created under section 21 of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1421.

(c) "Designated reporter", "eligibility certificate", "equity owner", and "project owner" mean those terms as defined under section 22e of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

(d) "Qualified taxpayer" means a taxpayer that is the project owner or an equity owner that has been allocated a state low-income housing tax credit.

(e) "State low-income housing tax credit" means a credit reserved under section 22e of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

Sec. 821. (1) Subject to subsection (2), for tax years that begin on and after January 1, 2027, a qualified taxpayer may claim a state low-income housing tax credit against the tax imposed under this part in an amount equal to the amount allocated to the taxpayer for the tax year as provided on the eligibility certificate and reported on the allocation form. The qualified taxpayer must attach a copy of the allocation form for that calendar year to the annual return filed under this part for the same tax year on which a credit under this section is being claimed. A qualified taxpayer is not eligible to claim a credit under this section for any tax year unless that taxpayer and the amount of the credit allocated to that taxpayer is listed on the allocation form attached to the annual return for that tax year.

(2) If any portion of the federal credit allocated to a qualified project for which a state low-income housing credit is also claimed under this section is recaptured under section 42(j) of the internal revenue code, 26 USC 42, or is otherwise disallowed, the department, in consultation with the authority, shall recapture a proportionate amount of the tax credit claimed under this section in connection with the same qualified project. If the department, in consultation with the authority, determines to recapture the tax credit, the department and authority shall determine the taxpayer or taxpayers that claimed the credit, the tax against which the credit was claimed, and the amount to be recaptured from each respective taxpayer and have that recaptured amount added back to the tax liability of those taxpayers under this part. The statute of limitations on assessments under this act does not bar an assessment made under this subsection.

(3) The credit allowed under this section must be claimed after all other credits allowed under this part. If the credit allowed under this section for the tax year and any unused carryforward of the credit allowed by this section exceed the qualified taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year must not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first. If a qualified taxpayer has an unused carryforward of a credit under this section, the amount otherwise added under subsection (2) to the qualified taxpayer's tax liability may instead be used to reduce the qualified taxpayer's carryforward under this section.

(4) As used in this section:

(a) "Allocation form" means the form submitted by the designated reporter under 22e(11) of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

(b) "Authority" means the Michigan state housing development authority created under section 21 of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1421.

(c) "Designated reporter", "eligibility certificate", "equity owner", and "project owner" mean those terms as defined under section 22e of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

(d) "Qualified taxpayer" means a taxpayer that is the project owner or an equity owner that has been allocated a state low-income housing tax credit.

(e) "State low-income housing tax credit" means a credit reserved under section 22e of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422e.

Enacting section 1. This amendatory act does not take effect unless all of the following bills of the 103rd Legislature are enacted into law:

(a) Senate Bill No. 966.

(b) Senate Bill No. 968.