HOUSE BILL No. 4244 February 14, 2001, Introduced by Reps. Woronchak, Bishop, Spade, Meyer, Birkholz, Ehardt, Patterson, Richardville, Gosselin, Van Woerkom, Shackleton, Ruth Johnson, Tabor, Julian, Vander Roest, Kolb, Stewart, Allen, Newell and Bob Brown and referred to the Committee on Tax Policy. A bill to amend 1967 PA 281, entitled "Income tax act of 1967," by amending sections 520 and 522 (MCL 206.520 and 206.522), sec- tion 520 as amended by 1995 PA 245 and section 522 as amended by 2000 PA 41. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 520. (1) Subject to the limitations and the defini- 2 tions in this chapter, a claimant may claim against the tax due 3 under this act for the tax year a credit for the property taxes 4 on the taxpayer's homestead deductible for federal income tax 5 purposes pursuant to section 164 of the internal revenue code, or 6 that would have been deductible if the claimant had not elected 7 the zero bracket amount or if the claimant had been subject to 8 the federal income tax. The property taxes used for the credit 00117'01 RJA 2 1 computation shall not be greater than the amount levied for 1 tax 2 year. 3 (2) A person who rents or leases a homestead may claim a 4 similar credit computed under this section and section 522 based 5 upon 17% of the gross rent paid for tax years before the 1994 tax 6 year, or 20% of the gross rent paid for tax years after the 1993 7 tax year. A person who rents or leases a homestead subject to a 8 service charge in lieu of ad valorem taxes as provided by 9 section 15a of the state housing development authority act of 10 1966,Act No. 346 of the Public Acts of 1966, being11section 125.1415a of the Michigan Compiled Laws1966 PA 346, MCL 12 125.1415A, may claim a similar credit computed under this section 13 and section 522 based upon 10% of the gross rent paid. 14 (3) If the credit claimed under this section and section 522 15 exceeds the tax liability for the tax year or if there is no tax 16 liability for the tax year, the amount of the claim not used as 17 an offset against the tax liability shall, after examination and 18 review, be approved for payment, without interest, to the 19 claimant. In determining the amount of the payment under this 20 subsection, withholdings and other credits shall be used first to 21 offset any tax liabilities. 22 (4) If the homestead is an integral part of a multipurpose 23 or multidwelling building that is federally aided housing or 24 state aided housing, a claimant who is a senior citizen entitled 25 to a payment under subsection (2) may assign the right to that 26 payment to a mortgagor if the mortgagor reduces the rent charged 27 and collected on the claimant's homestead in an amount equal to 00117'01 3 1 the tax credit payment provided in this chapter. The assignment 2 of the claim is valid only if the Michigan state housing develop- 3 ment authority, by affidavit, verifies that the claimant's rent 4 has been so reduced. 5 (5) Only the renter or lessee shall claim a credit on prop- 6 erty that is rented or leased as a homestead. 7 (6) A person who discriminates in the charging or collection 8 of rent on a homestead by increasing the rent charged or col- 9 lected because the renter or lessee claims and receives a credit 10 or payment under this chapter is guilty of a misdemeanor. 11 Discrimination against a renter who claims and receives the 12 credit under this section and section 522 by a reduction of the 13 rent on the homestead of a person who does not claim and receive 14 the credit is a misdemeanor. If discriminatory rents are charged 15 or collected, each charge or collection of the higher or lower 16 payment is a separate offense. Each acceptance of a payment of 17 rent is a separate offense. 18 (7) A person who receivedaid to families with dependent19children,state family INDEPENDENCE assistance,orstate dis- 20 ability assistance, OR OTHER ASSISTANCE THROUGH FAMILY INDEPEN- 21 DENCE PROGRAMS pursuant to the social welfare act,Act No. 28022of the Public Acts of 1939, as amended, being sections 400.1 to23400.119b of the Michigan Compiled Laws1939 PA 280, MCL 400.1 TO 24 400.119B, in the tax year for which the person is filing a return 25 shall have a credit that is authorized and computed under this 26 section and section 522 reduced by an amount equal to the product 27 of the claimant's credit multiplied by the quotient of the sum of 00117'01 4 1 the claimant'said to families with dependent children,state 2 family INDEPENDENCE assistance,andstate disability 3 assistance, OR OTHER ASSISTANCE THROUGH FAMILY INDEPENDENCE PRO- 4 GRAMS PURSUANT TO THE SOCIAL WELFARE ACT, 1939 PA 280, MCL 400.1 5 TO 400.119B, for the tax year divided by the claimant's household 6 income. The reduction of credit shall not exceed the sum of the 7aid to families with dependent children,state family 8 INDEPENDENCE assistance,andstate disability assistance, AND 9 OTHER ASSISTANCE THROUGH FAMILY INDEPENDENCE PROGRAMS PURSUANT TO 10 THE SOCIAL WELFARE ACT, 1939 PA 280, MCL 400.1 TO 400.119B, for 11 the tax year. For the purposes of this subsection,aid to fami-12lies with dependent childrenANY ASSISTANCE THROUGH FAMILY INDE- 13 PENDENCE PROGRAMS does not include child support payments that 14 offset or reduce payments made to the claimant. 15 (8) A credit under subsection (1) or (2) shall be reduced by 16 10% for each claimant whose household income exceeds $73,650.00 17 and by an additional 10% for each increment of $1,000.00 of 18 household income in excess of $73,650.00. 19 (9) If the credit authorized and calculated under this sec- 20 tion and section 522 and adjusted under subsection (7) or (8) 21 does not provide to a senior citizen who rents or leases a home- 22 stead that amount attributable to rent that constitutes more than 23 40% of the household income of the senior citizen, the senior 24 citizen may claim a credit based upon the amount of household 25 income attributable to rent as provided by this section. 26 (10) A senior citizen whose gross rent paid for the tax year 27 is more than the percentage of household income specified in 00117'01 5 1 subsection (9) for the respective tax year may claim a credit for 2 the amount of rent paid that constitutes more than the percentage 3 of the household income of the senior citizen specified in sub- 4 section (9) and that was not provided to the senior citizen by 5 the credit computed pursuant to this section and section 522 and 6 adjusted pursuant to subsection (7) or (8). 7 (11) The department may promulgate rules to implement sub- 8 sections (9) to(16)(14) and may prescribe a table to allow a 9 claimant to determine the credit provided under this section and 10 section 522 in the instruction booklet that accompanies the 11 respective income tax or property tax credit forms used by 12 claimants. 13 (12) A senior citizen may claim the credit under subsections 14 (9) to(16)(14) on the same form as the property tax credit 15 permitted by subsection (2). The department shall adjust the 16 forms accordingly. 17 (13) A senior citizen who moves to a different rented or 18 leased homestead shall determine, for 2 tax years after the move, 19 both his or her qualification to claim a credit under subsections 20 (9) to(16)(14) and the amount of a credit under subsections 21 (9) to(16)(14) on the basis of the annualized final monthly 22 rental payment at his or her previous homestead, if this annua- 23 lized rental is less than the senior citizen's actual annual 24 rental payments. 25 (14) For a return of less than 12 months, the claim for a 26 credit under subsections (9) to(16)(14) shall be reduced 27 proportionately. 00117'01 6 1 (15) The Michigan state housing development authority shall 2 report on the effect of the credit provided by subsections (9) to 3(16)(14) on the price of rented and leased homesteads. If the 4 authority determines that the price of rented and leased home- 5 steads has increased as a result of the credit provided by sub- 6 sections (9) to(16)(14), the authority shall make recommenda- 7 tions to the legislature to remedy this situation. The report 8 shall be made to the chairpersons of the house and senate commit- 9 tees that have primary responsibility for taxation legislation 2 10 years after the credit provided by subsections (9) to(16)(14) 11 is in effect. 12 (16) The total credit allowed by this section and section 13 522 shall not exceed$1,200.00 per yearTHE AMOUNT UNDER SEC- 14 TION 522. 15 Sec. 522. (1) The amount of a claim made pursuant to this 16 chapter shall be determined as follows: 17 (a) A claimant is entitled to a credit against the state 18 income tax liability equal to 60% of the amount by which the 19 property taxes on the homestead, or the credit for rental of the 20 homestead for the tax year, exceeds 3.5% of the claimant's house- 21 hold income for that tax year. 22 (b) A claimant who is a senior citizen or a paraplegic, 23 hemiplegic, or quadriplegic and for tax years that begin after 24 December 31, 1999, a claimant who is totally and permanently dis- 25 abled or deaf is entitled to a credit against the state income 26 tax liability for the amount by which the property taxes on the 27 homestead, the credit for rental of the homestead, or a service 00117'01 7 1 charge in lieu of ad valorem taxes as provided by section 15a of 2 the state housing development authority act of 1966, 1966 PA 346, 3 MCL 125.1415a, for the tax year exceeds the percentage of the 4 claimant's household income for that tax year computed as 5 follows: 6 7 Household income Percentage 8 Not over $3,000.00 .0% 9 Over $3,000.00 but not over $4,000.00 1.0% 10 Over $4,000.00 but not over $5,000.00 2.0% 11 Over $5,000.00 but not over $6,000.00 3.0% 12 Over $6,000.00 3.5% 13 (c) For a tax year that begins before January 1, 2000, a 14 claimant who is totally and permanently disabled is entitled to a 15 credit against the state income tax liability equal to 60% of the 16 amount by which the property taxes on the homestead, or the 17 credit for rental of the homestead or for a service charge in 18 lieu of ad valorem taxes as provided in section 15a of the state 19 housing development authority act of 1966, 1966 PA 346, MCL 20 125.1415a, for the tax year, exceeds the percentage of the 21 claimant's household income for that tax year based on the sched- 22 ule in subdivision (b). 23 (d) A claimant who is an eligible serviceperson, eligible 24 veteran, or eligible widow or widower is entitled to a credit 25 against the state income tax liability for a percentage of the 00117'01 8 1 property taxes on the homestead for the tax year not in excess of 2 100% determined as follows: 3 (i) Divide the taxable value allowance specified in section 4 506 by the taxable value of the homestead or, if the eligible 5 serviceperson, eligible veteran, or eligible widow or widower 6 leases or rents a homestead, divide 17% of the total annual rent 7 paid for tax years before the 1994 tax year, or 20% of the total 8 annual rent paid for tax years after the 1993 tax year on the 9 property by the property tax rate on the property. 10 (ii) Multiply the property taxes on the homestead by the 11 percentage computed in subparagraph (i). 12 (e) A claimant who is blind is entitled to a credit against 13 the state income tax liability for a percentage of the property 14 taxes on the homestead for the tax year determined as follows: 15 (i) If the taxable value of the homestead is $3,500.00 or 16 less, 100% of the property taxes. 17 (ii) If the taxable value of the homestead is more than 18 $3,500.00, the percentage that $3,500.00 bears to the taxable 19 value of the homestead. 20 (2) A person who is qualified to make a claim under more 21 than 1 classification shall elect the classification under which 22 the claim is made. 23 (3) Only 1 claimant per household for a tax year is entitled 24 to the credit, unless both the husband and wife filing a joint 25 return are blind, then each shall be considered a claimant. 00117'01 9 1 (4) As used in this section, "totally and permanently 2 disabled" means disability as defined in section 216 of title II 3 of the social security act, 42 U.S.C. 416. 4 (5) A senior citizen who has a total household income for 5 the tax year of $6,000.00 or less and who for 1973 received a 6 senior citizen homestead exemption under former section 7c of the 7 general property tax act,Act No. 206 of the Public Acts of818931893 PA 206, may compute the credit against the state 9 income tax liability for a percentage of the property taxes on 10 the homestead for the tax year determined as follows: 11 (a) If the taxable value of the homestead is $2,500.00 or 12 less, 100% of the property taxes. 13 (b) If the taxable value of the homestead is more than 14 $2,500.00, the percentage that $2,500.00 bears to the taxable 15 value of the homestead. 16 (6) For a return of less than 12 months, the claim shall be 17 reduced proportionately. 18 (7) The commissioner may prescribe tables that may be used 19 to determine the amount of the claim. 20 (8) The total credit allowed in this sectionfor each year21after December 31, 1975shall not exceed $1,200.00 per year FOR 22 CLAIMANTS WHO ARE 70 YEARS OF AGE OR YOUNGER ON THE LAST DAY OF 23 THE TAX YEAR OR $1,800.00 FOR CLAIMANTS WHO ARE OLDER THAN 70 24 YEARS OF AGE ON THE LAST DAY OF THE TAX YEAR. 25 (9) The total credit allowable under this act and part 361 26 of the natural resources and environmental protection act, 1994 27 PA 451, MCL 324.36101 to 324.36117, shall not exceed the total 00117'01 10 1 property tax due and payable by the claimant in that year. The 2 amount by which the credit exceeds the property tax due and pay- 3 able shall be deducted from the credit claimed under part 361 of 4 the natural resources and environmental protection act, 1994 PA 5 451, MCL 324.36101 to 324.36117. 00117'01 Final page. RJA