January 28, 2003, Introduced by Rep. Woronchak 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),
section 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
2 definitions in this chapter, a claimant may claim against the tax
3 due under this act for the tax year a credit for the property
4 taxes on the taxpayer's homestead deductible for federal income
5 tax purposes pursuant to section 164 of the internal revenue
6 code, or that would have been deductible if the claimant had not
7 elected the zero bracket amount or if the claimant had been
8 subject to the federal income tax. The property taxes used for
9 the credit computation shall not be greater than the amount
1 levied for 1 tax year.
2 (2) A person who rents or leases a homestead may claim a
3 similar credit computed under this section and section 522 based
4 upon 17% of the gross rent paid for tax years before the 1994 tax
5 year, or 20% of the gross rent paid for tax years after the 1993
6 tax year. A person who rents or leases a homestead subject to a
7 service charge in lieu of ad valorem taxes as provided by
8 section 15a of the state housing development authority act of
9 1966, Act No. 346 of
the Public Acts of 1966, being
10 section 125.1415a of
the Michigan Compiled Laws 1966
PA 346, MCL
11 125.1415a, may claim a similar credit computed under this section
12 and section 522 based upon 10% of the gross rent paid.
13 (3) If the credit claimed under this section and section 522
14 exceeds the tax liability for the tax year or if there is no tax
15 liability for the tax year, the amount of the claim not used as
16 an offset against the tax liability shall, after examination and
17 review, be approved for payment, without interest, to the
18 claimant. In determining the amount of the payment under this
19 subsection, withholdings and other credits shall be used first to
20 offset any tax liabilities.
21 (4) If the homestead is an integral part of a multipurpose or
22 multidwelling building that is federally aided housing or state
23 aided housing, a claimant who is a senior citizen entitled to a
24 payment under subsection (2) may assign the right to that payment
25 to a mortgagor if the mortgagor reduces the rent charged and
26 collected on the claimant's homestead in an amount equal to the
27 tax credit payment provided in this chapter. The assignment of
1 the claim is valid only if the Michigan state housing development
2 authority, by affidavit, verifies that the claimant's rent has
3 been so reduced.
4 (5) Only the renter or lessee shall claim a credit on
5 property that is rented or leased as a homestead.
6 (6) A person who discriminates in the charging or collection
7 of rent on a homestead by increasing the rent charged or
8 collected because the renter or lessee claims and receives a
9 credit or payment under this chapter is guilty of a misdemeanor.
10 Discrimination against a renter who claims and receives the
11 credit under this section and section 522 by a reduction of the
12 rent on the homestead of a person who does not claim and receive
13 the credit is a misdemeanor. If discriminatory rents are charged
14 or collected, each charge or collection of the higher or lower
15 payment is a separate offense. Each acceptance of a payment of
16 rent is a separate offense.
17 (7) A person who
received aid to families with dependent
18 children, state family
assistance, or state disability
19 assistance through family independence programs pursuant to the
20 social welfare act, Act
No. 280 of the Public Acts of 1939, as
21 amended, being
sections 400.1 to 400.119b of the Michigan
22 Compiled Laws 1939 PA 280, MCL 400.1 to 400.119b, in the tax
23 year for which the person is filing a return shall have a credit
24 that is authorized and computed under this section and
25 section 522 reduced by an amount equal to the product of the
26 claimant's credit multiplied by the quotient of the sum of the
27 claimant's aid to
families with dependent children, state family
1 assistance, and state
disability assistance through
family
2 independence programs pursuant to the social welfare act, 1939 PA
3 280, MCL 400.1 to 400.119b, for the tax year divided by the
4 claimant's household income. The reduction of credit shall not
5 exceed the sum of the
aid to families with dependent children,
6 state family
assistance, and state disability assistance
through
7 family independence programs pursuant to the social welfare act,
8 1939 PA 280, MCL 400.1 to 400.119b, for the tax year. For the
9 purposes of this
subsection, aid to families with dependent
10 children assistance through family independence programs
does
11 not include child support payments that offset or reduce payments
12 made to the claimant.
13 (8) A credit under subsection (1) or (2) shall be reduced by
14 10% for each claimant whose household income exceeds $73,650.00
15 and by an additional 10% for each increment of $1,000.00 of
16 household income in excess of $73,650.00.
17 (9) If the credit authorized and calculated under this
18 section and section 522 and adjusted under subsection (7) or (8)
19 does not provide to a senior citizen who rents or leases a
20 homestead that amount attributable to rent that constitutes more
21 than 40% of the household income of the senior citizen, the
22 senior citizen may claim a credit based upon the amount of
23 household income attributable to rent as provided by this
24 section.
25 (10) A senior citizen whose gross rent paid for the tax year
26 is more than the percentage of household income specified in
27 subsection (9) for the respective tax year may claim a credit for
1 the amount of rent paid that constitutes more than the percentage
2 of the household income of the senior citizen specified in
3 subsection (9) and that was not provided to the senior citizen by
4 the credit computed pursuant to this section and section 522 and
5 adjusted pursuant to subsection (7) or (8).
6 (11) The department may promulgate rules to implement
7 subsections (9) to (16)
(13) and may prescribe a table to allow
8 a claimant to determine the credit provided under this section
9 and section 522 in the instruction booklet that accompanies the
10 respective income tax or property tax credit forms used by
11 claimants.
12 (12) A senior citizen may claim the credit under subsections
13 (9) to (16) (13)
on the same form as the property tax credit
14 permitted by subsection (2). The department shall adjust the
15 forms accordingly.
16 (13) A senior citizen who moves to a different rented or
17 leased homestead shall determine, for 2 tax years after the move,
18 both his or her qualification to claim a credit under subsections
19 (9) to (16) (13)
and the amount of a credit under subsections
20 (9) to (16) (13)
on the basis of the annualized final monthly
21 rental payment at his or her previous homestead, if this
22 annualized rental is less than the senior citizen's actual annual
23 rental payments.
24 (14) For a return of less than 12 months, the claim for a
25 credit under subsections
(9) to (16) (13) shall be reduced
26 proportionately.
27 (15) The Michigan state housing development authority shall
1 report on the effect of the credit provided by subsections (9) to
2 (16) (14) on the price of rented and leased
homesteads. If the
3 authority determines that the price of rented and leased
4 homesteads has increased as a result of the credit provided by
5 subsections (9) to (16)
(14), the authority shall make
6 recommendations to the legislature to remedy this situation. The
7 report shall be made to the chairpersons of the house and senate
8 committees that have primary responsibility for taxation
9 legislation 2 years after the credit provided by subsections (9)
10 to (16) (14)
is in effect.
11 (16) The total credit allowed by this section and section 522
12 shall not exceed $1,200.00
per year the amount under section
13 522.
14 Sec. 522. (1) The amount of a claim made pursuant to this
15 chapter shall be determined as follows:
16 (a) A claimant is entitled to a credit against the state
17 income tax liability equal to 60% of the amount by which the
18 property taxes on the homestead, or the credit for rental of the
19 homestead for the tax year, exceeds 3.5% of the claimant's
20 household income for that tax year.
21 (b) A claimant who is a senior citizen or a paraplegic,
22 hemiplegic, or quadriplegic and for tax years that begin after
23 December 31, 1999, a claimant who is totally and permanently
24 disabled or deaf is entitled to a credit against the state income
25 tax liability for the amount by which the property taxes on the
26 homestead, the credit for rental of the homestead, or a service
27 charge in lieu of ad valorem taxes as provided by section 15a of
1 the state housing development authority act of 1966, 1966 PA 346,
2 MCL 125.1415a, for the tax year exceeds the percentage of the
3 claimant's household income for that tax year computed as
4 follows:
5 Household income Percentage
6 Not over $3,000.00 .0%
7 Over $3,000.00 but not over $4,000.00 1.0%
8 Over $4,000.00 but not over $5,000.00 2.0%
9 Over $5,000.00 but not over $6,000.00 3.0%
10 Over $6,000.00 3.5%
11 (c) For a tax year that begins before January 1, 2000, a
12 claimant who is totally and permanently disabled is entitled to a
13 credit against the state income tax liability equal to 60% of the
14 amount by which the property taxes on the homestead, or the
15 credit for rental of the homestead or for a service charge in
16 lieu of ad valorem taxes as provided in section 15a of the state
17 housing development authority act of 1966, 1966 PA 346, MCL
18 125.1415a, for the tax year, exceeds the percentage of the
19 claimant's household income for that tax year based on the
20 schedule in subdivision (b).
21 (d) A claimant who is an eligible serviceperson, eligible
22 veteran, or eligible widow or widower is entitled to a credit
23 against the state income tax liability for a percentage of the
24 property taxes on the homestead for the tax year not in excess of
25 100% determined as follows:
1 (i) Divide the taxable value allowance specified in section
2 506 by the taxable value of the homestead or, if the eligible
3 serviceperson, eligible veteran, or eligible widow or widower
4 leases or rents a homestead, divide 17% of the total annual rent
5 paid for tax years before the 1994 tax year, or 20% of the total
6 annual rent paid for tax years after the 1993 tax year on the
7 property by the property tax rate on the property.
8 (ii) Multiply the property taxes on the homestead by the
9 percentage computed in subparagraph (i).
10 (e) A claimant who is blind is entitled to a credit against
11 the state income tax liability for a percentage of the property
12 taxes on the homestead for the tax year determined as follows:
13 (i) If the taxable value of the homestead is $3,500.00 or
14 less, 100% of the property taxes.
15 (ii) If the taxable value of the homestead is more than
16 $3,500.00, the percentage that $3,500.00 bears to the taxable
17 value of the homestead.
18 (2) A person who is qualified to make a claim under more than
19 1 classification shall elect the classification under which the
20 claim is made.
21 (3) Only 1 claimant per household for a tax year is entitled
22 to the credit, unless both the husband and wife filing a joint
23 return are blind, then each shall be considered a claimant.
24 (4) As used in this section, "totally and permanently
25 disabled" means disability as defined in section 216 of title II
26 of the social security act, 42 U.S.C. 416.
27 (5) A senior citizen who has a total household income for the
1 tax year of $6,000.00 or less and who for 1973 received a senior
2 citizen homestead exemption under former section 7c of the
3 general property tax act,
Act No. 206 of the Public Acts of
4 1893 1893 PA 206, may compute the credit against
the state
5 income tax liability for a percentage of the property taxes on
6 the homestead for the tax year determined as follows:
7 (a) If the taxable value of the homestead is $2,500.00 or
8 less, 100% of the property taxes.
9 (b) If the taxable value of the homestead is more than
10 $2,500.00, the percentage that $2,500.00 bears to the taxable
11 value of the homestead.
12 (6) For a return of less than 12 months, the claim shall be
13 reduced proportionately.
14 (7) The commissioner may prescribe tables that may be used to
15 determine the amount of the claim.
16 (8) The Except
as otherwise provided in this subsection,
17 the total credit allowed
in this section for each year after
18 December 31, 1975 shall not exceed $1,200.00 per year. For tax
19 years that begin after December 31, 2002, for claimants who are
20 70 years of age or younger on the last day of the tax year, the
21 total credit allowed in this section shall not exceed $1,200.00
22 or $1,800.00 for claimants who are older than 70 years of age on
23 the last day of the tax year.
24 (9) The total credit allowable under this act and part 361 of
25 the natural resources and environmental protection act, 1994 PA
26 451, MCL 324.36101 to 324.36117, shall not exceed the total
27 property tax due and payable by the claimant in that year. The
1 amount by which the credit exceeds the property tax due and
2 payable shall be deducted from the credit claimed under part 361
3 of the natural resources and environmental protection act, 1994
4 PA 451, MCL 324.36101 to 324.36117.