SB-0150, As Passed Senate, June 27, 2008

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 150

     A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

by amending section 261 (MCL 206.261), as amended by 2007 PA 94.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 261. (1) For the 1989 tax year and each tax year after

1989 and subject to the applicable limitations in this section, a

taxpayer may credit against the tax imposed by this act 50% of the

amount the taxpayer contributes during the tax year to an endowment

fund of a community foundation or for the 1992 tax year and each

tax year after 1992 and subject to the applicable limitations in

this section, a taxpayer may credit against the tax imposed by this

act 50% of the sum of the cash amount and, for the 2008 tax year

and each tax year after 2008, if the food items are contributed in

conjunction with a program in which a vendor makes a matching

contribution of similar items, the value of those food items the

taxpayer contributes during the tax year to 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

accommodation, 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.

     (2) For a taxpayer other than a resident estate or trust, the

credit allowed by this section for a contribution to a community

foundation shall not exceed $100.00, or $200.00 for a husband and

wife filing a joint return for tax years before the 2000 tax year

and $100.00 or $200.00 for a husband and wife filing a joint return

for tax years after the 1999 tax year. For the 1992 tax year and

each tax year after 1992, a taxpayer may claim an additional credit

under this section not to exceed $100.00, or $200.00 for a husband

and wife filing a joint return, for total cash contributions made

and, for the 2008 tax year and each tax year after 2008, including

the value of food items contributed as described in subsection (1)

in the tax year to shelters for homeless persons, food kitchens,

food banks, and, except for community foundations, other entities

allowed under subsection (1). For a resident estate or trust, the

credit allowed by this section for a contribution to a community

foundation shall not exceed 10% of the taxpayer's tax liability for

the tax year before claiming any credits allowed by this act or

$5,000.00, whichever is less. For the 1992 tax year and each tax

year after 1992, a resident estate or trust may claim an additional

credit under this section not to exceed 10% of the taxpayer's tax

liability for the tax year before claiming any credits allowed by

this act or $5,000.00, whichever is less, for total cash

contributions made and, for the 2008 tax year and each tax year

after 2008, including the value of food items contributed as

described in subsection (1) in the tax year to shelters for

homeless persons, food kitchens, food banks, and, except for

community foundations, other entities allowed under subsection (1).

For a resident estate or trust, the amount used to calculate the

credits under this section shall not have been deducted in arriving

at federal taxable income.

     (3) For the 2008 tax year and each tax year after 2008 and

subject to the applicable limitations in this section, when

calculating the amount of the credit allowed under this section a

taxpayer may include as a cash contribution an amount equal to the

value of food items contributed as described in subsection (1) in

the tax year to a shelter for homeless persons, food kitchen, food

bank, or other entity located in this state as described in

subsection (1).

(4) (3) The credits allowed under this section are

nonrefundable so that a taxpayer shall not claim under this section

a total credit amount that reduces the taxpayer's tax liability to

less than zero.

(5) (4) As used in this section, "community foundation" means

an organization that applies for certification on or before May 15

of the tax year for which the taxpayer is claiming the credit and

that the department certifies for that tax year as meeting all of

the following requirements:

     (a) Qualifies for exemption from federal income taxation under

section 501(c)(3) of the internal revenue code.

     (b) Supports a broad range of charitable activities within the

specific geographic area of this state that it serves, such as a

municipality or county.

     (c) Maintains an ongoing program to attract new endowment

funds by seeking gifts and bequests from a wide range of potential

donors in the community or area served.

     (d) Is publicly supported as defined by the regulations of the

United States department of treasury, 26 CFR 1.170A-9(e)(10). To

maintain certification, the community foundation shall submit

documentation to the department annually that demonstrates

compliance with this subdivision.

     (e) Is not a supporting organization as an organization is

described in section 509(a)(3) of the internal revenue code and the

regulations of the United States department of treasury, 26 CFR

1.509(a)-4 and 1.509(a)-5.

     (f) Meets the requirements for treatment as a single entity

contained in the regulations of the United States department of

treasury, 26 CFR 1.170A-9(e)(11).

     (g) Except as provided in subsection (6) (7), is incorporated

or established as a trust at least 6 months before the beginning of

the tax year for which the credit under this section is claimed and

that has an endowment value of at least $100,000.00 before the

expiration of 18 months after the community foundation is

incorporated or established.

     (h) Has an independent governing body representing the general

public's interest and that is not appointed by a single outside

entity.

     (i) Provides evidence to the department that the community

foundation has, before the expiration of 6 months after the

community foundation is incorporated or established, and maintains

continually during the tax year for which the credit under this

section is claimed, at least 1 part-time or full-time employee.

     (j) For community foundations that have an endowment value of

$1,000,000.00 or more only, the community foundation is subject to

an annual independent financial audit and provides copies of that

audit to the department not more than 3 months after the completion

of the audit. For community foundations that have an endowment

value of less than $1,000,000.00, the community foundation is

subject to an annual review and an audit every third year.

     (k) In addition to all other criteria listed in this

subsection for a community foundation that is incorporated or

established after the effective date of the amendatory act that

added this subdivision June 22, 2000, operates in a county of this

state that was not served by a community foundation when the

community foundation was incorporated or established or operates as

a geographic component of an existing certified community

foundation.

(6) (5) An entity other than a community foundation may

request that the department determine if a contribution to that

entity qualifies for the credit under this section. The department

shall make a determination and respond to a request no later than

30 days after the department receives the request.

(7) (6) A taxpayer may claim a credit under this section for

contributions to a community foundation made before the expiration

of the 18-month period after a community foundation was

incorporated or established during which the community foundation

must build an endowment value of $100,000.00 as provided in

subsection (4)(g) (5)(g). If the community foundation does not

reach the required $100,000.00 endowment value during that 18-month

period, contributions to the community foundation made after the

date on which the 18-month period expires shall not be used to

calculate a credit under this section. At any time after the

expiration of the 18-month period under subsection (4)(g) (5)(g)

that the community foundation has an endowment value of

$100,000.00, the community foundation may apply to the department

for certification under this section.

(8) (7) On or before July 1 of each year, the department shall

report to the house committee on tax policy and the senate finance

committee the total amount of tax credits claimed under this

section and under section 38c of the former single business tax

act, 1975 PA 228, MCL 208.38c, or section 425 of the Michigan

business tax act, 2007 PA 36, MCL 208.1425, for the immediately

preceding tax year.