November 12, 2009, Introduced by Senators KUIPERS, VAN WOERKOM, CHERRY, WHITMER, McMANUS, CROPSEY, BISHOP, SANBORN, GILBERT, JELINEK, NOFS, GEORGE, STAMAS, ALLEN, BASHAM, PAPPAGEORGE, JANSEN, HARDIMAN, KAHN, BIRKHOLZ, BROWN, RICHARDVILLE, CLARKE, SWITALSKI, CLARK-COLEMAN, GLEASON, ANDERSON, HUNTER, BARCIA, OLSHOVE, SCOTT, BRATER, PATTERSON, PRUSI and THOMAS and referred to the Committee on Finance.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 261 (MCL 206.261), as amended by 2008 PA 207.
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, state veterans home created under
1885 PA 152, MCL 36.1 to 36.12, 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, state veterans homes created under 1885 PA 152, MCL
36.1 to 36.12, 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, state veterans homes
created under 1885 PA 152, MCL 36.1 to 36.12, 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, a state veterans home created under 1885 PA 152, MCL 36.1 to
36.12, or other entity located in this state as described in
subsection (1).
(4) 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) 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 (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 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) 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) 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 (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 (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) 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 , or section 425 of the Michigan business tax act,
2007 PA 36, MCL 208.1425, for the immediately preceding tax year.
Enacting section 1. This amendatory act takes effect January
1, 2010.