HB-6004, As Passed House, June 12, 2018

HB-6004, As Passed Senate, June 12, 2018

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 6004

      A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

by amending section 527a (MCL 206.527a), as amended by 2018 PA 161.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1        Sec. 527a. (1) Subject to subsections (18) and (19), a

 2  claimant may claim a credit for heating fuel costs for the

 3  claimant's homestead in this state. An adult foster care home,

 4  nursing home, home for the aged, or substance abuse center is not a

 5  homestead for purposes of this section. The credit shall be

 6  determined in the following manner:

 7        (a) Subject to subsections (18) and (19), the following table

 8  shall be used for the computation of a credit as computed under

 9  subdivision (c):

1	Exemptions	0 or 1	2	3	4	5	6 or more
2	Credit	$272	$326	$379	$450	$525	$601 + $76 for each
3							exemption over 6

 4        (b) The amounts in the table in subdivision (a) shall be

 5  adjusted each year as necessary by the department so that a

 6  claimant with total household resources of less than 110% of the

 7  federal poverty income standards as defined and determined annually

 8  by the United States Office of Management and Budget is not denied

 9  a credit.

10        (c) A claimant shall receive the greater of the credit amount

11  as determined in subparagraph (i) or (ii):

12        (i) Subtract 3.5% of the claimant's total household resources

13  from the amount specified in subdivision (a) that corresponds with

14  the number of exemptions claimed in the return filed under this

15  part, except that the number of exemptions for purposes of this

16  subdivision shall not exceed the actual number of persons living in

17  the household plus the additional personal exemptions allowed under

18  section 30, and any dependency exemptions for a person or persons

19  living in the household under a custodial arrangement, even if the

20  exemptions may not be claimed for other income tax purposes. For a

21  claimant whose heating costs are included in his or her rent,

22  multiply the result of the preceding calculation by 50%.

23        (ii) Subject to subsection (2), for a claimant whose total

24  household resources do not exceed the maximum specified in the

25  following table, as adjusted, that corresponds with the number of

26  exemptions claimed in the return filed under this part, subtract

27  11% of claimant's total household resources from the total cost

 1  incurred by a claimant for heating fuel from a heating fuel

 2  provider during the 12 consecutive monthly billing periods ending

 3  in October of the tax year, and multiply the resulting amount by

 4  70%:

5	Exemptions	0 or 1	2	3	4	5	For each
6							exemption
7							over 5,
8							add
9							$2,441.00
10							to the
11							maximum
12							total
13							household
14							resources
15	Maximum
16	Total
17	Household
18	Resources	$7,060	$9,501	$11,943	$14,382	$16,824

19        (d) The maximum cost incurred by a claimant for heating fuel

20  during a tax year shall be adjusted by multiplying the maximum cost

21  for the immediately preceding tax year by the percentage by which

22  the average all urban Detroit Consumer Price Index for fuels and

23  other utilities for the 12 months ending August 31 of the tax year

24  for which the credit is claimed exceeds that index's average for

25  the 12 months ending on August 31 of the previous tax year, but not

26  more than 10%. That product shall be added to the maximum cost of

27  the immediately preceding tax year and then rounded to the nearest

 1  whole dollar. That dollar amount is the new maximum cost for the

 2  current tax year. If the claimant received any credits to his or

 3  her heating bill during the tax year, as provided for in subsection

 4  (6), the credits shall be treated as costs incurred by the

 5  claimant.

 6        (e) The maximum total household resources specified in

 7  subdivision (c)(ii) shall be adjusted by multiplying the respective

 8  maximum total household resources for the immediately preceding tax

 9  year by the percentage by which the average all urban Detroit

10  Consumer Price Index for all items for the 12 months ending August

11  31 of the tax year for which the credit is claimed exceeds that

12  index's average for the 12 months ending on August 31 of the

13  immediately preceding tax year, but not more than 10%. That product

14  shall be added to the immediately preceding tax year's respective

15  maximum total household resources and then rounded to the nearest

16  whole dollar. That dollar amount is the new maximum level for total

17  household resources for the then current tax year.

18        (2) An enrolled heating fuel provider shall notify each of its

19  customers, not later than December 15 of each year, of the

20  availability, upon request, of the information necessary for

21  determining the credit under this section. For a claimant for whom,

22  at the time of filing, the department of health and human services

23  is making direct vendor payments to an enrolled heating fuel

24  provider, the enrolled heating fuel provider that accepts the

25  direct payments shall provide the information necessary to

26  determine the credit before February 1 of each year. If an enrolled

27  heating fuel provider refuses or fails to provide to a customer the

 1  information required to determine the credit, or if the claimant is

 2  not a customer of an enrolled heating fuel provider, a claimant may

 3  determine the credit provided in subsection (1)(c)(ii) based on his

 4  or her own records.

 5        (3) A credit claimed on a return that covers a period of less

 6  than 12 months shall be calculated based on subsection (1)(c)(i)

 7  and shall be reduced proportionately.

 8        (4) The allowable amount of the credit under this section

 9  shall be remitted to the claimant, other than a claimant whose

10  heating costs are included in his or her rent, in the form of an

11  energy draft that states the name of the claimant and is issued by

12  the department. For a claimant for whom, at the time of filing, the

13  department of health and human services has identified the enrolled

14  heating fuel provider or is making direct vendor payments to an

15  enrolled heating fuel provider, the department shall send the

16  energy draft directly to the claimant's enrolled heating fuel

17  provider, as identified by the claimant. If the department

18  establishes a program or pilot program for the direct payment of

19  energy drafts to enrolled heating fuel providers, enrolled heating

20  fuel providers may submit to the department, in a manner prescribed

21  by the department, the names of their customers who are claimants.

22  If a claimant whose name has been submitted meets the standards

23  established by the department, the department shall send that

24  claimant's energy draft directly to the claimant's enrolled heating

25  fuel provider. If the enrolled heating fuel provider submits names

26  of claimants who are not its customers and the energy drafts of any

27  of those claimants are sent to the enrolled heating fuel provider,

 1  the enrolled heating fuel provider shall return the energy drafts

 2  or pay the value of the energy drafts to the department plus

 3  interest on the amount of the energy drafts at the rate calculated

 4  under section 23 of 1941 PA 122, MCL 205.23, for deficiencies in

 5  tax payments. Except as provided in subsection (5), after July 31,

 6  a refundable credit for a prior tax year may be paid in the form of

 7  a negotiable warrant. The energy draft shall be negotiable only

 8  through the claimant's enrolled heating fuel provider upon

 9  remittance by the claimant.

10        (5) If a claimant received home heating assistance from the

11  department of health and human services, a governmental agency, or

12  a nonprofit organization 12 months prior to remitting an energy

13  draft to the claimant's enrolled heating fuel provider and the

14  amount of the energy draft is greater than the total of outstanding

15  bills incurred by the claimant with the enrolled heating fuel

16  provider as of the date that the energy draft was remitted to the

17  enrolled heating fuel provider, the enrolled heating fuel provider

18  shall first apply the full amount of the energy draft to the

19  claimant's outstanding bills and then apply any remaining amount to

20  subsequent bills of the claimant until the full amount of the

21  energy draft is used up or the expiration of 9 months after the

22  date on which the energy draft was first applied to cover the

23  claimant's outstanding bills. If there is any remaining energy

24  draft amount at the end of the 9-month period, or if before the end

25  of the 9-month period the claimant is no longer a customer of the

26  enrolled heating fuel provider, the enrolled heating fuel provider

27  shall remit the remaining amount to the claimant in the form of a

 1  fully negotiable check within 14 days after the end of the 9-month

 2  period or 14 days after the termination of services, whichever

 3  occurs sooner. If the claimant did not receive home heating

 4  assistance from the department of health and human services, a

 5  governmental agency, or a nonprofit organization 12 months prior to

 6  remitting an energy draft, the claimant, by checking the

 7  appropriate box to be included on the energy draft or application

 8  for participation with an enrolled heating fuel provider, may

 9  request from the enrolled heating fuel provider a payment equal to

10  the amount of the energy draft less the amount of the outstanding

11  bills. The enrolled heating fuel provider shall issue the payment

12  within 14 days after the claimant's request. For purposes of this

13  subsection, home heating assistance does not include the credit

14  allowed under this section.

15        (6) If a claimant whose energy draft exceeds his or her

16  outstanding bills does not request a payment from an enrolled

17  heating fuel provider under subsection (5), an energy draft

18  remitted to an enrolled heating fuel provider shall be applied upon

19  receipt to the claimant's designated account. The energy draft may

20  be used to cover outstanding bills that the claimant has incurred

21  with the enrolled heating fuel provider and to cover subsequent

22  heating costs until the full amount of the energy draft is used or

23  until 1 year after the date on which the energy draft is first

24  applied to the claimant's designated account. If a credit amount

25  remains from this energy draft after the 1-year period, or if prior

26  to the end of the 1-year period a claimant is no longer a customer

27  of the enrolled heating fuel provider, the heating fuel provider

 1  shall remit the remaining unused portion to the claimant in the

 2  form of a fully negotiable check within 14 days after the end of

 3  the 1-year period or within 14 days after termination of service,

 4  whichever is sooner.

 5        (7) A claimant who is no longer a resident of this state, who

 6  is not a customer of an enrolled heating fuel provider, or whose

 7  heating fuel provider refuses to accept an energy draft shall

 8  return the energy draft to the department and request the issuance

 9  of a negotiable warrant. A claimant may return an energy draft to

10  the department and request issuance of a negotiable warrant if the

11  energy draft is impractical because the claimant has already

12  purchased his or her energy supply for the year and does not have

13  an outstanding obligation to an enrolled heating fuel provider. The

14  department may honor that request if it agrees that the use of the

15  energy draft is impractical. The department shall issue the warrant

16  within 14 days after receiving the energy draft from the claimant.

17        (8) The enrolled heating fuel provider shall bill the

18  department for credit amounts that have been applied to claimant

19  accounts pursuant to subsection (6), and the department shall pay

20  the bills within 14 days of receipt. The billing shall be

21  accompanied by the energy drafts for which reimbursement is

22  claimed.

23        (9) A claimant whose heating fuel is provided by a utility

24  regulated by the Michigan public service commission is protected

25  against the discontinuance of his or her heating fuel service from

26  the date of filing a claim for the credit under this section

27  through the date of issuance of an energy draft and during a period

 1  beginning December 1 of the tax year for which the credit is

 2  claimed and ending March 31 of the following year if the claimant

 3  participates in the winter protection program set forth in R

 4  460.148 of the Michigan Administrative Code or if the utility

 5  accepts the claimant's energy draft. The acceptance of an energy

 6  draft by a utility is considered a request by the claimant for the

 7  winter protection program. The energy draft shall be coded by the

 8  department to denote claimants who are 65 years of age or older. If

 9  the claimant is a claimant whose heating cost is included in his or

10  her rent payments, the amount of the claim not used as an offset

11  against the state income tax, after examination and review, shall

12  be approved for payment, without interest, to the claimant.

13        (10) If an enrolled heating fuel provider does not issue a

14  payment or a negotiable check within 14 days or as otherwise

15  provided in subsection (5) or (6), beginning on the fifteenth day

16  or the fifteenth day after the expiration of the 9-month period

17  under subsection (5), the amount due to the claimant is increased

18  by adding interest computed on the basis of the rate of interest

19  prescribed for delayed refunds of excess tax payments in section

20  30(3) of 1941 PA 122, MCL 205.30. The enrolled heating fuel

21  provider shall pay the interest and shall not bill the interest to

22  or be reimbursed for the interest by the department.

23        (11) Only the renter or lessee shall claim a credit on

24  property that is rented or leased as a homestead. Only 1 credit may

25  be claimed for a household. The credit under this section is in

26  addition to other credits to which the claimant is entitled under

27  this part. A person who is a full-time student at a school,

 1  community college, or college or university and who is claimed as a

 2  dependent by another person is not eligible for the credit provided

 3  by this section. A claimant who shares a homestead with other

 4  eligible claimants shall prorate the credit by the number of

 5  claimants sharing the homestead.

 6        (12) A claimant who is eligible for the credit provided by

 7  this section shall be referred by the department to the appropriate

 8  state agency for determination of eligibility for home

 9  weatherization assistance and shall accept weatherization

10  assistance if eligible and if assistance is available. A heating

11  fuel provider that is required by the Michigan public service

12  commission to participate in the residential conservation services

13  home energy analysis program shall annually contact each claimant

14  to whom it provides heating fuel, and whose usage exceeds 200,000

15  cubic feet of natural gas or 18,000 kilowatt hours of electricity

16  annually, and shall offer to provide a home energy analysis at no

17  cost to the claimant. A heating fuel provider that is not required

18  to participate in the residential conservation services program

19  shall not be required to conduct a home energy analysis for its

20  customers. For all rental properties that are weatherized pursuant

21  to this section, each agency that determines eligibility for

22  weatherization assistance shall require that not less than 25% of

23  the total cost of the weatherization services for that property

24  shall be contributed by the property owner unless the property

25  owner is also eligible for weatherization assistance or is a

26  nonprofit organization, governmental agency, or municipal

27  corporation.

 1        (13) If an enrolled heating fuel provider is regulated by the

 2  Michigan public service commission, the Michigan public service

 3  commission may use an enforcement method authorized by law or rule

 4  to enforce the requirements prescribed by this section on the

 5  enrolled heating fuel provider. If an enrolled heating fuel

 6  provider is not regulated by the Michigan public service

 7  commission, the department of health and human services may use an

 8  enforcement method authorized by law or rule to enforce the

 9  requirements prescribed by this section on the enrolled heating

10  fuel provider.

11        (14) The department shall mail a home heating credit return to

12  every person who received assistance through the department of

13  health and human services pursuant to the social welfare act, 1939

14  PA 280, MCL 400.1 to 400.119b, during the tax year.

15        (15) The department shall complete a study by August 1 of

16  1985, and of each subsequent year, of the actual heating costs of

17  each claimant who received a credit from the department under this

18  section for the immediately preceding tax year.

19        (16) The department may promulgate rules necessary to

20  administer this section pursuant to the administrative procedures

21  act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

22        (17) The department shall provide a simplified procedure for

23  claiming the credit under this section for claimants for whom, at

24  the time of filing, the department of health and human services is

25  making direct vendor payments to an enrolled heating fuel provider.

26        (18) For the 2001 tax year and each tax year after the 2001

27  tax year, the credit under this section is allowed only if there

 1  has been a federal appropriation for the federal fiscal year

 2  beginning in the tax year of federal low income home energy

 3  assistance program block grant funds of any amount. If the amount

 4  of federal low income home energy assistance program block grant

 5  funds available for the home heating credit is less than the full

 6  home heating credit amount, each individual credit claimed under

 7  this section shall be reduced by multiplying the credit amount by a

 8  fraction, the numerator of which is the amount available for the

 9  home heating credit and the denominator of which is the full home

10  heating credit amount. As used in this subsection, "amount

11  available for the home heating credit" means the sum of the federal

12  low income home energy assistance program block grant allotment for

13  this state for the federal fiscal year beginning in the tax year

14  and the amount as certified by the director of the department of

15  health and human services carried forward from the immediately

16  preceding fiscal year for the low income home energy assistance

17  program block grant minus the sum of the amount certified by the

18  director of the department of health and human services for

19  administration of the low income home energy assistance program

20  block grant, the amount certified by the director of the department

21  of health and human services for crisis assistance programs, and

22  the amount certified by the director of the department of health

23  and human services for weatherization. For the 2014-2015 fiscal

24  year and continuing through the 2021-2022 fiscal year, the amount

25  used for weatherization each fiscal year shall be determined as

26  provided under this subsection. If the total federal low income

27  home energy assistance program block grant received for the current

 1  fiscal year is greater than or equal to 90% of the amount of block

 2  grant funds received in the immediately preceding fiscal year, then

 3  the amount of federal low income home energy assistance program

 4  block grant funds used for weatherization for that fiscal year

 5  shall be at least $6,000,000.00 but not greater than 15% of the

 6  total federal low income home energy assistance program block grant

 7  funds received for that fiscal year. If the total federal low

 8  income home energy assistance block grant received for the current

 9  fiscal year is less than 90% of the amount of block grant funds

10  received in the immediately preceding fiscal year, then the amount

11  of federal low income home energy assistance program block grant

12  funds used for weatherization for that fiscal year shall be at

13  least $5,000,000.00 but not greater than 15% of the total federal

14  low income home energy assistance program block grant funds

15  received for that fiscal year. The amounts under this subsection

16  that require certification by the director of the department of

17  health and human services or by the state treasurer and the

18  director of the department of technology, management, and budget

19  shall be certified on or before December 30 of the tax year and

20  each tax year thereafter. As used in this subsection, "full home

21  heating credit amount" means the amount certified by the state

22  treasurer and the director of the department of technology,

23  management, and budget to be the estimated amount of the credits

24  that would have been provided under this section for the tax year

25  if no reduction as provided in this subsection were made for that

26  tax year.

27        (19) For tax years after the 1994 tax year, a claimant who

 1  claims a credit under this section shall not report the credit

 2  amount on the claimant's income tax return filed under this part as

 3  an offset against the tax imposed by this part, but shall claim the

 4  credit on a separate form prescribed by the department. For tax

 5  years after the 1995 tax year, a credit claimed under this section

 6  shall not be allowed unless the claim for the credit is filed with

 7  the department on or before the September 30 immediately following

 8  the tax year for which the credit is claimed. For tax years after

 9  the 2017 tax year, a credit claimed under this section is not

10  allowed unless the claimant provides the department with all of the

11  information, as requested by the department of health and human

12  services, necessary to comply with the requirements of the federal

13  appropriation of the federal low income home energy assistance

14  program block grant. The department shall disclose the information

15  provided under this subsection to the department of health and

16  human services or the United States Department of Health and Human

17  Services or its successor. The confidentiality restrictions

18  provided in section 28(1)(f) of 1941 PA 122, MCL 205.28, do not

19  apply to the disclosure required by this subsection.

20        (20) The state treasurer shall notify all of the following

21  each state fiscal year that the federal low income home energy

22  assistance program block grant allotment for this state for that

23  fiscal year is less than the full home heating credit amount:

24        (a) The chairpersons and vice-chairpersons of the senate and

25  house of representatives appropriations committees.

26        (b) The senate and house of representatives committees on

27  taxation and finance related issues.

 1        (c) The senate and house of representatives committees on

 2  energy and technology related issues.

 3  (20) (21) Notwithstanding section 30a of 1941 PA 122, MCL

 4  205.30a, the credit allowed under this section is exempt from

 5  interception, execution, levy, attachment, garnishment, or other

 6  legal process to collect a debt. No portion of the credit allowed

 7  or any rights existing under this section shall be applied as an

 8  offset to any liability of the claimant under section 30a of 1941

 9  PA 122, MCL 205.30a, or any arrearage or other debt of the

10  claimant.

11  (21) (22) The department shall meet with interested parties

12  including enrolled heating fuel providers and advocacy groups to

13  identify and implement methods of improving the processing of

14  claims for the credit allowed under this section and payments

15  attributable to those credits.

16  (22) (23) By July 1, 2018 and by each July 1 thereafter, the

17  department of health and human services shall submit a report on

18  the operation and effectiveness of the home heating and

19  weatherization assistance programs under this section and any

20  recommendations regarding the home heating and weatherization

21  assistance programs to all of the following:

22        (a) The chairpersons and vice-chairpersons of the senate and

23  house of representatives appropriations committees.

24        (b) The senate and house of representatives committees on

25  taxation and finance related issues.

26        (c) The senate and house of representatives committees on

27  energy and technology related issues.

 1  (23) (24) As used in this section:

 2        (a) "Claimant whose heating costs are included in his or her

 3  rent" means a claimant whose rent includes the cost of heat at the

 4  time the claim for the credit under this section is filed.

 5        (b) "Enrolled heating fuel provider" means a heating fuel

 6  provider that is enrolled with the department of health and human

 7  services as a heating fuel provider.

 8        (c) "Heating fuel provider" means an individual or entity that

 9  provides a claimant with heating fuel or electricity for heating

10  purposes.