Bill Text: MI HB4581 | 2009-2010 | 95th Legislature | Introduced

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Bill Title: Income tax; property tax credit; maximum amount of property tax credit; index for inflation. Amends secs. 520 & 522 of 1967 PA 281 (MCL 206.520 & 206.522).

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2009-03-17 - Printed Bill Filed 03/13/2009 [HB4581 Detail]

Download: Michigan-2009-HB4581-Introduced.html

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HOUSE BILL No. 4581

 

 

March 12, 2009, Introduced by Reps. Barnett and Opsommer 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 definitions

 

 2  in this chapter, a claimant may claim against the tax due under

 

 3  this act for the tax year a credit for the property taxes on the

 

 4  taxpayer's homestead deductible for federal income tax purposes

 

 5  pursuant to section 164 of the internal revenue code, or that

 

 6  would have been deductible if the claimant had not elected the

 

 7  zero bracket amount or if the claimant had been subject to the

 

 8  federal income tax. The property taxes used for the credit

 

 9  computation shall not be greater than the amount levied for 1 tax

 

 1  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 section

 

 8  15a of the state housing development authority act of 1966, Act

 

 9  No. 346 of the Public Acts of 1966, being section 125.1415a of

 

10  the Michigan Compiled Laws 1966 PA 346, MCL 125.1415a, may claim

 

11  a similar credit computed under this section and section 522

 

12  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

 

22  or multidwelling building that is federally aided housing or

 

23  state aided housing, a claimant who is a senior citizen entitled

 

24  to a payment under subsection (2) may assign the right to that

 

25  payment to a mortgagor if the mortgagor reduces the rent charged

 

26  and collected on the claimant's homestead in an amount equal to

 

27  the tax credit payment provided in this chapter. The assignment

 

 1  of the claim is valid only if the Michigan state housing

 

 2  development authority, by affidavit, verifies that the claimant's

 

 3  rent has 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 assistance

 

19  through department of human services 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 year

 

23  for which the person is filing a return shall have a credit that

 

24  is authorized and computed under this section and section 522

 

25  reduced by an amount equal to the product of the claimant's

 

26  credit multiplied by the quotient of the sum of the claimant's

 

27  aid to families with dependent children, state family assistance,

 

 1  and state disability assistance through department of human

 

 2  services 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  department of human services programs pursuant to the social

 

 8  welfare act, 1939 PA 280, MCL 400.1 to 400.119b, for the tax

 

 9  year. For the purposes of this subsection, aid to families with

 

10  dependent children any assistance through department of human

 

11  services programs does not include child support payments that

 

12  offset or reduce payments 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) (14) and may prescribe a table to allow a

 

 8  claimant to determine the credit provided under this section and

 

 9  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) (14) 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) (14) and the amount of a credit under subsections (9)

 

20  to (16) (14) on the basis of the annualized final monthly rental

 

21  payment at his or her previous homestead, if this annualized

 

22  rental is less than the senior citizen's actual annual rental

 

23  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

 

12  522 shall not exceed $1,200.00 per year for tax years that begin

 

13  before January 1, 2009. For the 2009 tax year, the total credit

 

14  allowed by this section and section 522 shall not exceed

 

15  $1,300.00. For the tax years that begin after December 31, 2009,

 

16  the maximum amount allowed under this subsection shall be

 

17  adjusted by the percentage increase in the United States consumer

 

18  price index for the immediately preceding calendar year. The

 

19  department shall annualize the amounts provided in this

 

20  subsection as necessary. As used in this subsection, "United

 

21  States consumer price index" means the United States consumer

 

22  price index for all urban consumers as defined and reported by

 

23  the United States department of labor, bureau of labor

 

24  statistics.

 

25        Sec. 522. (1) The amount of a claim made pursuant to this

 

26  chapter shall be determined as follows:

 

27        (a) A claimant is entitled to a credit against the state

 

 1  income tax liability equal to 60% of the amount by which the

 

 2  property taxes on the homestead, or the credit for rental of the

 

 3  homestead for the tax year, exceeds 3.5% of the claimant's

 

 4  household income for that tax year.

 

 5        (b) A claimant who is a senior citizen or a paraplegic,

 

 6  hemiplegic, or quadriplegic and for tax years that begin after

 

 7  December 31, 1999, a claimant who is totally and permanently

 

 8  disabled or deaf is entitled to a credit against the state income

 

 9  tax liability for the amount by which the property taxes on the

 

10  homestead, the credit for rental of the homestead, or a service

 

11  charge in lieu of ad valorem taxes as provided by section 15a of

 

12  the state housing development authority act of 1966, 1966 PA 346,

 

13  MCL 125.1415a, for the tax year exceeds the percentage of the

 

14  claimant's household income for that tax year computed as

 

15  follows:

 

 

16                  Household income                   Percentage

17      Not over $3,000.00                                .0%

18      Over $3,000.00 but not over $4,000.00            1.0%

19      Over $4,000.00 but not over $5,000.00            2.0%

20      Over $5,000.00 but not over $6,000.00            3.0%

21      Over $6,000.00                                   3.5%

 

 

22        (c) For a tax year that begins before January 1, 2000, a

 

23  claimant who is totally and permanently disabled is entitled to a

 

24  credit against the state income tax liability equal to 60% of the

 

25  amount by which the property taxes on the homestead, or the

 

26  credit for rental of the homestead or for a service charge in

 

 1  lieu of ad valorem taxes as provided in section 15a of the state

 

 2  housing development authority act of 1966, 1966 PA 346, MCL

 

 3  125.1415a, for the tax year, exceeds the percentage of the

 

 4  claimant's household income for that tax year based on the

 

 5  schedule in subdivision (b).

 

 6        (d) A claimant who is an eligible serviceperson, eligible

 

 7  veteran, or eligible widow or widower is entitled to a credit

 

 8  against the state income tax liability for a percentage of the

 

 9  property taxes on the homestead for the tax year not in excess of

 

10  100% determined as follows:

 

11        (i) Divide the taxable value allowance specified in section

 

12  506 by the taxable value of the homestead or, if the eligible

 

13  serviceperson, eligible veteran, or eligible widow or widower

 

14  leases or rents a homestead, divide 17% of the total annual rent

 

15  paid for tax years before the 1994 tax year, or 20% of the total

 

16  annual rent paid for tax years after the 1993 tax year on the

 

17  property by the property tax rate on the property.

 

18        (ii) Multiply the property taxes on the homestead by the

 

19  percentage computed in subparagraph (i).

 

20        (e) A claimant who is blind is entitled to a credit against

 

21  the state income tax liability for a percentage of the property

 

22  taxes on the homestead for the tax year determined as follows:

 

23        (i) If the taxable value of the homestead is $3,500.00 or

 

24  less, 100% of the property taxes.

 

25        (ii) If the taxable value of the homestead is more than

 

26  $3,500.00, the percentage that $3,500.00 bears to the taxable

 

27  value of the homestead.

 

 1        (2) A person who is qualified to make a claim under more

 

 2  than 1 classification shall elect the classification under which

 

 3  the claim is made.

 

 4        (3) Only 1 claimant per household for a tax year is entitled

 

 5  to the credit, unless both the husband and wife filing a joint

 

 6  return are blind, then each shall be considered a claimant.

 

 7        (4) As used in this section, "totally and permanently

 

 8  disabled" means disability as defined in section 216 of title II

 

 9  of the social security act, 42 U.S.C. USC 416.

 

10        (5) A senior citizen who has a total household income for

 

11  the tax year of $6,000.00 or less and who for 1973 received a

 

12  senior citizen homestead exemption under former section 7c of the

 

13  general property tax act, Act No. 206 of the Public Acts of 1893

 

14  1893 PA 206, may compute the credit against the state income tax

 

15  liability for a percentage of the property taxes on the homestead

 

16  for the tax year determined as follows:

 

17        (a) If the taxable value of the homestead is $2,500.00 or

 

18  less, 100% of the property taxes.

 

19        (b) If the taxable value of the homestead is more than

 

20  $2,500.00, the percentage that $2,500.00 bears to the taxable

 

21  value of the homestead.

 

22        (6) For a return of less than 12 months, the claim shall be

 

23  reduced proportionately.

 

24        (7) The commissioner may prescribe tables that may be used

 

25  to determine the amount of the claim.

 

26        (8) The total credit allowed in this section for each year

 

27  after December 31, 1975 shall not exceed $1,200.00 per year the

 

 1  amount determined under section 520.

 

 2        (9) The total credit allowable under this act and part 361

 

 3  of the natural resources and environmental protection act, 1994

 

 4  PA 451, MCL 324.36101 to 324.36117, shall not exceed the total

 

 5  property tax due and payable by the claimant in that year. The

 

 6  amount by which the credit exceeds the property tax due and

 

 7  payable shall be deducted from the credit claimed under part 361

 

 8  of the natural resources and environmental protection act, 1994

 

 9  PA 451, MCL 324.36101 to 324.36117.