Bill Text: MI SB0003 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Income tax; credit; charitable contributions to an educational foundation; provide for. Amends sec. 261 of 1967 PA 281 (MCL 206.261).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-01-19 - Referred To Committee On Finance [SB0003 Detail]
Download: Michigan-2011-SB0003-Introduced.html
SENATE BILL No. 3
January 19, 2011, Introduced by Senator PAPPAGEORGE 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, 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. In addition to the other contributions
for which a credit may be claimed under this section, for the 2011
tax year and each tax year after 2011 and subject to the applicable
limitations in this section, a taxpayer may credit against the tax
imposed by this act 50% of the total amount the taxpayer
contributes during the tax year to an endowment fund of an
education foundation or to a specific project organized by an
education foundation.
(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 taxpayer other than a resident
estate or trust, for the 2011 tax year and each tax year after
2011, a taxpayer may claim an additional credit under this section
not to exceed $50.00, or $100.00 for a husband and wife filing a
joint return, for contributions to an endowment fund of an
education foundation or to a specific project organized by an
education foundation. 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 the 2011 tax year and each tax year after 2011, a resident
estate or trust may claim an additional credit under this section
not to exceed 5% of the taxpayer's tax liability for the tax year
before claiming any credits allowed by this act or $2,500.00,
whichever is less, for total contributions made to an endowment
fund of an education foundation or to a specific project organized
by an education foundation. 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) 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
(a) "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:
(i) (a)
Qualifies for exemption from
federal income taxation
under section 501(c)(3) of the internal revenue code.
(ii) (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.
(iii) (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.
(iv) (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.
(v) (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.
(vi) (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).
(vii) (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.
(viii) (h)
Has an independent governing body
representing the
general public's interest and that is not appointed by a single
outside entity.
(ix) (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.
(x) (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.
(xi) (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.
(b) "Education foundation" means an organization that applies
for certification on or before April 1 of the tax year for which
the taxpayer is claiming the credit, that annually submits
documentation to the department that demonstrates continued
compliance with this subdivision, and that the department certifies
for that tax year as meeting all of the following requirements:
(i) Qualifies for exemption from federal income taxation under
section 501(c)(3) of the internal revenue code.
(ii) 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.
(iii) All funds, gifts, and bequests are exclusively dedicated
to providing assistance to students and teachers in the schools of
this state including school districts, public school academies, and
schools described under 1921 PA 302, MCL 388.551 to 388.558, for
nonessential supplies and assistance.
(iv) Is publicly supported as defined by the regulations of the
United States department of treasury, 26 CFR 1.170A-9(e)(10).
(v) 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).
(vi) Is incorporated or established as a trust at least 6
months before the beginning of the tax year for which the credit is
claimed.
(vii) Has an independent governing body representing the
general public's interest and that is not appointed by a single
outside entity.
(viii) Is subject to a program review each year and an
independent financial audit every 3 years and provides copies of
the reviews and audits to the department not more than 3 months
after the review or audit is completed.
(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) (5)(a)(vii). 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) (5)(a)(vii)
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.
