Bill Text: MI SB0335 | 2009-2010 | 95th Legislature | Introduced

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Bill Title: Income tax; property tax credit; cap on homestead credit; increase for certain taxpayers. Amends secs. 520 & 522 of 1967 PA 281 (MCL 206.520 & 206.522).

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Introduced - Dead) 2009-03-05 - Referred To Committee On Finance [SB0335 Detail]

Download: Michigan-2009-SB0335-Introduced.html

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SENATE BILL No. 335

 

 

March 5, 2009, Introduced by Senators HUNTER, THOMAS, BARCIA, JACOBS, ANDERSON, OLSHOVE and SCOTT and referred to the Committee on Finance.

 

 

 

      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

 

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

 

 2  year.

 

 3        (2) A person who rents or leases a homestead may claim a

 

 4  similar credit computed under this section and section 522 based

 

 5  upon 17% of the gross rent paid for tax years before the 1994 tax

 

 6  year, or 20% of the gross rent paid for tax years after the 1993

 

 7  tax year. A person who rents or leases a homestead subject to a

 

 8  service charge in lieu of ad valorem taxes as provided by section

 

 9  15a of the state housing development authority act of 1966, Act

 

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

 

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

 

12  a similar credit computed under this section and section 522

 

13  based upon 10% of the gross rent paid.

 

14        (3) If the credit claimed under this section and section 522

 

15  exceeds the tax liability for the tax year or if there is no tax

 

16  liability for the tax year, the amount of the claim not used as

 

17  an offset against the tax liability shall, after examination and

 

18  review, be approved for payment, without interest, to the

 

19  claimant. In determining the amount of the payment under this

 

20  subsection, withholdings and other credits shall be used first to

 

21  offset any tax liabilities.

 

22        (4) If the homestead is an integral part of a multipurpose

 

23  or multidwelling building that is federally aided housing or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 4  rent has been so reduced.

 

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

 

 6  property that is rented or leased as a homestead.

 

 7        (6) A person who discriminates in the charging or collection

 

 8  of rent on a homestead by increasing the rent charged or

 

 9  collected because the renter or lessee claims and receives a

 

10  credit or payment under this chapter is guilty of a misdemeanor.

 

11  Discrimination against a renter who claims and receives the

 

12  credit under this section and section 522 by a reduction of the

 

13  rent on the homestead of a person who does not claim and receive

 

14  the credit is a misdemeanor. If discriminatory rents are charged

 

15  or collected, each charge or collection of the higher or lower

 

16  payment is a separate offense. Each acceptance of a payment of

 

17  rent is a separate offense.

 

18        (7) A person who received aid to families with dependent

 

19  children, state family assistance, or state disability assistance

 

20  through department of human services programs pursuant to the

 

21  social welfare act, Act No. 280 of the Public Acts of 1939, as

 

22  amended, being sections 400.1 to 400.119b of the Michigan

 

23  Compiled Laws 1939 PA 280, MCL 400.1 to 400.119b, in the tax year

 

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

 

25  is authorized and computed under this section and section 522

 

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

 

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

 

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

 

 2  and state disability assistance through department of human

 

 3  services programs pursuant to the social welfare act, 1939 PA

 

 4  280, MCL 400.1 to 400.119b, for the tax year divided by the

 

 5  claimant's household income. The reduction of credit shall not

 

 6  exceed the sum of the aid to families with dependent children,

 

 7  state family assistance, and state disability assistance through

 

 8  department of human services programs pursuant to the social

 

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

 

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

 

11  dependent children any assistance through department of human

 

12  services programs does not include child support payments that

 

13  offset or reduce payments made to the claimant.

 

14        (8) A credit under subsection (1) or (2) shall be reduced by

 

15  10% for each claimant whose household income exceeds $73,650.00

 

16  and by an additional 10% for each increment of $1,000.00 of

 

17  household income in excess of $73,650.00.

 

18        (9) If the credit authorized and calculated under this

 

19  section and section 522 and adjusted under subsection (7) or (8)

 

20  does not provide to a senior citizen who rents or leases a

 

21  homestead that amount attributable to rent that constitutes more

 

22  than 40% of the household income of the senior citizen, the

 

23  senior citizen may claim a credit based upon the amount of

 

24  household income attributable to rent as provided by this

 

25  section.

 

26        (10) A senior citizen whose gross rent paid for the tax year

 

27  is more than the percentage of household income specified in

 

 1  subsection (9) for the respective tax year may claim a credit for

 

 2  the amount of rent paid that constitutes more than the percentage

 

 3  of the household income of the senior citizen specified in

 

 4  subsection (9) and that was not provided to the senior citizen by

 

 5  the credit computed pursuant to this section and section 522 and

 

 6  adjusted pursuant to subsection (7) or (8).

 

 7        (11) The department may promulgate rules to implement

 

 8  subsections (9) to (16) (14) and may prescribe a table to allow a

 

 9  claimant to determine the credit provided under this section and

 

10  section 522 in the instruction booklet that accompanies the

 

11  respective income tax or property tax credit forms used by

 

12  claimants.

 

13        (12) A senior citizen may claim the credit under subsections

 

14  (9) to (16) (14) on the same form as the property tax credit

 

15  permitted by subsection (2). The department shall adjust the

 

16  forms accordingly.

 

17        (13) A senior citizen who moves to a different rented or

 

18  leased homestead shall determine, for 2 tax years after the move,

 

19  both his or her qualification to claim a credit under subsections

 

20  (9) to (16) (14) and the amount of a credit under subsections (9)

 

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

 

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

 

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

 

24  payments.

 

25        (14) For a return of less than 12 months, the claim for a

 

26  credit under subsections (9) to (16) (13) shall be reduced

 

27  proportionately.

 

 1        (15) The Michigan state housing development authority shall

 

 2  report on the effect of the credit provided by subsections (9) to

 

 3  (16) (14) on the price of rented and leased homesteads. If the

 

 4  authority determines that the price of rented and leased

 

 5  homesteads has increased as a result of the credit provided by

 

 6  subsections (9) to (16) (14), the authority shall make

 

 7  recommendations to the legislature to remedy this situation. The

 

 8  report shall be made to the chairpersons of the house and senate

 

 9  committees that have primary responsibility for taxation

 

10  legislation 2 years after the credit provided by subsections (9)

 

11  to (16) (14) is in effect.

 

12        (16) The Except as otherwise provided under this subsection,

 

13  the total credit allowed by this section and section 522 shall

 

14  not exceed $1,200.00 per year. For tax years that begin after

 

15  December 31, 2008, if a claimant's household income is $50,000.00

 

16  or less, the total credit allowed by this section and section 522

 

17  shall not exceed $1,400.00 per year.

 

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

 

19  chapter shall be determined as follows:

 

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

 

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

 

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

 

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

 

24  household income for that tax year.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 8  follows:

 

 

9	Household income                   Percentage
10	Not over $3,000.00                                .0%
11	Over $3,000.00 but not over $4,000.00            1.0%
12	Over $4,000.00 but not over $5,000.00            2.0%
13	Over $5,000.00 but not over $6,000.00            3.0%
14	Over $6,000.00                                   3.5%

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22  125.1415a, for the tax year, exceeds the percentage of the

 

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

 

24  schedule in subdivision (b).

 

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

 

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

 

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

 

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

 

 3  100% determined as follows:

 

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

 

 5  506 by the taxable value of the homestead or, if the eligible

 

 6  serviceperson, eligible veteran, or eligible widow or widower

 

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

 

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

 

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

 

10  property by the property tax rate on the property.

 

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

 

12  percentage computed in subparagraph (i).

 

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

 

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

 

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

 

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

 

17  less, 100% of the property taxes.

 

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

 

19  $3,500.00, the percentage that $3,500.00 bears to the taxable

 

20  value of the homestead.

 

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

 

22  than 1 classification shall elect the classification under which

 

23  the claim is made.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 7  1893 PA 206, may compute the credit against the state income tax

 

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

 

 9  for the tax year determined as follows:

 

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

 

11  less, 100% of the property taxes.

 

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

 

13  $2,500.00, the percentage that $2,500.00 bears to the taxable

 

14  value of the homestead.

 

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

 

16  reduced proportionately.

 

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

 

18  to determine the amount of the claim.

 

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

 

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

 

21  amount determined under section 520.

 

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

 

23  of the natural resources and environmental protection act, 1994

 

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

 

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

 

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

 

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

 

 1  of the natural resources and environmental protection act, 1994

 

 2  PA 451, MCL 324.36101 to 324.36117.