September 7, 2005, Introduced by Reps. Vagnozzi, Polidori, Sheltrown, Kehrl, Zelenko, Clack, Brown, Anderson, Bieda, Tobocman, Hopgood, Kathleen Law, Rocca, Miller, Donigan, Wojno, Gillard, Bennett, Plakas and Leland 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:
Sec. 520. (1) Subject to the limitations and the definitions
in this chapter, a claimant may claim against the tax due under
this act for the tax year a credit for the property taxes on the
taxpayer's homestead deductible for federal income tax purposes
pursuant to section 164 of the internal revenue code, or that would
have been deductible if the claimant had not elected the zero
bracket amount or if the claimant had been subject to the federal
income tax. The property taxes used for the credit computation
shall not be greater than the amount levied for 1 tax year.
(2) A person who rents or leases a homestead may claim a
similar credit computed under this section and section 522 based
upon 17% of the gross rent paid for tax years before the 1994 tax
year, or 20% of the gross rent paid for tax years after the 1993
tax year. A person who rents or leases a homestead subject to a
service charge in lieu of ad valorem taxes as provided by section
15a
of the state housing development authority act of 1966, Act
No.
346 of the Public Acts of 1966, being section 125.1415a of the
Michigan
Compiled Laws 1966 PA 346, MCL 125.1415a, may claim a
similar credit computed under this section and section 522 based
upon 10% of the gross rent paid.
(3) If the credit claimed under this section and section 522
exceeds the tax liability for the tax year or if there is no tax
liability for the tax year, the amount of the claim not used as an
offset against the tax liability shall, after examination and
review, be approved for payment, without interest, to the claimant.
In determining the amount of the payment under this subsection,
withholdings and other credits shall be used first to offset any
tax liabilities.
(4) If the homestead is an integral part of a multipurpose or
multidwelling building that is federally aided housing or state
aided housing, a claimant who is a senior citizen entitled to a
payment under subsection (2) may assign the right to that payment
to a mortgagor if the mortgagor reduces the rent charged and
collected on the claimant's homestead in an amount equal to the tax
credit payment provided in this chapter. The assignment of the
claim is valid only if the Michigan state housing development
authority, by affidavit, verifies that the claimant's rent has been
so reduced.
(5) Only the renter or lessee shall claim a credit on property
that is rented or leased as a homestead.
(6) A person who discriminates in the charging or collection
of rent on a homestead by increasing the rent charged or collected
because the renter or lessee claims and receives a credit or
payment under this chapter is guilty of a misdemeanor.
Discrimination against a renter who claims and receives the credit
under this section and section 522 by a reduction of the rent on
the homestead of a person who does not claim and receive the credit
is a misdemeanor. If discriminatory rents are charged or collected,
each charge or collection of the higher or lower payment is a
separate offense. Each acceptance of a payment of rent is a
separate offense.
(7)
A person who received aid to families with dependent
children,
state family assistance, or state disability assistance
through department of human services programs pursuant to the
social
welfare act, Act No. 280 of the Public Acts of 1939, as
amended,
being sections 400.1 to 400.119b of the Michigan Compiled
Laws
1939 PA 280, MCL 400.1 to 400.119b, in the tax year for which
the person is filing a return shall have a credit that is
authorized and computed under this section and section 522 reduced
by an amount equal to the product of the claimant's credit
multiplied
by the quotient of the sum of the claimant's aid to
families
with dependent children, state family assistance, and
state
disability assistance through department of human services
programs pursuant to the social welfare act, 1939 PA 280, MCL 400.1
to 400.119b, for the tax year divided by the claimant's household
income.
The reduction of credit shall not exceed the sum of the
aid
to families with dependent children, state family assistance,
and
state disability assistance through department of human
services programs pursuant to the social welfare act, 1939 PA 280,
MCL 400.1 to 400.119b, for the tax year. For the purposes of this
subsection,
aid to families with dependent children any
assistance through department of human services programs does not
include child support payments that offset or reduce payments made
to the claimant.
(8) A credit under subsection (1) or (2) shall be reduced by
10% for each claimant whose household income exceeds $73,650.00 and
by an additional 10% for each increment of $1,000.00 of household
income in excess of $73,650.00.
(9) If the credit authorized and calculated under this section
and section 522 and adjusted under subsection (7) or (8) does not
provide to a senior citizen who rents or leases a homestead that
amount attributable to rent that constitutes more than 40% of the
household income of the senior citizen, the senior citizen may
claim a credit based upon the amount of household income
attributable to rent as provided by this section.
(10) A senior citizen whose gross rent paid for the tax year
is more than the percentage of household income specified in
subsection (9) for the respective tax year may claim a credit for
the amount of rent paid that constitutes more than the percentage
of the household income of the senior citizen specified in
subsection (9) and that was not provided to the senior citizen by
the credit computed pursuant to this section and section 522 and
adjusted pursuant to subsection (7) or (8).
(11) The department may promulgate rules to implement
subsections
(9) to (16) (14) and may prescribe a table to allow a
claimant to determine the credit provided under this section and
section 522 in the instruction booklet that accompanies the
respective income tax or property tax credit forms used by
claimants.
(12) A senior citizen may claim the credit under subsections
(9)
to (16) (14) on the same form as the property tax credit
permitted by subsection (2). The department shall adjust the forms
accordingly.
(13) A senior citizen who moves to a different rented or
leased homestead shall determine, for 2 tax years after the move,
both his or her qualification to claim a credit under subsections
(9)
to (16) (14) and the amount of a credit under subsections (9)
to
(16) (14) on the basis of the annualized final monthly rental
payment at his or her previous homestead, if this annualized rental
is less than the senior citizen's actual annual rental payments.
(14) For a return of less than 12 months, the claim for a
credit
under subsections (9) to (16) (14) shall be reduced
proportionately.
(15) The Michigan state housing development authority shall
report
on the effect of the credit provided by subsections (9) to
(16)
(14) on the price of rented
and leased homesteads. If the
authority determines that the price of rented and leased homesteads
has increased as a result of the credit provided by subsections (9)
to
(16) (14), the authority shall make recommendations to the
legislature to remedy this situation. The report shall be made to
the chairpersons of the house and senate committees that have
primary responsibility for taxation legislation 2 years after the
credit
provided by subsections (9) to (16) (14) is in effect.
(16) The total credit allowed by this section and section 522
shall
not exceed $1,200.00 per year for
tax years that begin
before January 1, 2005. For the tax years that begin after December
31, 2004, the maximum amounts allowed under this subsection shall
be adjusted by the percentage increase in the United States
consumer price index for the immediately preceding calendar year.
As used in this subsection, "United States consumer price index"
means the United States consumer price index for all urban
consumers as defined and reported by the United States department
of labor, bureau of labor statistics.
Sec. 522. (1) The amount of a claim made pursuant to this
chapter shall be determined as follows:
(a) A claimant is entitled to a credit against the state
income tax liability equal to 60% of the amount by which the
property taxes on the homestead, or the credit for rental of the
homestead for the tax year, exceeds 3.5% of the claimant's
household income for that tax year.
(b) A claimant who is a senior citizen or a paraplegic,
hemiplegic, or quadriplegic and for tax years that begin after
December 31, 1999, a claimant who is totally and permanently
disabled or deaf is entitled to a credit against the state income
tax liability for the amount by which the property taxes on the
homestead, the credit for rental of the homestead, or a service
charge in lieu of ad valorem taxes as provided by section 15a of
the state housing development authority act of 1966, 1966 PA 346,
MCL 125.1415a, for the tax year exceeds the percentage of the
claimant's household income for that tax year computed as follows:
Household income Percentage
Not over $3,000.00 .0%
Over $3,000.00 but not over $4,000.00 1.0%
Over $4,000.00 but not over $5,000.00 2.0%
Over $5,000.00 but not over $6,000.00 3.0%
Over $6,000.00 3.5%
(c) For a tax year that begins before January 1, 2000, a
claimant who is totally and permanently disabled is entitled to a
credit against the state income tax liability equal to 60% of the
amount by which the property taxes on the homestead, or the credit
for rental of the homestead or for a service charge in lieu of ad
valorem taxes as provided in section 15a of the state housing
development authority act of 1966, 1966 PA 346, MCL 125.1415a, for
the tax year, exceeds the percentage of the claimant's household
income for that tax year based on the schedule in subdivision (b).
(d) A claimant who is an eligible serviceperson, eligible
veteran, or eligible widow or widower is entitled to a credit
against the state income tax liability for a percentage of the
property taxes on the homestead for the tax year not in excess of
100% determined as follows:
(i) Divide the taxable value allowance specified in section 506
by the taxable value of the homestead or, if the eligible
serviceperson, eligible veteran, or eligible widow or widower
leases or rents a homestead, divide 17% of the total annual rent
paid for tax years before the 1994 tax year, or 20% of the total
annual rent paid for tax years after the 1993 tax year on the
property by the property tax rate on the property.
(ii) Multiply the property taxes on the homestead by the
percentage computed in subparagraph (i).
(e) A claimant who is blind is entitled to a credit against
the state income tax liability for a percentage of the property
taxes on the homestead for the tax year determined as follows:
(i) If the taxable value of the homestead is $3,500.00 or less,
100% of the property taxes.
(ii) If the taxable value of the homestead is more than
$3,500.00, the percentage that $3,500.00 bears to the taxable value
of the homestead.
(2) A person who is qualified to make a claim under more than
1 classification shall elect the classification under which the
claim is made.
(3) Only 1 claimant per household for a tax year is entitled
to the credit, unless both the husband and wife filing a joint
return are blind, then each shall be considered a claimant.
(4) As used in this section, "totally and permanently
disabled" means disability as defined in section 216 of title II of
the
social security act, 42 U.S.C. USC
416.
(5) A senior citizen who has a total household income for the
tax year of $6,000.00 or less and who for 1973 received a senior
citizen homestead exemption under former section 7c of the general
property
tax act, Act No. 206 of the Public Acts of 1893 1893 PA
206, may compute the credit against the state income tax liability
for a percentage of the property taxes on the homestead for the tax
year determined as follows:
(a) If the taxable value of the homestead is $2,500.00 or
less, 100% of the property taxes.
(b) If the taxable value of the homestead is more than
$2,500.00, the percentage that $2,500.00 bears to the taxable value
of the homestead.
(6) For a return of less than 12 months, the claim shall be
reduced proportionately.
(7) The commissioner may prescribe tables that may be used to
determine the amount of the claim.
(8)
The total credit allowed in this section for each year
after
December 31, 1975 shall not exceed
$1,200.00 per year the
amount determined under section 520.
(9) The total credit allowable under this act and part 361 of
the natural resources and environmental protection act, 1994 PA
451, MCL 324.36101 to 324.36117, shall not exceed the total
property tax due and payable by the claimant in that year. The
amount by which the credit exceeds the property tax due and payable
shall be deducted from the credit claimed under part 361 of the
natural resources and environmental protection act, 1994 PA 451,
MCL 324.36101 to 324.36117.