COMMUNITY FOUNDATION - S.B. 695 (S-1): FLOOR ANALYSIS

Senate Bill 695 (Substitute S-1 as reported)

Sponsor: Senator Bill Schuette

Committee: Finance

CONTENT

The bill would amend the Income Tax Act to place additional qualification requirements on community foundations.

Under the Act, a taxpayer may claim an income tax credit for contributions to a community foundation. An entity must meet certain requirements in order for the Department of Treasury to certify it as a community foundation. In addition to other requirements, a community foundation must be publicly supported (as defined by U.S. Department of Treasury regulations). The bill provides that, to maintain its certification, a community foundation would have to submit documentation to the Michigan Department of Treasury, each year, that demonstrated compliance with the Federal regulations. Currently, a community foundation must be incorporated or established as a trust before September 1 each year. The bill provides that a community foundation would have to be incorporated or established as a trust at least six months before the beginning of the tax year for which a credit was claimed; and have an endowment value of at least $25,000 within six months after being incorporated or established.

A community foundation also would have to: have an independent governing body that was not appointed by a single entity; provide evidence to the Department that the community foundation had at least one part-time or full-time paid employee, within six months after the community foundation was incorporated or established, and maintained continually during the tax year for which the credit was claimed; be subject to an annual independent financial review, and an independent financial audit every three years, and provide copies of the review and audit to the Department within three months after their completion; and, for a community foundation that was incorporated or established after the bill's effective date, operate in a county that was not served by a community foundation when the community foundation was incorporated or established, or operate as a geographic component of an existing certified community foundation.

MCL 206.261 - Legislative Analyst: G. Towne

FISCAL IMPACT

Information is still being gathered on how these proposed new requirements and standards would affect the status of the current qualifying community foundations; however, based on preliminary information, it is estimated that these new requirements and standards would have very little, if any, impact on the dollar amount of the community foundation credits claimed.

Date Completed: 10-7-97 - Fiscal Analyst: J. Wortley

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This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.