HOUSE BILL No. 4411 March 6, 2001, Introduced by Reps. Woodward, Frank, Callahan, Zelenko, Murphy, Whitmer, Switalski, Neumann, DeWeese, Pestka, Lockwood, Mans, Schauer, Spade, Bernero, Rivet, Plakas, Wojno, Lipsey, Kolb, Rich Brown, Waters, Bovin, Williams, Adamini, Bob Brown, McConico, Phillips, Anderson, Quarles, Rison, Basham, Garza, Jamnick, Clarke, Hansen, Kilpatrick, Jacobs, Sheltrown, O'Neil, Minore, Bogardus, Hale, Reeves, Hardman, Clark, Schermesser, Dennis, Woronchak, Pumford, Ehardt, Kowall, Toy, Julian, Pappageorge, Koetje, Richardville, Middaugh, Rocca, Howell, DeRossett, DeVuyst, Gosselin, Richner, Vear, Lemmons and Raczkowski and referred to the Committee on Energy and Technology. A bill to amend 1967 PA 281, entitled "Income tax act of 1967," by amending section 527a (MCL 206.527a), as amended by 1996 PA 484. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 527a. (1) For tax years 1985 through 1994, a claimant 2 may claim a credit against the state income tax for heating fuel 3 costs for the claimant's homestead in this state. For the 1995 4 tax year and subject to subsection (18), a claimant may claim a 5 credit for heating fuel costs for the claimant's homestead in 6 this state. For tax years1996 through 2000AFTER THE 1995 TAX 7 YEAR and subject to subsections (19) and (20), a claimant may 8 claim a credit for heating fuel costs for the claimant's 9 homestead in this state. An adult foster care home, nursing 10 home, home for the aged, or substance abuse center is not a 03290'01 RJA 2 1 homestead for purposes of this section. The credit shall be 2 determined in the following manner: 3 (a) For the 1988 tax year through the 1994 tax year; subject 4 to subsection (18), for the 1995 tax year; and subject to 5 subsections (19) and (20) forthe 1996 tax year through the62000TAX YEARS AFTER THE 1995 tax year, the following table 7 shall be used for the computation of a credit as computed under 8 subdivision (c): 9 Exemptions 0 or 1 2 3 4 5 6 or more 10 Credit $272 $326 $379 $450 $525 $601 + $76 11 for each 12 exemption 13 over 6 14 (b) For tax years after the 1988 tax year, the amounts in 15 the table in subdivision (a) shall be adjusted each year as nec- 16 essary by the department so that a claimant with a household 17 income less than 110% of the federal poverty income standards FOR 18 TAX YEARS THAT BEGIN BEFORE JANUARY 1, 2001 AND 150% OF THE FED- 19 ERAL POVERTY INCOME STANDARDS FOR TAX YEARS THAT BEGIN AFTER 20 DECEMBER 31, 2000 as defined and determined annually by the 21 United States office of management and budget is not denied a 22 credit. 23 (c) A claimant shall receive the greater of the credit 24 amount as determined in subparagraph (i) or (ii): 25 (i) Subtract 3.5% of the claimant's household income from 26 the amount specified in subdivision (a) that corresponds with the 03290'01 3 1 number of exemptions claimed in the return filed under this act, 2 except that the number of exemptions for purposes of this subdi- 3 vision shall not exceed the actual number of persons living in 4 the household plus the additional personal exemptions allowed 5 under section 30, and any dependency exemptions for a person or 6 persons living in the household under a custodial arrangement, 7 even if the exemptions may not be claimed for other income tax 8 purposes. For a claimant whose heating costs are included in his 9 or her rent, multiply the result of the preceding calculation by 10 50%. 11 (ii) Subject to subsection (2), for a claimant whose house- 12 hold income does not exceed the maximum specified in the follow- 13 ing table, as adjusted, that corresponds with the number of 14 exemptions claimed in the return filed under this act, subtract 15 11% of claimant's household income from the total cost incurred 16 by a claimant for heating fuel from a heating fuel provider 17 during the 12 consecutive monthly billing periods ending in 18 October of the tax year, and multiply the resulting amount by 19 70%: 03290'01 4 1 Exemptions 0 or 1 2 3 4 5 For each 2 exemption 3 over 5, 4 add 5 $2,441.00 6 to the 7 maximum 8 income 9 Maximum 10 Income $7,060 $9,501 $11,943 $14,382 $16,824 11 (d) For the 1988 tax year for the purposes of subdivision 12 (c), the total cost incurred by a claimant for heating fuel from 13 a heating fuel provider shall not exceed $1,190.00. For tax 14 years after the 1988 tax year, the maximum cost incurred by a 15 claimant for heating fuel during a tax year shall be adjusted by 16 multiplying the maximum cost for the immediately preceding tax 17 year by the percentage by which the average all urban Detroit 18 consumer price index for fuels and other utilities for the 12 19 months ending August 31 of the tax year for which the credit is 20 claimed exceeds that index's average for the 12 months ending on 21 August 31 of the previous tax year, but not more than 10%. That 22 product shall be added to the maximum cost of the immediately 23 preceding tax year and then rounded to the nearest whole dollar. 24 That dollar amount is the new maximum cost for the current tax 25 year. If the claimant received any credits to his or her heating 03290'01 5 1 bill during the tax year, as provided for in subsection (6), the 2 credits shall be treated as costs incurred by the claimant. 3 (e) For tax years after the 1988 tax year, the maximum 4 income amounts specified in subdivision (c)(ii) shall be adjusted 5 by multiplying the respective maximum income amounts for the 6 immediately preceding tax year by the percentage by which the 7 average all urban Detroit consumer price index for all items for 8 the 12 months ending August 31 of the tax year for which the 9 credit is claimed exceeds that index's average for the 12 months 10 ending on August 31 of the immediately preceding tax year, but 11 not more than 10%. That product shall be added to the immedi- 12 ately preceding tax year's respective maximum income level and 13 then rounded to the nearest whole dollar. That dollar amount is 14 the new maximum income level for the then current tax year. 15 (2) An enrolled heating fuel provider shall notify each of 16 its customers, not later than December 15 of each year or, for 17 1995 only, not later than14 days after the effective date of18subsection (18)JANUARY 10, 1996 or for 1996 only, not later 19 than14 days after the effective date of subsection (19), which-20ever is laterJANUARY 15, 1996, of the availability, upon 21 request, of the information necessary for determining the credit 22 under this section. For a claimant for whom, at the time of 23 filing, thedepartment of social servicesFAMILY INDEPENDENCE 24 AGENCY is making direct vendor payments to an enrolled heating 25 fuel provider, the enrolled heating fuel provider that accepts 26 the direct payments shall mail the information necessary to 27 determine the credit before February 1 of each year. If an 03290'01 6 1 enrolled heating fuel provider refuses or fails to provide to a 2 customer the information required to determine the credit, or if 3 the claimant is not a customer of an enrolled heating fuel pro- 4 vider, a claimant may determine the credit provided in subsection 5 (1)(c)(ii) based on his or her own records. 6 (3) A credit claimed on a return that covers a period of 7 less than 12 months shall be calculated based on subsection 8 (1)(c)(i) and shall be reduced proportionately. 9 (4) If the allowable amount of the credit under this section 10 exceeds the state income tax otherwise due for the tax year, the 11 amount of credit not used as an offset against the state income 12 tax that is due shall be remitted to the claimant, other than a 13 claimant whose heating costs are included in his or her rent, in 14 the form of an energy draft that states the name of the claimant 15 and is issued by the department. For a claimant for whom, at the 16 time of filing, thedepartment of social servicesFAMILY INDE- 17 PENDENCE AGENCY is making direct vendor payments to an enrolled 18 heating fuel provider, the department shall send the energy draft 19 directly to the claimant's enrolled heating fuel provider, as 20 identified by the claimant. After July 31, a refundable credit 21 for a prior tax year may be paid in the form of a negotiable 22 warrant. The energy draft shall be negotiable only through the 23 claimant's enrolled heating fuel provider upon remittance by the 24 claimant. 25 (5) If, when a claimant remits an energy draft to the 26 claimant's enrolled heating fuel provider, the amount of the 27 energy draft is greater than the total of outstanding bills 03290'01 7 1 incurred by the claimant with the enrolled heating fuel provider, 2 the claimant, by checking the appropriate box to be included on 3 the energy draft, may request from the enrolled heating fuel pro- 4 vider a payment equal to the amount of the energy draft less the 5 amount of the outstanding bills. The enrolled heating fuel pro- 6 vider shall issue the payment within 14 days after the claimant's 7 request. 8 (6) If a claimant whose energy draft exceeds his or her out- 9 standing bills does not request a payment from an enrolled heat- 10 ing fuel provider under subsection (5), an energy draft remitted 11 to an enrolled heating fuel provider shall be applied upon 12 receipt to the claimant's designated account. The energy draft 13 may be used to cover outstanding bills that the claimant has 14 incurred with the enrolled heating fuel provider and to cover 15 subsequent heating costs until the full amount of the energy 16 draft is used or until 1 year after the date on which the energy 17 draft is first applied to the claimant's designated account. If 18 a credit amount remains from this energy draft after the 1-year 19 period, or if prior to the end of the 1-year period a claimant is 20 no longer a customer of the heating fuel provider, the heating 21 fuel provider shall remit the remaining unused portion to the 22 claimant in the form of a fully negotiable check within 14 days 23 after the end of the 1-year period or within 14 days after termi- 24 nation of service, whichever is sooner. 25 (7) A claimant who is no longer a resident of this state, 26 who is not a customer of an enrolled heating fuel provider, or 27 whose heating fuel provider refuses to accept an energy draft 03290'01 8 1 shall return the energy draft to the department and request the 2 issuance of a negotiable warrant. A claimant may return an 3 energy draft to the department and request issuance of a negotia- 4 ble warrant if the energy draft is impractical because the claim- 5 ant has already purchased his or her energy supply for the year 6 and does not have an outstanding obligation to an enrolled heat- 7 ing fuel provider. The department may honor that request if it 8 agrees that the use of the energy draft is impractical. The 9 department shall issue the warrant within 14 days after receiving 10 the energy draft from the claimant. 11 (8) The enrolled heating fuel provider shall bill the 12 department for credit amounts that have been applied to claimant 13 accounts pursuant to subsection (6), and the department shall pay 14 the bills within 14 days of receipt. The billing shall be accom- 15 panied by the energy drafts for which reimbursement is claimed. 16 (9) A claimant whose heating fuel is provided by a utility 17 regulated by the Michigan public service commission is protected 18 against the discontinuance of his or her heating fuel service 19 from the date of filing a claim for the credit under this section 20 through the date of issuance of an energy draft and during a 21 period beginning December 1 of the tax year for which the credit 22 is claimed and ending March 31 of the following year if the 23 claimant participates in the winter protection program set forth 24 in R 460.2162(2) to (6) of the Michigan administrative code or if 25 the utility accepts the claimant's energy draft. The acceptance 26 of an energy draft by a utility is considered a request by the 27 claimant for the winter protection program. The energy draft 03290'01 9 1 shall be coded by the department to denote claimants who are 65 2 years of age or older. If the claimant is a claimant whose heat- 3 ing cost is included in his or her rent payments, the amount of 4 the claim not used as an offset against the state income tax, 5 after examination and review, shall be approved for payment, 6 without interest, to the claimant. 7 (10) If an enrolled heating fuel provider does not issue a 8 payment or a negotiable check within 14 days as provided in sub- 9 section (5) or (6), beginning on the fifteenth day, the amount 10 due to the claimant is increased by adding interest computed on 11 the basis of the rate of interest prescribed for delayed refunds 12 of excess tax payments in section 30(3) ofAct No. 122 of the13Public Acts of 1941, being section 205.30 of the Michigan14Compiled Laws1941 PA 122, MCL 205.30. The enrolled heating 15 fuel provider shall pay the interest and shall not bill the 16 interest to or be reimbursed for the interest by the department. 17 (11) Only the renter or lessee shall claim a credit on prop- 18 erty that is rented or leased as a homestead. Only 1 credit may 19 be claimed for a household. The credit under this section is in 20 addition to other credits to which the claimant is entitled under 21 this act. A person who is a full-time student at a school, com- 22 munity college, or college or university and who is claimed as a 23 dependent by another person is not eligible for the credit pro- 24 vided by this section. A claimant who shares a homestead with 25 other eligible claimants shall prorate the credit by the number 26 of claimants sharing the homestead. 03290'01 10 1 (12) A claimant who is eligible for the credit provided by 2 this section shall be referred by the department to the 3 appropriate state agency for determination of eligibility for 4 home weatherization assistance and shall accept weatherization 5 assistance if eligible and if assistance is available. A heating 6 fuel provider that is required by the Michigan public service 7 commission to participate in the residential conservation serv- 8 ices home energy analysis program shall annually contact each 9 claimant to whom it provides heating fuel, and whose usage 10 exceeds 200,000 cubic feet of natural gas or 18,000 kilowatt 11 hours of electricity annually, and shall offer to provide a home 12 energy analysis at no cost to the claimant. A heating fuel pro- 13 vider that is not required to participate in the residential con- 14 servation services program shall not be required to conduct a 15 home energy analysis for its customers. 16 (13) If an enrolled heating fuel provider is regulated by 17 the Michigan public service commission, the Michigan public serv- 18 ice commission may use an enforcement method authorized by law or 19 rule to enforce the requirements prescribed by this section on 20 the enrolled heating fuel provider. If an enrolled heating fuel 21 provider is not regulated by the Michigan public service commis- 22 sion, thedepartment of social servicesFAMILY INDEPENDENCE 23 AGENCY may use an enforcement method authorized by law or rule to 24 enforce the requirements prescribed by this section on the 25 enrolled heating fuel provider. 26 (14) The department shall mail a home heating credit return 27 to every person who receivedaid to families with dependent03290'01 11 1children, state family assistance, or state disability2 assistance THROUGH FAMILY INDEPENDENCE PROGRAMS pursuant to the 3 social welfare act,Act No. 280 of the Public Acts of 1939,4being sections 400.1 to 400.119b of the Michigan Compiled Laws5 1939 PA 280, MCL 400.1 TO 400.119B, during the tax year. 6 (15) The department shall complete a study by August 1 of 7 1985, and of each subsequent year, of the actual heating costs of 8 each claimant who received a credit from the department under 9 this section for the immediately preceding tax year. 10 (16) The department may promulgate rules necessary to admin- 11 ister this section pursuant to the administrative procedures act 12 of 1969,Act No. 306 of the Public Acts of 1969, being sections1324.201 to 24.328 of the Michigan Compiled Laws1969 PA 306, MCL 14 24.201 TO 24.328. 15 (17) The department shall provide a simplified procedure for 16 claiming the credit under this section for claimants for whom, at 17 the time of filing, thedepartment of social servicesFAMILY 18 INDEPENDENCE AGENCY is making direct vendor payments to an 19 enrolled heating fuel provider. 20 (18) For the 1995 tax year, the credit under this section is 21 allowed only if there has been a federal appropriation for fed- 22 eral fiscal year 1995-96 of the total amount of federal low 23 income home heating energy assistance block grant funds and if 24 the federal low income home heating energy assistance block grant 25 allotment for this state is at least $25,400,000.00. If the fed- 26 eral low income home heating energy assistance block grant 27 allotment for this state is less than $75,400,000.00, each 03290'01 12 1 individual credit claimed under this section shall be reduced by 2 multiplying the credit amount by a fraction the numerator of 3 which is Michigan's 1995-96 fiscal year federal low income home 4 heating energy assistance block grant allotment minus $400,000.00 5 and the denominator of which is $75,000,000.00. 6 (19) Forthe 1996 tax year through the 2000TAX YEARS 7 AFTER THE 1995 tax year, the credit under this section is allowed 8 only if there has been a federal appropriation for the federal 9 fiscal year beginning in the tax year of the total amount of fed- 10 eral low income home energy assistance program block grant funds 11 and if the amount available for the home heating credit is not 12 less than $20,000,000.00. If the amount available for the home 13 heating credit is less than the full home heating credit amount, 14 each individual credit claimed under this section shall be 15 reduced by multiplying the credit amount by a fraction, the 16 numerator of which is the amount available for the home heating 17 credit and the denominator of which is the full home heating 18 credit amount. As used in this subsection, "amount available for 19 the home heating credit" means the sum of the federal low income 20 home energy assistance program block grant allotment for this 21 state for the federal fiscal year beginning in the tax year and 22 the amount as certified by the director of the family indepen- 23 dence agency carried forward from the immediately preceding 24 fiscal year for the low income home energy assistance program 25 block grant minus the sum of the amount certified by the director 26 of the family independence agency for administration of the low 27 income home energy assistance program block grant and the amount 03290'01 13 1 certified by the director of the family independence agency for 2 crisis assistance programs. The amounts under this subsection 3 that require certification by the director of the family indepen- 4 dence agency or by the state treasurer and the director of the 5 department of management and budget shall be certified on or 6 before December 30 of the tax year for the 1996 tax year, and on 7 or before November 1 of the tax year forthe 1997 through 20008 tax years AFTER THE 1996 TAX YEAR. As used in this subsection, 9 "full home heating credit amount" means $62,000,000.00 for the 10 1996 tax year and forthe 1997 through 2000tax years AFTER THE 11 1996 TAX YEAR the amount certified by the state treasurer and the 12 director of the department of management and budget to be the 13 estimated amount of the credits that would have been provided 14 under this section for the tax year if no reduction as provided 15 in this subsection were made for that tax year. 16 (20) For tax years after the 1994 tax year, a claimant who 17 claims a credit under this section shall not report the credit 18 amount on the claimant's income tax return filed under this act 19 as an offset against the tax imposed by this act, but shall claim 20 the credit on a separate form prescribed by the department. For 21 tax years after the 1995 tax year, a credit claimed under this 22 section shall not be allowed unless the claim for the credit is 23 filed with the department on or before the September 30 immedi- 24 ately following the tax year for which the credit is claimed. 25 (21) As used in this section: 03290'01 14 1 (a) "Claimant whose heating costs are included in his or her 2 rent" means a claimant whose rent includes the cost of heat at 3 the time the claim for the credit under this section is filed. 4 (b) "Enrolled heating fuel provider" means a heating fuel 5 provider that is enrolled with thedepartment of social6servicesFAMILY INDEPENDENCE AGENCY as a heating fuel provider. 7 (c) "Heating fuel provider" means an individual or entity 8 that provides a claimant with heating fuel or electricity for 9 heating purposes. 03290'01 Final page. RJA