SENATE BILL No. 261

February 27, 2001, Introduced by Senator SHUGARS and referred to the Committee on Finance.

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 years 1996 through 2000 and subject to

7 subsections (19) and (20), a claimant may claim a credit for

8 heating fuel costs for the claimant's homestead in this state.

9 An adult foster care home, nursing home, home for the aged, or

10 substance abuse center is not a homestead for purposes of this

01594'01 RJA

2

1 section. The credit shall be determined in the following

2 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) for the 1996 tax year through the 2000

6 tax year, the following table shall be used for the computation

7 of a credit as computed under subdivision (c):

8 Exemptions 0 or 1 2 3 4 5 6 or more

9 Credit $272 $326 $379 $450 $525 $601 + $76

10 for each

11 exemption

12 over 6

13 (b) For tax years after the 1988 tax year, the THE amounts

14 in the table in subdivision (a) shall be adjusted each year as

15 necessary by the department so that a claimant with a household

16 income less than 110% of the federal poverty income standards as

17 defined and determined annually by the United States office of

18 management and budget is not denied a credit.

19 (c) A claimant shall receive the greater of the credit

20 amount as determined in subparagraph (i) or (ii):

21 (i) Subtract 3.5% of the claimant's household income from

22 the amount specified in subdivision (a) that corresponds with the

23 number of exemptions claimed in the return filed under this act,

24 except that the number of exemptions for purposes of this subdi-

25 vision shall not exceed the actual number of persons living in

26 the household plus the additional personal exemptions allowed

01594'01

3

1 under section 30, and any dependency exemptions for a person or

2 persons living in the household under a custodial arrangement,

3 even if the exemptions may not be claimed for other income tax

4 purposes. For a claimant whose heating costs are included in

5 his or her rent, multiply the result of the preceding calculation

6 by 50%.

7 (ii) Subject to subsection (2), for a claimant whose house-

8 hold income does not exceed the maximum specified in the follow-

9 ing table, as adjusted, that corresponds with the number of

10 exemptions claimed in the return filed under this act, subtract

11 11% of claimant's household income from the total cost incurred

12 by a claimant for heating fuel from a heating fuel provider

13 during the 12 consecutive monthly billing periods ending in

14 October of the tax year, and multiply the resulting amount by

15 70%:

16 Exemptions 0 or 1 2 3 4 5 For each

17 exemption

18 over 5,

19 add

20 $2,441.00

21 to the

22 maximum

23 income

24 Maximum

25 Income $7,060 $9,501 $11,943 $14,382 $16,824

01594'01

4

1 (d) For the 1988 tax year for the purposes of subdivision

2 (c), the total cost incurred by a claimant for heating fuel from

3 a heating fuel provider shall not exceed $1,190.00. For tax

4 years after the 1988 tax year, the THE maximum cost incurred by

5 a claimant for heating fuel during a tax year shall be adjusted

6 by multiplying the maximum cost for the immediately preceding tax

7 year by the percentage by which the average all urban Detroit

8 consumer price index for fuels and other utilities for the 12

9 months ending August 31 of the tax year for which the credit is

10 claimed exceeds that index's average for the 12 months ending on

11 August 31 of the previous tax year, but not more than 10%. That

12 product shall be added to the maximum cost of the immediately

13 preceding tax year and then rounded to the nearest whole dollar.

14 That dollar amount is the new maximum cost for the current tax

15 year. If the claimant received any credits to his or her heating

16 bill during the tax year, as provided for in subsection (6), the

17 credits shall be treated as costs incurred by the claimant.

18 (e) For tax years after the 1988 tax year, the THE maximum

19 income amounts specified in subdivision (c)(ii) shall be adjusted

20 by multiplying the respective maximum income amounts for the

21 immediately preceding tax year by the percentage by which the

22 average all urban Detroit consumer price index for all items for

23 the 12 months ending August 31 of the tax year for which the

24 credit is claimed exceeds that index's average for the 12 months

25 ending on August 31 of the immediately preceding tax year, but

26 not more than 10%. That product shall be added to the

27 immediately preceding tax year's respective maximum income level

01594'01

5

1 and then rounded to the nearest whole dollar. That dollar amount

2 is the new maximum income level for the then current tax year.

3 (2) An enrolled heating fuel provider shall notify each of

4 its customers, not later than December 15 of each year, or, for

5 1995 only, not later than 14 days after the effective date of

6 subsection (18) or for 1996 only, not later than 14 days after

7 the effective date of subsection (19), whichever is later, of

8 the availability, upon request, of the information necessary for

9 determining the credit under this section. For a claimant for

10 whom, at the time of filing, the department of social services

11 FAMILY INDEPENDENCE AGENCY is making direct vendor payments to an

12 enrolled heating fuel provider, the enrolled heating fuel pro-

13 vider that accepts the direct payments shall mail the information

14 necessary to determine the credit before February 1 of each

15 year. If an enrolled heating fuel provider refuses or fails to

16 provide to a customer the information required to determine the

17 credit, or if the claimant is not a customer of an enrolled heat-

18 ing fuel provider, a claimant may determine the credit provided

19 in subsection (1)(c)(ii) based on his or her own records.

20 (3) A credit claimed on a return that covers a period of

21 less than 12 months shall be calculated based on subsection

22 (1)(c)(i) and shall be reduced proportionately.

23 (4) If the allowable amount of the credit under this section

24 exceeds the state income tax otherwise due for the tax year, the

25 amount of credit not used as an offset against the state income

26 tax that is due shall be remitted to the claimant, other than a

27 claimant whose heating costs are included in his or her rent, in

01594'01

6

1 the form of an energy draft that states the name of the claimant

2 and is issued by the department. For a claimant for whom, at the

3 time of filing, the department of social services FAMILY INDE-

4 PENDENCE AGENCY is making direct vendor payments to an enrolled

5 heating fuel provider, the department shall send the energy draft

6 directly to the claimant's enrolled heating fuel provider, as

7 identified by the claimant. After July 31, a refundable credit

8 for a prior tax year may be paid in the form of a negotiable

9 warrant. The energy draft shall be negotiable only through the

10 claimant's enrolled heating fuel provider upon remittance by the

11 claimant.

12 (5) If, when a claimant remits an energy draft to the

13 claimant's enrolled heating fuel provider, the amount of the

14 energy draft is greater than the total of outstanding bills

15 incurred by the claimant with the enrolled heating fuel provider,

16 the claimant, by checking the appropriate box to be included on

17 the energy draft, may request from the enrolled heating fuel pro-

18 vider a payment equal to the amount of the energy draft less the

19 amount of the outstanding bills. The enrolled heating fuel pro-

20 vider shall issue the payment within 14 days after the claimant's

21 request.

22 (6) If a claimant whose energy draft exceeds his or her out-

23 standing bills does not request a payment from an enrolled heat-

24 ing fuel provider under subsection (5), an energy draft remitted

25 to an enrolled heating fuel provider shall be applied upon

26 receipt to the claimant's designated account. The energy draft

27 may be used to cover outstanding bills that the claimant has

01594'01

7

1 incurred with the enrolled heating fuel provider and to cover

2 subsequent heating costs until the full amount of the energy

3 draft is used or until 1 year after the date on which the energy

4 draft is first applied to the claimant's designated account. If

5 a credit amount remains from this energy draft after the 1-year

6 period, or if prior to the end of the 1-year period a claimant is

7 no longer a customer of the heating fuel provider, the heating

8 fuel provider shall remit the remaining unused portion to the

9 claimant in the form of a fully negotiable check within 14 days

10 after the end of the 1-year period or within 14 days after termi-

11 nation of service, whichever is sooner.

12 (7) A claimant who is no longer a resident of this state,

13 who is not a customer of an enrolled heating fuel provider, or

14 whose heating fuel provider refuses to accept an energy draft

15 shall return the energy draft to the department and request the

16 issuance of a negotiable warrant. A claimant may return an

17 energy draft to the department and request issuance of a negotia-

18 ble warrant if the energy draft is impractical because the claim-

19 ant has already purchased his or her energy supply for the year

20 and does not have an outstanding obligation to an enrolled heat-

21 ing fuel provider. The department may honor that request if it

22 agrees that the use of the energy draft is impractical. The

23 department shall issue the warrant within 14 days after receiving

24 the energy draft from the claimant.

25 (8) The enrolled heating fuel provider shall bill the

26 department for credit amounts that have been applied to claimant

27 accounts pursuant to subsection (6), and the department shall pay

01594'01

8

1 the bills within 14 days of receipt. The billing shall be

2 accompanied by the energy drafts for which reimbursement is

3 claimed.

4 (9) A claimant whose heating fuel is provided by a utility

5 regulated by the Michigan public service commission is protected

6 against the discontinuance of his or her heating fuel service

7 from the date of filing a claim for the credit under this section

8 through the date of issuance of an energy draft and during a

9 period beginning December 1 of the tax year for which the credit

10 is claimed and ending March 31 of the following year if the

11 claimant participates in the winter protection program set forth

12 in R 460.2162(2) to (6) of the Michigan administrative code or if

13 the utility accepts the claimant's energy draft. The acceptance

14 of an energy draft by a utility is considered a request by the

15 claimant for the winter protection program. The energy draft

16 shall be coded by the department to denote claimants who are 65

17 years of age or older. If the claimant is a claimant whose heat-

18 ing cost is included in his or her rent payments, the amount of

19 the claim not used as an offset against the state income tax,

20 after examination and review, shall be approved for payment,

21 without interest, to the claimant.

22 (10) If an enrolled heating fuel provider does not issue a

23 payment or a negotiable check within 14 days as provided in sub-

24 section (5) or (6), beginning on the fifteenth day, the amount

25 due to the claimant is increased by adding interest computed on

26 the basis of the rate of interest prescribed for delayed refunds

27 of excess tax payments in section 30(3) of Act No. 122 of the

01594'01

9

1 Public Acts of 1941, being section 205.30 of the Michigan

2 Compiled Laws 1941 PA 122, MCL 205.30. The enrolled heating

3 fuel provider shall pay the interest and shall not bill the

4 interest to or be reimbursed for the interest by the department.

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

6 erty that is rented or leased as a homestead. Only 1 credit may

7 be claimed for a household. The credit under this section is in

8 addition to other credits to which the claimant is entitled under

9 this act. A person who is a full-time student at a school, com-

10 munity college, or college or university and who is claimed as a

11 dependent by another person is not eligible for the credit pro-

12 vided by this section. A claimant who shares a homestead with

13 other eligible claimants shall prorate the credit by the number

14 of claimants sharing the homestead.

15 (12) A claimant who is eligible for the credit provided by

16 this section shall be referred by the department to the appropri-

17 ate state agency for determination of eligibility for home weath-

18 erization assistance and shall accept weatherization assistance

19 if eligible and if assistance is available. A heating fuel pro-

20 vider that is required by the Michigan public service commission

21 to participate in the residential conservation services home

22 energy analysis program shall annually contact each claimant to

23 whom it provides heating fuel, and whose usage exceeds 200,000

24 cubic feet of natural gas or 18,000 kilowatt hours of electricity

25 annually, and shall offer to provide a home energy analysis at no

26 cost to the claimant. A heating fuel provider that is not

27 required to participate in the residential conservation services

01594'01

10

1 program shall not be required to conduct a home energy analysis

2 for its customers.

3 (13) If an enrolled heating fuel provider is regulated by

4 the Michigan public service commission, the Michigan public serv-

5 ice commission may use an enforcement method authorized by law or

6 rule to enforce the requirements prescribed by this section on

7 the enrolled heating fuel provider. If an enrolled heating fuel

8 provider is not regulated by the Michigan public service commis-

9 sion, the department of social services FAMILY INDEPENDENCE

10 AGENCY may use an enforcement method authorized by law or rule to

11 enforce the requirements prescribed by this section on the

12 enrolled heating fuel provider.

13 (14) The department shall mail a home heating credit return

14 to every person who received aid to families with dependent

15 children, state family assistance, or state disability assist-

16 ance THROUGH FAMILY INDEPENDENCE PROGRAMS pursuant to the social

17 welfare act, Act No. 280 of the Public Acts of 1939, being sec-

18 tions 400.1 to 400.119b of the Michigan Compiled Laws 1939 PA

19 280, MCL 400.1 TO 400.119B, during the tax year.

20 (15) The department shall complete a study by August 1 of

21 1985, and of each subsequent year, of the actual heating costs of

22 each claimant who received a credit from the department under

23 this section for the immediately preceding tax year.

24 (16) The department may promulgate rules necessary to admin-

25 ister this section pursuant to the administrative procedures act

26 of 1969, Act No. 306 of the Public Acts of 1969, being sections

01594'01

11

1 24.201 to 24.328 of the Michigan Compiled Laws 1969 PA 306, MCL

2 24.201 TO 24.328.

3 (17) The department shall provide a simplified procedure for

4 claiming the credit under this section for claimants for whom, at

5 the time of filing, the department of social services FAMILY

6 INDEPENDENCE AGENCY is making direct vendor payments to an

7 enrolled heating fuel provider.

8 (18) For the 1995 tax year, the credit under this section is

9 allowed only if there has been a federal appropriation for fed-

10 eral fiscal year 1995-96 of the total amount of federal low

11 income home heating energy assistance block grant funds and if

12 the federal low income home heating energy assistance block grant

13 allotment for this state is at least $25,400,000.00. If the fed-

14 eral low income home heating energy assistance block grant allot-

15 ment for this state is less than $75,400,000.00, each individual

16 credit claimed under this section shall be reduced by multiplying

17 the credit amount by a fraction the numerator of which is

18 Michigan's 1995-96 fiscal year federal low income home heating

19 energy assistance block grant allotment minus $400,000.00 and the

20 denominator of which is $75,000,000.00.

21 (19) For the 1996 tax year through the 2000 tax year, the

22 credit under this section is allowed only if there has been a

23 federal appropriation for the federal fiscal year beginning in

24 the tax year of the total amount of federal low income home

25 energy assistance program block grant funds and if the amount

26 available for the home heating credit is not less than

27 $20,000,000.00. If the amount available for the home heating

01594'01

12

1 credit is less than the full home heating credit amount, each

2 individual credit claimed under this section shall be reduced by

3 multiplying the credit amount by a fraction, the numerator of

4 which is the amount available for the home heating credit and the

5 denominator of which is the full home heating credit amount. As

6 used in this subsection, "amount available for the home heating

7 credit" means the sum of the federal low income home energy

8 assistance program block grant allotment for this state for the

9 federal fiscal year beginning in the tax year and the amount as

10 certified by the director of the family independence agency car-

11 ried forward from the immediately preceding fiscal year for the

12 low income home energy assistance program block grant minus the

13 sum of the amount certified by the director of the family inde-

14 pendence agency for administration of the low income home energy

15 assistance program block grant and the amount certified by the

16 director of the family independence agency for crisis assistance

17 programs. The amounts under this subsection that require certi-

18 fication by the director of the family independence agency or by

19 the state treasurer and the director of the department of manage-

20 ment and budget shall be certified on or before December 30 of

21 the tax year for the 1996 tax year, and on or before November 1

22 of the tax year for the 1997 through 2000 tax years. As used in

23 this subsection, "full home heating credit amount" means

24 $62,000,000.00 for the 1996 tax year and for the 1997 through

25 2000 tax years the amount certified by the state treasurer and

26 the director of the department of management and budget to be the

27 estimated amount of the credits that would have been provided

01594'01

13

1 under this section for the tax year if no reduction as provided

2 in this subsection were made for that tax year.

3 (20) For tax years after the 1994 tax year, a claimant who

4 claims a credit under this section shall not report the credit

5 amount on the claimant's income tax return filed under this act

6 as an offset against the tax imposed by this act, but shall claim

7 the credit on a separate form prescribed by the department. For

8 tax years after the 1995 tax year, a credit claimed under this

9 section shall not be allowed unless the claim for the credit is

10 filed with the department on or before the September 30 immedi-

11 ately following the tax year for which the credit is claimed.

12 (21) As used in this section:

13 (a) "Claimant whose heating costs are included in his or her

14 rent" means a claimant whose rent includes the cost of heat at

15 the time the claim for the credit under this section is filed.

16 (b) "Enrolled heating fuel provider" means a heating fuel

17 provider that is enrolled with the department of social

18 services FAMILY INDEPENDENCE AGENCY as a heating fuel provider.

19 (c) "Heating fuel provider" means an individual or entity

20 that provides a claimant with heating fuel or electricity for

21 heating purposes.

01594'01 Final page. RJA