A bill to amend 1967 PA 281, entitled “Income tax act of 1967,” by amending sections 266a and 676 (MCL 206.266a and 206.676), as added by 2020 PA 343.
The legislative text aims to amend the Income Tax Act of 1967 by modifying sections 266a and 676, primarily focusing on tax credits for the rehabilitation of historic resources. The bill introduces several key provisions, including the eligibility criteria for taxpayers to claim credits, the percentage of qualified expenditures that can be credited, and the process for applying and receiving preapproval letters and certificates of completed rehabilitation. Specifically, the bill allows qualified taxpayers to claim a credit against their tax liability for expenditures related to the rehabilitation of historic resources, with the credit amount varying based on the type and size of the historic resource. For large and medium nonresidential historic resources, the credit is set at 25% of qualified expenditures, while for small nonresidential and residential historic resources, the credit is 30%.
The bill also outlines the funding allocations for these credits, setting a cap of $5,000,000 per calendar year through December 31, 2023, and increasing it to $100,000,000 per calendar year starting in 2024. The allocations are divided among different categories of historic resources, ensuring that specific amounts are reserved for large, medium, and small nonresidential historic resources, as well as residential historic resources. Additionally, the bill imposes limits on the maximum credit that can be claimed for a single historic resource in a tax year, with different caps for large, medium, and small nonresidential historic resources.
The legislation introduces several changes to existing laws, including the extension of the period within which a taxpayer must claim the credit and the adjustment of the application review timelines. It also allows for the monetization and assignment of credits, enabling taxpayers to transfer or sell their credits under certain conditions. The bill mandates that the State Historic Preservation Office (SHPO) approve or deny completed applications within specified timeframes and issue preapproval letters and certificates of completed rehabilitation accordingly. Furthermore, the bill stipulates that the SHPO can revoke preapproval letters or certificates if the rehabilitation is not undertaken as represented or if unapproved alterations are made within five years of the tax year in which the certificate was issued.
Significant timelines and deadlines are established, including the requirement for taxpayers to initially claim the credit within five years of the issuance of the certificate of completed rehabilitation. The bill also sets deadlines for the SHPO to approve or deny applications and issue certificates, as well as timelines for the commencement and completion of rehabilitation projects. Additionally, the bill requires the SHPO to submit an annual economic impact report to the legislature, detailing the rehabilitation projects, their costs, and the economic benefits generated.
The additional context further refines the bill by specifying that the SHPO may issue a certificate of completed rehabilitation in excess of the preapproved amount under certain conditions and may inspect historic resources at any time during the rehabilitation process. The bill also clarifies the eligibility of historic resources for the tax credit, including those listed on the National Register of Historic Places, state register of historic sites, or designated by local ordinances. It allows for the monetization and assignment of credits, with specific provisions for the irrevocable assignment and reassignment of credits, and outlines the process for claiming and transferring these credits.
The bill also introduces a provision allowing qualified taxpayers to elect to forgo the carryover period and receive a refund of 90% of the credit amount that exceeds their tax liability for projects with credit amounts less than $500,000, starting after December 31, 2023. It establishes a detailed process for revoking credits if the historic resource is sold or altered within five years of the certificate issuance and outlines the percentage of the credit to be added back to the taxpayer's liability based on the timing of the revocation. The bill mandates that taxpayers notify the SHPO and the department of their intent to transfer or sell the historic resource at least 60 days before the proposed sale or transfer and provides conditions under which the transfer or sale can occur without triggering the addback provision.
The bill allows the SHPO to impose fees to cover administrative costs, including hiring additional staff, and requires taxpayers to attach specific documentation to their annual tax returns when claiming the credit. It also permits the SHPO to promulgate rules to implement the section and mandates an annual economic impact report to the legislature. The bill defines key terms such as "historic resource," "qualified expenditures," "qualified taxpayer," and various categories of historic resources, ensuring clarity and consistency in the application of the tax credits.
Co-sponsored by Reps.
Referred to the Committee on Tax Policy
