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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
tax credit; foster care organizations
Purpose
Retroactive to taxable years beginning January 1, 2022, expands eligibility for the Credit for Contribution to Qualifying Charitable Organizations by deeming optional the criteria for a qualifying foster care charitable organization to spend 50 percent of its budget on services to qualified individuals and expands the definition of qualified individual.
Background
Statute allows an individual tax credit for voluntary cash contributions to a qualifying foster care charitable organization of up to $500 for a single individual or head of household or $1,000 for a married couple filing jointly.
A qualifying
charitable organization is a 501(c)(3) nonprofit organization or a
designated community action agency that receives Community Services Block Grant
Program monies. A qualifying charitable organization must spend at least
50 percent of its annual budget on services to: 1) Arizona residents who
receive Temporary Assistance for Needy Families benefits;
2) low-income Arizona residents and their households; or 3) Arizona residents
who have a chronic illness or physical disability. A qualifying charitable
organization must provide a signed, written certification to the Arizona
Department of Revenue that includes verification of the organization’s federal
participation status and financial data on the prior year's budget spent on
qualifying services.
A qualifying foster care charitable organization is a qualifying charitable organization that also: 1) provides services to at least 200 qualified individuals in Arizona and 2) spends at least 50 percent of its budget on services to qualified individuals in Arizona. A qualified individual is a child placed in a foster home or child welfare agency or a person who is under 21 years old and is participating in a transitional living program (A.R.S. § 43-1088).
If expanding the definitions of qualifying foster care charitable organization and qualified individual result in additional approved claims of the Credit for Contribution to Qualifying Charitable Organizations, there may be a fiscal impact to the state General Fund.
Provisions
1. Expands the definition of qualifying foster care charitable organization by allowing an organization to be certified as a qualifying charitable organization in lieu of the requirement that the organization spend at least 50 percent of its budget on services to qualified individuals in Arizona.
2. Expands the definition of qualified individual by removing the age requirement for a person participating in a transitional independent living program and adding a person who is:
a) participating in an independent living program;
b) participating in an extended foster care program; or
c) under 27 years old whose reason for leaving foster care is:
i. reaching 18 years old;
ii. adoption or legal guardianship after reaching 16 years old; or
iii. reunification at 14 years old or 15 years old.
3. Makes technical and conforming changes.
4.
Becomes effective on the general effective date, retroactive to taxable
years beginning
January 1, 2022.
Prepared by Senate Research
January 24, 2022
MG/KJA/slp