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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
REVISED
AMENDED
tax credit; foster care organizations
Purpose
Retroactive to taxable years beginning January 1, 2022, requires the amount of the Credit for Contribution to Qualifying Charitable Organizations and the Credit for Contribution to Qualifying Foster Care Charitable Organizations to be annually adjusted for inflation. Expands the definition of qualified individual.
Background
Statute allows an individual tax credit for voluntary cash contributions to: 1) 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; and 2) a qualifying charitable organization of up to $400 for a single individual or head of household or $800 for a married couple filing jointly. A taxpayer may contribute to either or both types of organizations and claim a credit for either or both credits.
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).
The Joint Legislative Budget Committee fiscal note estimates that adjusting the Credit for Contribution to Qualifying Charitable Organizations and the Credit for Contribution to Qualifying Foster Care Charitable Organizations for inflation annually will reduce state General Fund revenues by $1 million each year beginning in FY 2024 (JLBC).
Provisions
1. 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.
2. Requires the Arizona Department of Revenue to adjust the amount of the Credit for Contribution to Qualifying Charitable Organizations and the Credit for Contribution to Qualifying Foster Care Charitable Organizations according to the annual change in the metropolitan Phoenix Consumer Price Index.
3. Prohibits the dollar amount of the credits from being revised below the amounts allowed in the prior taxable year and requires the amount to be raised to the nearest whole dollar.
4. Makes technical and conforming changes.
5.
Becomes effective on the general effective date, retroactive to taxable
years beginning
January 1, 2022.
Amendments Adopted by Committee
1. Removes the expansion of the Credit for Contribution to Qualifying Foster Care Charitable Organizations.
2. Adds an annual inflation adjustment for the Credit for Contribution to Qualifying Charitable Organizations and the Credit for Contribution to Qualifying Foster Care Charitable Organizations.
Revisions
· Updates the fiscal impact statement.
Senate Action
FIN 1/26/22 DPA 8-2-0
Prepared by Senate Research
February 4, 2022
MG/slp