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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
tax credit; charitable organizations; adjustment
Purpose
Expands the definitions of qualified individual and services for the purposes of qualifying charitable organizations (QCOs) and qualifying foster care charitable organizations (QFCOs). Requires, for taxable years beginning January 1, 2023, the amount of the Credit for Contribution to QCOs and the Credit for Contribution to QFCOs to be annually adjusted for inflation.
Background
Statute allows an individual tax credit for voluntary cash contributions to: 1) a QFCO of up to $500 for a single individual or head of household or $1,000 for a married couple filing jointly; and 2) a QCO 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 QCO is a 501(c)(3) nonprofit organization or a designated community action agency that receives Community Services Block Grant Program monies. A QCO 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 QFCO is a QCO 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. Services are cash assistance, medical care, child care, food, clothing, shelter, job placement and job training services or any other assistance that is reasonably necessary to meet immediate basic needs and that is provided and used in Arizona (A.R.S. § 43-1088).
The Joint Legislative Budget Committee fiscal note for H.B. 2693, as introduced, estimates that adjusting the Credit for Contribution to QCOs and the Credit for Contribution to QFCOs for inflation annually will reduce state General Fund revenues by $1 million each year beginning in FY 2024 (JLBC fiscal note).
Provisions
1. Expands the definition of qualified individual by removing the age requirement for 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 15 years old; or
iii. reunification after reaching 14 years old.
2. Expands the definition of services, for the purposes of a QFCO, by removing shelter and adding:
a) behavioral health services;
b) character education programs;
c) workforce development programs;
d) secondary education student retention programs;
e) housing or financial literacy services; and
f) any other assistance that is reasonably necessary to meet basic needs or provide normalcy and that is provided and used in Arizona.
3. Requires, for taxable years beginning January 1, 2023, the Arizona Department of Revenue to adjust the dollar amounts of the Credit for Contribution to QCOs and the Credit for Contribution to QFCOs according to the average annual change in the Metropolitan Phoenix Consumer Price Index published by the U. S. Department of Labor, Bureau of Labor Statistics.
4. Prohibits the dollar amounts from being revised below the amounts allowed in the prior taxable year and requires the amount to be raised to the nearest whole dollar.
6. Defines behavioral health services, character education program, job training services, normalcy and workforce development program.
7. Makes technical and conforming changes.
8.
Becomes effective on the general effective date, retroactive to taxable
years beginning
January 1, 2022.
Amendments Adopted by Committee
2. Makes technical changes.
Amendments Adopted by Committee of the Whole
1. Modifies the definition of qualified individual by lowering the age threshold for certain categories of persons under 27 years old who left foster care for specified reasons.
2. Expands the definition of services, for the purposes of a QFCO, by removing shelter and adding:
a) behavioral health services;
b) character education programs;
c) workforce development programs;
d) secondary education student retention programs;
e) housing or financial literacy services; and
f) any other assistance that is reasonably necessary to meet basic needs or provide normalcy and that is provided and used in Arizona.
3. Specifies that food, for the purposes of the definition of services applicable to a QFCO, includes snacks at a QFCO's foster youth event.
4. Defines terms.
5. Makes technical and conforming changes.
House Action Senate Action
WM 2/16/22 DP 7-2-0-1 FIN 3/16/22 DPA 9-1-0
3rd Read 2/23/22 51-8-1
Prepared by Senate Research
June 22, 2022
MG/slp