SENATE BILL NO. 220
INTRODUCED BY J. BOHLINGER, ELLINGSON
A BILL FOR AN ACT ENTITLED: "AN ACT ALLOWING A REFUNDABLE EARNED INCOME CREDIT BASED
ON A PERCENTAGE OF THE FEDERAL EARNED INCOME CREDIT FOR QUALIFIED FAIM RECIPIENTS;
PROVIDING FOR A PHASED-IN INCREASE OF THE PERCENTAGE AMOUNT OF THE CREDIT ALLOWED;
REQUIRING THE DEPARTMENT OF REVENUE PUBLIC HEALTH AND HUMAN SERVICES TO NOTIFY
TAXPAYERS OF THEIR POTENTIAL ELIGIBILITY FOR THE CREDIT; REQUIRING THE DEPARTMENT OF
REVENUE TO REPORT STATISTICAL INFORMATION ABOUT THE CREDIT TO THE MONTANA
LEGISLATURE AND TO THE GOVERNOR; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE, AND A
RETROACTIVE APPLICABILITY DATE, AND A TERMINATION DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
NEW SECTION. Section 1. Earned income tax credit. (1) There is allowed as a credit against the tax imposed by 15-30-103 the applicable percentage of the credit allowed for the federal earned income credit for which a QUALIFIED resident individual taxpayer is eligible for the tax year under section 32 of the Internal Revenue Code (26 U.S.C. 32).
(2) TO QUALIFY FOR A CREDIT UNDER THIS SECTION, THE TAXPAYER MUST, ON THE LAST DAY OF THE TAX YEAR, HAVE BEEN AN ELIGIBLE FAIM RECIPIENT OF CASH ASSISTANCE UNDER TITLE 53, CHAPTER 4, PART 6.
(2)(3) (A) The amount of the credit allowed under subsection (1) is determined according to the following schedule:
(a)(I), for tax years beginning after December 31, 2000, the amount of the credit is 10% THE PERCENT 25% 15% of
the amount of the credit determined for the tax year under section 32 of the Internal Revenue Code (26 U.S.C. 32)
COMPUTED BY THE DEPARTMENT PURSUANT TO SUBSECTION (2)(B);
(b)(II) for tax years beginning after December 31, 2002, the amount of the credit is 15% of the amount of the credit
determined for the tax year under section 32 of the Internal Revenue Code (26 U.S.C. 32); and
(c)(III) for tax years beginning after December 31, 2004, the amount of the credit is 20% of the amount of the credit
determined for the tax year under section 32 of the Internal Revenue Code (26 U.S.C. 32).
(B) THE DEPARTMENT SHALL ESTABLISH THE RATE FOR THE CREDIT AUTHORIZED IN SUBSECTION
(2)(A) EACH YEAR BY RULE. THE RATE, DETERMINED IN COOPERATION WITH THE DEPARTMENT OF
PUBLIC HEALTH AND HUMAN SERVICES, WILL SET A CREDIT PERCENTAGE RATE THAT, WHEN TAKEN
BY TAXPAYERS, WILL RESULT IN A DOLLAR AMOUNT OF CREDIT THAT WILL EQUAL, AS CLOSELY AS
POSSIBLE, THE AMOUNT THAT THE STATE IS EXPECTED TO RECEIVE FROM THE TEMPORARY
ASSISTANCE TO NEEDY FAMILIES BLOCK GRANT.
(3)(4) Except for married taxpayers living apart who are treated as single under section 7703(b) of the Internal Revenue
Code (26 U.S.C. 7703(b)), the credit is not allowed to married taxpayers if the husband and wife report their income on
separate tax returns.
(4)(5) In the case of married taxpayers filing separately on the same return, the tax credit allowed under this section may
be applied against the tax of either the husband or the wife or divided between them as they may elect.
(5)(6) The credit is not allowed for temporary residents or nonresidents of the state.
(6)(7) The taxpayer is entitled to a refund equal to the amount by which the credit exceeds the taxpayer's tax liability or,
if the taxpayer has no tax liability, a refund equal to the amount of the credit.
NEW SECTION. Section 2. Notification of availability of earned income credit. The department OF PUBLIC
HEALTH AND HUMAN SERVICES shall periodically, but not less than every 3 years, make efforts to inform taxpayers
that they may be eligible to receive the credit allowed under [section 1]. In making a determination of whether a taxpayer
may be eligible for the credit, the department shall use data as may be appropriate and available, including but not limited
to data from the U.S. department of the treasury, the internal revenue service, and Montana income tax returns for previous
tax years.
NEW SECTION. Section 3. Report on earned income credit. (1) The department shall report to the revenue and taxation interim committee at least once each year the number of taxpayers claiming the credit under [section 1] and the total credit claimed. The report must also include but is not limited to information about the average credit claimed and the number of credits and the average credit claimed by taxpayers in each county.
(2) The department shall also report the information required under subsection (1) to the Montana legislature and the governor during each regular session of the legislature.
NEW SECTION. SECTION 4. FUND TRANSFER PAYMENT OF FEDERAL FUNDS. EACH YEAR, THE
DEPARTMENT OF PUBLIC HEALTH AND HUMAN SERVICES SHALL TRANSFER PAY, TO THE EXTENT
PERMITTED UNDER FEDERAL LAW, FROM THE TEMPORARY ASSISTANCE TO NEEDY FAMILIES BLOCK
GRANT RECEIVED AS FEDERAL SPECIAL REVENUE TO THE GENERAL FUND THE AMOUNT NECESSARY
TO PAY THE REFUNDABLE PORTION OF THE EARNED INCOME CREDIT ALLOWED IN [SECTION 1].
NEW SECTION. Section 5. Codification instruction. (1) [Section 1] is intended to be codified as an integral part of Title 15, chapter 30, part 1, and the provisions of Title 15, chapter 30, part 1, apply to [section 1].
(2) [Sections 2 and 3] are intended to be codified as an integral part of Title 15, chapter 1, part 2, and the provisions of Title 15, chapter 1, part 2, apply to [sections 2 and 3].
NEW SECTION. Section 6. Effective date. [This act] is effective on passage and approval.
NEW SECTION. Section 7. Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to tax years beginning after December 31, 2000.
NEW SECTION. SECTION 8. TERMINATION. [THIS ACT] TERMINATES DECEMBER 31, 2002.
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Latest Version of SB 220 (SB0220.05)
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