House bill NO. 225

INTRODUCED BY C. Sprunger, A. Buckley, B. Mercer, J. Fuller, R. Lynch, M. Noland, D. Harvey, Z. Wirth

By Request of the ****

A BILL FOR AN ACT ENTITLED: "AN ACT PROVIDING FOR AN ADOPTION TAX CREDIT; PROVIDING THAT THE TAX CREDIT IS REFUNDABLE; PROVIDING RULEMAKING AUTHORITY; providing a definition; AMENDING SECTION 15-30-2303, MCA; and PROVIDING AN immediate effective date, a retroactive APPLICABILITY DATE, and a termination date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

Section 1. Adoption tax credit -- rulemaking. (1) A resident taxpayer is allowed a credit against the tax imposed by 15-30-2103 or 15-30-2151 for the legal adoption of an eligible child on or after July 1, 2022.

(2) The amount of the credit allowed under subsection (1) is equal to:

(a) $7,500 in the tax year the adoption is final if the eligible child was in foster care under the custody of the state as provided in Title 41, chapter 3, at the time of adoption; or

(b) $5,000 in the tax year the adoption is final if the eligible child does not meet the requirements of subsection (2)(a).

(3) To claim the credit under this section, the taxpayer shall:

(a) include the name, age, location of birth, and federal tax identification number, if known, of the eligible child on the tax return; and

(b) provide other information as required by the department, including the identification of an agent assisting with the adoption.

(4) 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 under this chapter, a refund equal to the amount of the credit. The credit may be claimed by filing a Montana income tax return.

(5) Only one credit is allowed for each eligible child.

(6) The department shall adopt rules to administer this credit.

(7) For the purposes of this section, "eligible child" means a child under the age of 18 or a person who is physically or mentally incapable of providing self-care.

Section 2. Section 15-30-2303, MCA, is amended to read:

"15-30-2303. Tax credits subject to review by interim committee. (1) The following tax credits must be reviewed during the biennium commencing July 1, 2019, and during each biennium commencing 10 years thereafter:

(a) the credit for contractor's gross receipts provided for in 15-50-207; and

(b) the credit for elderly homeowners and renters provided for in 15-30-2337 through 15-30-2341.

(2) The following tax credits must be reviewed during the biennium commencing July 1, 2021, and during each biennium commencing 10 years thereafter:

(a) the credit for donations to an educational improvement account provided for in 15-30-2334, 15-30-3110, and 15-31-158; and

(b) the credit for donations to a student scholarship organization provided for in 15-30-2335, 15-30-3111, and 15-31-159; and

(3) The following tax credits must be reviewed during the biennium commencing July 1, 2023, and during each biennium commencing 10 years thereafter:

(a) the credit for infrastructure use fees provided for in 17-6-316;

(b) the credit for contributions to a qualified endowment provided for in 15-30-2327 through 15-30-2329, 15-31-161, and 15-31-162; and

(c) the credit for property to recycle or manufacture using recycled material provided for in Title 15, chapter 32, part 6.

(4) The following tax credits must be reviewed during the biennium commencing July 1, 2025, and during each biennium commencing 10 years thereafter:

(a) the credit for preservation of historic buildings provided for in 15-30-2342 and 15-31-151;

(b) the credit for unlocking state lands provided for in 15-30-2380;

(d) the credit for trades education and training provided for in 15-30-2359 and 15-31-174.

(5) The following tax credits must be reviewed during the biennium commencing July 1, 2027, and during each biennium commencing 10 years thereafter:

(a) the credit for hiring a registered apprentice or veteran apprentice provided for in 15-30-2357 and 15-31-173;

(b) the earned income tax credit provided for in 15-30-2318; and

(6) The revenue interim committee shall review the tax credits scheduled for review and make recommendations in accordance with 5-11-210 at the conclusion of the full review to the legislature about whether to eliminate or revise the credits. The committee shall also review any tax credit with an expiration date or termination date that is not listed in this section in the biennium before the credit is scheduled to expire or terminate.

(7) The revenue interim committee shall review the credits using the following criteria:

(a) whether the credit changes taxpayer decisions, including whether the credit rewards decisions that may have been made regardless of the existence of the tax credit;

(b) to what extent the credit benefits some taxpayers at the expense of other taxpayers;

(d) the timing of costs and benefits of the credit and how long the credit is effective;

(e) any adverse impacts of the credit or its elimination and whether the benefits of continuance or elimination outweigh adverse impacts; and

(f) the extent to which benefits of the credit affect the larger economy. (Subsection (4)(d) terminates December 31, 2026--sec. 7, Ch. 248, L. 2021; subsection (4)(c) terminates December 31, 2028--sec. 24(1), Ch. 550, L. 2021.)"

Section 3. Codification instruction. [Section 1] is intended to be codified as an integral part of Title 15, chapter 30, part 23, and the provisions of Title 15, chapter 30, part 23, apply to [section 1].

Section 4. Effective date. [This act] is effective on passage and approval.

Section 5. Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to eligible adoptions on or after July 1, 2022, claimed on tax returns filed for tax years beginning after December 31, 2022.

Section 6. Termination. [This act] terminates December 31, 2031.