Changes to Tax Credits for Contributions to Qualifying Charities

HOUSE BILL 2286

CHAPTER 80

CHANGES TO THE CREDIT FOR CONTRIBUTIONS TO QUALIFYING CHARITABLE ORGANIZATIONS

A.R.S. §43‐1088

The individual income tax credit is for voluntary cash contributions made by the taxpayer during the taxable year to a qualifying charitable organization of up to $200 in any taxable year for a single individual or a head of household and up to $400 in any taxable year for a married couple filing a joint return. There is a 5‐year carry forward.

The credit can only be taken if the taxpayer itemizes deductions in the taxable year. There is no longer any baseline amount, 1996 or otherwise. If the taxpayer donates money to the qualified charity and itemizes their deductions, they are eligible to take the credit.

The definition of a qualifying charitable organization has been expanded. This still has to be a 501(c) (3) organization or a designated community action agency that receives community services block grant program monies pursuant to 42 United States Code section 9901. The organization must spend at least 50% of its budget on services to Arizona residents who receive temporary assistance for needy families or low income Arizona residents and their households OR TO CHRONICALLY ILL OR PHYSICALLY DISABLED CHILDREN WHO ARE ARIZONA RESIDENTS. Chronically ill or physically disabled is defined in section 36‐262 as children who are under 21 years of age and whose primary diagnosis is a severe physical condition which may require ongoing medical or surgical intervention. Services to residents means 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.

CERTIFICATION PROCESS:

  1. The qualifying charitable organization must provide ADOR with a written certification that it meets all criteria to be considered a qualifying charitable organization.
  2. The written certification must be signed by an officer of the organization under the penalty of perjury.
  3. The written certification must include
    • verification of the organization’s 501(c)(3) status or verification that the organization is a designated community action agency
    • financial statements indicating the organization’s budget for the prior operating year and the amount of the revenue spent on services to Arizona residents who either
      1. receive Temporary Assistance of Needy Families (TANF) benefits
      2. are low income residents
      3. are chronically ill or disabled children
    • a statement that the organization plans to continue spending at least 50% of its budget on services to the qualified people.

ADOR shall review each written certification and determine if the organization meets the criteria to be considered a qualifying charitable organization. ADOR shall notify the organization of its determination. ADOR may periodically request recertification from the organization.

All charitable organizations that have previously submitted a written certification must send ADOR another written certification containing all the information required above. An organization that fails to recertify:

  1. No longer qualifies as a qualifying charitable organization and shall be removed from the list.
  2. May be added at a later date if it supplies the required information and is determined to be a qualified charity by ADOR.
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