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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
tax credit qualifying charitable organizations
Purpose
Modifies the definitions of qualifying charitable organizations (QCOs) and services for the purposes of the Credit for Contributions to QCOs.
Background
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 (TANF) benefits;
2) low-income Arizona residents and their households; or
3) Arizona residents who have a chronic illness or physical disability. A qualifying
foster care charitable organization (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.
For QCOs, services include 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. For QFCOs, services include cash assistance, medical care, behavioral health services, child care, food, including snacks at the QFCO's foster youth events, clothing, shelter, job placement services, job training services, character education programs, workforce development programs, secondary education student retention programs, housing or financial literacy services or any other assistance that is reasonably necessary to meet basic needs or provide normalcy and that is provided and used in Arizona.
For TY 2025, statute allows an individual income tax credit for voluntary cash contributions to: 1) a QFCO of up to $618 for a single individual or head of household or $1,234 for a married couple filing jointly; and 2) a QCO of up to $495 for a single individual or head of household or $987 for a married couple filing jointly. A taxpayer may contribute to either or both types of organizations and claim a tax credit for either or both credits (A.R.S. § 43-1088).
The Joint Legislative Budget Committee fiscal note on S.B. 1496 estimates that applying the definition of services used for QFCOs to QCOs would increase use of the Credit for Contributions to QCOs resulting in a reduction of state General Fund revenue collections, but the magnitude depends on how broadly the Arizona Department of Revenue interprets the statutes regarding eligible services (JLBC Fiscal Note).
Provisions
1. Modifies the definition of QCO to require the QCO to direct or spend, rather than only spend, at least 50 percent of its budget on services to Arizona residents who receive TANF benefits, are low-income or have a chronic illness or physical disability.
2. Defines direct as providing or allocating monies or financial or in-kind assistance to a QCO.
3. Eliminates the definition of services used for QCOs and applies the definition of services used for QFCOs to QCOs.
4. Redefines job training services as job placement and job training services and includes in the definition work activities, as defined, and any other preparation and training used toward obtaining a high school equivalency diploma.
5. Makes technical and conforming changes.
6. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Defines direct as providing or allocating monies or financial or in-kind assistance to a qualifying charitable organization.
2. Makes technical and conforming changes.
Senate Action
FIN 2/10/25 DP 4-3-0
Prepared by Senate Research
February 25, 2025
MG/ci