Michigan Amendment Exempts Gift Annuity Payments From Withholding

As noted in the March eRate, Michigan  revised its tax law to provide for withholding of Michigan income taxes from pension and annuity payments, effective January 1, 2012.  While the revision did not specifically mention gift annuities, it did appear that in certain circumstances they could be subject to the withholding requirement. 

In late April a bill seeking to amend the recently revised law was introduced, and included a provision that exempts gift annuities from the withholding requirement. That bill (SB 1104), was adopted and signed by the Governor on June 25, 2012. Relevant to gift annuities, the amendment provides:

“(15) A person who disburses annuity payments pursuant to the terms of a qualified charitable gift annuity is not required to deduct and withhold a tax on those payments as prescribed under subsection(1).  As used in this subsection, “qualified charitable gift annuity” means an annuity described under Section 501(m)(5) of the internal revenue code and issued by an organization exempt under section 501(c)(3) of the internal revenue code.”           

Read the full text of SB 1104 (Public Act 217 of 2012).

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