tax credit; fraud prevention organizations

HB2836 - 572R - I Ver

REFERENCE TITLE:
tax credit; fraud prevention organizations

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 2836

Introduced by

Representative
Weninger

AN
ACT

amending section 43-1088, Arizona
Revised Statutes; relating to income tax credits.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 43-1088, Arizona Revised
Statutes, is amended to read:

START_STATUTE
43-1088.

Credit for contribution to qualifying charitable organizations
and qualifying foster care charitable organizations; definitions

A. Except as provided in
subsections B and C of this section, a credit is allowed against the taxes
imposed by this title for voluntary cash contributions by the taxpayer or on
the taxpayer's behalf pursuant to section 43-401, subsection G during the
taxable year to a qualifying charitable organization, other than a qualifying
foster care charitable organization, not to exceed:

1. $400 in any taxable
year for a single individual or a head of household.

2. $800 in any taxable
year for a married couple filing a joint return.

B. A separate credit is
allowed for voluntary cash contributions during the taxable year to a
qualifying foster care charitable organization. A contribution to a
qualifying foster care charitable organization does not qualify for, and shall
not be included in, any credit amount under subsection A of this
section. If the voluntary cash contribution by the taxpayer or on
the taxpayer's behalf pursuant to section 43-401, subsection G is to a
qualifying foster care charitable organization, the credit shall not exceed:

1. $500 in any taxable
year for a single individual or a head of household.

2. $1,000 in any taxable
year for a married couple filing a joint return.

C. Subsections A and B of this section provide
separate credits against taxes imposed by this title depending on the
recipients of the contributions. A taxpayer, including a married
couple filing a joint return, in the same taxable year, may either or both:

1. Contribute to a qualifying charitable
organization, other than a qualifying foster care charitable organization, and
claim a credit under subsection A of this section.

2. Contribute to a qualifying foster care charitable
organization and claim a credit under subsection B of this section.

D. A husband and wife who file separate returns for
a taxable year in which they could have filed a joint return may each claim
only one-half of the tax credit that would have been allowed for a joint
return.

E. For the purposes of
this section, a contribution for which a credit is claimed and that is made on
or before the fifteenth day of the fourth month following the close of the
taxable year may be applied to either the current or preceding taxable year and
is considered to have been made on the last day of that taxable year.

F. If the allowable tax
credit exceeds the taxes otherwise due under this title on the claimant's
income, or if there are no taxes due under this title, the taxpayer may carry
forward the amount of the claim not used to offset the taxes under this title
for not more than five consecutive taxable years' income tax liability.

G. The credit allowed by
this section is in lieu of a deduction pursuant to section 170 of the internal
revenue code and taken for state tax purposes.

H. For taxable years
beginning from and after December 31, 2022, the department shall adjust the
dollar amounts prescribed in subsection A, paragraphs 1 and 2 of this section
and subsection B, paragraphs 1 and 2 of this section according to the average
annual change in the metropolitan Phoenix consumer price index published by the
United States department of labor, bureau of labor statistics. The
revised dollar amounts shall be raised to the nearest whole
dollar. The dollar amounts may not be revised below the amounts
prescribed in the prior taxable year.

I. Taxpayers taking a
credit authorized by this section shall provide the name of the qualifying
charitable organization and the amount of the contribution to the department on
forms provided by the department.

J. A qualifying
charitable organization shall provide the department with a written
certification that it meets all criteria to be considered a qualifying
charitable organization. The organization shall also notify the
department of any changes that may affect the qualifications under this
section.

K. The charitable
organization's written certification must be signed by an officer of the
organization under penalty of perjury.� The written certification must include
the following:

1. Verification of the
organization's status under section 501(c)(3) of the internal revenue code or
verification that the organization is a designated community action agency that
receives community services block grant program monies pursuant to 42 United
States Code section 9901.

2. Financial data
indicating the organization's budget for the organization's prior operating
year and the amount of that budget spent on services to residents of this state
who either:

(a) Receive temporary
assistance for needy families benefits.

(b) Are low-income
residents.

(c) Are individuals who
have a chronic illness or physical disability.

(
d
) Are senior citizens who are at risk of financial fraud
and cybercrimes.

3. A statement that the organization plans to
continue directing or spending at least fifty percent of its budget on services
to residents of this state who receive temporary assistance for needy families
benefits, who are low-income residents or who are individuals who have a
chronic illness or physical disability.

4. A statement that the
organization does not provide, pay for or provide coverage of abortions and
does not financially support any other entity that provides, pays for or
provides coverage of abortions.

L. The department shall
review each written certification and determine whether the organization meets
all the criteria to be considered a qualifying charitable organization and
notify the organization of its determination. The department may
also periodically request recertification from the organization.� The
department shall compile and make available to the public a list of the
qualifying charitable organizations.

M. For the purposes of
this section:

1. "Direct"
means providing monies or financial or in-kind assistance to a charitable
organization that is exempt from federal income taxation under section 501(c)(3)
of the internal revenue code and that directly provides services to residents
of this state who receive temporary assistance for needy families benefits, to
low-income residents of this state and their households or to individuals
who have a chronic illness or physical disability and who are residents of this
state.

2. "Individuals who have a chronic illness or
physical disability" means individuals whose primary diagnosis is a severe
physical condition that may require ongoing medical or surgical intervention.

3. "Low-income
residents" means persons whose household income is less than one hundred
fifty percent of the federal poverty level.

4. "Qualified individual"
means any of the following:

(a) A foster child as
defined in section 8-501.

(b) A person who is
participating in an independent living program as prescribed in section 8-521.

(c) A person who is
participating in a transitional independent living program as prescribed by
section 8-521.01.

(d) A person who is participating in an extended
foster care program as prescribed in section 8-521.02.

(e) A person who is under twenty-seven years
of age and whose reason for leaving foster care is any of the following:

(i) Reaching eighteen years of age.

(ii) Adoption or legal guardianship after reaching
fifteen years of age.

(iii) Reunification after reaching fourteen years of
age.

5. "Qualifying
charitable organization" means a charitable organization that is exempt
from federal income taxation under section 501(c)(3) of the internal revenue
code or is a designated community action agency that receives community
services block grant program monies pursuant to 42 United States Code section
9901. The organization must direct or spend at least fifty percent
of its budget on services to residents of this state who receive temporary
assistance for needy families benefits, to low-income residents of this
state and their households
,
or
to
individuals who have a chronic illness or physical disability
or
to senior citizens who are at risk of financial fraud and cybercrimes

and who are residents of this state.� Taxpayers choosing to make donations
through an umbrella charitable organization that collects donations on behalf
of member charities shall designate that the donation be directed to a member
charitable organization that would qualify under this section on a stand-alone
basis. Qualifying charitable organization does not include any
entity that provides, pays for or provides coverage of abortions or that
financially supports any other entity that provides, pays for or provides
coverage of abortions.

6. "Qualifying
foster care charitable organization" means a qualifying charitable
organization that is exempt from federal income taxation under section
501(c)(3) of the internal revenue code or is a designated community action
agency that receives community services block grant program monies pursuant to
42 United States Code section 9901 and that each operating year provides
services to at least two hundred qualified individuals in this state and spends
at least fifty percent of its budget on services to qualified individuals in
this state.

7. "Senior
citizens who are at risk of financial fraud and cybercrimes" means an
individual who is at least sixty-five years of age and who seeks
information on threats and practices relating to financial fraud and
cybercrimes.

7.
8.
"Services" means:

(a) For a qualifying
charitable organization, cash assistance, medical care, behavioral health
services,
financial fraud and cybercrime prevention programs,
child
care, food, clothing, shelter, job placement and job training services,
workforce readiness services, workforce development programs or any other
assistance that is reasonably necessary to meet basic needs and that is
provided and used in this state. For the purposes of this
subdivision:

(i) "Behavioral
health services" has the same meaning prescribed in section 36-401.

(ii) "Job placement
and job training" includes work activities as defined in section 46-101
and any other preparation and training used toward obtaining a high school
equivalency diploma.

(iii) "Workforce
development program" means any program recognized by the workforce Arizona
council pursuant to section 41-5401.

(
iv
) "Financial fraud and cybercrime prevention
program" means any program conducted by a qualifying charitable
organization in this state to protect individuals from practices that seek to
illegally obtain personal and private information, financial data or digital
asset data through persuasion or false pretense and other financial fraud and
cybercrimes.

(b) For a qualifying foster care charitable
organization, cash assistance, medical care, behavioral health services, child
care, food, including snacks at the qualifying foster care charitable organization'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 this state.� For the
purposes of this subdivision:

(i) "Behavioral health services" has the
same meaning prescribed in section 36-401.

(ii) "Character education program" means
any program described in section 15-719, subsection B that is offered by
a qualifying foster care charitable organization.

(iii) "Job training services" has the same
meaning as vocational and technical preparation as defined in section 15-781.

(iv) "Normalcy" means the condition of
experiencing a typical childhood by participating in activities that are age or
developmentally-appropriate, as defined in 42 United States Code
section 675.

(v) "Workforce development program" means
any program recognized by the workforce Arizona council pursuant to section 41-5401.

END_STATUTE

Sec. 2.
Applicability

This act applies to taxable years
beginning from and after December 31, 2026.