Sec. 1. Short title. This act shall be known and may be cited as the "Michigan Tax Relief and Property Protection Act".

Sec. 2. Legislative findings and intent. The legislature finds that:

• This state imposes a flat income tax rate of 4.25 percent on all residents regardless of financial circumstance, placing a disproportionate burden on working families, lower-income households, and residents living paycheck to paycheck.
• The average Michigan family pays approximately $1,496 annually in state income taxes, a sum that for families earning under $125,000 represents a significant and often crushing financial obligation.
• Thousands of residents carry accumulated state tax debt that compounds year over year, trapping working families in a cycle of penalties, interest, and financial hardship from which they cannot escape.
• Michigan families should not be penalized by the state for being working class, and the purpose of state government is to serve its people rather than to extract wealth from those who have the least to give.
• The foreclosure crisis in this state continues to displace families, destroy communities, and destabilize neighborhoods, with banks and financial institutions wielding foreclosure as a weapon against homeowners who fall into temporary hardship.
• A brief and structured moratorium on residential foreclosures will provide working families the breathing room necessary to stabilize their financial situations without permanently relieving them of their payment obligations.
• Government assistance programs exist to bridge the gap between financial hardship and recovery, and it is the obligation of the state to connect residents with those resources.
• The Constitution of the United States and the state constitution obligate the state to act in the best interest of the health, safety, welfare, and economic security of the people of this state.

Sec. 3. Definitions. As used in this act:

• "Accumulated state tax debt" means all outstanding state income tax liability, including associated penalties and interest, owed to this state and accrued prior to the effective date of this act.
• "Department" means the department of treasury.
• "Authority" means the Michigan state housing development authority.
• "Lending entity" means any financial institution, bank, mortgage servicer, or other lending entity operating within this state.
• "Qualifying resident" means an individual or household with a total annual gross income of $125,000 or less.
• "Residential foreclosure" means a bank-initiated or lender-initiated foreclosure proceeding against residential real property located in this state.
• "State income tax" means the income tax obligations imposed by this state, and does not include federal income tax obligations, local or city income taxes, business taxes, or any tax liability owed to an entity other than this state.
• "Moratorium period" means the 90-day period described in section 5.

Sec. 4. Forgiveness of state tax obligations for qualifying residents. All state income tax obligations and accumulated state tax debt owed to this state are forgiven, relieved, and permanently discharged for any qualifying resident. This forgiveness applies to all outstanding state income tax debt accumulated prior to the effective date of this act. A qualifying resident shall not be pursued, penalized, garnished, or otherwise compelled to repay forgiven state tax debt by any state agency, department, or court.

Sec. 5. Scope of tax relief. The relief provided under this act applies exclusively to state income tax obligations and accumulated state tax debt. It does not apply to federal income tax obligations, local or city income taxes, business taxes, or any tax liability owed to an entity other than this state. Within 30 days after the effective date of this act, the department shall publish clear public guidance describing how qualifying residents may confirm that their state tax debt has been forgiven and removed from their record.

Sec. 6. Eligibility determination. A qualifying resident whose total annual gross income of $125,000 or less is reported on the resident's most recent state tax return automatically qualifies for relief under this act. The department shall:

• Establish a streamlined process by which residents who have not filed recent returns may apply for relief under this act.
• Provide any resident who has not filed recent returns the opportunity to file and qualify before denying relief, and shall not deny relief solely because of unfiled returns without first affording that opportunity.

Sec. 7. Moratorium on residential foreclosures. For a period of 90 days beginning on the effective date of this act, all bank-initiated and lender-initiated residential foreclosures in this state are suspended. During the moratorium period, a lending entity shall not initiate, advance, or complete a residential foreclosure proceeding.

Sec. 8. Conditions of the foreclosure moratorium. The moratorium established under section 7 is conditional and does not constitute unconditional relief from a homeowner's payment obligations. The following conditions apply:

• To maintain protection under this act, a homeowner shall continue making the regular scheduled mortgage payments required under the homeowner's existing loan agreement throughout the moratorium period.
• A homeowner who fails to maintain regular scheduled payments during the moratorium period forfeits protection under this act, and foreclosure proceedings against that property may resume immediately.
• This section exists to protect homeowners in hardship and does not relieve any homeowner of the obligation to make payments.

Sec. 9. Availability of government assistance. During the moratorium period, the state shall actively connect qualifying homeowners with all available federal and state assistance programs, including the Michigan homeowner assistance fund, emergency mortgage relief programs, HUD-approved housing counseling services, and federal hardship relief programs. Within 15 days after the effective date of this act, the authority shall establish a dedicated telephone hotline and online portal to assist homeowners in accessing these resources before the moratorium period expires.

Sec. 10. Lender compliance and enforcement. Compliance with this act is mandatory. A lending entity that initiates, advances, or completes a residential foreclosure proceeding in violation of this act is subject to all of the following:

• Immediate suspension of its license to operate within this state.
• A civil penalty of up to $50,000 for each violation.
• Referral to the attorney general for prosecution.

Sec. 11. Permanent framework; continuing legislative policy. It is the policy of this state to maintain a permanent income threshold below which residents are exempt from state income tax and to maintain a permanent framework for foreclosure protection and homeowner assistance during times of economic hardship. The department and the authority shall administer this act consistent with that policy.

Sec. 12. Agency coordination and reporting. The department, the authority, and all other relevant state agencies shall fully implement and enforce this act within their respective jurisdictions and shall report compliance to the office of the governor within 30 days after the effective date of this act.

Sec. 13. Effective date. This act takes effect 90 days after the date it is enacted into law.