HOUSE BILL No. 4563 April 22, 1999, Introduced by Reps. Stallworth and Vaughn and referred to the Committee on Tax Policy. A bill to amend 1893 PA 206, entitled "The general property tax act," by amending section 9 (MCL 211.9), as amended by 1996 PA 582. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 9. The following personal property is exempt from 2 taxation: 3 (a) The personal property of NONPROFIT CORPORATIONS, SOCIE- 4 TIES, AND ORGANIZATIONS, INCLUDING charitable, educational, and 5 scientific institutions incorporated under the laws of this 6 state. This exemption does not apply to secret or fraternal 7 societies, but the personal property of all charitable homes of 8 the NONPROFIT CORPORATIONS, societies,and nonprofit9corporationsOR ORGANIZATIONS that own and operate facilities 10 for the aged and chronically ill in which the net income from the 11 operation of the corporations, SOCIETIES, OR ORGANIZATIONS does 02541'99 FDD 2 1 not inure to the benefit of a person other than the residents is 2 exempt. 3 (b) The property of all library associations, circulating 4 libraries, libraries of reference, and reading rooms owned or 5 supported by the public and not used for gain. 6 (c) The property of posts of the grand army of the republic, 7 sons of veterans' unions, and of the women's relief corps con- 8 nected with them, of young men's Christian associations, women's 9 Christian temperance union associations, young people's Christian 10 unions, a boy or girl scout or camp fire girls organization, 4-H 11 clubs, and other similar associations. 12 (d) Pensions receivable from the United States. 13 (e) The property of Indians who are not citizens. 14 (f) The personal property owned and used by a householder 15 such as customary furniture, fixtures, provisions, fuel, and 16 other similar equipment, and the wearing apparel including per- 17 sonal jewelry, family pictures, school books, library books of 18 reference, and allied items. Personal property is not exempt 19 under this subdivision if it is used to produce income, if it is 20 held for speculative investment, or if it constitutes an inven- 21 tory of goods for sale in the regular course of trade. 22 (g) Household furnishings, provisions, and fuel to the state 23 equalized value of not more than $5,000.00, of each social or 24 professional fraternity, sorority, and student cooperative house 25 recognized by the educational institution at which it is 26 located. 02541'99 3 1 (h) The working tools of a mechanic to the state equalized 2 value of not more than $500.00. "Mechanic", as used in this 3 subdivision, means a person skilled in a trade pertaining to a 4 craft or in the construction or repair of machinery if the 5 person's employment by others is dependent on his or her furnish- 6 ing the tools. 7 (i) Fire engines and other implements used in extinguishing 8 fires owned or used by an organized or independent fire company. 9 (j) Property actually being used in agricultural operations 10 and the farm implements held for sale or resale by retail servic- 11 ing dealers for use in agricultural production. As used in this 12 subdivision, "agricultural operations" means farming in all its 13 branches, including cultivation of the soil, growing and harvest- 14 ing of an agricultural, horticultural, or floricultural commodi- 15 ty, dairying, raising of livestock, bees, fur-bearing animals, or 16 poultry, turf and tree farming, raising and harvesting of fish, 17 and any practices performed by a farmer or on a farm as an inci- 18 dent to, or in conjunction with, farming operations, but exclud- 19 ing retail sales and food processing operations. Property used 20 in agricultural operations includes machinery used to prepare the 21 crop for market operated incidental to a farming operation that 22 does not substantially alter the form, shape, or substance of the 23 crop and is limited to cleaning, cooling, washing, pitting, grad- 24 ing, sizing, sorting, drying, bagging, boxing, crating, and han- 25 dling if not less than 33% of the volume of the crops processed 26 in the year ending on the applicable tax day or in at least 3 of 27 the immediately preceding 5 years were grown by the farmer in 02541'99 4 1 Michigan who is the owner or user of the crop processing 2 machinery. 3 (k) Personal property to the state equalized value of not 4 more than $500.00 used by a householder in the operation of a 5 business in the householder's dwelling or at 1 other location in 6 the city, township, or village where the householder resides. 7 (l) The products, materials, or goods processed or otherwise 8 and in whatever form, but expressly excepting alcoholic bever- 9 ages, located in a public warehouse, United States customs port 10 of entry bonded warehouse, dock, or port facility on December 31 11 of each year, if those products, materials, or goods are desig- 12 nated as in transit to destinations out of state pursuant to the 13 published tariffs of a railroad or common carrier by the filing 14 of the freight bill covering the products, materials, or goods 15 with the agency designated by the tariffs, so as to entitle the 16 shipper to transportation rate privileges. Products in a United 17 States customs port of entry bonded warehouse that arrived from 18 another state or a foreign country, whether awaiting shipment to 19 another state or to a final destination within this state, are 20 considered to be in transit and temporarily at rest, and not 21 subject to personal property taxation. To obtain exemption, the 22 owner shall file a sworn statement with, and in the form required 23 by, the assessing officer of the tax district in which the ware- 24 house, dock, or port facility is located, at a time between the 25 tax day, December 31, and before closing of the assessment rolls 26 by the assessing officer, describing the products, materials, or 27 goods, and reporting their cost and value as of December 31 of 02541'99 5 1 each year. The status of persons, and products, materials, or 2 goods for which exemption is requested shall be determined as of 3 December 31, which shall be the tax day. The assessment on the 4 basis of average monthly inventory does not apply in valuing pro- 5 ducts, materials, or goods for which exemption is requested. Any 6 property located in a public warehouse, dock, or port facility on 7 December 31 of each year, which is exempt from taxation under 8 this subdivision but which is not shipped outside the state pur- 9 suant to the particular tariff under which the transportation 10 rate privilege was established, shall be assessed upon the next 11 succeeding or a subsequent assessment roll by the assessing offi- 12 cer and taxed at the same rate of taxation as other taxable prop- 13 erties for the year or years for which the property was exempted, 14 to the owner at the time of the omission, unless the owner or 15 person entitled to possession of the products, materials, or 16 goods is a resident of, or authorized to do business in, this 17 state and files with the assessing officer, with whom statements 18 of taxable property are required to be filed, a statement under 19 oath that the products, materials, or goods are not for sale or 20 use in this state and will be shipped to a point or points out- 21 side this state. If a person, firm, or corporation claims exemp- 22 tion by the filing of a sworn statement, the person, firm, or 23 corporation shall append to the statement of taxable property 24 required to be filed in the next year or, if a statement of tax- 25 able property is not filed for the next year, a sworn statement 26 on a form required by the assessing officer shall be filed 27 showing a complete list of the property for which the exemption 02541'99 6 1 was claimed with a statement of the manner of shipment and of the 2 point or points to which the products, materials, or goods were 3 shipped from the public warehouse, dock, or port facility and the 4 products, materials, or goods not shipped to a point or points 5 outside this state shall be assessed upon the next succeeding 6 assessment roll, or on a subsequent assessment roll by the 7 assessing officer and taxed at the same rate of taxation as other 8 taxable properties for the year or years for which the property 9 was exempted, to the owner at the time of the omission. The 10 records, accounts, and books of warehouses, docks, or port facil- 11 ities, individuals, partnerships, corporations, owners, or those 12 in possession of tangible personal property shall be open to and 13 available for inspection, examination, or auditing by assessing 14 officers. A warehouse, dock, or port facility, individual, part- 15 nership, corporation, owner, or person in possession of tangible 16 personal property shall report within 90 days after shipment of 17 products, materials, or goods in transit, for which exemption 18 under this section was claimed or granted, the destination of 19 shipments or parts of shipments and the cost value of those ship- 20 ments to the assessing officer. For failure to comply with this 21 requirement, the warehouse, dock, or port facility, individual, 22 partnership, corporation, or owner is subject to a fine of 23 $100.00 for each omission. A person, firm, individual, partner- 24 ship, corporation, or owner failing to report products, materi- 25 als, or goods located in a warehouse, dock, or port facility to 26 the assessing officer is subject to a fine of $100.00 and a 27 penalty of 50% of the final amount of taxes found to be 02541'99 7 1 assessable for the year on property not reported, the assessable 2 taxes and penalty to be spread on a subsequent assessment roll in 3 the same manner as general taxes on personal property. For the 4 purpose of this subdivision, a public warehouse, dock, or port 5 facility means a warehouse, dock, or port facility owned or oper- 6 ated by a person, firm, or corporation engaged in the business of 7 storing products, materials, or goods for hire for profit who 8 issues a schedule of rates for storage of the products, materi- 9 als, or goods and who issues warehouse receipts pursuant toAct10No. 303 of the Public Acts of 1909, being sections 443.50 to11443.55 of the Michigan Compiled Laws1909 PA 303, MCL 443.50 TO 12 443.55. A United States customs port of entry bonded warehouse 13 means a warehouse within a classification designated by 19 14 C.F.R. 19.1 and which is located in a port of entry, as defined 15 by 19 C.F.R.101.1(m)101.1. A portion of a public warehouse, 16 United States customs port of entry bonded warehouse, dock, or 17 port facility leased to a tenant or a portion of any premises 18 owned or leased or operated by a consignor or consignee or an 19 affiliate or subsidiary of the consignor or consignee shall not 20 be considered a public warehouse, dock, or port facility. 21 (m) Personal property owned by a bank or trust company orga- 22 nized under the laws of this state, national banking association, 23 or incorporated bank holding company as defined in section 2 of 24 the bank holding company act of 1956, chapter 240, 70 Stat. 133, 25 12 U.S.C. 1841, that controls a bank, national banking associa- 26 tion, trust company, or industrial bank subsidiary located in 27 this state. However, buildings owned by a state or national 02541'99 8 1 bank, trust company, or incorporated bank holding company and 2 situated upon lands of which the state or national bank, trust 3 company, or incorporated bank holding company is not the owner of 4 the fee are considered real property and are not exempt from tax- 5 ation and personal property owned by a state or national bank, 6 trust company, or incorporated bank holding company that is 7 leased, loaned, or otherwise made available to and used by a pri- 8 vate individual, association, or corporation in connection with a 9 business conducted for profit is not exempt from taxation. 10 (n) Farm products processed or otherwise, the ultimate use 11 of which is for human or animal consumption as food, except wine, 12 beer, and other alcoholic beverages regularly placed in storage 13 in a public warehouse, dock, or port facility, while in storage 14 are considered in transit and only temporarily at rest, and are 15 not subject to personal property taxation. The assessing officer 16 is the determining authority as to what constitutes, is defined 17 as, or classified as, farm products as used in this subdivision. 18 The records, accounts, and books of warehouses, docks, or port 19 facilities, individuals, partnerships, corporations, owners, or 20 those in possession of farm products shall be open to and avail- 21 able for inspection, examination, or auditing by assessing 22 officers. 23 (o) Sugar in solid or liquid form, produced from sugar beets 24 and dried beet pulp and beet molasses, when owned or held by 25 processors. 26 (p) The personal property of a parent cooperative 27 preschool. As used in this subdivision and section 7z, "parent 02541'99 9 1 cooperative preschool" means a nonprofit, nondiscriminatory 2 educational institution maintained as a community service and 3 administered by parents of children currently enrolled in the 4 preschool, that provides an educational and developmental program 5 for children younger than compulsory school age, that provides an 6 educational program for parents, including active participation 7 with children in preschool activities, that is directed by quali- 8 fied preschool personnel, and that is licensed by thedepartment9of social servicesFAMILY INDEPENDENCE AGENCY underAct No. 11610of the Public Acts of 1973, being sections 722.111 to 722.128 of11the Michigan Compiled Laws1973 PA 116, MCL 722.111 TO 722.128. 12 (q) All equipment used exclusively in wood harvesting, but 13 not including portable or stationary sawmills or other equipment 14 used in secondary processing operations. As used in this subdi- 15 vision, "wood harvesting" means the clearing of land for forest 16 management purposes, the planting of trees, and all forms of cut- 17 ting or chipping of trees and the loading of them on trucks for 18 removal from the harvest area. 19 (r) Liquefied petroleum gas tanks located on residential or 20 agricultural property and used to store liquefied petroleum gas 21 for residential or agricultural property use. As used in this 22 subdivision, "liquefied petroleum gas" means that term as defined 23 in section 51 ofAct No. 150 of the Public Acts of 1927, being24section 207.151 of the Michigan Compiled Laws1927 PA 150, MCL 25 207.151. 26 (s) Water conditioning systems used for a residential 27 dwelling. 02541'99