SB-0672, As Passed House, December 18, 2003

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 672

                                                                             A bill to amend 1975 PA 228, entitled                                             

"Single business tax act,"                                                  

by amending section 4 (MCL 208.4), as amended by 2002 PA 603.               

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 4.  (1) "Casual transaction" means a transaction made                  

2   or engaged in other than in the ordinary course of repeated and             

3   successive transactions of a like character, except that a                  

4   transaction made or engaged in by a person that is incidental to            

5   that person's regular business activity is a business activity              

6   within the meaning of this act.                                             

7       (2) "Commissioner" means the  state commissioner of revenue

8   department.                                                                 

9       (3) Except as otherwise provided in subsection (4),                         

10  "compensation" means all wages, salaries, fees, bonuses,                    

11  commissions, or other payments made in the taxable year on behalf           

1   of or for the benefit of employees, officers, or directors of the           

2   taxpayers.  Compensation includes, but is not limited to,                   

3   payments that are subject to or specifically exempt or excepted             

4   from withholding under sections 3401 to 3406 of the internal                

5   revenue code.  Compensation also includes, on a cash or accrual             

6   basis consistent with the taxpayer's method of accounting for               

7   federal income tax purposes, payments to state and federal                  

8   unemployment compensation funds, payments under the federal                 

9   insurance contribution act and similar social insurance programs,           

10  payments, including self-insurance, for worker's compensation               

11  insurance, payments to individuals not currently working,                   

12  payments to dependents and heirs of individuals because of                  

13  current or former labor services rendered by those individuals,             

14  payments to a pension, retirement, or profit sharing plan, and              

15  payments for insurance for which employees are the beneficiaries,           

16  including payments under health and welfare and noninsured                  

17  benefit plans and payments of fees for the administration of                

18  health and welfare and noninsured benefit plans.  Compensation              

19  does not include any of the following:                                      

20      (a) Discounts on the price of the taxpayer's merchandise or                 

21  services sold to the taxpayer's employees, officers, or directors           

22  that are not available to other customers.                                  

23      (b) Payments to an independent contractor.                                  

24      (c) For tax years beginning after December 31, 1994, payments               

25  to state and federal unemployment compensation funds.                       

26      (d) For tax years beginning after December 31, 1994, the                    

27  employer's portion of payments under the federal insurance                  

1   contributions act, chapter 21 of subtitle C of the internal                 

2   revenue code, 26  U.S.C. USC 3101 to 3128, the railroad                    

3   retirement tax act, chapter 22 of subtitle C of the internal                

4   revenue code, 26  U.S.C. USC 3201 to 3233, and similar social              

5   insurance programs.                                                         

6       (e) For tax years beginning after December 31, 1994,                        

7   payments, including self-insurance payments, for worker's                   

8   compensation insurance or federal employers' liability act                  

9   insurance pursuant to chapter 149, 35 Stat. 65, 45  U.S.C. USC

10  51 to 60.                                                                   

11  (f) For tax years beginning after December 31, 2003, the                    

12  following payments under health and welfare and noninsured                  

13  benefit plans for the benefit of persons who are residents of               

14  this state and payments of fees for the administration of health            

15  and welfare and noninsured benefit plans for the benefit of                 

16  persons who are residents of this state for the specified years:            

17                                                                               (i) For tax years that begin after December 31, 2003 and                            

18  before January 1, 2005, 5%.                                                 

19      (ii) For tax years that begin after December 31, 2004 and                    

20  before January 1, 2006, 20%.                                                

21      (iii) For tax years that begin after December 31, 2005 and                   

22  before January 1, 2007, 40%.                                                

23      (iv) For tax years that begin after December 31, 2006, the                   

24  percentage of payments as provided under section 4a.

25      (4) For tax years that begin after December 31, 2003, for                   

26  purposes of determining compensation of a professional employer             

27  organization, compensation includes payments by the professional            

1   employer organization to the officers and employees of an entity            

2   whose employment operations are managed by the professional                 

3   employer organization.  Compensation of the entity whose                    

4   employment operations are managed by a professional employer                

5   organization does not include compensation paid by the                      

6   professional employer organization to the officers and employees            

7   of the entity whose employment operations are managed by the                

8   professional employer organization.  As used in this subsection,            

9   "professional employer organization" means an organization that             

10  provides the management and administration of the human resources           

11  and employer risk of another entity by contractually assuming               

12  substantial employer rights, responsibilities, and risk through a           

13  professional employer agreement that establishes an employer                

14  relationship with the leased officers or employees assigned to              

15  the other entity by doing all of the following:                             

16      (a) Maintaining the right of direction and control of                       

17  employees' work, although this responsibility may be shared with            

18  the other entity.                                                           

19      (b) Paying wages and employment taxes of the employees out of               

20  its own accounts.                                                           

21      (c) Reporting, collecting, and depositing state and federal                 

22  employment taxes for the employees.                                         

23      (d) Retaining the right to hire and fire employees.                         

24      (5) "Department" means the  revenue bureau of the  department               

25  of treasury.                                                                

26      Enacting section 1.  This amendatory act does not take                      

27  effect unless Senate Bill No. 673 of the 92nd Legislature is                

1   enacted into law.