SB-0387, As Passed Senate, June 16, 2005

SUBSTITUTE FOR

SENATE BILL NO. 387

     A bill to amend 1975 PA 228, entitled

"Single business tax act,"

(MCL 208.1 to 208.145) by adding section 35d.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 35d. (1) For tax years that begin after December 31,

2005, an eligible taxpayer that pays eligible expenses for a

qualified employee may claim a credit against the tax imposed by

this act equal to 10% of the first $10,000.00 of eligible expenses

paid in the tax year for each qualified employee for courses that

will lead to a postsecondary degree or that are taken to acquire or

improve the qualified employee's job skills at an eligible

educational institution.

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

maximum amounts of adjusted gross income under subsection (6)(e)(ii)

shall be adjusted by the percentage increase in the United States

consumer price index for the immediately preceding calendar year.

     (3) Money from any other source used to pay for eligible

expenses shall not be used to calculate the credit under this

section.

     (4) Amounts deducted under any other section of this act or

the income tax act, 1967 PA 281, MCL 206.1 to 206.532, shall not be

used to calculate the credit under this section.

     (5) If the amount of the credit allowed under this section

exceeds the tax liability of the eligible taxpayer for the tax

year, that portion of the credit that exceeds the tax liability

shall be refunded.

     (6) As used in this section:

     (a) "Eligible educational institution" means any college,

university, vocational school, or other postsecondary educational

institution that is eligible to participate in a student aid

program administered by the federal department of education.

     (b) "Eligible expenses" means expenses listed in subparagraphs

(i) and (ii) paid for courses the qualified employee took during the

tax year and for which he or she received academic credit and does

not include expenses listed in subparagraph (iii), as follows:

     (i) Tuition.

     (ii) Related expenses such as student-activity fees and

expenses for course-related books, supplies, and equipment if the

related expenses are a condition for enrollment or attendance at

the institution or in the course.

     (iii) Any expenses related to the following types of courses:

     (A) Courses taken to meet a continuing education requirement

for a license or certificate required for the qualified employee's

job.

     (B) Sports, games, or hobbies.

(c) "Eligible taxpayer" means a taxpayer that has an average

of 250 or fewer full-time equivalent employees during the tax year

in which a credit under this section is claimed.

     (d) "Modified adjusted gross income" means modified adjusted

gross income for purposes of the lifetime learning credit under

section 25A of the internal revenue code.

     (e) "Qualified employee" means an individual who meets all of

the following criteria:

     (i) Is an employee of the eligible taxpayer during the tax

year.

     (ii) Has modified adjusted gross income of less than $51,000.00

if the employee files a single return or less than $103,000.00 if

the employee files a joint return.

     (iii) Is at least 24 years old.

     (iv) Is employed by the eligible taxpayer for 25 hours per week

or more.

     (v) Is not a full-time student as that status is determined by

the eligible educational institution that the employee attends.

     (f) "United States consumer price index" means the United

States consumer price index for all urban consumers as defined and

reported by the United States department of labor, bureau of labor

statistics, and as certified by the state treasurer.