August 9, 2006, Introduced by Reps. McDowell, Donigan, Byrnes, Gonzales, Miller, Alma Smith, Tobocman, Polidori, Hood, Kolb, Sheltrown, Hunter, Sak, Espinoza, Mayes, Vagnozzi, Zelenko, Clack, Kathleen Law, Cushingberry, Plakas, Accavitti, Condino, Angerer, Bennett, Bieda, Leland, Lemmons, Jr., Byrum, Gillard, Murphy, Meisner and Lemmons, III and referred to the Committee on Commerce.
A bill to amend 1975 PA 228, entitled
"Single business tax act,"
by amending section 39c (MCL 208.39c), as amended by 2006 PA 240.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 39c. (1) A qualified taxpayer with a rehabilitation plan
certified after December 31, 1998 may credit against the tax
imposed by this act the amount determined pursuant to subsection
(2) for the qualified expenditures for the rehabilitation of a
historic resource pursuant to the rehabilitation plan in the year
in which the certification of completed rehabilitation of the
historic resource is issued provided that the certification of
completed rehabilitation was issued not more than 5 years after the
rehabilitation plan was certified by the Michigan historical
center.
(2) The credit allowed under this section shall be 25% of the
qualified expenditures that are eligible for the credit under
section 47(a)(2) of the internal revenue code if the taxpayer is
eligible for the credit under section 47(a)(2) of the internal
revenue code or, if the taxpayer is not eligible for the credit
under section 47(a)(2) of the internal revenue code, 25% of the
qualified expenditures that would qualify under section 47(a)(2) of
the internal revenue code except that the expenditures are made to
a historic resource that is not eligible for the credit under
section 47(a)(2) of the internal revenue code, subject to both of
the following:
(a) A taxpayer with qualified expenditures that are eligible
for the credit under section 47(a)(2) of the internal revenue code
may not claim a credit under this section for those qualified
expenditures unless the taxpayer has claimed and received a credit
for those qualified expenditures under section 47(a)(2) of the
internal revenue code.
(b) A credit under this section shall be reduced by the amount
of a credit received by the taxpayer for the same qualified
expenditures under section 47(a)(2) of the internal revenue code.
(3) To be eligible for the credit under this section, the
taxpayer shall apply to and receive from the Michigan historical
center certification that the historic significance, the
rehabilitation plan, and the completed rehabilitation of the
historic resource meet the criteria under subsection (6) and either
of the following:
(a) All of the following criteria:
(i) The historic resource contributes to the significance of
the historic district in which it is located.
(ii) Both the rehabilitation plan and completed rehabilitation
of the historic resource meet the federal secretary of the
interior's standards for rehabilitation and guidelines for
rehabilitating historic buildings, 36 CFR part 67.
(iii) All rehabilitation work has been done to or within the
walls, boundaries, or structures of the historic resource or to
historic resources located within the property boundaries of the
property.
(b) The taxpayer has received certification from the national
park service that the historic resource's significance, the
rehabilitation plan, and the completed rehabilitation qualify for
the credit allowed under section 47(a)(2) of the internal revenue
code.
(4) If a qualified taxpayer is eligible for the credit allowed
under section 47(a)(2) of the internal revenue code, the qualified
taxpayer shall file for certification with the center to qualify
for the credit allowed under section 47(a)(2) of the internal
revenue code. If the qualified taxpayer has previously filed for
certification with the center to qualify for the credit allowed
under section 47(a)(2) of the internal revenue code, additional
filing for the credit allowed under this section is not required.
(5) The center may inspect a historic resource at any time
during the rehabilitation process and may revoke certification of
completed rehabilitation if the rehabilitation was not undertaken
as represented in the rehabilitation plan or if unapproved
alterations to the completed rehabilitation are made during the 5
years after the tax year in which the credit was claimed. The
center shall promptly notify the department of a revocation.
(6) Qualified expenditures for the rehabilitation of a
historic resource may be used to calculate the credit under this
section if the historic resource meets 1 of the criteria listed in
subdivision (a) and 1 of the criteria listed in subdivision (b):
(a) The resource is 1 of the following during the tax year in
which a credit under this section is claimed for those qualified
expenditures:
(i) Individually listed on the national register of historic
places or state register of historic sites.
(ii) A contributing resource located within a historic district
listed on the national register of historic places or the state
register of historic sites.
(iii) A contributing resource located within a historic district
designated by a local unit pursuant to an ordinance adopted under
the local historic districts act, 1970 PA 169, MCL 399.201 to
399.215.
(b) The resource meets 1 of the following criteria during the
tax year in which a credit under this section is claimed for those
qualified expenditures:
(i) The historic resource is located in a designated historic
district in a local unit of government with an existing ordinance
under the local historic districts act, 1970 PA 169, MCL 399.201 to
399.215.
(ii) The historic resource is located in an incorporated local
unit of government that does not have an ordinance under the local
historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and
has a population of less than 5,000.
(iii) The historic resource is located in an unincorporated
local unit of government.
(iv) The historic resource is located in an incorporated local
unit of government that does not have an ordinance under the local
historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and is
located within the boundaries of an association that has been
chartered under 1889 PA 39, MCL 455.51 to 455.72.
(7) If a qualified taxpayer is a partnership, limited
liability company, or subchapter S corporation, the qualified
taxpayer may assign all or any portion of a credit allowed under
this section to its partners, members, or shareholders, based on
the partner's, member's, or shareholder's proportionate share of
ownership or based on an alternative method approved by the
department. A credit assignment under this subsection is
irrevocable and shall be made in the tax year in which a
certificate of completed rehabilitation is issued. A qualified
taxpayer may claim a portion of a credit and assign the remaining
credit amount. A partner, member, or shareholder that is an
assignee shall not subsequently assign a credit or any portion of a
credit assigned to the partner, member, or shareholder under this
subsection. A credit amount assigned under this subsection may be
claimed against the partner's, member's, or shareholder's tax
liability under this act or under the income tax act of 1967, 1967
PA 281, MCL 206.1 to 206.532. A credit assignment under this
subsection shall be made on a form prescribed by the department.
The qualified taxpayer and assignees shall send a copy of the
completed assignment form to the department in the tax year in
which the assignment is made and attach a copy of the completed
assignment form to the annual return required to be filed under
this act for that tax year.
(8) If the credit allowed under this section for the tax year
and any unused carryforward of the credit allowed by this section
exceed the taxpayer's tax liability for the tax year, that portion
that exceeds the tax liability for the tax year shall not be
refunded but may be carried forward to offset tax liability in
subsequent tax years for 10 years or until used up, whichever
occurs first.
(9) If the taxpayer sells a historic resource for which a
credit under this section was claimed less than 5 years after the
year in which the credit was claimed, the following percentage of
the credit amount previously claimed relative to that historic
resource shall be added back to the tax liability of the taxpayer
in the year of the sale:
(a) If the sale is less than 1 year after the year in which
the credit was claimed, 100%.
(b) If the sale is at least 1 year but less than 2 years after
the year in which the credit was claimed, 80%.
(c) If the sale is at least 2 years but less than 3 years
after the year in which the credit was claimed, 60%.
(d) If the sale is at least 3 years but less than 4 years
after the year in which the credit was claimed, 40%.
(e) If the sale is at least 4 years but less than 5 years
after the year in which the credit was claimed, 20%.
(f) If the sale is 5 years or more after the year in which the
credit was claimed, an addback to the taxpayer's tax liability
shall not be made.
(10) If a certification of completed rehabilitation is revoked
under subsection (5) less than 5 years after the year in which a
credit was claimed, the following percentage of the credit amount
previously claimed relative to that historic resource shall be
added back to the tax liability of the taxpayer in the year of the
revocation:
(a) If the revocation is less than 1 year after the year in
which the credit was claimed, 100%.
(b) If the revocation is at least 1 year but less than 2 years
after the year in which the credit was claimed, 80%.
(c) If the revocation is at least 2 years but less than 3
years after the year in which the credit was claimed, 60%.
(d) If the revocation is at least 3 years but less than 4
years after the year in which the credit was claimed, 40%.
(e) If the revocation is at least 4 years but less than 5
years after the year in which the credit was claimed, 20%.
(f) If the revocation is 5 years or more after the year in
which the credit was claimed, an addback to the taxpayer's tax
liability shall not be made.
(11) The department of history, arts, and libraries through
the Michigan historical center may impose a fee to cover the
administrative cost of implementing the program under this section.
(12) The qualified taxpayer shall attach all of the following
to the qualified taxpayer's annual return required under this act
or under the income tax act of 1967, 1967 PA 281, MCL 206.1 to
206.532, if applicable, on which the credit is claimed:
(a) Certification of completed rehabilitation.
(b) Certification of historic significance related to the
historic resource and the qualified expenditures used to claim a
credit under this section.
(c) A completed assignment form if the qualified taxpayer has
assigned any portion of a credit allowed under this section to a
partner, member, or shareholder, or if the taxpayer is an assignee
of any portion of a credit allowed under this section.
(13) The department of history, arts, and libraries shall
promulgate rules to implement this section pursuant to the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328.
(14) The total of the credits claimed under this section and
section 266 of the income tax act of 1967, 1967 PA 281, MCL
206.266, for a rehabilitation project shall not exceed 25% of the
total qualified expenditures eligible for the credit under this
section for that rehabilitation project.
(15) The department of history, arts, and libraries through
the Michigan historical center shall report all of the following to
the legislature annually for the immediately preceding state fiscal
year:
(a) The fee schedule used by the center and the total amount
of fees collected.
(b) A description of each rehabilitation project certified.
(c) The location of each new and ongoing rehabilitation
project.
(16) If this act is repealed for tax years beginning after
December 31, 2007, all of the following apply:
(a) Except as otherwise provided in this subsection, a
qualified taxpayer that has a rehabilitation plan certified before
January 1, 2007 for the rehabilitation of a historic resource for
which a certification of completed rehabilitation has been issued
after the end of the taxpayer's last tax year but before January 1,
2010 or an assignee may claim the historic preservation credit
amount for the year in which the certification of completed
rehabilitation is issued against the taxpayer's or assignee's tax
liability under this act on the taxpayer's or assignee's timely
filed original or amended annual return filed under this act, for
the taxpayer's or assignee's last tax year.
(b) A credit under this subsection shall be taken after all
other credits the taxpayer claims for the tax year under this act
and all of the following apply:
(i) The historic preservation credit amount that the taxpayer
or assignee would have been allowed to claim for historic
rehabilitation completed in 2008 after the end of the taxpayer's or
assignee's last tax year or for the rehabilitation of a historic
resource completed in 2009 is in addition to the historic
preservation credit amount that the taxpayer or assignee is allowed
to claim for the rehabilitation of a historic resource completed
before the end of the taxpayer's or assignee's last tax year.
(ii) The historic preservation credit amount that the taxpayer
or assignee is allowed to claim for the rehabilitation of a
historic resource completed in 2008 after the end of the taxpayer's
or assignee's last tax year or for the rehabilitation of a historic
resource completed in 2009 on the taxpayer's or assignee's annual
return for the taxpayer's or assignee's last tax year or the sum of
both historic preservation credit amounts shall not exceed the
taxpayer's or assignee's tax liability for the taxpayer's or
assignee's last tax year after all other credits for that tax year
except the taxpayer's or assignee's historic preservation credit
for the taxpayer's or assignee's last tax year have been taken.
(iii) The historic preservation credit amount that the taxpayer
or assignee is allowed to claim for its last tax year under this
subsection shall not exceed the sum of the amount that the taxpayer
or assignee would have been allowed to claim for the rehabilitation
of a historic resource completed in 2008 after the end of the
taxpayer's or assignee's last tax year plus the amount that the
taxpayer or assignee would have been allowed to claim for the
rehabilitation of a historic resource completed in 2009.
(c) If the amount of the total of all historic preservation
credit amounts that may be claimed by the taxpayer or assignee
under this subsection exceeds the taxpayer's or assignee's tax
liability for the taxpayer's or assignee's last tax year, the
amount by which the total of all historic preservation credit
amounts exceeds the taxpayer's or assignee's tax liability for the
taxpayer's or assignee's last tax year shall be refunded.
(d) A historic preservation credit under this subsection shall
not be claimed before a certification of completed rehabilitation
is issued for the rehabilitation of a historic resource on which
the historic preservation credit is based.
(e) This subsection does not apply to any amount the taxpayer
or assignee may claim for the same rehabilitation plan for a tax
year that begins after December 31, 2007 under any other tax act.
(f) As used in this subsection:
(i) "Assignee" means an assignee under subsection (7).
(ii) "Historic preservation credit" means the credit allowed
under this section.
(iii) "Last tax year" means the taxpayer's tax year under this
act that begins after December 31, 2006 and before January 1, 2008.
(17) For tax years beginning on or after January 1, 2007, an
otherwise qualified taxpayer who fails to comply with section 3 of
the Michigan corporate responsibility act or who fails to disclose
a civil or criminal offense as required by section 3 of the
Michigan corporate responsibility act is not eligible for the
credit under this section.
(18) (17)
As used in this section:
(a) "Contributing resource" means a historic resource that
contributes to the significance of the historic district in which
it is located.
(b) "Historic district" means an area, or group of areas not
necessarily having contiguous boundaries, that contains 1 resource
or a group of resources that are related by history, architecture,
archaeology, engineering, or culture.
(c) "Historic resource" means a publicly or privately owned
historic building, structure, site, object, feature, or open space
located within a historic district designated by the national
register of historic places, the state register of historic sites,
or a local unit acting under the local historic districts act, 1970
PA 169, MCL 399.201 to 399.215; or that is individually listed on
the state register of historic sites or national register of
historic places and includes all of the following:
(i) An owner-occupied personal residence or a historic resource
located within the property boundaries of that personal residence.
(ii) An income-producing commercial, industrial, or residential
resource or a historic resource located within the property
boundaries of that resource.
(iii) A resource owned by a governmental body, nonprofit
organization, or tax-exempt entity that is used primarily by a
taxpayer lessee in a trade or business unrelated to the
governmental body, nonprofit organization, or tax-exempt entity and
that is subject to tax under this act.
(iv) A resource that is occupied or utilized by a governmental
body, nonprofit organization, or tax-exempt entity pursuant to a
long-term lease or lease with option to buy agreement.
(v) Any other resource that could benefit from rehabilitation.
(d) "Local unit" means a county, city, village, or township.
(e) "Long-term lease" means a lease term of at least 27.5
years for a residential resource or at least 31.5 years for a
nonresidential resource.
(f) "Michigan historical center" or "center" means the state
historic preservation office of the Michigan historical center of
the department of history, arts, and libraries or its successor
agency.
(g) "Open space" means undeveloped land, a naturally
landscaped area, or a formal or man-made landscaped area that
provides a connective link or a buffer between other resources.
(h) "Person" means an individual, partnership, corporation,
association, governmental entity, or other legal entity.
(i) "Qualified expenditures" means capital expenditures that
qualify for a rehabilitation credit under section 47(a)(2) of the
internal revenue code if the taxpayer is eligible for the credit
under section 47(a)(2) of the internal revenue code or, if the
taxpayer is not eligible for the credit under section 47(a)(2) of
the internal revenue code, the qualified expenditures that would
qualify under section 47(a)(2) of the internal revenue code except
that the expenditures are made to a historic resource that is not
eligible for the credit under section 47(a)(2) of the internal
revenue code that were paid not more than 5 years after the
certification of the rehabilitation plan that included those
expenditures was approved by the center, and that were paid after
December 31, 1998 for the rehabilitation of a historic resource.
Qualified expenditures do not include capital expenditures for
nonhistoric additions to a historic resource except an addition
that is required by state or federal regulations that relate to
historic preservation, safety, or accessibility.
(j) "Qualified taxpayer" means a person that is an assignee
under subsection (7) or either owns the resource to be
rehabilitated or has a long-term lease agreement with the owner of
the historic resource and that has qualified expenditures for the
rehabilitation of the historic resource equal to or greater than
10% of the state equalized valuation of the property. If the
historic resource to be rehabilitated is a portion of a historic or
nonhistoric resource, the state equalized valuation of only that
portion of the property shall be used for purposes of this
subdivision. If the assessor for the local tax collecting unit in
which the historic resource is located determines the state
equalized valuation of that portion, that assessor's determination
shall be used for purposes of this subdivision. If the assessor
does not determine that state equalized valuation of that portion,
qualified expenditures, for purposes of this subdivision, shall be
equal to or greater than 5% of the appraised value as determined by
a certified appraiser. If the historic resource to be rehabilitated
does not have a state equalized valuation, qualified expenditures
for purposes of this subdivision shall be equal to or greater than
5% of the appraised value of the resource as determined by a
certified appraiser.
(k) "Rehabilitation plan" means a plan for the rehabilitation
of a historic resource that meets the federal secretary of the
interior's standards for rehabilitation and guidelines for
rehabilitation of historic buildings under 36 CFR part 67.