May 4, 2010, Introduced by Reps. Amash, Genetski, McMillin, Agema, DeShazor, Haveman, Paul Scott, Calley, Green, Meekhof, Meltzer, Walsh, Daley, Bolger, Crawford, Lund, Rogers, Kowall and Booher and referred to the Committee on Tax Policy.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending sections 203 and 403 (MCL 208.1203 and 208.1403),
section 203 as amended by 2008 PA 168 and section 403 as amended by
2008 PA 434.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 203. (1) Except as otherwise provided in this act, there
is levied and imposed a modified gross receipts tax on every
taxpayer with nexus as determined under section 200. The modified
gross receipts tax is imposed on the modified gross receipts tax
base,
after allocation or apportionment to this state at a rate of
the following rates in the following circumstances:
(a) For tax years that begin after December 31, 2007 and
before January 1, 2011, 0.80%.
(b) For tax years that begin after December 31, 2010, 0.50%.
(2) The tax levied and imposed under this section is upon the
privilege of doing business and not upon income or property.
(3) The modified gross receipts tax base means a taxpayer's
gross receipts subject to the adjustment in subsection (6), if
applicable, less purchases from other firms before apportionment
under this act. The modified gross receipts of a unitary business
group is the sum of modified gross receipts of each person, other
than a foreign operating entity or a person subject to the tax
imposed under chapter 2A or 2B, included in the unitary business
group less any modified gross receipts arising from transactions
between persons included in the unitary business group.
(4) For the 2008 tax year, deduct 65% of any remaining
business loss carryforward calculated under section 23b(h) of
former 1975 PA 228 that was actually incurred in the 2006 or 2007
tax year to the extent not deducted in tax years beginning before
January 1, 2008. A deduction under this subsection shall not
include any business loss carryforward that was incurred before
January 1, 2006. If the taxpayer is a unitary business group, the
business loss carryforward under this subsection may only be
deducted against the modified gross receipts tax base of that
person included in the unitary business group calculated as if the
person was not included in the unitary business group.
(5) Nothing in this act shall prohibit a taxpayer who
qualifies for the credit under section 445 or a taxpayer who is a
dealer of new or used personal watercraft from collecting the tax
imposed under this section in addition to the sales price. The
amount remitted to the department for the tax under this section
shall not be less than the stated and collected amount.
(6) Subject to the limitations provided in this subsection,
for a person that is a qualified affordable housing project, deduct
an amount equal to that person's total gross receipts attributable
to residential rental units in this state owned by the qualified
affordable housing project multiplied by a fraction, the numerator
of which is the number of rent restricted units in this state owned
by the qualified affordable housing project and the denominator of
which is the number of all rental units in this state owned by the
qualified affordable housing project. The amount of the deduction
calculated under this subsection shall be reduced by the amount of
limited dividends or other distributions made to the partners,
members, or shareholders of the qualified affordable housing
project. Gross receipts attributable to residential rental units do
not include amounts received by the management, construction, or
development company for completion and operation of the project and
those rental units.
(7) If a qualified affordable housing project no longer meets
the requirements of subsection (8)(b) or fails to operate those
residential rental units as rent restricted units in accordance
with the operation agreement and the requirements of subsection
(8)(c), the qualified affordable housing project is entitled to the
deduction under subsection (6) as long as the qualified affordable
housing project continues to offer some of the residential rental
units purchased as rent restricted units in accordance with the
operation agreement.
(8) For purposes of subsections (6) and (7) and this
subsection:
(a) "Limited dividend housing association" means a limited
dividend housing association, corporation, or cooperative organized
and qualified pursuant to chapter 7 of the state housing
development authority act of 1966, 1966 PA 346, MCL 125.1491 to
125.1496.
(b) "Qualified affordable housing project" means a person that
is organized, qualified, and operated as a limited dividend housing
association that has a limitation on the amount of dividends or
other distributions that may be distributed to its owners in any
given year and has received funding, subsidies, grants, operating
support, or construction or permanent funding through 1 or more of
the following sources and programs:
(i) Mortgage or other financing provided by the Michigan state
housing development authority created in section 21 of the state
housing development authority act of 1966, 1966 PA 346, MCL
125.1421, the United States department of housing and urban
development, the United States department of agriculture for rural
housing service, the Michigan interfaith housing trust fund,
Michigan housing and community development fund, federal home loan
bank, housing commission loan, community development financial
institution, or mortgage or other funding or guaranteed by Fannie,
Ginnie, federal housing association, United States department of
agriculture, or federal home loan mortgage corporation.
(ii) A tax-exempt bond issued by a nonprofit organization,
local governmental unit, or other authority.
(iii) A payment in lieu of tax agreement or other tax abatement.
(iv) Funding from the state or a local governmental unit
through a HOME investments partnership program authorized under 42
USC 12741 to 12756.
(v) A grant or other funding from a federal home loan bank's
affordable housing program.
(vi) Financing or funding under the new markets tax credit
program under section 45D of the internal revenue code.
(vii) Financed in whole or in part under the United States
department of housing and urban development's hope VI program as
authorized by section 803 of the national affordable housing act,
42 USC 8012.
(viii) Financed in whole or in part under the United States
department of housing and urban development's section 202 program
authorized by section 202 of the national housing act, 12 USC
1701q.
(ix) Financing or funding under the low-income housing tax
credit program under section 42 of the internal revenue code.
(x) Financing or other subsidies from any new programs similar
to any of the above.
(c) "Rent restricted unit" means any residential rental unit's
rental income is restricted in accordance with section 42(g)(1) of
the internal revenue code as if it was a qualified low-income
housing project, or receives rental assistance in the form of HUD
section 8 subsidies or HUD housing assistance program subsidies, or
rental assistance from the United States department of agriculture
rural housing programs, from any of the other programs described
under subdivision (b).
Sec. 403. (1) Notwithstanding any other provision in this act,
the credits provided in this section shall be taken before any
other credit under this act. Except as otherwise provided in
subsection (6), for the 2008 tax year, the total combined credit
allowed under this section shall not exceed 50% of the tax
liability imposed under this act before the imposition and levy of
the
surcharge under section 281. For the 2009 tax year and each tax
year
after 2009 the 2010 tax year, the total combined credit
allowed under this section shall not exceed 52% of the tax
liability imposed under this act before the imposition and levy of
the surcharge under section 281.
(2) Subject to the limitation in subsection (1), for the 2008
tax year a taxpayer may claim a credit against the tax imposed by
this act equal to 0.296% of the taxpayer's compensation in this
state.
For the 2009 tax year and each tax year after 2009 the 2010
tax year, subject to the limitation in subsection (1), a taxpayer
may claim a credit against the tax imposed by this act equal to
0.370% of the taxpayer's compensation in this state. For purposes
of this subsection, a taxpayer includes a person subject to the tax
imposed under chapter 2A and a person subject to the tax imposed
under chapter 2B. A professional employer organization shall not
include payments by the professional employer organization to the
officers and employees of a client of the professional employer
organization whose employment operations are managed by the
professional employer organization. A client may include payments
by the professional employer organization to the officers and
employees of the client whose employment operations are managed by
the professional employer organization.
(3) Subject to the limitation in subsection (1), for the 2008
tax year a taxpayer may claim a credit against the tax imposed by
this act equal to 2.32% multiplied by the result of subtracting the
sum of the amounts calculated under subdivisions (d), (e), and (f)
from the sum of the amounts calculated under subdivisions (a), (b),
and
(c). Subject to the limitation in subsection (1), for the 2009
tax
year and each tax year after 2009 the 2010 tax year, a
taxpayer
may claim a credit against the tax imposed by this act equal to
2.9% multiplied by the result of subtracting the sum of the amounts
calculated under subdivisions (d), (e), and (f) from the sum of the
amounts calculated under subdivisions (a), (b), and (c):
(a) Calculate the cost, including fabrication and
installation, paid or accrued in the taxable year of tangible
assets of a type that are, or under the internal revenue code will
become, eligible for depreciation, amortization, or accelerated
capital cost recovery for federal income tax purposes, provided
that the assets are physically located in this state for use in a
business activity in this state and are not mobile tangible assets.
(b) Calculate the cost, including fabrication and
installation, paid or accrued in the taxable year of mobile
tangible assets of a type that are, or under the internal revenue
code will become, eligible for depreciation, amortization, or
accelerated capital cost recovery for federal income tax purposes.
This amount shall be multiplied by the apportionment factor for the
tax year as prescribed in chapter 3.
(c) For tangible assets, other than mobile tangible assets,
purchased or acquired for use outside of this state in a tax year
beginning after December 31, 2007 and subsequently transferred into
this state and purchased or acquired for use in a business
activity, calculate the federal basis used for determining gain or
loss as of the date the tangible assets were physically located in
this state for use in a business activity plus the cost of
fabrication and installation of the tangible assets in this state.
(d) If the cost of tangible assets described in subdivision
(a) was paid or accrued in a tax year beginning after December 31,
2007, or before December 31, 2007 to the extent the credit is used
and at the rate at which the credit was used under former 1975 PA
228 or this act, calculate the gross proceeds or benefit derived
from the sale or other disposition of the tangible assets minus the
gain, multiplied by the apportionment factor for the taxable year
as prescribed in chapter 3, and plus the loss, multiplied by the
apportionment factor for the taxable year as prescribed in chapter
3 from the sale or other disposition reflected in federal taxable
income and minus the gain from the sale or other disposition added
to the business income tax base in section 201.
(e) If the cost of tangible assets described in subdivision
(b) was paid or accrued in a tax year beginning after December 31,
2007, or before December 31, 2007 to the extent the credit is used
and at the rate at which the credit was used under former 1975 PA
228 or this act, calculate the gross proceeds or benefit derived
from the sale or other disposition of the tangible assets minus the
gain and plus the loss from the sale or other disposition reflected
in federal taxable income and minus the gain from the sale or other
disposition added to the business income tax base in section 201.
This amount shall be multiplied by the apportionment factor for the
tax year as prescribed in chapter 3.
(f) For assets purchased or acquired in a tax year beginning
after December 31, 2007, or before December 31, 2007 to the extent
the credit is used and at the rate at which the credit was used
under former 1975 PA 228 or this act, that were eligible for a
credit under subdivision (a) or (c) and that were transferred out
of this state, calculate the federal basis used for determining
gain or loss as of the date of the transfer.
(4) For a tax year in which the amount of the credit
calculated under subsection (3) is negative, the absolute value of
that amount is added to the taxpayer's tax liability for the tax
year.
(5) A taxpayer that claims a credit under this section is not
prohibited from claiming a credit under section 405. However, the
taxpayer shall not claim a credit under this section and section
405 based on the same costs and expenses.
(6) For a taxpayer primarily engaged in furnishing electric
and gas utility service that makes capital investments in electric
and gas distribution assets for which a portion of the credit
provided under subsection (3) would be denied for the 2008 tax year
by reason of the 50% limitation of subsection (1), the 50%
limitation on the total combined credit for the 2008 tax year
provided in subsection (1) shall be increased by an amount not to
exceed the lesser of the amount of the denied credit or 50% of the
tax increase under this act accrued for financial reporting
purposes due to the elimination of the deduction under section
168(k)
of the internal revenue code by the amendatory act that
added
this subsection. 2008 PA 434.
Provided, however, that the
total combined credit allowed under this section for the 2008 tax
year shall not exceed 80% of the tax liability imposed under this
act after the imposition and levy of the surcharge under section
281.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 95th Legislature are
enacted into law:
(a) House Bill No. 5249.
(b) Senate Bill No.____ or House Bill No. 6104(request no.
04275'09).
(c) Senate Bill No.____ or House Bill No. 6105(request no.
05670'09).
(d) Senate Bill No.____ or House Bill No. 6106(request no.
05671'09).
(e) Senate Bill No.____ or House Bill No. 6107(request no.
05672'09).
(f) Senate Bill No.____ or House Bill No. 6112(request no.
05673'09).
(g) Senate Bill No.____ or House Bill No. 6113(request no.
05675'09*).
(h) Senate Bill No.____ or House Bill No. 6109(request no.
05676'09).
(i) Senate Bill No.____ or House Bill No. 6110(request no.
05677'09).
(j) Senate Bill No.____ or House Bill No. 6116(request no.
05678'09).
(k) Senate Bill No.____ or House Bill No. 6114(request no.
05679'09).
(l) Senate Bill No.____ or House Bill No. 6117(request no.
05680'09).
(m) Senate Bill No.____ or House Bill No. 6108(request no.
05681'09).
(n) Senate Bill No.____ or House Bill No. 6119(request no.
05930'10).
(o) Senate Bill No.____ or House Bill No. 6111(request no.
05931'10).
(p) Senate Bill No.____ or House Bill No. 6115(request no.
05932'10).
(q) Senate Bill No.____ or House Bill No. 6118(request no.
05933'10).