HOUSE BILL No. 6103

 

 

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).