SENATE BILL No. 1264

April 15, 2010, Introduced by Senator CASSIS and referred to the Committee on Finance.

A bill to amend 2007 PA 36, entitled

"Michigan business tax act,"

by amending sections 113, 281, 409, 413, 417, 423, 429, 430, 431,

431a, 431b, 431c, 434, 435, 437, 441, 450, and 455 (MCL 208.1113,

208.1281, 208.1409, 208.1413, 208.1417, 208.1423, 208.1429,

208.1430, 208.1431, 208.1431a, 208.1431b, 208.1431c, 208.1434,

208.1435, 208.1437, 208.1441, 208.1450, and 208.1455), section 113

as amended by 2008 PA 472, section 281 as added and section 413 as

amended by 2007 PA 145, section 409 as amended by 2008 PA 572,

section 429 as amended by 2009 PA 184, section 430 as amended by

2009 PA 90, section 431 as amended by 2009 PA 126, section 431a as

amended by 2009 PA 159, section 431b as added by 2008 PA 109,

section 431c as amended by 2009 PA 160, section 434 as amended by

2009 PA 240, section 435 as amended by 2009 PA 192, section 437 as

amended by 2009 PA 241, section 450 as added by 2007 PA 214, and

section 455 as added by 2008 PA 77.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 113. (1) "Partner" means a partner or member of a

partnership.

(2) "Partnership" means a taxpayer that is required to or has

elected to file as a partnership for federal income tax purposes.

(3) "Person" means an individual, firm, bank, financial

institution, insurance company, limited partnership, limited

liability partnership, copartnership, partnership, joint venture,

association, corporation, subchapter S corporation, limited

liability company, receiver, estate, trust, or any other group or

combination of groups acting as a unit.

(4) "Professional employer organization" means an organization

that provides the management and administration of the human

resources of another entity by contractually assuming substantial

employer rights and responsibilities through a professional

employer agreement that establishes an employer relationship with

the leased officers or employees assigned to the other entity by

doing all of the following:

(a) Maintaining a right of direction and control of employees'

work, although this responsibility may be shared with the other

entity.

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

its own accounts.

employment taxes for the employees.

(d) Retaining a right to hire and fire employees.

(5) Professional employer organization is not a staffing

company as that term is defined in subsection (6).

(6) "Purchases from other firms" means all of the following:

(a) Inventory acquired during the tax year, including freight,

shipping, delivery, or engineering charges included in the original

contract price for that inventory.

(b) Assets, including the costs of fabrication and

installation, acquired during the tax year 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.

property, materials and supplies, including repair parts and fuel.

(d) For a staffing company, compensation of personnel supplied

to customers of staffing companies. As used in this subdivision:

(i) "Compensation" means that term as defined under section 107

plus all payroll tax and worker's compensation costs.

(ii) "Staffing company" means a taxpayer whose business

activities are included in industry group 736 under the standard

industrial classification code as compiled by the United States

department of labor.

(e) For a person included in major group 15, 16, or 17 under

the standard industrial classification code as compiled by the

United States department of labor that does not qualify for a

credit under section 417, both of the following:

(i) Payments to subcontractors for a construction project under

a contract specific to that project.

(ii) To the extent not deducted under subdivisions (a) and (c),

payments for materials deducted as purchases in determining the

cost of goods sold for the purpose of calculating total income on

the taxpayer's federal income tax return.

(f) For the 2008 tax year and each tax year after 2008, all

film rental or royalty payments paid by a theater owner to a film

distributor, a film producer, or a film distributor and producer.

(g) For a taxpayer licensed under article 25 or 26 of the

occupational code, 1980 PA 299, MCL 339.2501 to 339.2518 and

339.2601 to 339.2637, payments to an independent contractor

licensed under article 25 or 26 of the occupational code, 1980 PA

299, MCL 339.2501 to 339.2518 and 339.2601 to 339.2637.

(h) On and after October 1, 2010, 1/3 of the services

purchased from another taxpayer during the tax year that are

directly related to business activity, excluding services performed

by an employee for an employer, services performed by a

subcontractor that are included in a construction project for which

those payments have been excluded from gross receipts under

subdivision (e), and goods that have been excluded from gross

receipts under subdivision (a), (b), or (c).

(7) "Revenue mile" means the transportation for a

consideration of 1 net ton in weight or 1 passenger the distance of

1 mile.

Sec. 281. (1) In addition to the taxes imposed and levied

under this act and subject to subsections (2), (3), and (4), to

meet deficiencies in state funds an annual surcharge is imposed and

levied on each taxpayer equal to the following percentage of the

taxpayer's tax liability under this act after allocation or

apportionment to this state under this act but before calculation

of the various credits available under this act:

(a) For each taxpayer other than a person subject to the tax

imposed and levied under chapter 2B: ,

(i) For tax years ending after December 31, 2007 and before

October 1, 2010, 21.99%.

(ii) On and after October 1, 2010, 17.60%.

(b) For a person subject to the tax imposed and levied under

chapter 2B:

(i) For tax years ending after December 31, 2007 and before

January 1, 2009, 27.7%.

(ii) For tax years ending after December 31, 2008 and before

October 1, 2010, 23.4%.

(iii) On and after October 1, 2010, 18.72%.

(2) If the Michigan personal income growth exceeds 0% in any 1

of the 3 calendar years immediately preceding the 2017 calendar

year, then the surcharge under subsection (1) shall not be levied

and imposed on or after January 1, 2017. For purposes of this

subsection, "Michigan personal income" means personal income for

this state as defined by the bureau of economic analysis of the

United States department of commerce or its successor.

(3) The amount of the surcharge imposed and levied on any

taxpayer under subsection (1)(a) shall not exceed $6,000,000.00 for

any single tax year ending before October 1, 2010 and $4,800,000.00

for any single tax year beginning on and after October 1, 2010.

(4) The surcharge imposed and levied under this section does

not apply to either of the following:

(a) A person subject to the tax imposed and levied under

chapter 2A.

(b) A person subject to the tax imposed and levied under

chapter 2B that is authorized to exercise only trust powers.

(5) The surcharge imposed and levied under this section shall

constitute a part of the tax imposed under this act and shall be

administered, collected, and enforced as provided under this act.

Sec. 409. (1) For tax years that begin on or after January 1,

2008 and end before January 1, 2013, an eligible taxpayer may claim

a credit against the tax imposed by this act equal to the amount of

capital expenditures in this state on infield renovation,

grandstand and infrastructure upgrades, and any other construction

and upgrades, subject to the following:

(a) For the 2008 through 2010 tax years, the credit shall not

exceed $2,100,000.00 or the taxpayer's tax liability under this

act, whichever is less.

(b) For the 2011 tax year, the credit shall not exceed

$1,580,000.00 or the taxpayer's tax liability under this act,

whichever is less.

$1,050,000.00 or the taxpayer's tax liability under this act,

whichever is less.

(2) In addition to the credit allowed under subsection (1),

for the 2009 tax year an eligible taxpayer may claim a credit

against the tax imposed by this act equal to 50% of the amount of

necessary expenditures in this state incurred including any

professional fees, additional police officers, and any traffic

management devices, to ensure traffic and pedestrian safety while

hosting the requisite motorsports events each calendar year. For

the 2010 tax year and each tax year after 2010, an eligible

taxpayer may claim a credit against the tax imposed by this act

equal to all of the necessary expenditures in this state incurred

including any professional fees, additional police officers, and

any traffic management devices, to ensure traffic and pedestrian

safety while hosting the requisite motorsports events each calendar

year. If For necessary expenditures incurred on and after October

1, 2010, if the amount of the credit allowed under this subsection

exceeds the tax liability of the taxpayer for the tax year, that

excess shall not be refunded. For necessary expenditures incurred

on and after December 31, 2008 and before October 1, 2010, if the

amount of the credit allowed under this subsection exceeds the tax

liability of the taxpayer for the tax year that excess shall be

refunded.

(3) An eligible taxpayer shall expend at least $30,000,000.00

on capital expenditures before January 1, 2011.

(4) As used in this section:

(a) "Eligible taxpayer" means any of the following:

(i) A person who owns and operates a motorsports entertainment

complex and has at least 2 days of motorsports events each calendar

year which shall be comparable to NASCAR Nextel cup events held in

2007 or their successor events.

(ii) A person who is the lessee and operator of a motorsports

entertainment complex or the lessee of the land on which a

motorsports entertainment complex is located and operates that

motorsports entertainment complex.

(iii) A person who operates and maintains a motorsports

entertainment complex under an operation and management agreement.

(b) "Motorsports entertainment complex" means a closed-course

motorsports facility, and its ancillary grounds and facilities,

that satisfies all of the following:

(i) Has at least 70,000 fixed seats for race patrons.

(ii) Has at least 6 scheduled days of motorsports events each

calendar year.

(iii) Serves food and beverages at the motorsports entertainment

complex during motorsports events each calendar year through

concession outlets, which are staffed by individuals who represent

or are members of 1 or more nonprofit civic or charitable

organizations that directly benefit from the concession outlets'

sales.

(iv) Engages in tourism promotion.

(v) Has permanent exhibitions of motorsports history, events,

or vehicles within the motorsports entertainment complex.

ancillary activities that have been sanctioned by a sanctioning

body.

(d) "Sanctioning body" means the American motorcycle

association (AMA); auto racing club of America (ARCA); championship

auto racing teams (CART); grand American road racing association

(GRAND AM); Indy racing league (IRL); national association for

stock car auto racing (NASCAR); national hot rod association

(NHRA); professional sports car racing (PSR); sports car club of

America (SCCA); United States auto club (USAC); Michigan state

promoters association; or any successor organization or any other

nationally or internationally recognized governing body of

motorsports that establishes an annual schedule of motorsports

events and grants rights to conduct the events, that has

established and administers rules and regulations governing all

participants involved in the events and all persons conducting the

events, and that requires certain liability assurances, including

insurance.

Sec. 413. (1) Subject to subsection (2), a taxpayer may claim

a credit against the tax imposed by this act equal to the

following:

(a) For property taxes levied after December 31, 2007, 35% of

the amount paid for property taxes on eligible personal property in

the tax year.

(b) Twenty-three percent of the amount paid for property taxes

levied on eligible telephone personal property in the 2008 tax year

and 13.5% of the amount paid for property taxes levied on eligible

telephone personal property in subsequent tax years.

the amount paid for property taxes on eligible natural gas pipeline

property in the tax year.

(2) To qualify for the credit under subsection (1), the

taxpayer shall file, if applicable, within the time prescribed each

of the following:

(a) The statement of assessable personal property prepared

pursuant to section 19 of the general property tax act, 1893 PA

206, MCL 211.19, identifying the eligible personal property or

eligible natural gas pipeline property, or both, for which the

credit under subsection (1) is claimed.

(b) The annual report filed under section 6 of 1905 PA 282,

MCL 207.6, identifying the eligible telephone personal property for

which the credit under subsection (1) is claimed.

for the eligible personal property, eligible natural gas pipeline

property, or eligible telephone property for which the credit under

subsection (1) is claimed.

(3) If For tax years that begin on or after January 1, 2008

and before October 1, 2010, if the amount of the credit allowed

under this section exceeds the tax liability of the taxpayer for

the tax year, that excess shall be refunded. For tax years that

begin on or after October 1, 2010, if the amount of the credit

allowed under this section exceeds the tax liability of the

taxpayer for the tax year, that excess shall not be refunded.

(4) As used in this section:

(a) "Eligible natural gas pipeline property" means natural gas

pipelines that are classified as utility personal property under

section 34c of the general property tax act, 1893 PA 206, MCL

211.34c, and are subject to regulation under the natural gas act,

15 USC 717 to 717z.

(b) "Eligible personal property" means personal property that

is classified as industrial personal property under section 34c of

the general property tax act, 1893 PA 206, MCL 211.34c, or in the

case of personal property that is subject to 1974 PA 198, MCL

207.551 to 207.572, is situated on land classified as industrial

real property under section 34c of the general property tax act,

1893 PA 206, MCL 211.34c.

property of a telephone company subject to the tax levied under

1905 PA 282, MCL 207.1 to 207.21.

(d) "Property taxes" means any of the following:

(i) Taxes collected under the general property tax act, 1893 PA

206, MCL 211.1 to 211.155.

(ii) Taxes levied under 1974 PA 198, MCL 207.551 to 207.572.

(iii) Taxes levied under the obsolete property rehabilitation

act, 2000 PA 146, MCL 125.2781 to 125.2797.

(iv) Taxes levied under 1905 PA 282, MCL 207.1 to 207.21.

Sec. 417. (1) The credit provided in this section shall be

taken after the credits under sections 403 and 405 and before any

other credit under this act and is available to any taxpayer with

gross receipts that do not exceed $20,000,000.00 and with adjusted

business income minus the loss adjustment that does not exceed

~~$1,300,000.00~~ $1,500,000.00 as adjusted annually for inflation

using the Detroit consumer price index and subject to the

following:

(a) An individual, a partnership, a limited liability company,

or a subchapter S corporation is disqualified if the individual,

any 1 partner of the partnership, any 1 member of the limited

liability company, or any 1 shareholder of the subchapter S

corporation receives more than ~~$180,000.00~~ $210,000.00 as adjusted

annually for inflation using the Detroit consumer price index as a

distributive share of the adjusted business income minus the loss

adjustment of the individual, the partnership, the limited

liability company, or the subchapter S corporation.

(b) A corporation other than a subchapter S corporation is

disqualified if either of the following occur for the respective

tax year:

(i) Compensation and directors' fees of a shareholder or

officer exceed ~~$180,000.00~~ $210,000.00 as adjusted annually for

inflation using the Detroit consumer price index.

(ii) The sum of the following amounts exceeds ~~$180,000.00~~

$210,000.00 as adjusted annually for inflation using the Detroit

consumer price index:

(A) Compensation and directors' fees of a shareholder.

(B) The product of the percentage of outstanding ownership or

of outstanding stock owned by that shareholder multiplied by the

difference between the sum of business income and, to the extent

deducted in determining federal taxable income, a carryback or a

carryover of a net operating loss or capital loss, minus the loss

adjustment.

subsection (3), the credit determined under this subsection shall

be reduced by the following percentages in the following

circumstances:

(i) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is more than ~~$160,000.00~~ $165,000.00 as adjusted annually for

inflation using the Detroit consumer price index but less than

~~$165,000.00~~ $170,000.00 as adjusted annually for inflation using

the Detroit consumer price index, the credit is reduced by ~~20%~~ 10%.

(ii) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is ~~$165,000.00~~ $170,000.00 as adjusted annually for inflation using

the Detroit consumer price index or more but less than ~~$170,000.00~~

$175,000.00 as adjusted annually for inflation using the Detroit

consumer price index, the credit is reduced by ~~40%~~ 20%.

(iii) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is ~~$170,000.00~~ $175,000.00 as adjusted annually for inflation using

the Detroit consumer price index or more but less than ~~$175,000.00~~

$180,000.00 as adjusted annually for inflation using the Detroit

consumer price index, the credit is reduced by ~~60%~~ 30%.

(iv) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is ~~$175,000.00~~ $180,000.00 as adjusted annually for inflation using

the Detroit consumer price index or more but ~~not in excess of~~

~~$180,000.00~~ less than $185,000.00 as adjusted annually for

inflation using the Detroit consumer price index, the credit is

reduced by ~~80%~~ 40%.

(v) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is $185,000.00 as adjusted annually for inflation using the Detroit

consumer price index or more but less than $190,000.00 as adjusted

annually for inflation using the Detroit consumer price index, the

credit is reduced by 50%.

(vi) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is $190,000.00 as adjusted annually for inflation using the Detroit

consumer price index or more but less than $195,000.00 as adjusted

annually for inflation using the Detroit consumer price index, the

credit is reduced by 60%.

(vii) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is $195,000.00 as adjusted annually for inflation using the Detroit

consumer price index or more but less than $200,000.00 as adjusted

annually for inflation using the Detroit consumer price index, the

credit is reduced by 70%.

(viii) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is $200,000.00 as adjusted annually for inflation using the Detroit

consumer price index or more but less than $205,000.00 as adjusted

annually for inflation using the Detroit consumer price index, the

credit is reduced by 80%.

(ix) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is $205,000.00 as adjusted annually for inflation using the Detroit

consumer price index or more but less than or equal to $210,000.00

as adjusted annually for inflation using the Detroit consumer price

index, the credit is reduced by 90%.

(2) For the purposes of determining disqualification under

subsection (1), an active shareholder's share of business income

shall not be attributed to another active shareholder.

(3) To determine the reduction percentage under subsection

(1)(c), the following apply:

(a) The reduction percentage for a partnership, limited

liability company, or subchapter S corporation is based on the

distributive share of adjusted business income minus loss

adjustment of the partner, member, or shareholder with the greatest

distributive share of adjusted business income minus loss

adjustment.

(b) The reduction percentage for a corporation other than a

subchapter S corporation is the greater of the following:

(i) The reduction percentage based on the compensation and

directors' fees of the shareholder or officer with the greatest

amount of compensation and directors' fees.

(ii) The reduction percentage based on the sum of the amounts

in subsection (1)(b)(ii)(A) and (B) for the shareholder or officer

with the greatest sum of the amounts in subsection (1)(b)(ii)(A) and

(B).

(4) A taxpayer that qualifies under subsection (1) is allowed

a credit against the tax imposed under this act. The credit under

this subsection is the amount by which the tax imposed under this

act exceeds 1.8% of adjusted business income.

(5) If gross receipts exceed $19,000,000.00, the credit shall

be reduced by a fraction, the numerator of which is the amount of

gross receipts over $19,000,000.00 and the denominator of which is

$1,000,000.00. The credit shall not exceed 100% of the tax

liability imposed under this act.

(6) For a taxpayer that reports for a tax year less than 12

months, the amounts specified in this section for gross receipts,

adjusted business income, and share of business income shall be

multiplied by a fraction, the numerator of which is the number of

months in the tax year and the denominator of which is 12.

(7) The department shall permit a taxpayer that elects to

claim the credit allowed under this section based on the amount by

which the tax imposed under this act exceeds the percentage of

adjusted business income for the tax year as determined under

subsection (4), and that is not required to reduce the credit

pursuant to subsection (1) or (5), to file and pay the tax imposed

by this act without computing the tax imposed under sections 201

and 203.

(8) Compensation paid by the professional employer

organization to the officers of the client and to employees of the

professional employer organization who are assigned or leased to

and perform services for the client shall be included in

determining eligibility of the client under this section.

(9) As used in this section:

(a) "Active shareholder" means a shareholder who receives at

least $10,000.00 in compensation, directors' fees, or dividends

from the business, and who owns at least 5% of the outstanding

stock or other ownership interest.

(b) "Adjusted business income" means business income as

defined in section 105 with all of the following adjustments:

(i) Add compensation and directors' fees of active shareholders

of a corporation.

(ii) Add, to the extent deducted in determining federal taxable

income, a carryback or a carryover of a net operating loss.

(iii) Add, to the extent deducted in determining federal taxable

income, a capital loss.

(iv) Add compensation and directors' fees of officers of a

corporation.

comprehensive index of consumer prices available for the Detroit

area from the United States department of labor, bureau of labor

statistics.

(d) "Loss adjustment" means the amount by which adjusted

business income was less than zero in any of the 5 tax years

immediately preceding the tax year for which eligibility for the

credit under this section is being determined. In determining the

loss adjustment for a tax year, a taxpayer is not required to use

more of the taxpayer's total negative adjusted business income than

the amount needed to qualify the taxpayer for the credit under this

section. A taxpayer shall not be considered to have used any

portion of the taxpayer's negative adjusted business income amount

unless the portion used is necessary to qualify for the credit

under this section. A taxpayer shall not reuse a negative adjusted

business income amount used as a loss adjustment in a previous tax

year or use a negative adjusted business income amount from a year

in which the taxpayer did not receive the credit under this

section.

Sec. 423. (1) A taxpayer that is an employer that is subject

to the worker's disability compensation act of 1969, 1969 PA 317,

MCL 418.101 to 418.941, may claim a credit against the tax imposed

by this act an amount equal to the amount paid during that tax year

by the taxpayer pursuant to section 352 of the worker's disability

compensation act of 1969, 1969 PA 317, MCL 418.352, as certified by

the director of the bureau of worker's disability compensation

pursuant to section 391(6) of the worker's disability compensation

act of 1969, 1969 PA 317, MCL 418.391.

(2) A taxpayer that claims a credit under this section shall

claim a portion of the credit allowed by this section equal to the

payments made during a calendar quarter pursuant to section 352 of

the worker's disability compensation act of 1969, 1969 PA 317, MCL

418.352, against the estimated tax payments made under section 501.

Any subsequent increase or decrease in the amount claimed for

payments made by the insurer or self-insurer shall be reflected in

the amount of the credit taken for the calendar quarter in which

the amount of the adjustment is finalized.

(3) The credit under this section is in addition to any other

credits the taxpayer is eligible for under this act.

(4) If For tax years that begin on or after January 1, 2008

and before October 1, 2010, if the amount of the credit allowed

under this section exceeds the tax liability of the taxpayer for

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

liability shall be refunded. For tax years that begin on or after

October 1, 2010, if the amount of the credit allowed under this

section exceeds the tax liability of the taxpayer for the tax year,

that portion of the credit that exceeds the tax liability shall not

be refunded.

Sec. 429. (1) A taxpayer may claim a credit against the tax

imposed by this act for 1 or more of the following as applicable:

(a) The credit allowed under subsection (2).

(b) The credit allowed under subsection (5).

(2) A taxpayer that is certified under the Michigan next

energy authority act, 2002 PA 593, MCL 207.821 to 207.827, as an

eligible taxpayer may claim a nonrefundable credit for the tax year

equal to the amount determined under subdivision (a) or (b),

whichever is less:

(a) The amount by which the taxpayer's tax liability

attributable to qualified business activity for the tax year

exceeds the taxpayer's baseline tax liability attributable to

qualified business activity.

(b) Ten percent of the amount by which the taxpayer's adjusted

qualified business activity performed in this state outside of a

renaissance zone for the tax year exceeds the taxpayer's adjusted

qualified business activity performed in this state outside of a

renaissance zone for the 2001 tax year under section 39e of former

1975 PA 228.

(3) For any tax year in which the eligible taxpayer's tax

liability attributable to qualified business activity for the tax

year does not exceed the taxpayer's baseline tax liability

attributable to qualified business activity, the eligible taxpayer

shall not claim the credit allowed under subsection (2).

(4) A taxpayer that claims a credit under subsection (2) shall

attach a copy of each of the following as issued pursuant to the

Michigan next energy authority act, 2002 PA 593, MCL 207.821 to

207.827, to the annual return required under this act for each tax

year in which the taxpayer claims the credit allowed under

subsection (2):

(a) The proof of certification that the taxpayer is an

eligible taxpayer for the tax year.

(b) The proof of certification of the taxpayer's tax liability

attributable to qualified business activity for the tax year.

liability attributable to qualified business activity.

(5) A taxpayer that is a qualified alternative energy entity

may claim a credit for the taxpayer's qualified payroll amount. A

taxpayer shall claim the credit under this subsection after all

allowable nonrefundable credits under this act.

(6) If For tax years that begin on or after January 1, 2008

and before October 1, 2010, if the credit allowed under subsection

(5) exceeds the tax liability of the taxpayer for the tax year,

that portion of the credit that exceeds the tax liability shall be

refunded. For tax years that begin on or after October 1, 2010, if

the credit allowed under subsection (5) exceeds the tax liability

of the taxpayer for the tax year, that portion of the credit that

exceeds the tax liability shall not be refunded.

(7) As used in this section:

(a) "Adjusted qualified business activity performed in this

state outside of a renaissance zone" means either of the following:

(i) Except as provided in subparagraph (ii), the taxpayer's

payroll for qualified business activity performed in this state

outside of a renaissance zone.

(ii) For a partnership, limited liability company, subchapter S

corporation, or individual, the amount determined under

subparagraph (i) plus the product of the following as related to the

taxpayer:

(A) Business income.

(B) The apportionment factor as determined under chapter 3.

(b) "Alternative energy business activity factor" means a

fraction, the numerator of which is the ratio of the value of the

taxpayer's property used for qualified business activity and

located in this state outside of a renaissance zone for the year

for which the factor is being calculated to the value of all of the

taxpayer's property located in this state for that year plus the

ratio of the taxpayer's payroll for qualified business activity

performed in this state outside of a renaissance zone for that year

to all of the taxpayer's payroll in this state for that year and

the denominator of which is 2.

"alternative energy system", "alternative energy vehicle", and

"alternative energy technology" mean those terms as defined in the

Michigan next energy authority act, 2002 PA 593, MCL 207.821 to

207.827.

(d) "Alternative energy zone" means a renaissance zone

designated as an alternative energy zone by the board of the

Michigan strategic fund under section 8a of the Michigan

renaissance zone act, 1996 PA 376, MCL 125.2688a.

(e) "Baseline tax liability attributable to qualified business

activity" means the taxpayer's tax liability for the 2001 tax year

under former 1975 PA 228 multiplied by the taxpayer's alternative

energy business activity factor for the 2001 tax year under former

1975 PA 228. A taxpayer with a 2001 tax year of less than 12 months

under former 1975 PA 228 shall annualize the amount calculated

under this subdivision as necessary to determine baseline tax

liability attributable to qualified business activity that reflects

a 12-month period.

(f) "Eligible taxpayer" means a taxpayer that has proof of

certification of qualified business activity under the Michigan

next energy authority act, 2002 PA 593, MCL 207.821 to 207.827.

(g) "Payroll" means total salaries and wages before deducting

any personal or dependency exemptions.

(h) "Qualified alternative energy entity" means a taxpayer

located in an alternative energy zone.

(i) "Qualified business activity" means research, development,

or manufacturing of an alternative energy marine propulsion system,

an alternative energy system, an alternative energy vehicle,

alternative energy technology, or renewable fuel.

(j) "Qualified employee" means an individual who is employed

by a qualified alternative energy entity, whose job

responsibilities are related to the research, development, or

manufacturing activities of the qualified alternative energy

entity, and whose regular place of employment is within an

alternative energy zone.

(k) "Qualified payroll amount" means an amount equal to

payroll of the qualified alternative energy entity attributable to

all qualified employees in the tax year of the qualified

alternative energy entity for which the credit under subsection (6)

is being claimed, multiplied by the tax rate for that tax year.

(l) "Renaissance zone" means a renaissance zone designated

under the Michigan renaissance zone act, 1996 PA 376, MCL 125.2681

to 125.2696.

(m) "Renewable fuel" means 1 or more of the following:

(i) Biodiesel or biodiesel blends containing at least 20%

biodiesel. As used in this subparagraph, "biodiesel" means a diesel

fuel substitute consisting of methyl or ethyl esters produced from

the transesterification of animal or vegetable fats with methanol

or ethanol.

(ii) Biomass. As used in this subparagraph, "biomass" means

residues from the wood and paper products industries, residues from

food production and processing, trees and grasses grown

specifically to be used as energy crops, and gaseous fuels produced

from solid biomass, animal wastes, municipal waste, or landfills.

(n) "Tax liability attributable to qualified business

activity" means the taxpayer's tax liability multiplied by the

taxpayer's alternative energy business activity factor for the tax

year.

(o) "Tax rate" means the rate imposed under section 51 of the

income tax act of 1967, 1967 PA 281, MCL 206.51, annualized as

necessary, for the tax year in which the qualified alternative

energy entity claims a credit under subsection (5).

Sec. 430. (1) Except as otherwise provided under subsection

(3) and subject to the limitations under subsection (2), for tax

years that begin on or after January 1, 2009, a qualified taxpayer

and an eligible taxpayer that has entered into an agreement with

the Michigan economic growth authority that provides that the

taxpayer will construct and operate in this state a new facility

for development and manufacturing of photovoltaic energy,

photovoltaic systems, or other photovoltaic technology may claim a

credit against the tax imposed by this act equal to 25% of the

capital investments made by the taxpayer in that new facility

during the tax year but not to exceed $15,000,000.00.

(2) The Michigan economic growth authority shall not enter

into an agreement under this section after December 31, 2011. The

total amount of credits allowed under this section for all tax

years shall not exceed $75,000,000.00. An agreement shall specify

all of the following:

(a) The amount of capital investment that will be made in a

new facility engaged in the development and manufacturing of

photovoltaic energy, photovoltaic systems, and other photovoltaic

technology.

(b) The number of qualified new jobs at the facility at which

the investment will be made.

(3) The Michigan economic growth authority may enter into 1

agreement with an eligible taxpayer for a credit under this section

of more than $15,000,000.00 but not more than $25,000,000.00.

(4) Except as otherwise provided under this subsection, the

credit allowed under this section shall be taken by a taxpayer in

equal installments over 2 years beginning with the tax year in

which the certification was issued. The Michigan economic growth

authority may allow only 1 taxpayer with whom it has entered into

an agreement for a credit under this section of $15,000,000.00 or

less to claim the total amount of the credit allowed in the same

tax year in which the certification was issued. If For any

agreements entered before October 1, 2010, if in any of those years

the credit allowed under this section for the tax year exceeds the

taxpayer's or assignee's tax liability for the tax year, that

portion that exceeds the tax liability for the tax year shall be

refunded. For an agreement entered on or after October 1, 2010, if

in any of those tax years the credit allowed under this section for

the tax year exceeds the taxpayer's or assignee's tax liability for

the tax year, that portion that exceeds the tax liability for the

tax year shall not be refunded.

(5) A taxpayer shall not claim a credit under this section

unless the Michigan economic growth authority has issued a

certificate to the taxpayer. The taxpayer shall attach the

certificate to the annual return filed under this act on which a

credit under this section is claimed. The certificate required

under this subsection shall state all of the following:

(a) The taxpayer is located in this state and engaged in the

development and manufacturing of photovoltaic energy, photovoltaic

systems, or other photovoltaic technology and qualifies for the

credit under this section.

(b) The taxpayer's federal employer identification number or

the Michigan department of treasury number assigned to the taxpayer

and, for a taxpayer that is a unitary business group, the federal

employer identification number or Michigan department of treasury

number assigned to the member of the group engaged in this state in

the development and manufacturing of photovoltaic energy,

photovoltaic systems, or other photovoltaic technology.

tax year and the amount of the credit under this section for which

the taxpayer is allowed to claim for the designated tax year.

(6) A taxpayer or assignee that claims a credit under this

section and subsequently fails to meet the requirements of this

section or any other conditions established by the Michigan

economic growth authority in the agreement provided for in this

section in order to obtain a certificate for which the credit was

claimed under this section may, as to be determined by the Michigan

economic growth authority, have its credit reduced or terminated or

have a percentage of the credit amount previously claimed under

this section added back to the tax liability of the taxpayer in the

tax year that the taxpayer or assignee fails to comply with this

section.

(7) A For a credit based on an agreement entered into before

October 1, 2010, a taxpayer may assign all or a portion of a credit

allowed under this section. A credit assignment under this

subsection is irrevocable and shall be made in the tax year in

which a certificate is issued. However, a taxpayer may also convey

the right to obtain an assignment of the credit under this section

after an agreement has been approved by the Michigan economic

growth authority and before a certificate has been issued. A

taxpayer may claim a portion of a credit and assign the remaining

credit amount. The credit assignment under this subsection shall be

made on a form prescribed by the Michigan economic growth

authority. The Michigan economic growth authority or its designee

shall review and issue a completed assignment certificate to the

assignee. An assignee shall attach a copy of the completed

assignment certificate to its annual return required under this

act, for the tax year in which the assignment is made and the

assignee first claims a credit, which shall be the same tax year.

In addition to all other procedures and requirements under this

section, the following apply:

(a) The credit shall be assigned based on the schedule

contained in the certificate.

(b) If the taxpayer assigns all or a portion of the credit

amount, the taxpayer shall assign the annual credit amount for each

tax year separately.

assignee, and the taxpayer may assign all or a portion of each

annual credit amount to any assignee.

(8) A taxpayer that has entered into an agreement with the

Michigan economic growth authority for a credit under sections 432

through 432d is not eligible for the credit under this section.

(9) As used in this section:

(a) "Capital investment" means the cost, including fabrication

and installation, paid or accrued in the tax year of property of a

type that is, 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

property is physically located in this state for use in a business

activity in this state.

(b) "Eligible taxpayer" means a taxpayer that has entered an

agreement to create at least 250 qualified new jobs and to make at

least $100,000,000.00 in a qualified capital investment of which

$25,000,000.00 shall be made prior to the issuance of a certificate

under this section.

35 hours or more each week and whose income and social security

taxes are withheld by 1 or more of the following:

(i) A qualified taxpayer or an eligible taxpayer.

(ii) An employee leasing company on behalf of a qualified

taxpayer or an eligible taxpayer.

(iii) A professional employer organization on behalf of a

qualified taxpayer or an eligible taxpayer.

(d) "Michigan economic growth authority" means the Michigan

economic growth authority created in the Michigan economic growth

authority act, 1995 PA 24, MCL 207.801 to 207.810.

(e) "Qualified new job" means a full-time job created by a

qualified taxpayer or an eligible taxpayer at a facility or

facilities that is in excess of the number of full-time jobs a

qualified taxpayer or an eligible taxpayer maintained in this state

or at a facility prior to the expansion or location, as determined

by the authority.

(f) "Qualified taxpayer" means a taxpayer that has entered an

agreement to create at least 500 qualified new jobs and to make at

least $50,000,000.00 in a qualified capital investment of which

$25,000,000.00 shall be made prior to the issuance of a certificate

under this section.

(g) "Photovoltaic cells" means an integrated device consisting

of layers of semiconductor materials and electric constructs

capable of converting incident light directly into electricity.

(h) "Photovoltaic energy" means solar energy.

(i) "Photovoltaic modules" means an assembly of interconnected

photovoltaic cells.

(j) "Photovoltaic systems" means solar energy devices composed

of 1 or more photovoltaic cells or photovoltaic modules, and

inverter or other power conditioning unit or photovoltaic

technology designed to deliver power of a selected current and

voltage, wires, and other electrical connectors in order to

generate electricity, heat or cool a residential structure, provide

hot water for use in a residential structure, or provide solar

process heat. Batteries for power storage may also be included in

photovoltaic systems.

(k) "Photovoltaic technology" means solar power technology

that uses photovoltaic cells and modules to convert light from the

sun directly into electricity. Photovoltaic technology includes

equipment, component parts, materials, electronic devices, testing

equipment, and other related systems that are specifically designed

or fabricated and used primarily for 1 or more of the following:

(i) The storage, generation, reformation, or distribution of

clean fuels integrated within a photovoltaic system.

(ii) The process of utilizing photovoltaic energy to generate

electricity for use by consumers.

(l) "Property" means section 1245 property and section 1250

property as those terms are defined in sections 1245 and 1250 of

the internal revenue code.

Sec. 431. (1) Except as otherwise provided under this

subsection, for a period of time not to exceed 20 years as

determined by the Michigan economic growth authority, a taxpayer

that is an authorized business may claim a credit against the tax

imposed by this act equal to the amount certified each year by the

Michigan economic growth authority as follows:

(a) Except as otherwise provided under this subdivision, for

an authorized business for the tax year, an amount not to exceed

the payroll of the authorized business attributable to employees

who perform qualified new jobs as determined under the Michigan

economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810,

multiplied by the tax rate; beginning after April 28, 2008, for an

authorized business for the tax year, an amount not to exceed the

sum of the payroll and health care benefits of the authorized

business attributable to employees who perform qualified new jobs

as determined under the Michigan economic growth authority act,

1995 PA 24, MCL 207.801 to 207.810, multiplied by the tax rate.

(b) For an eligible business as determined under section

8(5)(a) of the Michigan economic growth authority act, 1995 PA 24,

MCL 207.808, an amount not to exceed 50% of the payroll of the

authorized business attributable to employees who perform retained

jobs as determined under the Michigan economic growth authority

act, 1995 PA 24, MCL 207.801 to 207.810, multiplied by the tax rate

for the tax year.

8(5)(b) of the Michigan economic growth authority act, 1995 PA 24,

MCL 207.808, an amount not to exceed the payroll of the authorized

business attributable to employees who perform retained jobs as

determined under the Michigan economic growth authority act, 1995

PA 24, MCL 207.801 to 207.810, multiplied by the tax rate for the

tax year.

(d) For an authorized business that is a qualified high-

technology business, for a period of time not to exceed 7 years as

determined by the Michigan economic growth authority, an amount not

to exceed 200% of the sum of the payroll and health care benefits

of the qualified high-technology business attributable to employees

who perform qualified new jobs as determined under the Michigan

economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810,

for the first 3 tax years of the credit, multiplied by the tax rate

and, for each of the remaining tax years of the credit, an amount

not to exceed 100% of the sum of the payroll and health care

benefits of the qualified high-technology business attributable to

employees who perform qualified new jobs as determined under the

Michigan economic growth authority act, 1995 PA 24, MCL 207.801 to

207.810, multiplied by the tax rate.

(e) For an authorized business as determined under section

8(9) of the Michigan economic growth authority act, 1995 PA 24, MCL

207.808, an amount up to, but not to exceed 100% of, the sum of the

payroll and health care benefits of the authorized business

attributable to employees who perform retained jobs multiplied by a

fraction, the numerator of which is the amount of new capital

investment made at the facility and the denominator of which is the

product of the number of retained jobs multiplied by $100,000.00,

and then multiplied by the tax rate for the tax year.

(f) For an authorized business as determined under section

8(11) of the Michigan economic growth authority act, 1995 PA 24,

MCL 207.808, an amount not to exceed 100% of the sum of the payroll

and health care benefits of the authorized business attributable to

employees who perform new full-time jobs and retained jobs as

determined under the Michigan economic growth authority act, 1995

PA 24, MCL 207.801 to 207.810, multiplied by the tax rate for the

tax year.

(2) A taxpayer shall not claim a credit under this section

unless the Michigan economic growth authority has issued a

certificate to the taxpayer. The taxpayer shall attach the

certificate to the annual return filed under this act on which a

credit under this section is claimed.

(3) The certificate required by subsection (2) shall state all

of the following:

(a) The taxpayer is an authorized business.

(b) The amount of the credit under this section for the

authorized business for the designated tax year.

the Michigan department of treasury number assigned to the

taxpayer.

(4) The Michigan economic growth authority may certify a

credit under this section based on an agreement entered into prior

to January 1, 2008 pursuant to section 37c of former 1975 PA 228.

The number of years for which the credit may be claimed under this

section shall equal the maximum number of years designated in the

resolution reduced by the number of years for which a credit has

been claimed or could have been claimed under section 37c of former

1975 PA 228.

(5) ~~If the~~ For a credit certified under this section based on

an agreement entered into before October 1, 2010, if that credit

allowed under this section exceeds the tax liability of the

taxpayer for the tax year, that portion of the credit that exceeds

the tax liability of the taxpayer shall be refunded. For a credit

certified under this section based on an agreement entered into on

or after October 1, 2010, if that credit allowed under this section

exceeds the tax liability of the taxpayer for the tax year, that

portion that exceeds the tax liability of the taxpayer shall not be

refunded.

(6) Except as otherwise provided under this subsection, a

taxpayer that claims a credit under subsection (1) or section 37c

or 37d of former 1975 PA 228, that has an agreement with the

Michigan economic growth authority based on qualified new jobs as

defined in section 3(q)(ii) of the Michigan economic growth

authority act, 1995 PA 24, MCL 207.803, and that removes from this

state 51% or more of those qualified new jobs within 3 years after

the first year in which the taxpayer claims a credit described in

this subsection shall pay to the department no later than 12 months

after those qualified new jobs are removed from the state an amount

equal to the total of all credits described in this subsection that

were claimed by the taxpayer. Beginning after April 28, 2008, a

taxpayer that claims a credit under subsection (1) and subsequently

fails to meet the requirements of this section or any other

conditions included in an agreement entered into with the Michigan

economic growth authority in order to obtain a certificate for the

credit claimed under this section or removes any of the qualified

new jobs from this state during the term of the written agreement

and for a period of years after the term of the written agreement,

as determined by the Michigan economic growth authority, may have

its credit reduced or terminated or have a percentage of the credit

amount previously claimed under this section added back to the tax

liability of the taxpayer in the tax year that the taxpayer fails

to comply with this section or the agreement.

(7) If the Michigan economic growth authority or a designee of

the Michigan economic growth authority requests that a taxpayer

that claims the credit under this section get a statement prepared

by a certified public accountant verifying that the actual number

of new jobs created is the same number of new jobs used to

calculate the credit under this section, the taxpayer shall get the

statement and attach that statement to its annual return under this

act on which the credit under this section is claimed.

(8) A credit shall not be claimed by a taxpayer under this

section if the taxpayer's initial certification as required in

subsection (3) is issued after December 31, 2013.

(9) For the 2010 calendar year, ~~and each calendar year after~~

~~2010,~~ the total amount of all credits allowed to be claimed in the

first year of all new written agreements approved in that calendar

year under this section shall not exceed $95,000,000.00. For the

2011 calendar year and each calendar year after 2011, the total

amount of all credits allowed to be claimed in the first year of

all new written agreements approved in that calendar year under

this section shall not exceed $19,000,000.00, distributed as

follows:

(a) Not more than 3 credits of not more than $3,000,000.00

each.

(b) Not more than 10 credits of not more than $1,000,000.00

each.

(10) For purposes of this section, taxpayer includes a person

subject to the tax imposed under chapter 2A and a person subject to

the tax imposed under chapter 2B.

(11) As used in this section:

(a) "Authorized business", "facility", "full-time job",

"qualified high-technology business", "retained jobs", and "written

agreement" mean those terms as defined in the Michigan economic

growth authority act, 1995 PA 24, MCL 207.801 to 207.810.

(b) "Health care benefits" means all costs paid for a self-

funded health care benefit plan or for an expense-incurred

hospital, medical, or surgical policy or certificate, nonprofit

health care corporation certificate, or health maintenance

organization contract. Health care benefit does not include

accident-only, credit, dental, or disability income insurance;

long-term care insurance; coverage issued as a supplement to

liability insurance; coverage only for a specified disease or

illness; worker's compensation or similar insurance; or automobile

medical payment insurance.

economic growth authority created in the Michigan economic growth

authority act, 1995 PA 24, MCL 207.801 to 207.810.

(d) "Payroll" means the total salaries and wages before

deducting any personal or dependency exemptions.

(e) "Qualified new jobs" means 1 or more of the following:

(i) The average number of full-time jobs at a facility of an

authorized business for a tax year in excess of the average number

of full-time jobs the authorized business maintained in this state

prior to the expansion or location as that is determined under the

Michigan economic growth authority act, 1995 PA 24, MCL 207.801 to

207.810.

(ii) The average number of full-time jobs at a facility created

by an eligible business up to 90 days before becoming an authorized

business that is in excess of the average number of full-time jobs

that the business maintained in this state up to 90 days before

becoming an authorized business, as determined under the Michigan

economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810.

(f) "Tax rate" means the rate imposed under section 51 of the

income tax act of 1967, 1967 PA 281, MCL 206.51, for the tax year

in which the tax year of the taxpayer for which the credit is being

computed begins.

Sec. 431a. (1) A qualified taxpayer may claim a credit against

the tax imposed by this act equal to the sum of up to 100% of each

qualified supplier's and qualified customer's payroll attributable

to employees who perform qualified new jobs as determined by the

Michigan economic growth authority, multiplied by the tax rate for

the tax year and that credit may include each of the qualified

supplier's and qualified customer's payroll described above for a

period of up to 5 years as determined by the Michigan economic

growth authority. If For tax years that begin on or after January

1, 2008 and before October 1, 2010, if the credit allowed under

this subsection exceeds the liability of the taxpayer for the tax

year, the taxpayer may elect to have that portion that exceeds the

tax liability of the taxpayer refunded or to have the excess

carried forward to offset tax liability in subsequent years for 10

years or until it is used up, whichever occurs first. For tax years

that begin on or after October 1, 2010, if the credit allowed under

this subsection exceeds the tax liability of the taxpayer for the

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

taxpayer shall not be refunded but may be carried forward to offset

tax liability in subsequent tax years for 10 years or until it is

used up, whichever occurs first. The Michigan economic growth

authority shall not designate more than 5 new anchor companies in

each calendar year and shall not approve more than 5 new credits in

each calendar year under this subsection. An anchor company has 5

years from the date on which the anchor company is designated as an

anchor company to seek certification from the Michigan economic

growth authority as a qualified taxpayer for each qualified

supplier and qualified customer that is included in the credit

which that anchor company is seeking under this section. However, a

credit shall not be provided for a tax year prior to the tax year

during which the designation as an anchor company is made.

(2) The Michigan economic growth authority may also provide

that qualified sales to a qualified customer shall not be

considered in calculating the sales factor under this act for the

tax year for which a credit is provided under this section. Not

later than July 1 of each year, the Michigan economic growth

authority shall disclose to the senate majority leader or his or

her designee, the speaker of the house of representatives or his or

her designee, and the chairperson of each standing committee of the

house of representatives and the senate that primarily addresses

and has jurisdiction over issues pertaining to taxation, finance,

and economic development the name and address of each qualified

customer whose sales are not considered in the sales factor

pursuant to this subsection.

(3) A taxpayer shall not claim a credit under this section

unless the Michigan economic growth authority has issued a

certificate to the taxpayer. The taxpayer shall attach the

certificate to the annual return filed under this act on which the

credit under this section is claimed. The certificate required by

this subsection shall state all of the following:

(a) The taxpayer is a qualified taxpayer and the date on which

the taxpayer was designated as an anchor company.

(b) The amount of the credit under this section for the

qualified taxpayer for the designated tax year.

(d) The taxpayer's federal employer identification number or

the Michigan department of treasury number assigned to the

taxpayer.

(4) A qualified taxpayer that claims a credit under this

section and subsequently fails to meet the requirements of this

section or any other conditions included in an agreement entered

into with the Michigan economic growth authority in order to obtain

a certificate for which the credit was under this section may, as

to be determined by the Michigan economic growth authority, have

its credit reduced or terminated or have a percentage of the credit

amount previously claimed under this section added back to the tax

liability of the taxpayer in the year that the taxpayer fails to

comply with this section or the agreement.

(5) A credit under this section may be taken after all other

allowable nonrefundable credits under this act.

(6) As used in this section:

(a) "Anchor company" means a qualified high-technology

business that is an integral part of a high-technology activity and

that has the ability or potential ability to influence business

decisions and site location of qualified suppliers and customers.

(b) "Business", "qualified high-technology activity", and

"qualified high-technology business" mean those terms as defined in

the Michigan economic growth authority act, 1995 PA 24, MCL 207.801

to 207.810.

35 hours or more each week and whose income and social security

taxes are withheld by 1 or more of the following:

(i) A qualified supplier or qualified customer.

(ii) An employee leasing company on behalf of a qualified

supplier or qualified customer.

(iii) A professional employer organization on behalf of a

qualified supplier or qualified customer.

(d) "Michigan economic growth authority" means the Michigan

economic growth authority created in the Michigan economic growth

authority act, 1995 PA 24, MCL 207.801 to 207.810.

(e) "Qualified new job" means a full-time job created by a

qualified supplier or qualified customer at a facility or

facilities that is in excess of the number of full-time jobs a

qualified supplier or qualified customer maintained in this state

or at a facility prior to the expansion or location, as determined

by the authority.

(f) "Qualified sales to a qualified customer" means sales to a

qualified customer that are in excess of the Michigan sales to the

customer prior to the year of expansion or location within this

state as determined by the Michigan economic growth authority and

that would otherwise be included in the calculation of the sales

factor under this act.

(g) "Qualified supplier" and "qualified customer" ~~means~~ mean a

business that opens a new location in this state, a business that

locates in this state, or an existing business located in this

state that expands its business as a result of an anchor company

and satisfies prior to the issuance of a certificate and at the

time specified in the agreement with the qualified taxpayer, as

certified by the Michigan economic growth authority, each of the

following:

(i) Has financial transactions with the anchor company.

(ii) Sells a critical or unique component or technology

necessary for the anchor company to market a finished product as

the result of a commercial relationship with the anchor company or

buys a critical or unique component from the anchor company.

(iii) Has created more than 10 qualified new jobs.

(iv) Has made an investment of at least $1,000,000.00 as

certified by the Michigan economic growth authority.

(h) "Qualified taxpayer" means a taxpayer that was designated

by the Michigan economic growth authority as an anchor company

within the last 5 years and that has influenced a qualified

supplier or qualified customer to open, locate, or expand in this

state.

(i) "Tax rate" means the rate imposed under section 51 of the

income tax act of 1967, 1967 PA 281, MCL 206.51, for the tax year

in which the tax year of the taxpayer for which the credit is being

computed begins.

Sec. 431b. (1) Upon application, a person or group of persons

acting collectively may enter into an agreement with the Michigan

economic growth authority for a credit under this section. In

determining whether to enter into an agreement with a person or

group of persons, the authority shall consider the following

factors:

(a) The number of qualified new jobs or products, or both, to

be created or maintained as a result of winning a federal

procurement contract offered by the United States department of

defense, department of energy, or department of homeland security.

(b) The potential impact of the expansion, retention, or

location on the economy of Michigan if the person or group of

persons acting collectively is awarded the federal contract

described under subdivision (a).

person or group of persons acting collectively for the federal

contract described under subdivision (a).

(d) The total capital investment or new capital investment the

person or group of persons acting collectively will make to win and

maintain the federal contract described under subdivision (a).

(2) The agreement required under subsection (1) shall include,

but is not limited to, all of the following:

(a) A description of the federal contract for which the person

or group of persons acting collectively intends to bid.

(b) A description of the person's or group's expansion,

retention, or location that is necessary if awarded the federal

contract that is the subject of the agreement.

acting collectively is designated a qualified taxpayer under this

section.

(d) A statement by the person or group of persons acting

collectively that a violation of the written agreement may result

in the revocation of the designation as a qualified taxpayer and

the loss or reduction of future credits under this section.

(e) A statement by the person or group of persons acting

collectively that a misrepresentation in the application may result

in the revocation of the designation as a qualified taxpayer and

the refund of credits received under this section.

(f) A method for measuring qualified new jobs before and after

the award of a federal contract and the expansion, retention, or

location of the person or group of persons acting collectively in

this state as a result of winning the federal contract.

(3) A qualified taxpayer may claim a credit against the tax

imposed by this act in an amount up to 100% of the qualified

taxpayer's payroll attributable to employees who perform qualified

new jobs created as a result of the person or group of persons

acting collectively being awarded a federal procurement contract by

the United States department of defense, department of energy, or

department of homeland security as determined by the Michigan

economic growth authority, multiplied by the tax rate for the tax

year for a period of up to 7 years or the term of the contract,

whichever is less, as determined by the Michigan economic growth

authority. If the qualified taxpayer is a group of persons acting

collectively, the Michigan economic growth authority shall

determine the amount of the credit which each person included in

the group is allowed to claim by multiplying the amount of the

credit allowed collectively by the qualified taxpayer by a

fraction, the numerator of which is the person's payroll

attributable to employees who perform qualified new jobs and the

denominator of which is 100% of the qualified taxpayer's payroll

attributable to employees who perform qualified new jobs, and then

certifying the amount of the credit that each person is allowed to

claim respectively. If For tax years that begin on or after January