SENATE BILL No. 830 October 19, 1999, Introduced by Senators SIKKEMA, MC MANUS, EMMONS, STILLE, GOUGEON, BULLARD, HAMMERSTROM and HOFFMAN and referred to the Committee on Finance. A bill to amend 1893 PA 206, entitled "The general property tax act," by amending section 9 (MCL 211.9), as amended by 1996 PA 582. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 9. The following personal property is exempt from 2 taxation: 3 (a) The personal property of charitable, educational, and 4 scientific institutions incorporated under the laws of this 5 state. This exemption does not apply to secret or fraternal 6 societies, but the personal property of all charitable homes of 7theSECRET OR FRATERNAL societies and OF nonprofit corporations 8 that own and operate facilities for the aged and chronically ill 9 in which the net income from the operation of the corporations 10 does not inure to the benefit of a person other than the 11 residents is exempt. 04444'99 FDD 2 1 (b) The property of all library associations, circulating 2 libraries, libraries of reference, and reading rooms owned or 3 supported by the public and not used for gain. 4 (c) The property of posts of the grand army of the republic, 5 sons of veterans' unions, and of the women's relief corps con- 6 nected with them, of young men's Christian associations, women's 7 Christian temperance union associations, young people's Christian 8 unions, a boy or girl scout or camp fire girls organization, 4-H 9 clubs, and other similar associations. 10 (d) Pensions receivable from the United States. 11 (e) The property of Indians who are not citizens. 12 (f) The personal property owned and used by a householder 13 such as customary furniture, fixtures, provisions, fuel, and 14 other similar equipment,and thewearing apparel including per- 15 sonal jewelry, family pictures, school books, library books of 16 reference, and allied items. Personal property is not exempt 17 under this subdivision if it is used to produce income, if it is 18 held for speculative investment, or if it constitutes an inven- 19 tory of goods for sale in the regular course of trade. 20 (g) Household furnishings, provisions, and fuelto the21state equalized valueof not more than $5,000.00 IN TAXABLE 22 VALUE, of each social or professional fraternity, sorority, and 23 student cooperative house recognized by the educational institu- 24 tion at which it is located. 25 (h) The working tools of a mechanicto the state equalized26valueof not more than $500.00 IN TAXABLE VALUE. "Mechanic", as 27 used in this subdivision, means a person skilled in a trade 04444'99 3 1 pertaining to a craft or in the construction or repair of 2 machinery if the person's employment by others is dependent on 3 his or her furnishing the tools. 4 (i) Fire engines and other implements used in extinguishing 5 fires owned or used by an organized or independent fire company. 6 (j) Property actuallybeingused in agricultural opera- 7 tions andthefarm implements held for sale or resale by retail 8 servicing dealers for use in agricultural production. As used in 9 this subdivision, "agricultural operations" means farming in all 10 its branches, including cultivation of the soil, growing and har- 11 vesting of an agricultural, horticultural, or floricultural com- 12 modity, dairying, raising of livestock, bees, fur-bearing ani- 13 mals, or poultry, turf and tree farming, raising and harvesting 14 of fish, and any practices performed by a farmer or on a farm as 15 an incident to, or in conjunction with, farming operations, but 16 excluding retail sales and food processing operations. Property 17 used in agricultural operations includes machinery used to pre- 18 pare the crop for market operated incidental to a farming opera- 19 tion that does not substantially alter the form, shape, or sub- 20 stance of the crop and is limited to cleaning, cooling, washing, 21 pitting, grading, sizing, sorting, drying, bagging, boxing, crat- 22 ing, and handling if not less than 33% of the volume of the crops 23 processed in the year ending on the applicable tax day or in at 24 least 3 of the immediately preceding 5 years were grown by the 25 farmer in Michigan who is the owner or user of the crop process- 26 ing machinery. 04444'99 4 1 (k) Personal propertyto the state equalized valueof not 2 more than $500.00 IN TAXABLE VALUE used by a householder in the 3 operation of a business in the householder's dwelling or at 1 4 other location in the city, township, or village where the house- 5 holder resides. 6 (l) The products, materials, or goods processed or otherwise 7 and in whatever form, but expressly excepting alcoholic bever- 8 ages, located in a public warehouse, United States customs port 9 of entry bonded warehouse, dock, or port facility on December 31 10 of each year, if those products, materials, or goods are desig- 11 nated as in transit to destinationsout ofOUTSIDE THIS state 12 pursuant to the published tariffs of a railroad or common carrier 13 bythefilingofthe freight bill covering the products, 14 materials, or goods with the agency designated by the tariffs, 15so as to entitleENTITLING the shipper to transportation rate 16 privileges. Products in a United States customs port of entry 17 bonded warehouse that arrived from another state or a foreign 18 country, whether awaiting shipment to another state or to a final 19 destination within this state, are considered to be in transit 20 and temporarily at rest, and not subject to personal property 21 taxation. To obtain AN exemption FOR PRODUCTS, MATERIALS, OR 22 GOODS UNDER THIS SUBDIVISION, the owner shall file a sworn state- 23 ment with, and in the form required by, the assessing officer of 24 the tax district in which the warehouse, dock, or port facility 25 is located, at a time between the tax day, December 31, and 26 beforeclosing ofthe ASSESSING OFFICER CLOSES THE assessment 27 rollsby the assessing officer,describing the products, 04444'99 5 1 materials, or goods, and reporting their cost and value as of 2 December 31 of each year. The status of persons,and pro- 3 ducts, materials, or goods for which AN exemption is requested 4shall beIS determined as of December 31, whichshall beIS 5 the tax day.The assessment on the basis of average monthly6inventory does not apply in valuing products, materials, or goods7for which exemption is requested.Any property located in a 8 public warehouse, dock, or port facility on December 31 of each 9 year, whichTHAT is exempt from taxation under this subdivi- 10 sion butwhichTHAT is not shipped outsidetheTHIS state 11 pursuant to the particular tariff under which the transportation 12 rate privilege was established,shall be assessed upon the 13nextIMMEDIATELY succeeding or a subsequent assessment roll by 14 the assessing officer and taxed at the same rate of taxation as 15 other taxablepropertiesPROPERTY for the year or years for 16 which the property was exempted,to the owner at the time of 17 the omission,unless the owner or person entitled to posses- 18 sion of the products, materials, or goods is a resident of, or 19 authorized to do business in, this state and files with the 20 assessing officer, with whom statements of taxable property are 21 required to be filed, a statement under oath that the products, 22 materials, or goods are not for sale or use in this state and 23 will be shipped to a point or points outside this state. If a 24 person, firm, or corporation claims exemption bythefiling 25ofa sworn statement, the person, firm, or corporation shall 26 append to the statement of taxable property required to be filed 27 in thenextIMMEDIATLEY SUCCEEDING year or, if a statement of 04444'99 6 1 taxable property is not filed for thenextIMMEDIATLEY 2 SUCCEEDING year, TO a sworn statement FILED on a form required by 3 the assessing officer,shall be filed showinga complete list 4 of the property for which the exemption was claimed with a state- 5 ment of the manner of shipment and of the point or points to 6 which the products, materials, or goods were shipped from the 7 public warehouse, dock, or port facility.andTHE ASSESSING 8 OFFICER SHALL ASSESS the products, materials, or goods not 9 shipped to a point or points outside this stateshall be10assessedupon thenextIMMEDIATELY succeeding assessment roll 11,or on a subsequent assessment rollby the assessing officer12 and THE PRODUCTS, MATERIALS, OR GOODS SHALL BE taxed at the same 13 rate of taxation as other taxablepropertiesPROPERTY for the 14 year or years for which the property was exempted,to the 15 owner at the time of the omission. The records, accounts, and 16 books of warehouses, docks, or port facilities, individuals, 17 partnerships, corporations, owners, or those in possession of 18 tangible personal property shall be open to and available for 19 inspection, examination, or auditing by assessing officers. A 20 warehouse, dock,orport facility, individual, partnership, 21 corporation, owner, or person in possession of tangible personal 22 property shall report within 90 days after shipment of products, 23 materials, or goods in transit, for which AN exemption under this 24 section was claimed or granted, the destination of shipments or 25 parts of shipments and the cost value of those shipments OR PARTS 26 OF SHIPMENTS to the assessing officer.For failure to comply27with this requirement, theA warehouse, dock,orport 04444'99 7 1 facility, individual, partnership, corporation, or owner is 2 subject to a fine of $100.00 for eachomissionFAILURE TO 3 REPORT THE DESTINATION AND COST VALUE OF SHIPMENTS OR PARTS OF 4 SHIPMENTS AS REQUIRED IN THIS SUBDIVISION. A person, firm, indi- 5 vidual, partnership, corporation, or owner failing to report pro- 6 ducts, materials, or goods located in a warehouse, dock, or port 7 facility to the assessing officer is subject to a fine of $100.00 8 and a penalty of 50% of the final amount of taxes found to be 9 assessable for the year on property not reported, the assessable 10 taxes and penalty to be spread on a subsequent assessment roll in 11 the same manner as general taxes on personal property. For the 12 purpose of this subdivision, a public warehouse, dock, or port 13 facility means a warehouse, dock, or port facility owned or oper- 14 ated by a person, firm, or corporation engaged in the business of 15 storing products, materials, or goods for hire for profit who 16 issues a schedule of rates for storage of the products, materi- 17 als, or goods and who issues warehouse receipts pursuant toAct18No. 303 of the Public Acts of 1909, being sections 443.50 to19443.55 of the Michigan Compiled Laws1909 PA 303, MCL 443.50 TO 20 443.55. A United States customs port of entry bonded warehouse 21 means a CUSTOMS warehouse within a classification designated by 22 19 C.F.R. 19.1 andwhichTHAT is located in a port of entry, as 23 defined by 19 C.F.R.101.1(m)101.1. A portion of a public 24 warehouse, United States customs port of entry bonded warehouse, 25 dock, or port facility leased to a tenant or a portion of any 26 premises owned or leased or operated by a consignor or consignee 27 or an affiliate or subsidiary of the consignor or consignee 04444'99 8 1shallIS notbe considereda public warehouse, dock, or port 2 facility. 3 (m) Personal property owned by a bank or trust company orga- 4 nized under the laws of this state, A national banking associa- 5 tion, or AN incorporated bank holding company as defined in sec- 6 tion 2 of the bank holding company act of 1956, chapter 240, 7 70 Stat. 133, 12 U.S.C. 1841, that controls a bank, national 8 banking association, trust company, or industrial bank subsidiary 9 located in this state.However, buildingsBUILDINGS owned by a 10 state or national bank, trust company, or incorporated bank hold- 11 ing company and situated upon lands of which the state or 12 national bank, trust company, or incorporated bank holding com- 13 pany is not the owner of the fee are considered real property and 14 are not exempt from taxation.and personalPERSONAL property 15 owned by a state or national bank, trust company, or incorporated 16 bank holding company that is leased, loaned, or otherwise made 17 available to and used by a private individual, association, or 18 corporation in connection with a business conducted for profit is 19 not exempt from taxation. 20 (n) Farm products, processed or otherwise, the ultimate use 21 of which is for human or animal consumption as food, except wine, 22 beer, and other alcoholic beverages regularly placed in storage 23 in a public warehouse, dock, or port facility,while in stor- 24 age are considered in transit and only temporarily at rest,25 and are not subject to personal property taxation. The assessing 26 officer is the determining authority as to what constitutes, is 27 defined as, or classified as, farm products as used in this 04444'99 9 1 subdivision. The records, accounts, and books of warehouses, 2 docks, or port facilities, individuals, partnerships, corpora- 3 tions, owners, or those in possession of farm products shall be 4 open to and available for inspection, examination, or auditing by 5 assessing officers. 6 (o) Sugar, in solid or liquid form, produced from sugar 7 beets,anddried beet pulp, and beet molasses, whenIF owned 8 or held by processors. 9 (p) The personal property of a parent cooperative 10 preschool. As used in this subdivision and section 7z, "parent 11 cooperative preschool" means a nonprofit, nondiscriminatory edu- 12 cational institution maintained as a community service and admin- 13 istered by parents of children currently enrolled in the pre- 14 school, that provides an educational and developmental program 15 for children younger than compulsory school age, that provides an 16 educational program for parents, including active participation 17 with children in preschool activities, that is directed by quali- 18 fied preschool personnel, and that is licensedby the department19of social servicesunderAct No. 116 of the Public Acts of201973, being sections 722.111 to 722.128 of the Michigan Compiled21Laws1973 PA 116, MCL 722.111 TO 722.128. 22 (q) All equipment used exclusively in wood harvesting, but 23 not including portable or stationary sawmills or other equipment 24 used in secondary processing operations. As used in this subdi- 25 vision, "wood harvesting" meanstheclearingofland for 26 forest management purposes,theplantingoftrees,andall 04444'99 10 1 forms of cutting or chippingoftrees, andtheloadingof2themTREES on trucks for removal from the harvest area. 3 (r) Liquefied petroleum gas tanks located on residential or 4 agricultural propertyandused to store liquefied petroleum gas 5 for residential or agricultural property use. As used in this 6 subdivision, "liquefied petroleum gas" means that term as defined 7 in section 51 ofAct No. 150 of the Public Acts of 1927, being8section 207.151 of the Michigan Compiled Laws1927 PA 150, 9 MCL 207.151. 10 (s) Water conditioning systems used for a residential 11 dwelling. 12 (T) THE PERSONAL PROPERTY OF A FARMERS' COOPERATIVE IF THAT 13 PERSONAL PROPERTY WOULD BE EXEMPT UNDER SUBDIVISION (J) IF OWNED 14 BY A MEMBER OF THAT FARMERS' COOPERATIVE. AS USED IN THIS SUBDI- 15 VISION, "FARMERS' COOPERATIVE" MEANS THAT TERM AS DESCRIBED IN 16 SECTION 521(b)(1) OF THE INTERNAL REVENUE CODE OF 1986. 04444'99 Final page. FDD