SENATE BILL No. 988

February 10, 2000, Introduced by Senator EMMONS and referred to the Committee on

Finance.

A bill to amend 1933 PA 167, entitled

"General sales tax act,"

by amending section 1 (MCL 205.51), as amended by 1999 PA 116.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 1. (1) As used in this act:

2 (a) "Person" means an individual, firm, partnership, joint

3 venture, association, social club, fraternal organization, munic-

4 ipal or private corporation whether organized for profit or not,

5 company, estate, trust, receiver, trustee, syndicate, the United

6 States, this state, county, or any other group or combination

7 acting as a unit, and includes the plural as well as the singular

8 number, unless the intention to give a more limited meaning is

9 disclosed by the context.

10 (b) "Sale at retail" means a transaction by which the

11 ownership of tangible personal property is transferred for

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1 consideration, if the transfer is made in the ordinary course of

2 the transferor's business and is made to the transferee for con-

3 sumption or use, or for any purpose other than for resale, or for

4 lease, if the rental receipts are taxable under the use tax act,

5 1937 PA 94, MCL 205.91 to 205.111, in the form of tangible per-

6 sonal property to a person licensed under this act, or for demon-

7 stration purposes or lending or leasing to a public or parochial

8 school offering a course in automobile driving. However, a vehi-

9 cle purchased by the school shall be certified for driver educa-

10 tion and shall not be reassigned for personal use of the school's

11 administrative personnel. For a dealer selling a new car or

12 truck, the exemption for demonstration purposes shall be deter-

13 mined by the number of new cars and trucks sold during the cur-

14 rent calendar year or the immediately preceding year without

15 regard to specific make or style in accordance with the following

16 schedule of 0 to 25, 2 units; 26 to 100, 7 units; 101 to 500, 20

17 units; 501 or more, 25 units; but not to exceed 25 cars and

18 trucks in a calendar year for demonstration purposes.

19 (c) "Sale at retail" includes a conditional sale, install-

20 ment lease sale, or other transfer of property if title is

21 retained as security for the purchase price but is intended to be

22 transferred later.

23 (d) "Sale at retail" includes the sale of electricity, natu-

24 ral or artificial gas, or steam, if the sale is made to the con-

25 sumer or user for consumption or use rather than for resale.

26 BEGINNING SEPTEMBER 20, 1999, SALE AT RETAIL ALSO INCLUDES THE

27 SALE OF THE TRANSMISSION AND DISTRIBUTION OF ELECTRICITY, WHETHER

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1 THE ELECTRICITY IS PURCHASED FROM THE DELIVERING UTILITY OR FROM

2 ANOTHER PROVIDER, IF THE SALE IS MADE TO THE CONSUMER OR USER FOR

3 CONSUMPTION OR USE RATHER THAN FOR RESALE. Sale at retail also

4 includes the sale of a prepaid telephone calling card or a pre-

5 paid authorization number for telephone use, rather than for

6 resale, . Sale at retail AND also includes the reauthorization

7 of a prepaid telephone calling card or a prepaid authorization

8 number. Sale at retail does not include the sale of water

9 through water mains or the sale of water delivered in bulk tanks

10 in quantities of not less than 500 gallons.

11 (e) "Sale at retail" includes computer software offered for

12 general sale to the public or software modified or adapted to the

13 user's needs or equipment by the seller, only if the software is

14 available for sale from a seller of software on an as is basis or

15 as an end product without modification or adaptation. Sale at

16 retail does not include specific charges for technical support or

17 for adapting or modifying prewritten, standard, or canned com-

18 puter software programs to a purchaser's needs or equipment if

19 those charges are separately stated and identified. Sale at

20 retail does not include computer software originally designed for

21 the exclusive use and special needs of the purchaser. As used in

22 this subdivision, "computer software" means a set of statements

23 or instructions that when incorporated in a machine usable medium

24 is capable of causing a machine or device having information pro-

25 cessing capabilities to indicate, perform, or achieve a particu-

26 lar function, task, or result.

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1 (f) "Sale at retail" includes the sale of tangible personal

2 property by an industrial laundry under a sale, rental, or

3 service agreement with a term of at least 5 days.

4 (g) "Sale at retail" does not include an isolated transac-

5 tion by a person not licensed or required to be licensed under

6 this act, in which tangible personal property is offered for

7 sale, sold, transferred, and delivered by the owner.

8 (h) "Sale at retail" does not include a commercial advertis-

9 ing element if the commercial advertising element is used to

10 create or develop a print, radio, television, or other advertise-

11 ment, the commercial advertising element is discarded or returned

12 to the provider after the advertising message is completed, and

13 the commercial advertising element is custom developed by the

14 provider for the purchaser. As used in this subdivision,

15 "commercial advertising element" means a negative or positive

16 photographic image, an audiotape or videotape master, a layout, a

17 manuscript, writing of copy, a design, artwork, an illustration,

18 retouching, and mechanical or keyline instructions. Sale at

19 retail includes black and white or full color process separation

20 elements, an audiotape reproduction, or a videotape

21 reproduction.

22 (i) "Gross proceeds" means the amount received in money,

23 credits, subsidies, property, or other money's worth in consider-

24 ation of a sale at retail within this state, without a deduction

25 for the cost of the property sold, the cost of material used, the

26 cost of labor or service purchased, an amount paid for interest

27 or a discount, a tax paid on cigarettes or tobacco products at

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1 the time of purchase, a tax paid on beer or liquor at the time of

2 purchase or other expenses. Also, a deduction is not allowed for

3 losses. Gross proceeds do not include an amount received or

4 billed by the taxpayer for remittance to the employee as a gratu-

5 ity or tip, if the gratuity or tip is separately identified and

6 itemized on the guest check or billed to the customer. In a tax-

7 able sale at retail of a motor vehicle, if another motor vehicle

8 is used as part payment of the purchase price, the value of the

9 motor vehicle used as part payment of the purchase price shall be

10 that value agreed to by the parties to the sale as evidenced by

11 the signed statement executed pursuant to section 251 of the

12 Michigan vehicle code, 1949 PA 300, MCL 257.251. A credit or

13 refund for returned goods or a refund less an allowance for use

14 made for a motor vehicle returned under 1986 PA 87, MCL 257.1401

15 to 257.1410, as certified by the manufacturer on a form provided

16 by the department of treasury, may be deducted.

17 (j) "Business" includes an activity engaged in by a person

18 or caused to be engaged in by that person with the object of

19 gain, benefit, or advantage, either direct or indirect.

20 (k) "Tax year" or "taxable year" means the fiscal year of

21 the state or the taxpayer's fiscal year if permission is obtained

22 by the taxpayer from the department to use the taxpayer's fiscal

23 year as the tax period instead.

24 (l) "Department" means the revenue division of the depart-

25 ment of treasury.

26 (m) "Taxpayer" means a person subject to a tax under this

27 act.

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1 (n) "Tax" includes a tax, interest, or penalty levied under

2 this act.

3 (o) "Textiles" means goods that are made of or incorporate

4 woven or nonwoven fabric, including, but not limited to, cloth-

5 ing, shoes, hats, gloves, handkerchiefs, curtains, towels,

6 sheets, pillows, pillow cases, tablecloths, napkins, aprons,

7 linens, floor mops, floor mats, and thread. Textiles also

8 include materials used to repair or construct textiles, or other

9 goods used in the rental, sale, or cleaning of textiles.

10 (2) If the department determines that it is necessary for

11 the efficient administration of this act to regard an unlicensed

12 person, including a salesperson, representative, peddler, or can-

13 vasser as the agent of the dealer, distributor, supervisor, or

14 employer under whom the unlicensed person operates or from whom

15 the unlicensed person obtains the tangible personal property sold

16 by the unlicensed person, irrespective of whether the unlicensed

17 person is making sales on the unlicensed person's own behalf or

18 on behalf of the dealer, distributor, supervisor, or employer,

19 the department may so regard the unlicensed person and may regard

20 the dealer, distributor, supervisor, or employer as making sales

21 at retail at the retail price for the purposes of this act.

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