SB-0569, As Passed Senate, September 7, 2005

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 569

 

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 266 (MCL 206.266), as amended by 2001 PA 70.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 266. (1) A qualified taxpayer with a rehabilitation plan

 

certified after December 31, 1998 may credit against the tax

 

imposed by this act the amount determined pursuant to subsection

 

(2) for the qualified expenditures for the rehabilitation of a

 

historic resource pursuant to the rehabilitation plan in the year

 

in which the certification of completed rehabilitation of the

 

historic resource is issued provided that the certification of

 

completed rehabilitation was issued not more than 5 years after the

 

rehabilitation plan was certified by the Michigan historical

 


center.

 

     (2) The credit allowed under this section shall be 25% of the

 

qualified expenditures that are eligible for the credit under

 

section 47(a)(2) of the internal revenue code if the taxpayer is

 

eligible for the credit under section 47(a)(2) of the internal

 

revenue code or, if the taxpayer is not eligible for the credit

 

under section 47(a)(2) of the internal revenue code, 25% of the

 

qualified expenditures that would qualify under section 47(a)(2) of

 

the internal revenue code except that the expenditures are made to

 

a historic resource that is not eligible for the credit under

 

section 47(a)(2) of the internal revenue code, subject to both of

 

the following:

 

     (a) A taxpayer with qualified expenditures that are eligible

 

for the credit under section 47(a)(2) of the internal revenue code

 

may not claim a credit under this section for those qualified

 

expenditures unless the taxpayer has claimed and received a credit

 

for those qualified expenditures under section 47(a)(2) of the

 

internal revenue code.

 

     (b) A credit under this section shall be reduced by the amount

 

of a credit received by the taxpayer for the same qualified

 

expenditures under section 47(a)(2) of the internal revenue code.

 

     (3) To be eligible for the credit under this section, the

 

taxpayer shall apply to and receive from the Michigan historical

 

center certification that the historic significance, the

 

rehabilitation plan, and the completed rehabilitation of the

 

historic resource meet the criteria under subsection (6) and either

 

of the following:

 


     (a) All of the following criteria:

 

     (i) The historic resource contributes to the significance of

 

the historic district in which it is located.

 

     (ii) Both the rehabilitation plan and completed rehabilitation

 

of the historic resource meet the federal secretary of the

 

interior's standards for rehabilitation and guidelines for

 

rehabilitating historic buildings, 36  C.F.R.  CFR part 67.

 

     (iii) All rehabilitation work has been done to or within the

 

walls, boundaries, or structures of the historic resource or to

 

historic resources located within the property boundaries of the

 

resource.

 

     (b) The taxpayer has received certification from the national

 

park service that the historic resource's significance, the

 

rehabilitation plan, and the completed rehabilitation qualify for

 

the credit allowed under section 47(a)(2) of the internal revenue

 

code.

 

     (4) If a qualified taxpayer is eligible for the credit allowed

 

under section 47(a)(2) of the internal revenue code, the qualified

 

taxpayer shall file for certification with the center to qualify

 

for the credit allowed under section 47(a)(2) of the internal

 

revenue code. If the qualified taxpayer has previously filed for

 

certification with the center to qualify for the credit allowed

 

under section 47(a)(2) of the internal revenue code, additional

 

filing for the credit allowed under this section is not required.

 

     (5) The center may inspect a historic resource at any time

 

during the rehabilitation process and may revoke certification of

 

completed rehabilitation if the rehabilitation was not undertaken

 


as represented in the rehabilitation plan or if unapproved

 

alterations to the completed rehabilitation are made during the 5

 

years after the tax year in which the credit was claimed. The

 

center shall promptly notify the department of a revocation.

 

     (6) Qualified expenditures for the rehabilitation of a

 

historic resource may be used to calculate the credit under this

 

section if the historic resource meets 1 of the criteria listed in

 

subdivision (a) and 1 of the criteria listed in subdivision (b):

 

     (a) The resource is 1 of the following during the tax year in

 

which a credit under this section is claimed for those qualified

 

expenditures:

 

     (i) Individually listed on the national register of historic

 

places or state register of historic sites.

 

     (ii) A contributing resource located within a historic district

 

listed on the national register of historic places or the state

 

register of historic sites.

 

     (iii) A contributing resource located within a historic district

 

designated by a local unit pursuant to an ordinance adopted under

 

the local historic districts act, 1970 PA 169, MCL 399.201 to

 

399.215.

 

     (b) The resource meets 1 of the following criteria during the

 

tax year in which a credit under this section is claimed for those

 

qualified expenditures:

 

     (i) The historic resource is located in a designated historic

 

district in a local unit of government with an existing ordinance

 

under the local historic districts act, 1970 PA 169, MCL 399.201 to

 

399.215.

 


     (ii) The historic resource is located in an incorporated local

 

unit of government that does not have an ordinance under the local

 

historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and

 

has a population of less than 5,000.

 

     (iii) The historic resource is located in an unincorporated

 

local unit of government.

 

     (iv) The historic resource is located in an incorporated local

 

unit of government that does not have an ordinance under the local

 

historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and

 

has been chartered under 1889 PA 39, MCL 455.51 to 455.72.

 

     (7) A credit amount assigned under section 39c(7) of the

 

single business tax act, 1975 PA 228, MCL 208.39c, may be claimed

 

against the partner's, member's, or shareholder's tax liability

 

under this act as provided in section  39c(7) of the single

 

business tax act, 1975 PA 228, MCL 208.39c.

 

     (8) If the credit allowed under this section for the tax year

 

and any unused carryforward of the credit allowed by this section

 

exceed the taxpayer's tax liability for the tax year, that portion

 

that exceeds the tax liability for the tax year shall not be

 

refunded but may be carried forward to offset tax liability in

 

subsequent tax years for 10 years or until used up, whichever

 

occurs first.

 

     (9) If the taxpayer sells a historic resource for which a

 

credit under this section was claimed less than 5 years after the

 

year in which the credit was claimed, the following percentage of

 

the credit amount previously claimed relative to that historic

 

resource shall be added back to the tax liability of the taxpayer

 


in the year of the sale:

 

     (a) If the sale is less than 1 year after the year in which

 

the credit was claimed, 100%.

 

     (b) If the sale is at least 1 year but less than 2 years after

 

the year in which the credit was claimed, 80%.

 

     (c) If the sale is at least 2 years but less than 3 years

 

after the year in which the credit was claimed, 60%.

 

     (d) If the sale is at least 3 years but less than 4 years

 

after the year in which the credit was claimed, 40%.

 

     (e) If the sale is at least 4 years but less than 5 years

 

after the year in which the credit was claimed, 20%.

 

     (f) If the sale is 5 years or more after the year in which the

 

credit was claimed, an addback to the taxpayer's tax liability

 

shall not be made.

 

     (10) If a certification of completed rehabilitation is revoked

 

under subsection (5) less than 5 years after the year in which a

 

credit was claimed, the following percentage of the credit amount

 

previously claimed relative to that historic resource shall be

 

added back to the tax liability of the taxpayer in the year of the

 

revocation:

 

     (a) If the revocation is less than 1 year after the year in

 

which the credit was claimed, 100%.

 

     (b) If the revocation is at least 1 year but less than 2 years

 

after the year in which the credit was claimed, 80%.

 

     (c) If the revocation is at least 2 years but less than 3

 

years after the year in which the credit was claimed, 60%.

 

     (d) If the revocation is at least 3 years but less than 4

 


years after the year in which the credit was claimed, 40%.

 

     (e) If the revocation is at least 4 years but less than 5

 

years after the year in which the credit was claimed, 20%.

 

     (f) If the revocation is 5 years or more after the year in

 

which the credit was claimed, an addback to the taxpayer's tax

 

liability shall not be made.

 

     (11) The department of history, arts, and libraries through

 

the Michigan historical center may impose a fee to cover the

 

administrative cost of implementing the program under this section.

 

     (12) The qualified taxpayer shall attach all of the following

 

to the qualified taxpayer's annual return under this act:

 

     (a) Certification of completed rehabilitation.

 

     (b) Certification of historic significance related to the

 

historic resource and the qualified expenditures used to claim a

 

credit under this section.

 

     (c) A completed assignment form if the qualified taxpayer is

 

an assignee under section 39c of the single business tax act, 1975

 

PA 228, MCL 208.39c, of any portion of a credit allowed under that

 

section.

 

     (13) The department of history, arts, and libraries shall

 

promulgate rules to implement this section pursuant to the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328.

 

     (14) The total of the credits claimed under this section and

 

section 39c of the single business tax act, 1975 PA 228, MCL

 

208.39c, for a rehabilitation project shall not exceed 25% of the

 

total qualified expenditures eligible for the credit under this

 


section for that rehabilitation project.

 

     (15) The department of history, arts, and libraries through

 

the Michigan historical center shall report all of the following to

 

the legislature annually for the immediately preceding state fiscal

 

year:

 

     (a) The fee schedule used by the center and the total amount

 

of fees collected.

 

     (b) A description of each rehabilitation project certified.

 

     (c) The location of each new and ongoing rehabilitation

 

project.

 

     (16) As used in this section:

 

     (a) "Contributing resource" means a historic resource that

 

contributes to the significance of the historic district in which

 

it is located.

 

     (b) "Historic district" means an area, or group of areas not

 

necessarily having contiguous boundaries, that contains 1 resource

 

or a group of resources that are related by history, architecture,

 

archaeology, engineering, or culture.

 

     (c) "Historic resource" means a publicly or privately owned

 

historic building, structure, site, object, feature, or open space

 

located within a historic district designated by the national

 

register of historic places, the state register of historic sites,

 

or a local unit acting under the local historic districts act, 1970

 

PA 169, MCL 399.201 to 399.215; or that is individually listed on

 

the state register of historic sites or national register of

 

historic places and includes all of the following:

 

     (i) An owner-occupied personal residence or a historic resource

 


located within the property boundaries of that personal residence.

 

     (ii) An income-producing commercial, industrial, or residential

 

resource or a historic resource located within the property

 

boundaries of that resource.

 

     (iii) A resource owned by a governmental body, nonprofit

 

organization, or tax-exempt entity that is used primarily by a

 

taxpayer lessee in a trade or business unrelated to the

 

governmental body, nonprofit organization, or tax-exempt entity and

 

that is subject to tax under this act.

 

     (iv) A resource that is occupied or utilized by a governmental

 

body, nonprofit organization, or tax-exempt entity pursuant to a

 

long-term lease or lease with option to buy agreement.

 

     (v) Any other resource that could benefit from rehabilitation.

 

     (d) "Local unit" means a county, city, village, or township.

 

     (e) "Long-term lease" means a lease term of at least 27.5

 

years for a residential resource or at least 31.5 years for a

 

nonresidential resource.

 

     (f) "Michigan historical center" or "center" means the state

 

historic preservation office of the Michigan historical center of

 

the department of history, arts, and libraries or its successor

 

agency.

 

     (g) "Open space" means undeveloped land, a naturally

 

landscaped area, or a formal or man-made landscaped area that

 

provides a connective link or a buffer between other resources.

 

     (h) "Person" means an individual, partnership, corporation,

 

association, governmental entity, or other legal entity.

 

     (i) "Qualified expenditures" means capital expenditures that

 


qualify for a rehabilitation credit under section 47(a)(2) of the

 

internal revenue code if the taxpayer is eligible for the credit

 

under section 47(a)(2) of the internal revenue code or, if the

 

taxpayer is not eligible for the credit under section 47(a)(2) of

 

the internal revenue code, the qualified expenditures that would

 

qualify under section 47(a)(2) of the internal revenue code except

 

that the expenditures are made to a historic resource that is not

 

eligible for the credit under section 47(a)(2) of the internal

 

revenue code, that were paid not more than 5 years after the

 

certification of the rehabilitation plan that included those

 

expenditures was approved by the center, and that were paid after

 

December 31, 1998 for the rehabilitation of a historic resource.

 

Qualified expenditures do not include capital expenditures for

 

nonhistoric additions to a historic resource except an addition

 

that is required by state or federal regulations that relate to

 

historic preservation, safety, or accessibility.

 

     (j) "Qualified taxpayer" means a person that is an assignee

 

under section 39c of the single business tax act, 1975 PA 228, MCL

 

208.39c, or either owns the resource to be rehabilitated or has a

 

long-term lease agreement with the owner of the historic resource

 

and that has qualified expenditures for the rehabilitation of the

 

historic resource equal to or greater than 10% of the state

 

equalized valuation of the property. If the historic resource to be

 

rehabilitated is a portion of a historic or nonhistoric resource,

 

the state equalized valuation of only that portion of the property

 

shall be used for purposes of this subdivision. If the assessor for

 

the local tax collecting unit in which the historic resource is

 


located determines the state equalized valuation of that portion,

 

that assessor's determination shall be used for purposes of this

 

subdivision. If the assessor does not determine that state

 

equalized valuation of that portion, qualified expenditures, for

 

purposes of this subdivision, shall be equal to or greater than 5%

 

of the appraised value as determined by a certified appraiser. If

 

the historic resource to be rehabilitated does not have a state

 

equalized valuation, qualified expenditures for purposes of this

 

subdivision shall be equal to or greater than 5% of the appraised

 

value of the resource as determined by a certified appraiser.

 

     (k) "Rehabilitation plan" means a plan for the rehabilitation

 

of a historic resource that meets the federal secretary of the

 

interior's standards for rehabilitation and guidelines for

 

rehabilitation of historic buildings under 36  C.F.R.  CFR part 67.

 

     Enacting section 1.  This amendatory act is effective for tax

 

years that begin after December 31, 2004.