SB-0880, As Passed Senate, December 19, 2008
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 880
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending section 4p (MCL 205.94p), as added by 1999 PA 117, and
by adding section 4z.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 4p. (1) The tax under this act does not apply to property
sold to an extractive operator for use or consumption in extractive
operations.
(2) The property under subsection (1) is exempt only to the
extent that the property is used for the exempt purposes stated in
this section. The exemption is limited to the percentage of exempt
use to total use determined by a reasonable formula or method
approved by the department.
(3) Extractive operations include the actual production of
oil, gas, brine, or other natural resources. Property eligible for
the exemption includes the following:
(a) Casing pipe or drive pipe.
(b) Tubing.
(c) Well-pumping equipment.
(d) Chemicals.
(e) Explosives or acids used in fracturing, acidizing, or
shooting wells.
(f) Christmas trees, derricks, or other wellhead equipment.
(g) Treatment tanks.
(h) Piping, valves, or pumps used before movement or
transportation of the natural resource from the production area.
(i) Chemicals or acids used in the treatment of crude oil,
gas, brine, or other natural resources.
(j) Tangible personal property used or consumed in depositing
tailings from hard rock mining processing.
(k) Tangible personal property used or consumed in extracting
the lithologic units necessary to process iron ore.
(4) The extractive operation exemption does not include the
following:
(a) Tangible personal property consumed or used in the
construction, alteration, improvement, or repair of buildings,
storage tanks, and storage and housing facilities.
(b) Tangible personal property consumed or used in
transporting the product from the place of extraction, except for
tangible personal property consumed or used in transporting
extracted materials from the extraction site to the place where the
extracted materials first come to rest in finished goods inventory
storage.
(c) Tangible personal property that is a product the
extractive operator produces and that is consumed or used by the
extractive operator for a purpose other than the manufacturing or
producing of a product for ultimate sale. The extractor shall
account for and remit the tax to the state based upon the product's
fair market value.
(d) Equipment, materials, and supplies used in exploring,
prospecting, or drilling for oil, gas, brine, or other natural
resources.
(e) Equipment, materials, and supplies used in the storing,
withdrawing, or distribution of oil, gas, or brine from a storage
facility.
(f) Vehicles, including special bodies or attachments,
required to display a vehicle permit or license plate to operate on
public highways.
(5) As used in this section:
(a) "Extractive operations" means the activity of taking or
extracting for resale ore, oil, gas, coal, timber, stone, gravel,
clay, minerals, or other natural resource material. An extractive
operation begins when contact is made with the actual type of
natural raw product being recovered. Extractive operation includes
all necessary processing operations before shipment from the place
of
extraction. Extractive operations includes include all
necessary
processing operations and movement of the natural resource material
until the point at which the natural raw product being recovered
first comes to rest in finished goods inventory storage at the
extraction site. Extractive operations for timber include
transporting timber from the point of extraction to a place of
temporary storage at the extraction site and loading or
transporting timber from a place of temporary storage at the
extraction site to a vehicle or other equipment located at the
extraction site that will remove the timber from the extraction
site.
(b) An extractive operator is a person who, either directly or
by contract, performs extractive operations.
Sec. 4z. The tax levied under this act does not apply to
tangible personal property acquired before January 1, 2014 by a
person engaged in the business of altering, repairing, or improving
real estate for others if the property is to be affixed to or made
a structural part of a qualified convention facility under the
regional convention facility authority act.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 94th Legislature are
enacted into law:
(a) Senate Bill No. 881.
(b) Senate Bill No. 1630.
(c) Senate Bill No. 1633.
(d) House Bill No. 5691.