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.