HB-4338, As Passed House, March 29, 2007
February 28, 2007, Introduced by Reps. Sheltrown, Sheen, Ball, Rick Jones and Mayes and referred to the Committee on Tax Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 351 (MCL 206.351), as amended by 2003 PA 22.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 351. (1) Every employer in this state required under the
provisions of the internal revenue code to withhold a tax on the
compensation of an individual, except as otherwise provided, shall
deduct and withhold a tax in an amount computed by applying, except
as provided by subsection (9), the rate prescribed in section 51 to
the remainder of the compensation after deducting from compensation
the same proportion of the total amount of personal and dependency
exemptions of the individual allowed under this act that the period
of time covered by the compensation is of 1 year. The commissioner
may prescribe withholding tables that may be used by employers to
compute the amount of tax required to be withheld.
(2) Every flow-through entity in this state shall withhold a
tax in an amount computed by applying the rate prescribed in
section 51 to the share of taxable income available for
distribution of each nonresident member after deducting from that
distributive income the same proportion of the total amount of
personal and dependency exemptions of the individual allowed under
this act that the period of time covered by the distributive income
is of 1 year. If a flow-through entity is a nonresident member of a
separate flow-through entity in this state, the flow-through entity
in this state of which it is a member shall withhold the tax as
required by this subsection on behalf of the flow-through entity
that is a nonresident member and all nonresident members of that
flow-through entity that is a nonresident member. For purposes of
this subsection, "share of taxable income available for
distribution of each nonresident member" and "distributive income"
mean, for a flow-through entity that has a regulatory agreement
with the Michigan state housing development authority, the United
States department of housing and urban development, or the United
States department of agriculture under which approval is required
for cash distributions to members, cash distributions approved
under its agreement and actually made during the tax year.
(3) Every casino licensee shall withhold a tax in an amount
computed by applying the rate prescribed in section 51 to the
winnings of a nonresident reportable by the casino licensee under
the internal revenue code.
(4) Every race meeting licensee or track licensee shall
withhold a tax in an amount computed by applying the rate
prescribed in section 51 to a payoff price on a winning ticket of a
nonresident reportable by the race meeting licensee or track
licensee under the internal revenue code that is the result of
pari-mutuel wagering at a licensed race meeting.
(5) Every casino licensee or race meeting licensee or track
licensee shall report winnings of a resident reportable by the
casino licensee or race meeting licensee or track licensee under
the internal revenue code to the department in the same manner and
format as required under the internal revenue code.
(6) The taxes withheld under this section shall accrue to the
state on the last day of the month in which the taxes are withheld
but shall be returned and paid to the department by the employer,
flow-through entity, casino licensee, or race meeting licensee or
track licensee within 15 days after the end of any month or as
provided in section 355, except prior to July 1, 1993, taxes
deposited pursuant to section 19(2) of 1941 PA 122, MCL 205.19, are
accrued on the last day of the filing period.
(7) An employer, flow-through entity, casino licensee, or race
meeting licensee or track licensee required by this section to
deduct and withhold taxes on compensation, a share of income
available for distribution on which withholding is required under
subsection (2), winning on which withholding is required under
subsection (3), or a payoff price on which withholding is required
under subsection (4) holds the amount of tax withheld as a trustee
for the state, is liable for the payment of the tax to the state,
and is not liable to any individual for the amount of the payment.
(8) An employer in this state is not required to deduct and
withhold a tax on the compensation paid to a nonresident individual
employee, who, under section 256, may claim a tax credit equal to
or in excess of the tax estimated to be due for the tax year or is
exempted from liability for the tax imposed by this act. In each
tax year, the nonresident individual shall furnish to the employer,
on a form approved by the department, a verified statement of
nonresidence.
(9) An employer, flow-through entity, casino licensee, or race
meeting licensee or track licensee required to withhold a tax under
this act, by the fifteenth day of the following month, shall
provide the department with a copy of any exemption certificate on
which the employee, nonresident member, or person subject to
withholding under subsection (3) or (4) claims more than 9 personal
or dependency exemptions, claims a status that exempts the
employee, nonresident member, or person subject to withholding
under subsection (3) or (4) from withholding under this section, or
elects to pay the tax imposed by this act calculated under section
51a.
(10) An employer shall deduct and withhold the tax imposed by
this act calculated under section 51a for a resident who files an
exemption certificate under subsection (9) to elect to pay the tax
calculated under section 51a.
(11) The exemption certificate required by this section shall
include the following statement, "Electing to file using the no-
form option may not be for everyone who is eligible. If a taxpayer
chooses the no-form option, he or she may not be eligible for some
of the credits allowed under this act including the property tax
credit allowed under sections 520 and 522, the tuition tax credit
allowed under section 274, and the city income tax credit allowed
under section 257.".
(12) As used in this section:
(a) "Casino" means that term as defined in section 110.
(b) "Casino licensee" means a person licensed to operate a
casino under the Michigan gaming control and revenue act, the
Initiated Law of 1996, MCL 432.201 to 432.226.
(c) "Race meeting licensee" and "track licensee" mean a person
to whom a race meeting license or track license is issued pursuant
to section 8 of the horse racing law of 1995, 1995 PA 279, MCL
431.308.