HB-5408, As Passed Senate, November 20, 2007

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5408

(As amended, November 20, 2007)

<<A bill to amend 2007 PA 36, entitled

"Michigan business tax act,"

by amending sections 105, 239, 265, 403, 405, 409, 413, 417, 445, 447,

and 515 (MCL 208.1105, 208.1239, 208.1265, 208.1403, 208.1405,

208.1409, 208.1413, 208.1417, 208.1445, 208.1447, and 208.1515) and by

adding chapter 2C and section 451.>>

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 105. (1) "Business activity" means a transfer of legal or

equitable title to or rental of property, whether real, personal,

or mixed, tangible or intangible, or the performance of services,

or a combination thereof, made or engaged in, or caused to be made

or engaged in, whether in intrastate, interstate, or foreign

commerce, with the object of gain, benefit, or advantage, whether

direct or indirect, to the taxpayer or to others, but does not

include the services rendered by an employee to his or her employer

or services as a director of a corporation. Although an activity of

a taxpayer may be incidental to another or to other of his or her

business activities, each activity shall be considered to be

business engaged in within the meaning of this act. However,

business activity does not include an activity that does not

constitute a trade or business.

(2) "Business income" means that part of federal taxable

income derived from business activity. For a partnership or S

corporation, business income includes payments and items of income

and expense that are attributable to business activity of the

partnership or S corporation and separately reported to the

partners or shareholders. For an organization that is a mutual or

cooperative electric company exempt under section 501(c)(12) of the

internal revenue code, business income equals the organization's

excess or deficiency of revenues over expenses as reported to the

federal government by those organizations exempt from the federal

income tax under the internal revenue code, less capital credits

paid to members of that organization, less income attributed to

equity in another organization's net income, and less income

resulting from a charge approved by a state or federal regulatory

agency that is restricted for a specified purpose and refundable if

it is not used for the specified purpose. For a tax-exempt person,

business income means only that part of federal taxable income

derived from unrelated business activity.

Sec. 239. (1) An insurance company shall be allowed a credit

against the tax imposed under this chapter in an amount equal to

50% of the examination fees paid by the insurance company during

the tax year pursuant to section 224 of the insurance code of 1956,

1956 PA 218, MCL 500.224.

(2) An insurance company ~~that does not make any of the~~

~~payments described under section 237(1)(a) through (d)~~ may claim a

credit against the tax imposed under this act as provided under

section 403(2), not to exceed 65% of the insurance company's tax

liability for the tax year after claiming the other credits allowed

by this chapter.

Sec. 265. (1) For a financial institution, tax base means the

financial institution's net capital. Net capital means equity

capital as computed in accordance with generally accepted

accounting principles less goodwill ~~arising from purchase~~

~~accounting adjustments for transactions that occurred after July 1,~~

~~2007,~~ and the average daily book value of United States obligations

and Michigan obligations. If the financial institution does not

maintain its books and records in accordance with generally

accepted accounting principles, net capital shall be computed in

accordance with the books and records used by the financial

institution, so long as the method fairly reflects the financial

institution's net capital for purposes of the tax levied by this

chapter. Net capital does not include up to 125% of the minimum

regulatory capitalization requirements of a person subject to the

tax imposed under chapter 2A.

(2) Net capital shall be determined by adding the financial

institution's net capital as of the close of the current tax year

and preceding 4 tax years and dividing the resulting sum by 5. If a

financial institution has not been in existence for a period of 5

tax years, net capital shall be determined by adding together the

financial institution's net capital for the number of tax years the

financial institution has been in existence and dividing the

resulting sum by the number of years the financial institution has

been in existence. For purposes of this section, a partial year

shall be treated as a full year.

(3) For purposes of this section, each of the following

applies:

(a) A change in identity, form, or place of organization of 1

financial institution shall be treated as if a single financial

institution had been in existence for the entire tax year in which

the change occurred and each tax year after the change.

(b) The combination of 2 or more financial institutions into 1

shall be treated as if the constituent financial institutions had

been a single financial institution in existence for the entire tax

year in which the combination occurred and each tax year after the

combination, and the book values and deductions for United States

obligations and Michigan obligations of the constituent

institutions shall be combined. A combination shall include any

acquisition required to be accounted for by the surviving financial

institution in accordance with generally accepted accounting

principles or a statutory merger or consolidation.

CHAPTER 2C

Sec. 281. (1) In addition to the taxes imposed and levied

under this act and subject to the limitations provided under

subsections (2) and (3), an annual surcharge is imposed and levied

on each taxpayer equal to the following percentage of the

taxpayer's tax liability under this act after allocation or

apportionment to this state under this act but before calculation

of the various credits available under this act:

(a) For each taxpayer other than a person subject to the tax

imposed and levied under chapter 2B for tax years ending after

December 31, 2007 and before January 1, 2011, 14.0%.

(b) For a person subject to the tax imposed and levied under

chapter 2B:

(i) For tax years ending after December 31, 2007 and before

January 1, 2009, 27.7%.

(ii) For tax years ending after December 31, 2008 and before

January 1, 2011, 23.4%.

(2) The amount of the surcharge imposed and levied on any

taxpayer under subsection (1)(a) shall not exceed $7,500,000.00 for

any single tax year.

(3) The surcharge imposed and levied under this section does

not apply to a person subject to the tax imposed and levied under

chapter 2A.

(4) The surcharge imposed and levied under this section shall

constitute a part of the tax imposed under this act and shall be

administered, collected, and enforced as provided under this act.

Sec. 403. (1) Notwithstanding any other provision in this act,

the credits provided in this section shall be taken before any

other credit under this act. The total combined credit allowed

under this section shall not exceed 65% of the ~~total~~ tax liability

imposed under this act before the imposition and levy of the

surcharge under section 281.

(2) Subject to the limitation in subsection (1), a taxpayer

may claim a credit against the tax imposed by this act equal to

0.370% of the taxpayer's compensation in this state. For purposes

of this subsection, a taxpayer includes a person ~~described in~~

~~section 239(2) and~~ subject to the tax imposed under chapter 2A and

a person subject to the tax imposed under chapter 2B. A

professional employer organization shall not include payments by

the professional employer organization to the officers and

employees of a client of the professional employer organization

whose employment operations are managed by the professional

employer organization. A client may include payments by the

professional employer organization to the officers and employees of

the client whose employment operations are managed by the

professional employer organization.

(3) Subject to the limitation in subsection (1), a taxpayer

may claim a credit against the tax imposed by this act equal to

2.9% multiplied by the result of subtracting the sum of the amounts

calculated under subdivisions (d), (e), and (f) from the sum of the

amounts calculated under subdivisions (a), (b), and (c):

(a) Calculate the cost, including fabrication and

installation, paid or accrued in the taxable year of tangible

assets of a type that are, or under the internal revenue code will

become, eligible for depreciation, amortization, or accelerated

capital cost recovery for federal income tax purposes, provided

that the assets are physically located in this state for use in a

business activity in this state and are not mobile tangible assets.

(b) Calculate the cost, including fabrication and

installation, paid or accrued in the taxable year of mobile

tangible assets of a type that are, or under the internal revenue

code will become, eligible for depreciation, amortization, or

accelerated capital cost recovery for federal income tax purposes.

This amount shall be multiplied by the apportionment factor for the

tax year as prescribed in chapter 3.

purchased or acquired for use outside of this state in a tax year

beginning after December 31, 2007 and subsequently transferred into

this state and purchased or acquired for use in a business

activity, calculate the federal basis used for determining gain or

loss as of the date the tangible assets were physically located in

this state for use in a business activity plus the cost of

fabrication and installation of the tangible assets in this state.

(d) If the cost of tangible assets described in subdivision

(a) was paid or accrued in a tax year beginning after December 31,

2007, or before December 31, 2007 to the extent the credit is used

and at the rate at which the credit was used under former 1975 PA

228 or this act, calculate the gross proceeds or benefit derived

from the sale or other disposition of the tangible assets minus the

gain, multiplied by the apportionment factor for the taxable year

as prescribed in chapter 3, and plus the loss, multiplied by the

apportionment factor for the taxable year as prescribed in chapter

3 from the sale or other disposition reflected in federal taxable

income and minus the gain from the sale or other disposition added

to the business income tax base in section 201.

(e) If the cost of tangible assets described in subdivision

(b) was paid or accrued in a tax year beginning after December 31,

2007, or before December 31, 2007 to the extent the credit is used

and at the rate at which the credit was used under former 1975 PA

228 or this act, calculate the gross proceeds or benefit derived

from the sale or other disposition of the tangible assets minus the

gain and plus the loss from the sale or other disposition reflected

in federal taxable income and minus the gain from the sale or other

disposition added to the business income tax base in section 201.

This amount shall be multiplied by the apportionment factor for the

tax year as prescribed in chapter 3.

(f) For assets purchased or acquired in a tax year beginning

after December 31, 2007, or before December 31, 2007 to the extent

the credit is used and at the rate at which the credit was used

under former 1975 PA 228 or this act, that were eligible for a

credit under subdivision (a) or (c) and that were transferred out

of this state, calculate the federal basis used for determining

gain or loss as of the date of the transfer.

(4) For a tax year in which the amount of the credit

calculated under subsection (3) is negative, the absolute value of

that amount is added to the taxpayer's tax liability for the tax

year.

(5) A taxpayer that claims a credit under this section is not

prohibited from claiming a credit under section 405. However, the

taxpayer shall not claim a credit under this section and section

405 based on the same costs and expenses.

Sec. 405. A taxpayer may claim a credit against the tax

imposed by this act equal to 1.90% of the taxpayer's research and

development expenses in this state in the tax year. The credit

under this section combined with the total combined credit allowed

under section 403 shall not exceed 75% of the ~~total~~ tax liability

imposed under this act before the imposition and levy of the

surcharge under section 281. As used in this section, "research and

development expenses" means that term as defined in section 41(b)

of the internal revenue code.

Sec. 409. (1) For tax years that begin on or after January 1,

2008 and end before January 1, 2013, an eligible taxpayer may claim

a credit against the tax imposed by this act equal to the amount of

capital expenditures on infield renovation, grandstand and

infrastructure upgrades, and any other construction and upgrades,

subject to the following:

(a) For the 2008 through 2010 tax years, the credit shall not

exceed ~~$1,700,000.00~~ $2,260,000.00 or the taxpayer's tax liability

under this act, whichever is less.

(b) For the 2011 tax year, the credit shall not exceed

$1,180,000.00 or the taxpayer's tax liability under this act,

whichever is less.

$650,000.00 or the taxpayer's tax liability under this act,

whichever is less.

(2) In addition to the credit allowed under subsection (1), an

eligible taxpayer may claim a credit against the tax imposed by

this act equal to the amount of necessary expenditures incurred

including any professional fees, additional police officers, and

any traffic management devices, to ensure traffic and pedestrian

safety while hosting the requisite motorsports events each calendar

year. If the amount of the credit allowed under this subsection

exceeds the tax liability of the taxpayer for the tax year that

excess shall be refunded.

(3) ~~(2)~~ An eligible taxpayer shall expend at least

$25,000,000.00 on capital expenditures before January 1, 2011.

(4) ~~(3)~~ As used in this section:

(a) "Eligible taxpayer" means any of the following:

(i) A person who owns and operates a motorsports entertainment

complex and has at least 2 days of ~~motor sports~~ motorsports events

each calendar year which shall be comparable to NASCAR Nextel cup

events held in 2007 or their successor events.

(ii) A person who is the lessee and operator of a motorsports

entertainment complex or the lessee of the land on which a

motorsports entertainment complex is located and operates that

motorsports entertainment complex.

(iii) A person who operates and maintains a motorsports

entertainment complex under an operation and management agreement.

(b) "Motorsports entertainment complex" means a closed-course

motorsports facility, and its ancillary grounds and facilities,

that satisfies all of the following:

(i) Has at least 70,000 fixed seats for race patrons.

(ii) Has at least 6 scheduled days of motorsports events each

calendar year.

(iii) Serves food and beverages at the motorsports entertainment

complex during motorsports events each calendar year through

concession outlets, which are staffed by individuals who represent

or are members of 1 or more nonprofit civic or charitable

organizations that directly benefit from the concession outlets'

sales.

(iv) Engages in tourism promotion.

(v) Has permanent exhibitions of motorsports history, events,

or vehicles within the motorsports entertainment complex.

ancillary activities that have been sanctioned by a sanctioning

body.

(d) "Sanctioning body" means the American motorcycle

association (AMA); auto racing club of America (ARCA); championship

auto racing teams (CART); grand American road racing association

(GRAND AM); Indy racing league (IRL); national association for

stock car auto racing (NASCAR); national hot rod association

(NHRA); professional sports car racing (PSR); sports car club of

America (SCCA); United States auto club (USAC); Michigan state

promoters association; or any successor organization or any other

nationally or internationally recognized governing body of

motorsports that establishes an annual schedule of motorsports

events and grants rights to conduct the events, that has

established and administers rules and regulations governing all

participants involved in the events and all persons conducting the

events, and that requires certain liability assurances, including

insurance.

Sec. 413. (1) Subject to subsection (2), a taxpayer may claim

a credit against the tax imposed by this act equal to the

following:

(a) For property taxes levied after December 31, 2007, 35% of

the amount paid for property taxes on eligible personal property in

the tax year.

(b) Twenty-three percent of the amount paid for property taxes

levied on eligible telephone personal property in the 2008 tax year

and 13.5% of the amount paid for property taxes levied on eligible

telephone personal property in subsequent tax years.

the amount paid for property taxes on eligible natural gas pipeline

property in the tax year.

(2) To qualify for the credit under subsection (1), the

taxpayer shall file, if applicable, within the time prescribed each

of the following:

(a) The statement of assessable personal property prepared

pursuant to section 19 of the general property tax act, 1893 PA

206, MCL 211.19, identifying the eligible personal property or

eligible natural gas pipeline property, or both, for which the

credit under subsection (1) is claimed.

(b) The annual report filed under section 6 of 1905 PA 282,

MCL 207.6, identifying the eligible telephone personal property for

which the credit under subsection (1) is claimed.

for the eligible personal property, eligible natural gas pipeline

property, or eligible telephone property for which the credit under

subsection (1) is claimed.

(3) If the amount of the credit allowed under this section

exceeds the tax liability of the taxpayer for the tax year, that

excess shall be refunded.

(4) As used in this section:

(a) "Eligible natural gas pipeline property" means natural gas

pipelines that are classified as utility personal property under

section 34c of the general property tax act, 1893 PA 206, MCL

211.34c, and are subject to regulation under the natural gas act,

15 USC 717 to 717z.

(b) "Eligible personal property" means personal property that

is classified as industrial personal property under section 34c of

the general property tax act, 1893 PA 206, MCL 211.34c, or in the

case of personal property that is subject to 1974 PA 198, MCL

207.551 to 207.572, is situated on land classified as industrial

real property under section 34c of the general property tax act,

1893 PA 206, MCL 211.34c.

property of a telephone company subject to the tax levied under

1905 PA 282, MCL 207.1 to 207.21.

(d) "Property taxes" means any of the following:

(i) Taxes collected under the general property tax act, 1893 PA

206, MCL 211.1 to ~~211.157~~ 211.155.

(ii) Taxes levied under 1974 PA 198, MCL 207.551 to 207.572.

(iii) Taxes levied under the obsolete property rehabilitation

act, 2000 PA 146, MCL 125.2781 to 125.2797.

(iv) Taxes levied under 1905 PA 282, MCL 207.1 to 207.21.

Sec. 417. (1) The credit provided in this section shall be

taken after the credits under sections 403 and 405 and before any

other credit under this act and is available to any taxpayer with

gross receipts that do not exceed $20,000,000.00 and with adjusted

business income minus the loss adjustment that does not exceed

$1,300,000.00 as adjusted annually for inflation using the Detroit

consumer price index and subject to the following:

(a) An individual, a partnership, a limited liability company,

or a subchapter S corporation is disqualified if the individual,

any 1 partner of the partnership, any 1 member of the limited

liability company, or any 1 shareholder of the subchapter S

corporation receives more than ~~$180,000.00~~ $190,000.00 as adjusted

annually using the annual growth rate as a distributive share of

the adjusted business income minus the loss adjustment of the

individual, the partnership, the limited liability company, or the

subchapter S corporation.

(b) A corporation other than a subchapter S corporation is

disqualified if either of the following occur for the respective

tax year:

(i) Compensation and directors' fees of a shareholder or

officer exceed ~~$180,000.00~~ $190,000.00 as adjusted annually using

the annual growth rate.

(ii) The sum of the following amounts exceeds ~~$180,000.00~~

$190,000.00 as adjusted annually using the annual growth rate:

(A) Compensation and directors' fees of a shareholder.

(B) The product of the percentage of outstanding ownership or

of outstanding stock owned by that shareholder multiplied by the

difference between the sum of business income and, to the extent

deducted in determining federal taxable income, a carryback or a

carryover of a net operating loss or capital loss, minus the loss

adjustment.

subsection (3), the credit determined under this subsection shall

be reduced by the following percentages in the following

circumstances:

(i) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is more than ~~$160,000.00~~ $170,000.00 as adjusted annually using the

annual growth rate but less than ~~$165,000.00~~ $175,000.00 as

adjusted annually using the annual growth rate, the credit is

reduced by 20%.

(ii) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is ~~$165,000.00~~ $175,000.00 as adjusted annually using the annual

growth rate or more but less than ~~$170,000.00~~ $180,000.00 as

adjusted annually using the annual growth rate, the credit is

reduced by 40%.

(iii) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is ~~$170,000.00~~ $180,000.00 as adjusted annually using the annual

growth rate or more but less than ~~$175,000.00~~ $185,000.00 as

adjusted annually using the annual growth rate, the credit is

reduced by 60%.

(iv) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is ~~$175,000.00~~ $185,000.00 as adjusted annually using the annual

growth rate or more but not in excess of ~~$180,000.00~~ $190,000.00 as

adjusted annually using the annual growth rate, the credit is

reduced by 80%.

(2) For the purposes of determining disqualification under

subsection (1), an active shareholder's share of business income

shall not be attributed to another active shareholder.

(3) To determine the reduction percentage under subsection

(1)(c), the following apply:

(a) The reduction percentage for a partnership, limited

liability company, or subchapter S corporation is based on the

distributive share of adjusted business income minus loss

adjustment of the partner, member, or shareholder with the greatest

distributive share of adjusted business income minus loss

adjustment.

(b) The reduction percentage for a corporation other than a

subchapter S corporation is the greater of the following:

(i) The reduction percentage based on the compensation and

directors' fees of the shareholder or officer with the greatest

amount of compensation and directors' fees.

(ii) The reduction percentage based on the sum of the amounts

in subsection (1)(b)(ii)(A) and (B) for the shareholder or officer

with the greatest sum of the amounts in subsection (1)(b)(ii)(A) and

(B).

(4) A taxpayer that qualifies under subsection (1) is allowed

a credit against the tax imposed under this act. The credit under

this subsection is the amount by which the tax imposed under this

act exceeds 1.8% of adjusted business income.

(5) If gross receipts exceed $19,000,000.00, the credit shall

be reduced by a fraction, the numerator of which is the amount of

gross receipts over $19,000,000.00 and the denominator of which is

$1,000,000.00. The credit shall not exceed 100% of the tax

liability imposed under this act.

(6) For a taxpayer that reports for a tax year less than 12

months, the amounts specified in this section for gross receipts,

adjusted business income, and share of business income shall be

multiplied by a fraction, the numerator of which is the number of

months in the tax year and the denominator of which is 12.

(7) The department shall permit a taxpayer that elects to

claim the credit allowed under this section based on the amount by

which the tax imposed under this act exceeds the percentage of

adjusted business income for the tax year as determined under

subsection (4), and that is not required to reduce the credit

pursuant to subsection (1) or (5), to file and pay the tax imposed

by this act without computing the tax imposed under sections 201

and 203.

(8) Compensation paid by the professional employer

organization to the officers of the client and to employees of the

professional employer organization who are assigned or leased to

and perform services for the client shall be included in

determining eligibility of the client under this section.

(9) As used in this section:

(a) "Active shareholder" means a shareholder who receives at

least $10,000.00 in compensation, directors' fees, or dividends

from the business, and who owns at least 5% of the outstanding

stock or other ownership interest.

(b) "Adjusted business income" means business income as

defined in section 105 with all of the following adjustments:

(i) Add compensation and directors' fees of active shareholders

of a corporation.

(ii) Add, to the extent deducted in determining federal taxable

income, a carryback or a carryover of a net operating loss.

(iii) Add, to the extent deducted in determining federal taxable

income, a capital loss.

(iv) Add compensation and directors' fees of officers of a

corporation.

personal income as officially reported by the United States

department of commerce, bureau of economic analysis, or its

successor, for the current calendar year as compared to personal

income for the calendar year immediately preceding the current

calendar year. The annual growth rate shall be rounded off to the

nearest 0.1%.

(d) ~~(c)~~ "Detroit consumer price index" means the most

comprehensive index of consumer prices available for the Detroit

area from the United States department of labor, bureau of labor

statistics.

(e) ~~(d)~~ "Loss adjustment" means the amount by which adjusted

business income was less than zero in any of the 5 tax years

immediately preceding the tax year for which eligibility for the

credit under this section is being determined. In determining the

loss adjustment for a tax year, a taxpayer is not required to use

more of the taxpayer's total negative adjusted business income than

the amount needed to qualify the taxpayer for the credit under this

House Bill No. 5408 as amended November 20, 2007

section. A taxpayer shall not be considered to have used any

portion of the taxpayer's negative adjusted business income amount

unless the portion used is necessary to qualify for the credit

under this section. A taxpayer shall not reuse a negative adjusted

business income amount used as a loss adjustment in a previous tax

year or use a negative adjusted business income amount from a year

in which the taxpayer did not receive the credit under this

section.

<<Sec. 445. (1) A taxpayer that is a new motor vehicle dealer licensed under the Michigan vehicle code, 1949 PA 300, MCL 257.1 to 257.923, may claim a credit against the tax imposed by this act equal to 2% 1% of the amount paid by the taxpayer to acquire new motor vehicle inventory in the tax year, not to exceed ~~$10,000.00~~ $12,500.00.

(2) If the amount of the credit allowed under this section exceeds the tax liability of the taxpayer for the tax year, that excess shall not be refunded and shall not be carried forward as an offset to the tax liability in subsequent tax years.

(3) As used in this section, "new motor vehicle inventory" means new motor vehicles or motor vehicle parts.>>

Sec. 447. (1) An eligible taxpayer may claim a credit against

the tax imposed by this act equal to ~~0.535%~~ 1.0% of the taxpayer's

compensation in this state. ~~, not to exceed $4,500,000.00.~~ If the

limitation on the amount of the surcharge that may be levied and

imposed upon an eligible taxpayer under section 281(1)(a) is

$2,000,000.00 or less, then the amount of the credit allowed under

this section shall not exceed $4,500,000.00.

(2) If the amount of the credit allowed under this section

exceeds the tax liability of the taxpayer for the tax year, that

excess shall not be refunded and shall not be carried forward as an

offset to the tax liability in subsequent tax years.

(3) A taxpayer that claims a credit under this section shall

not claim a credit under section 449.

(4) As used in this section, "eligible taxpayer" means a

taxpayer that meets all of the following conditions:

(a) Operates at least 17,000,000 square feet of enclosed

retail space and 2,000,000 square feet of enclosed warehouse space

in this state.

(b) Sells all of the following at retail:

(i) Fresh, frozen, or processed food, food products, or

consumable necessities:

(ii) Prescriptions and over-the-counter medications.

(iii) Health and beauty care products.

(iv) Cosmetics.

(v) Pet products.

(vi) Carbonated beverages.

(vii) Beer, wine, or liquor.

more than 35% of the taxpayer's total sales in the tax year.

(d) ~~Maintains its headquarters operation in this state~~ Has

more than 30,000 employees.

Sec. 451. (1) An eligible taxpayer may claim a credit against

the tax imposed by this act equal to the following:

(a) For tax years that begin on and after January 1, 2008 and

before January 1, 2011, 28.5% of the taxpayer's expenses incurred

during the tax year to comply with 1976 IL 1, MCL 445.571 to

445.576.

(b) For tax years that begin on and after January 1, 2011, 25%

of the taxpayer's expenses incurred during the tax year to comply

with 1976 IL 1, MCL 445.571 to 445.576.

(2) If the amount of the credit allowed under this section

exceeds the tax liability of the taxpayer for the tax year, that

excess shall not be refunded and shall not be carried forward as an

offset to the tax liability in subsequent tax years.

(3) As used in this section:

(a) "Beverage container" and "distributor" mean those terms as

House Bill No. 5408 as amended November 20, 2007

defined under 1976 IL 1, MCL 445.571 to 445.576.

(b) "Eligible taxpayer" means a distributor or manufacturer

who originates a deposit on a beverage container in accordance with

1976 IL 1, MCL 445.571 to 445.576.

Sec. 515. (1) In fiscal year 2007-2008, ~~$136,000,000.00~~

$341,000,000.00 of the revenue collected under this act shall be

distributed to the school aid fund and the balance shall be

deposited into the general fund. In fiscal year 2008-2009,

~~$479,000,000.00~~ $729,000,000.00 of the revenue collected under this

act shall be distributed to the school aid fund and the balance

shall be deposited into the general fund. For each fiscal year

after the 2008-2009 fiscal year, that amount from the immediately

preceding fiscal year as adjusted by an amount equal to the growth

in the United States consumer price index in the immediately

preceding year shall be distributed to the school aid fund and the

balance shall be deposited into the general fund.

(2) As used in this section, "United States consumer price

index" means the United States consumer price index for all urban

consumers as defined and reported by the United States department

of labor, bureau of labor statistics.

Enacting section 1. This amendatory act does not take effect

unless Senate Bill No. 838 of the 94th Legislature is enacted into

law.

Enacting section 2. Sections 281 and 451 of the Michigan

business tax act, 2007 PA 36, MCL 208.1281 and 208.1451, as added

by this amendatory act, and sections 105, 239, 265, 403, 405, 409,

413, 417, <<445,>> 447, and 515 of the Michigan business tax act, 2007 PA