SB-0881, As Passed House, December 19, 2008
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 881
[A bill to amend 1933 PA 167, entitled
"General sales tax act,"
by amending sections 4d, 4u, and 6a (MCL 205.54d, 205.54u, and 205.56a),
section 4d as added and section 4u as amended by 2004 PA 173, and section
6a as amended by 1993 PA 325.]
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 4d. The following are exempt from the tax under this act:
(a) The sale of tangible personal property to a person who is
a lessor licensed under the use tax act, 1937 PA 94, MCL 205.91 to
205.111, and whose rental receipts are taxed or specifically exempt
under the use tax act.
(b) The sale of a vehicle acquired for lending or leasing to a
public or parochial school for use in a course in driver education.
(c) The sale of a vehicle purchased by a public or parochial
school if that vehicle is certified for driver education and is not
reassigned for personal use by the school's administrative
personnel.
(d) The sale of water through water mains, the sale of water
delivered in bulk tanks in quantities of not less than 500 gallons,
or the sale of bottled water.
(e) The sale of tangible personal property to a person for
demonstration purposes. For a dealer selling a new car or truck,
the exemption for demonstration purposes shall be determined by the
number of new cars and trucks sold during the current calendar year
or the immediately preceding year without regard to specific make
or style in accordance with the following schedule of 0 to 25, 2
units; 26 to 100, 7 units; 101 to 500, 20 units; 501 or more, 25
units; but not to exceed 25 cars and trucks in a calendar year for
demonstration purposes.
(f) Specific charges for technical support or for adapting or
modifying prewritten computer software programs to a purchaser's
needs or equipment if those charges are separately stated and
identified.
(g) The sale of computer software originally designed for the
exclusive use and special needs of the purchaser.
(h) The sale of a commercial advertising element if the
commercial advertising element is used to create or develop a
print, radio, television, or other advertisement, the commercial
advertising element is discarded or returned to the provider after
the advertising message is completed, and the commercial
advertising element is custom developed by the provider for the
purchaser. As used in this subdivision, "commercial advertising
element" means a negative or positive photographic image, an
audiotape or videotape master, a layout, a manuscript, writing of
copy, a design, artwork, an illustration, retouching, and
mechanical or keyline instructions. This exemption does not include
black and white or full color process separation elements, an
audiotape reproduction, or a videotape reproduction.
(i) A sale made outside of the ordinary course of the seller's
business.
(j) An isolated transaction by a person not licensed or
required to be licensed under this act, in which tangible personal
property is offered for sale, sold, or transferred and delivered by
the owner.
(k) The sale of oxygen for human use dispensed pursuant to a
prescription.
(l) The sale of insulin for human use.
(m) Before January 1, 2014, the sale of tangible personal
property for use in construction or renovation of a qualified
convention facility under the regional convention facility
authority act.
Sec. 4u. (1) A sale of tangible personal property to an
extractive operator for use or consumption in extractive operations
is exempt from the tax under this act.
(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 this 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
Senate Bill No. 881 (H-2) as amended December 19, 2008 (1 of 3)
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. 6a. (1) At the
time of purchase or shipment from a refiner, pipeline terminal operator, or
marine terminal operator, a purchaser or receiver of gasoline shall prepay a
portion of the tax imposed by this act at the rate provided in this section to
the refiner, pipeline terminal operator, or marine terminal operator for the
purchase or receipt of gasoline. If the purchase or receipt of gasoline is made
outside this state for shipment into and subsequent sale within this state, the
purchaser or receiver, other than a refiner, pipeline terminal operator, or
marine terminal operator, shall make the prepayment required by this section
directly to the department. Prepayments shall be made at a cents per gallon
rate determined by the department and shall be based on 6% of the statewide
average retail price of a gallon of self-serve unleaded regular gasoline as
determined and certified by the department rounded up to the nearest 1/10 of 1
cent. A person who makes prepayments direct directly to the department shall make those
prepayments according to the schedule in subsection (5) (4).
(2) The rate of prepayment applied
pursuant to subsection (1) shall be determined every 6 3 months by the department unless the department certifies
that the change in the statewide average retail price of a gallon of self-serve
unleaded regular gasoline has been less than 10% during the 6-month period.
However, the rate shall be determined not less than annually since the establishment of the rate
of prepayment then in effect.
(3) A person subject to tax under
this act who makes prepayment to another person as required by this section may
claim an estimated prepayment credit on its regular monthly return filed
pursuant to section 6. The credit shall be for prepayments made during the
month for which the return is required and shall be based upon the difference
between prepayments made in the immediately preceding month and collections of
prepaid tax received from sales or transfers. A sale or transfer for which
collection of prepaid tax is due the taxpayer is subject to a bad debt
deduction under section 4i, whether or not the sale or transfer is a sale at
retail. The credit shall not be reduced because of actual shrinkage. A taxpayer
who does not, in the ordinary course of business sell gasoline in each month of
the year, may, with the approval of the department, base the initial prepayment
deduction in each tax year on prepayments made in a month other than the
immediately preceding month. Estimated prepayment credits claimed with the
return due in January 1984
Senate Bill no. 881 (H-2) as amended December 19, 2008 (2 of 3)
shall be based on the taxpayer's retail
sales of gasoline in December 1983. The difference in actual prepayments shall be reconciled on
the annual return in accordance with procedures prescribed by the department.
(4) At the option of the taxpayer
the estimated prepayment credit may be claimed on the return required to be
filed under Act No. 150 of the Public Acts of 1927, being sections 207.101 to
207.202 of the Michigan Compiled Laws, instead of a claim for the credit on the
return required to be filed under section 6. Prepayments claimed on the motor
fuel tax return shall be based on the difference in the prepayments made in the
immediately preceding month and collections of prepaid tax received from sales
or transfer and shall be for prepayments made in the month in which the return
is due. A taxpayer electing an option under this subsection shall be entitled
to a deduction under section 4i as permitted by subsection (3). Amounts
credited pursuant to this section shall not be deducted from amounts required
to be credited to the Michigan transportation fund pursuant to section
18b of Act No. 150 of the Public Acts of 1927, being section 207.118b of the
Michigan Compiled Laws. The department may establish procedures for the
election of claims under subsection (3) and this subsection to avoid
duplication of claims.
(4) (5) Notwithstanding
the other provisions for the payment and remitting of tax due under this act, a
refiner, pipeline terminal operator, or marine terminal operator shall account
for and remit to the department the prepayments received pursuant to this
section in accordance with the following schedule:
(a) On or before the twenty-fifth of each month, prepayments received after the end of the preceding month and before the sixteenth of the month in which the prepayments are made.
(b) On or before the tenth of each month, payments received after the fifteenth and before the end of the preceding month.
(5) (6) A refiner,
pipeline terminal operator, or marine terminal operator who fails to remit
prepayments made by a purchaser or receiver of gasoline is subject to the
penalties provided by Act No. 122 of the Public Acts of 1941, being sections
205.1 to 205.31 of the Michigan Compiled Laws 1941 PA 122, MCL 205.1 to 205.31.
(6) (7) The refiner,
pipeline terminal operator, or marine terminal operator shall not receive a
deduction under section 4 for receiving and remitting prepayments from a
purchaser or receiver pursuant to this section.
(7) (8) The
purchaser or receiver of gasoline who makes prepayments is not subject to
further liability for the amount of the prepayment if the refiner, pipeline
terminal operator, or marine terminal operator fails to remit the prepayment.
(8) (9) As used in
this section:
(a) "Marine terminal operator" means a person who stores gasoline at a boat terminal transfer defined as a dock, a tank, or equipment contiguous to a dock or a tank, including equipment used in the unloading of gasoline from a ship and in transferring the gasoline to a tank pending wholesale bulk reshipment.
(b) "Pipeline terminal operator" means a person who stores gasoline in tanks and equipment used in receiving and storing gasoline from interstate and intrastate pipelines pending wholesale bulk reshipment.
(c) "Purchase" or "shipment" does not include an exchange of gasoline, or an exchange transaction, between refiners, pipeline terminal operators, or marine terminal operators.
(d) "Refiner" means a person who manufactures or produces gasoline by any process involving substantially more than the blending of gasoline.]
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 94th Legislature are
Senate Bill No. 881 (H-2) as amended December 19, 2008 (3 of 3)
enacted into law:
(a) Senate Bill No. 880.
(b) Senate Bill No. 1630.
(c) Senate Bill No. 1633.
(d) House Bill No. 5691.