December 13, 2007, Introduced by Senators JANSEN, GILBERT, BISHOP and PAPPAGEORGE and referred to the Committee on Finance.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending sections 111, 113, and 410 (MCL 208.1111, 208.1113, and
208.1410), sections 111 and 113 as amended by 2007 PA 145.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 111. (1) "Gross receipts" means the entire amount
received by the taxpayer from any activity whether in intrastate,
interstate, or foreign commerce carried on for direct or indirect
gain, benefit, or advantage to the taxpayer or to others except for
the following:
(a) Proceeds from sales by a principal that the taxpayer
collects in an agency capacity solely on behalf of the principal
and delivers to the principal.
(b) Amounts received by the taxpayer as an agent solely on
behalf of the principal that are expended by the taxpayer for any
of the following:
(i) The performance of a service by a third party for the
benefit of the principal that is required by law to be performed by
a licensed person.
(ii) The performance of a service by a third party for the
benefit of the principal that the taxpayer has not undertaken a
contractual duty to perform.
(iii) Principal and interest under a mortgage loan or land
contract, lease or rental payments, or taxes, utilities, or
insurance premiums relating to real or personal property owned or
leased by the principal.
(iv) A capital asset of a type that is, or under the internal
revenue code will become, eligible for depreciation, amortization,
or accelerated cost recovery by the principal for federal income
tax purposes, or for real property owned or leased by the
principal.
(v) Property not described under subparagraph (iv) that is
purchased by the taxpayer on behalf of the principal and that the
taxpayer does not take title to or use in the course of performing
its contractual business activities.
(vi) Fees, taxes, assessments, levies, fines, penalties, or
other payments established by law that are paid to a governmental
entity and that are the legal obligation of the principal.
(c) Amounts that are excluded from gross income of a foreign
corporation engaged in the international operation of aircraft
under section 883(a) of the internal revenue code.
(d) Amounts received by an advertising agency used to acquire
advertising media time, space, production, or talent on behalf of
another person.
(e) Notwithstanding any other provision of this section,
amounts received by a taxpayer that manages real property owned by
a third party that are deposited into a separate account kept in
the name of that third party and that are not reimbursements to the
taxpayer and are not indirect payments for management services that
the taxpayer provides to that third party.
(f) Proceeds from the taxpayer's transfer of an account
receivable if the sale that generated the account receivable was
included in gross receipts for federal income tax purposes. This
subdivision does not apply to a taxpayer that during the tax year
both buys and sells any receivables.
(g) Proceeds from any of the following:
(i) The original issue of stock or equity instruments.
(ii) The original issue of debt instruments.
(iii) Treasury functions that generate investment income, which
functions are embedded within an operating entity.
(h) Refunds from returned merchandise.
(i) Cash and in-kind discounts.
(j) Trade discounts.
(k) Federal, state, or local tax refunds.
(l) Security deposits.
(m) Payment of the principal portion of loans.
(n) Value of property received in a like-kind exchange.
(o) Proceeds from a sale, transaction, exchange, involuntary
conversion, or other disposition of tangible, intangible, or real
property that is a capital asset as defined in section 1221(a) of
the internal revenue code or land that qualifies as property used
in the trade or business as defined in section 1231(b) of the
internal revenue code, less any gain from the disposition to the
extent that gain is included in federal taxable income.
(p) The proceeds from a policy of insurance, a settlement of a
claim, or a judgment in a civil action less any proceeds under this
subdivision that are included in federal taxable income.
(q) For a sales finance company, as defined in section 2 of
the motor vehicles sales finance act, 1950 (Ex Sess) PA 27, MCL
492.102, and directly or indirectly owned in whole or in part by a
motor vehicle manufacturer as of January 1, 2008, amounts realized
from the repayment, maturity, sale, or redemption of the principal
of a loan, bond, or mutual fund, certificate of deposit, or similar
marketable instrument.
(r) For a sales finance company, as defined in section 2 of
the motor vehicles sales finance act, 1950 (Ex Sess) PA 27, MCL
492.102, and directly or indirectly owned in whole or in part by a
motor vehicle manufacturer as of January 1, 2008, the principal
amount received under a repurchase agreement or other transaction
properly characterized as a loan.
(s) For a mortgage company, proceeds representing the
principal balance of loans transferred or sold in the tax year. For
purposes of this subdivision, "mortgage company" means a person
that is licensed under the mortgage brokers, lenders, and servicers
licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, or the
secondary mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81, and
has greater than 90% of its revenues, in the ordinary course of
business, from the origination, sale, or servicing of residential
mortgage loans.
(t) For a professional employer organization, any amount
charged by a professional employer organization that represents the
actual cost of wages and salaries, benefits, worker's compensation,
payroll taxes, withholding, or other assessments paid to or on
behalf of a covered employee by the professional employer
organization under a professional employer arrangement.
(u) Any invoiced items used to provide more favorable floor
plan assistance to a person subject to the tax imposed under this
act than to a person not subject to this tax and paid by a
manufacturer, distributor, or supplier.
(v) For an individual, estate, partnership organized
exclusively for estate or gift planning purposes, or trust
organized exclusively for estate or gift planning purposes, amounts
received other than those from transactions, activities, and
sources in the regular course of the taxpayer's trade or business,
including the following:
(i) Receipts from tangible and intangible property if the
acquisition, rental, management, or disposition of the property
constitutes integral parts of the taxpayer's regular trade or
business operations.
(ii) Receipts received in the course of the taxpayer's trade or
business from stock and securities of any foreign or domestic
corporation and dividend and interest income.
(iii) Receipts derived from isolated sales, leases, assignment,
licenses, divisions, or other infrequently occurring dispositions,
transfers, or transactions involving property if the property is or
was used in the taxpayer's trade or business operation.
(iv) Receipts derived from the sale of a business.
(v) Receipts excluded from gross receipts under this
subsection for an individual, estate, partnership organized
exclusively for estate or gift planning purposes, or trust
organized exclusively for estate or gift planning purposes include,
but are not limited to, the following:
(A) Personal investment activity, including interest,
dividends, and gains from a personal investment portfolio or
retirement account.
(B) Disposition of tangible, intangible, or real property held
for personal use and enjoyment, such as a personal residence or
personal assets.
(w) Any tax, fee, or surcharge required by law.
(2) "Insurance company" means an authorized insurer as defined
in section 106 of the insurance code of 1956, 1956 PA 218, MCL
500.106.
(3) "Internal revenue code" means the United States internal
revenue code of 1986 in effect on January 1, 2008 or, at the option
of the taxpayer, in effect for the tax year.
(4) "Inventory" means, except as provided in subdivision (d),
all of the following:
(a) The stock of goods held for resale in the regular course
of trade of a retail or wholesale business, including electricity
or natural gas purchased for resale.
(b) Finished goods, goods in process, and raw materials of a
manufacturing business purchased from another person.
(c) For a person that is a new motor vehicle dealer licensed
under the Michigan vehicle code, 1949 PA 300, MCL 257.1 to 257.923,
floor plan interest expenses for new motor vehicles. For purposes
of this subdivision, "floor plan interest" means interest paid that
finances any part of the person's purchase of new motor vehicle
inventory from a manufacturer, distributor, or supplier. However,
amounts attributable to any invoiced items used to provide more
favorable floor plan assistance to a person subject to the tax
imposed under this act than to a person not subject to this tax is
considered interest paid by a manufacturer, distributor, or
supplier.
(d) Inventory does not include either of the following:
(i) Personal property under lease or principally intended for
lease rather than sale.
(ii) Property allowed a deduction or allowance for depreciation
or depletion under the internal revenue code.
(5) "Officer" means an officer of a corporation other than a
subchapter S corporation, including all of the following:
(a) The chairperson of the board.
(b) The president, vice president, secretary, or treasurer of
the corporation or board.
(c) Persons performing similar duties to persons described in
subdivisions (a) and (b).
Sec. 113. (1) "Partner" means a partner or member of a
partnership.
(2) "Partnership" means a taxpayer that is required to or has
elected to file as a partnership for federal income tax purposes.
(3) "Person" means an individual, firm, bank, financial
institution, insurance company, limited partnership, limited
liability partnership, copartnership, partnership, joint venture,
association, corporation, subchapter S corporation, limited
liability company, receiver, estate, trust, or any other group or
combination of groups acting as a unit.
(4) "Professional employer organization" means an organization
that provides the management and administration of the human
resources of another entity by contractually assuming substantial
employer rights and responsibilities through a professional
employer agreement that establishes an employer relationship with
the leased officers or employees assigned to the other entity by
doing all of the following:
(a) Maintaining a right of direction and control of employees'
work, although this responsibility may be shared with the other
entity.
(b) Paying wages and employment taxes of the employees out of
its own accounts.
(c) Reporting, collecting, and depositing state and federal
employment taxes for the employees.
(d) Retaining a right to hire and fire employees.
(5) Professional employer organization is not a staffing
company as that term is defined in subsection (6).
(6) "Purchases from other firms" means all of the following:
(a) Inventory acquired during the tax year, including freight,
shipping, delivery, or engineering charges included in the original
contract price for that inventory.
(b) Assets, including the costs of fabrication and
installation, acquired during the tax year 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.
(c) To the extent not included in inventory or depreciable
property, materials and supplies, including repair parts and fuel.
(d) For a staffing company, compensation of personnel supplied
to customers of staffing companies. As used in this subdivision:
(i) "Compensation" means that term as defined under section 107
plus all payroll tax and worker's compensation costs.
(ii) "Staffing company" means a taxpayer whose business
activities are included in industry group 736 under the standard
industrial classification code as compiled by the United States
department of labor.
(e) For a person included in major groups 15, 16, and 17 under
the standard industrial classification code as compiled by the
United States department of labor that does not qualify for a
credit under section 417, payments to subcontractors for a
construction project under a contract specific to that project.
(f)
For the 2009 tax year, 50% of film rental or royalty
payments
paid by a theater owner to a film distributor, a film
producer,
or a film distributor and producer. For
the 2010 2008 tax
year
and each tax year after 2010 2008, all film rental or royalty
payments paid by a theater owner to a film distributor, a film
producer, or a film distributor and producer.
(7) "Revenue mile" means the transportation for a
consideration of 1 net ton in weight or 1 passenger the distance of
1 mile.
Sec. 410. (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
following:
(a) For the 2008 through 2010 tax years, 65% of the eligible
taxpayer's total tax liability imposed under this act not to exceed
$1,700,000.00.
(b) For the 2011 tax year, 45% of the eligible taxpayer's
total tax liability imposed under this act not to exceed
$1,180,000.00.
(c) For the 2012 tax year, 25% of the eligible taxpayer's
total tax liability imposed under this act not to exceed
$650,000.00.
(2) As used in this section, "eligible taxpayer" means a
taxpayer
that satisfies each either of the following:
(a) Is, collectively or individually, including through
affiliated companies, an owner, operator, manager, licensee,
lessee, or tenant of more than 1 facility or stadium in this state,
including grounds and ancillary facilities, that has a capacity of
at least 14,000 patrons per facility and is primarily used for
professional
sporting events or other entertainment.
(b)
The owner, operator, manager, licensee, lessee, or tenant
as
described in subdivision (a) and
has made a capital investment
of not less than $250,000,000.00, collectively or individually,
including through affiliated companies, into the construction cost
of a facility or stadium for which the taxpayer qualifies for this
credit.
(b) (c)
The Is collectively or
individually, including through
affiliated companies, an owner, operator, manager, licensee,
lessee,
or tenant as described in subdivision (a) of more than 1
facility or stadium in this state, including grounds and ancillary
facilities, that has a capacity of at least 14,000 patrons per
facility and is primarily used for professional sporting events or
other entertainment, and has not received proceeds from a state
appropriation , or a
public bond issue from a local unit of
government
or public authority, or a state or local tax or fee to
assist in the construction or debt retirement of the facility,
other
than excluding a tax
abatement, other waiver of a state or
local tax or fee, or a state or local tax or fee from a public
entity for road or infrastructure assistance.
Enacting section 1. This amendatory act takes effect January
1, 2008.