SB-0490, As Passed Senate, October 23, 2013

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 490

     A bill to amend 1893 PA 206, entitled

"The general property tax act,"

by amending sections 9m and 9n (MCL 211.9m and 211.9n), section 9m

as added by 2012 PA 401 and section 9n as added by 2012 PA 403.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 9m. (1) Beginning December 31, 2015 and each year

thereafter, qualified new personal property for which an exemption

has been properly claimed under subsection (2) is exempt from the

collection of taxes under this act.

     (2) An owner of qualified new personal property A person shall

claim the exemption under this section by filing an affidavit with

the local tax collecting unit in which the qualified new personal

property is located and with the department of treasury not later

than February 20, 2016. as provided in subsection (3). The

affidavit shall be in a form prescribed by the department of

treasury. An owner of qualified new personal property is only

required to file the affidavit claiming the exemption under this

section in 2016.state tax commission. An affidavit claiming an

exemption under this section applies to all existing and

subsequently acquired qualified new personal property.

     (3) If an affidavit claiming the exemption under this section

is filed in 2016 as provided in subsection (2), the owner of that

qualified new personal property is not required to also file a

statement under section 19 for that qualified new personal property

in 2016.

     (4) Beginning in 2017 and each year after 2017, an owner of

qualified new personal property is not required to file an

affidavit claiming the exemption under this section for qualified

new personal property and is not required to file a statement under

section 19 for that qualified new personal property. An owner of

qualified new personal property exempt under this section shall

provide documentation evidencing the date of purchase of that

qualified new personal property to the assessor of the local tax

collecting unit upon request.

     (3) If a person claiming an exemption under this section has

not filed an affidavit under this section in any prior year with

the local tax collecting unit in which the qualified new personal

property is located, that person shall file the affidavit described

under subsection (2) with that local tax collecting unit not later

than February 10 of the first year for which the person is claiming

the exemption for qualified new personal property in the local tax

collecting unit.

     (4) Except for a person claiming an exemption under this

section for personal property that was subject to section 9f or

1974 PA 198, MCL 207.551 to 207.572, in 2015, if an affidavit

claiming the exemption under this section is filed as provided in

subsection (3) by February 10, 2016, and the person claiming the

exemption under this section complied with section 19(9) in 2015,

or if the filing requirement under section 19(9) was not applicable

because the qualified new personal property was acquired in 2015,

the person claiming the exemption under this section is not

required to file a statement under section 19 for that qualified

new personal property in 2016. Except for a person claiming an

exemption under this section for personal property that was subject

to section 9f or 1974 PA 198, MCL 207.551 to 207.572, in 2015, if

an affidavit claiming the exemption under this section is filed as

provided in subsection (3), beginning in 2017, the person claiming

the exemption under this section is not required to file a

statement under section 19 for qualified new personal property

exempt under this section. For a person claiming an exemption under

this section for personal property that was subject to section 9f

or 1974 PA 198, MCL 207.551 to 207.572, in 2015, if an affidavit

claiming the exemption under this section is filed as provided in

subsection (3) and the person claiming the exemption under this

section complied with section 19(9) in 2015, the person claiming

the exemption under this section is not required to file a

statement under section 19 for that qualified new personal property

in the first year for which that person is claiming an exemption

under this section or in any subsequent year. For a person claiming

an exemption under this section for personal property that was

subject to section 9f or 1974 PA 198, MCL 207.551 to 207.572, in

2015, if an affidavit claiming the exemption under this section is

filed as provided in subsection (3), but the person claiming the

exemption under this section did not comply with section 19(9) in

2015, the person claiming the exemption under this section shall

file a statement under section 19 for that person's qualified new

personal property in the first year for which that person is

claiming an exemption under this section for qualified new personal

property, but that person is not required to file a statement under

section 19 for that qualified new personal property in any

subsequent year. If the person claiming the exemption under this

section has not filed an affidavit as required under subsection

(2), the personal property for which the person is claiming an

exemption is subject to the collection of taxes under this act and

that person shall file a statement under section 19.

     (5) If the assessor of the local tax collecting unit believes

that personal property for which an affidavit claiming an exemption

is filed under subsection (2) is not qualified new personal

property, the assessor may deny that claim for exemption by

notifying the person that filed the affidavit in writing of the

reason for the denial and advising the person that the denial may

be appealed to the board of review under section 30 or 53b. The

assessor may deny a claim for exemption under this subsection for

the current year only. If the assessor denies a claim for

exemption, the assessor shall remove the exemption of that personal

property and amend the tax roll to reflect the denial and the local

treasurer shall within 30 days of the date of the denial issue a

corrected tax bill for any additional taxes.

     (6) A person claiming an exemption for qualified new personal

property exempt under this section shall maintain books and records

and shall provide access to those books and records as provided in

section 22.

     (7) If a person fraudulently claims an exemption for personal

property under this section, that person is subject to the

penalties provided for in section 21(2).

(8) (5) As used in this section:

     (a) "Affiliated person" means a sole proprietorship,

partnership, limited liability company, corporation, association,

flow-through entity, member of a unitary business group, or other

entity related to a person claiming an exemption under this

section.

(b) (a) "Direct integrated support" means research any of the

following:

     (i) Research and development functions, testing related to

goods produced in industrial processing and conducted in

furtherance of that industrial processing.

     (ii) Testing and quality control functions , engineering

related to goods produced in industrial processing and conducted in

furtherance of that industrial processing.

     (iii) Engineering functions , warehousing facilities that

directly support the owner or lessee engaging in industrial

processing and that store tangible personal property owned by that

owner or lessee, and sorting and distribution centers related to

goods produced in industrial processing and conducted in

furtherance of that industrial processing.

     (iv) Receiving or storing equipment, materials, supplies,

parts, or components for industrial processing, or scrap materials

or waste resulting from industrial processing, at the industrial

processing site or at another site owned or leased by the owner or

lessee of the industrial processing site.

     (v) Storing of finished goods inventory if the inventory was

produced by a business engaged primarily in industrial processing

and if the inventory is stored either at the site where it was

produced or at another site owned or leased by the business that

produced the inventory.

     (vi) Sorting, distributing, or sequencing functions that

optimize transportation and use just-in-time inventory management

and material handling for inputs to industrial processing.

(c) (b) "Eligible manufacturing personal property" means all

personal property that is located on a parcel of real property if

that personal property is used more than 50% of the time in

industrial processing or in direct integrated support. The

percentage of use of personal property in industrial processing or

in direct integrated support shall be determined in the following

manner:

     (i) Multiply the true cash value of each individual item of

personal property located on that parcel of real property by its

percentage of use in industrial processing or in direct integrated

support.

     (ii) Add the result of the calculation under subparagraph (i)

for all personal property located on that parcel of real property.

     (iii) Divide the result of the calculation under subparagraph

(ii) by the total true cash value of all personal property located

on that parcel of real property.located on occupied real property

if that personal property is predominantly used in industrial

processing or direct integrated support. Personal property located

on occupied real property is predominantly used in industrial

processing or direct integrated support if the result of the

following calculation is more than 50%:

     (i) Multiply the original cost of all personal property located

on that occupied real property by its percentage of use in

industrial processing or in direct integrated support. Personal

property is used in industrial processing if it is not used to

generate electricity for sale and if its purchase or use by the

person claiming the exemption would be eligible for exemption under

section 4t of the general sales tax act, 1933 PA 167, MCL 205.54t,

or section 4o of the use tax act, 1937 PA 94, MCL 205.94o. For an

item of personal property that is used in industrial processing,

its percentage of use in industrial processing shall equal the

percentage of the exemption the property would be eligible for

under section 4t of the general sales tax act, 1933 PA 167, MCL

205.54t, or section 4o of the use tax act, 1937 PA 94, MCL 205.94o.

     (ii) Divide the result of the calculation under subparagraph (i)

by the total original cost of all personal property located on that

occupied real property.

(d) (c) "Industrial processing" means the conversion or

conditioning of tangible personal property by changing the form,

composition, quality, combination, or character of the property for

ultimate sale at retail or for use in the manufacturing of a

product to ultimately be sold at retail. that term as defined in

section 4t of the general sales tax act, 1933 PA 167, MCL 205.54t,

or section 4o of the use tax act, 1937 PA 94, MCL 205.94o.

Industrial processing does not include the generation of

electricity for sale.

(e) (d) "New personal property" means property that meets all

of the following conditions:

     (i) Before January 1, 2013, was not subject to or exempt from

the collection of taxes under this act, except inventory exempt

under section 9c, and was not in use or placed in service in this

state.

     (ii) Before January 1, 2013, was not in use or placed in

service outside of this state.

     (iii) Was initially purchased from the manufacturer, dealer,

distributor, or other vendor of new property after December 31,

2012.was initially placed in service in this state or outside of

this state after December 31, 2012.

     (f) "Occupied real property" means all of the following:

     (i) A parcel of real property that is entirely owned, leased,

or otherwise occupied by a person claiming an exemption under this

section.

     (ii) Contiguous parcels of real property that are entirely

owned, leased, or otherwise occupied by a person claiming an

exemption under this section and that host a single, integrated

business operation engaged primarily in industrial processing,

direct integrated support, or both. A business operation is not

engaged primarily in industrial processing, direct integrated

support, or both if it engages in significant business activities

that are not directly related to industrial processing or direct

integrated support.

     (iii) The portion of a parcel of real property that is owned,

leased, or otherwise occupied by a person claiming the exemption or

by an affiliated person.

(g) (e) "Qualified new personal property" means property that

meets all of the following conditions:

     (i) Is eligible manufacturing personal property.

     (ii) Was Is new personal property. after December 31, 2012.

     Sec. 9n. (1) Beginning December 31, 2015 and each year

thereafter, qualified previously existing personal property for

which an exemption has been properly claimed under subsection (2)

is exempt from the collection of taxes under this act.

     (2) An owner of qualified previously existing personal

property A person shall claim the exemption under this section by

filing an affidavit with the local tax collecting unit in which the

qualified previously existing personal property is located and the

department of treasury not later than February 20. as provided in

subsection (3). The affidavit shall be in a form prescribed by the

department of treasury. An owner of qualified state tax commission.

A person claiming an exemption for previously existing personal

property is only required to file the affidavit claiming the

exemption under this section in for the first year in for which the

exemption for that qualified previously existing personal property

is claimed in the local tax collecting unit.

     (3) If an affidavit claiming the exemption under this section

is filed as provided in subsection (2), the owner of that qualified

previously existing personal property is not required to also file

a statement under section 19 for that qualified previously existing

personal property in that tax year or any succeeding tax year.

     (3) If a person claiming an exemption under this section has

not filed an affidavit under this section in any prior year with

the local tax collecting unit in which the qualified previously

existing personal property is located claiming an exemption for

that qualified previously existing personal property, that person

shall file the affidavit described under subsection (2) with that

local tax collecting unit not later than February 10 of the first

year for which the person is claiming the exemption for that

qualified previously existing personal property in the local tax

collecting unit. If an affidavit claiming the exemption for

qualified previously existing personal property under this section

is filed as provided in this subsection and the person claiming an

exemption for that qualified previously existing personal property

complied with section 19(9) with respect to that qualified

previously existing personal property in 2015, or if the filing

requirement under section 19(9) was not applicable because the

qualified previously existing personal property was acquired in

2015 or later, the person claiming the exemption under this section

is not required to also file a statement under section 19 for that

qualified previously existing personal property in the first year

for which the exemption is claimed or in any subsequent year. If an

affidavit claiming the exemption for qualified previously existing

personal property under this section is filed as provided in this

subsection but the person claiming the exemption under this section

did not comply with section 19(9) with respect to that qualified

previously existing personal property in 2015, the person claiming

the exemption under this section shall file a statement under

section 19 for that qualified previously existing personal property

in the first year for which the person is claiming an exemption for

that qualified previously existing personal property, but the

person is not required to file a statement under section 19 for

that qualified previously existing personal property in any

subsequent year. If a person claiming an exemption for qualified

previously existing personal property has not filed an affidavit as

required under this section, that person's qualified previously

existing personal property is subject to the collection of taxes

under this act and that person shall file a statement under section

19.

     (4) If the assessor of the local tax collecting unit believes

that personal property for which an affidavit claiming an exemption

is filed under subsection (2) is not qualified previously existing

personal property, the assessor may deny that claim for exemption

by notifying the person that filed the affidavit in writing of the

reason for the denial and advising the person that the denial may

be appealed to the board of review under section 30 or 53b. The

assessor may deny a claim for exemption under this subsection for

the current year only. If the assessor denies a claim for

exemption, the assessor shall remove the exemption of that personal

property and amend the tax roll to reflect the denial and the local

treasurer shall within 30 days of the date of the denial issue a

corrected tax bill for any additional taxes.

     (5) A person claiming an exemption for qualified previously

existing personal property exempt under this section shall maintain

books and records and shall provide access to those books and

records as provided in section 22.

     (6) If a person fraudulently claims an exemption for personal

property under this section, that person is subject to the

penalties provided for in section 21(2).

(7) (4) As used in this section:

     (a) "Direct integrated support" means research and development

functions, testing and quality control functions, engineering

functions, warehousing facilities that directly support the owner

or lessee engaging in industrial processing and that store tangible

personal property owned by that owner or lessee, and sorting and

distribution centers that optimize transportation and use just-in-

time inventory management and material handling for inputs to

industrial processing.

     (b) "Eligible manufacturing personal property" means all

personal property that is located on a parcel of real property if

that personal property is used more than 50% of the time in

industrial processing or in direct integrated support. The

percentage of use of personal property in industrial processing or

in direct integrated support shall be determined in the following

manner:

     (i) Multiply the true cash value of each individual item of

personal property located on that parcel of real property by its

percentage of use in industrial processing or in direct integrated

support.

     (ii) Add the result of the calculation under subparagraph (i)

for all personal property located on that parcel of real property.

     (iii) Divide the result of the calculation under subparagraph

(ii) by the total true cash value of all personal property located

on that parcel of real property.

     (c) "Industrial processing" means the conversion or

conditioning of tangible personal property by changing the form,

composition, quality, combination, or character of the property for

ultimate sale at retail or for use in the manufacturing of a

product to ultimately be sold at retail. Industrial processing does

not include the generation of electricity for sale.

     (a) "Direct integrated support", "eligible manufacturing

personal property", and "industrial processing" mean those terms as

defined in section 9m.

(b) (d) "Qualified previously existing personal property"

means personal property that meets all of the following conditions:

     (i) Is eligible manufacturing personal property.

     (ii) Meets any of the following conditions:

     (A) Has been subject to or exempt from the collection of taxes

under this act for the immediately preceding 10 years.

     (B) If that personal property was located both outside of and

within this state in the immediately preceding 10 years, that

personal property was subject to or exempt from the collection of

taxes under this act, or would have been subject to or exempt from

the collection of taxes under this act if located in this state,

for the immediately preceding 10 years.

     (C) If that personal property was located outside of this

state in the immediately preceding 10 years, that personal property

would have been subject to or exempt from the collection of taxes

under this act for the immediately preceding 10 years if that

personal property had been located in this state.