SB-0490, As Passed House, October 17, 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.