Bill Text: MI HB4019 | 2015-2016 | 98th Legislature | Introduced
Bill Title: Use tax; definitions; definition of prewritten computer software; revise. Amends sec. 2b of 1937 PA 94 (MCL 205.92b).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2015-02-11 - Referred To Second Reading [HB4019 Detail]
Download: Michigan-2015-HB4019-Introduced.html
HOUSE BILL No. 4019
January 15, 2015, Introduced by Rep. Farrington and referred to the Committee on Tax Policy.
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending section 2b (MCL 205.92b), as amended by 2008 PA 439.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2b. As used in this act:
(a) "Alcoholic beverage" means a beverage suitable for human
consumption that contains 1/2 of 1% or more of alcohol by volume.
(b) "Computer" means an electronic device that accepts
information in digital or similar form and manipulates it for a
result based on a sequence of instructions.
(c) "Computer software" means a set of coded instructions
designed to cause a computer or automatic data processing equipment
to perform a task.
(d) "Delivered electronically" means delivered from the seller
to the purchaser by means other than tangible storage media.
(e) "Delivery charges" means charges by the seller for
preparation and delivery to a location designated by the purchaser
of tangible personal property or services. Delivery charges
include, but are not limited to, transportation, shipping, postage,
handling, crating, and packing. Beginning September 1, 2004,
delivery charges do not include the charges for delivery of direct
mail if the charges are separately stated on an invoice or similar
billing document given to the purchaser. If a shipment includes
both exempt property and taxable property, the seller shall
allocate the delivery charge using 1 of the following methods:
(i) Multiply the delivery price by a fraction, the numerator of
which is the total sales prices of the taxable property and the
denominator of which is the total sales prices of all property in
the shipment.
(ii) Multiply the delivery price by a fraction, the numerator
of which is the total weight of the taxable property and the
denominator of which is the total weight of all property in the
shipment.
(f) "Dietary supplement" means any product, other than
tobacco, intended to supplement the diet that is all of the
following:
(i) Required to be labeled as a dietary supplement identifiable
by the "supplemental facts" box found on the label as required by
21 CFR 101.36.
(ii) Contains 1 or more of the following dietary ingredients:
(A) A vitamin.
(B) A mineral.
(C) An herb or other botanical.
(D) An amino acid.
(E) A dietary substance for use by humans to supplement the
diet by increasing the total dietary intake.
(F) A concentrate, metabolite, constituent, extract, or
combination of any ingredient listed in sub-subparagraphs (A)
through (E).
(iii) Intended for ingestion in tablet, capsule, powder,
softgel, gelcap, or liquid form, or if not intended for ingestion
in 1 of those forms, is not represented as conventional food or for
use as a sole item of a meal or of the diet.
(g) "Direct mail" means printed material delivered or
distributed by United States mail or other delivery service to a
mass audience or to addresses on a mailing list provided by the
purchaser or at the direction of the purchaser when the cost of the
items is not billed directly to the recipients, including tangible
personal property supplied directly or indirectly by the purchaser
to the direct mail seller for inclusion in the package containing
the printed material but not including multiple items of printed
material delivered to a single address.
(h) "Drug" means a compound, substance, or preparation, or any
component of a compound, substance, or preparation, other than food
or food ingredients, dietary supplements, or alcoholic beverages,
intended for human use that is 1 or more of the following:
(i) Recognized in the official United States pharmacopoeia,
official homeopathic pharmacopoeia of the United States, or
official national formulary, or in any of their supplements.
(ii) Intended for use in the diagnosis, cure, mitigation,
treatment, or prevention of disease.
(iii) Intended to affect the structure or any function of the
body.
(i) "Durable medical equipment" means equipment for home use,
other than mobility enhancing equipment, dispensed pursuant to a
prescription, including durable medical equipment repair or
replacement parts, that does all of the following:
(i) Can withstand repeated use.
(ii) Is primarily and customarily used to serve a medical
purpose.
(iii) Is not useful generally to a person in the absence of
illness or injury.
(iv) Is not worn in or on the body.
(j) "Durable medical equipment repair or replacement parts"
includes all components or attachments used in conjunction with
durable medical equipment.
(k) "Electronic" means relating to technology having
electrical, digital, magnetic, wireless, optical, electromagnetic,
or similar capabilities.
(l) "Lease or rental" means any transfer of possession or
control of tangible personal property for a fixed or indeterminate
term for consideration and may include future options to purchase
or extend. This definition applies only to leases and rentals
entered into after September 1, 2004 and has no retroactive impact
on leases and rentals that existed on that date. Lease or rental
does not include the following subparagraphs (i) through (iii) and
includes subparagraph (iv):
(i) A transfer of possession or control of tangible personal
property under a security agreement or deferred payment plan that
requires the transfer of title upon completion of the required
payments.
(ii) A transfer of possession or control of tangible personal
property under an agreement requiring transfer of title upon
completion of the required payments and payment of an option price
that does not exceed $100.00 or 1% of the total required payments,
whichever is greater.
(iii) The provision of tangible personal property along with an
operator for a fixed or indeterminate period of time, where that
operator is necessary for the equipment to perform as designed. To
be necessary, an operator must do more than maintain, inspect, or
set up the tangible personal property.
(iv) An agreement covering motor vehicles or trailers if the
amount of consideration may be increased or decreased by reference
to the amount realized upon sale or disposition of the property as
defined in 26 USC 7701(h)(1).
(m) "Mobility enhancing equipment" means equipment, other than
durable medical equipment or a motor vehicle or equipment on a
motor vehicle normally provided by a motor vehicle manufacturer,
dispensed pursuant to a prescription, including repair or
replacement parts for that equipment, that is all of the following:
(i) Primarily and customarily used to provide or increase the
ability to move from 1 place to another and is appropriate for use
at home or on a motor vehicle.
(ii) Not generally used by a person with normal mobility.
(n) "Prescription" means an order, formula, or recipe, issued
in any form of oral, written, electronic, or other means of
transmission by a licensed physician or other health professional
as defined in section 3501 of the insurance code of 1956, 1956 PA
218, MCL 500.3501. For a hearing aid, prescription includes an
order, instruction, or direction of a hearing aid dealer or
salesperson licensed under article 13 of the occupational code,
1980 PA 299, MCL 339.1301 to 339.1309.
(o) "Prewritten computer software" means computer software,
including prewritten upgrades, that is delivered by any means and
that is not designed and developed by the author or other creator
to the specifications of a specific purchaser. Prewritten computer
software does not include granting the right to use prewritten
computer software installed on another person's server. Prewritten
computer software includes all of the following:
(i) Any combination of 2 or more prewritten computer software
programs or portions of prewritten computer software programs.
(ii) Computer software designed and developed by the author or
other creator to the specifications of a specific purchaser if it
is sold to a person other than that specific purchaser.
(iii) The modification or enhancement of prewritten computer
software or portions of prewritten computer software where the
modification or enhancement is designed and developed to the
specifications of a specific purchaser unless there is a
reasonable, separately stated charge or an invoice or other
statement of the price is given to the purchaser for the
modification or enhancement. If a person other than the original
author or creator modifies or enhances prewritten computer
software, that person is considered to be the author or creator of
only that person's modifications or enhancements.
(p) "Prosthetic device" means a replacement, corrective, or
supportive device, other than contact lenses and dental prosthesis,
dispensed pursuant to a prescription, including repair or
replacement parts for that device, worn on or in the body to do 1
or more of the following:
(i) Artificially replace a missing portion of the body.
(ii) Prevent or correct a physical deformity or malfunction of
the body.
(iii) Support a weak or deformed portion of the body.
(q) "Tobacco" means cigarettes, cigars, chewing or pipe
tobacco, or any other item that contains tobacco.
Enacting section 1. Section 2b of the use tax act, 1937 PA 94,
MCL 205.92b, as amended by this amendatory act, is curative and is
intended to express the original intent of the legislature
concerning the taxation of prewritten computer software under the
use tax act, 1937 PA 94, MCL 205.91 to 205.111.
