Bill Text: MI HB4189 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Michigan business tax; credits; election to file a return under the Michigan business tax rather than corporate income tax act under certain circumstances; provide for. Amends secs. 117 & 500 of 2007 PA 36 (MCL 208.1117 & 208.1500) & repeals 2007 PA 36 (MCL 208.1101 - 208.1601). TIE BAR WITH: HB 4191'19, HB 4190'19
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2019-10-15 - Assigned Pa 90'19 With Immediate Effect [HB4189 Detail]
Download: Michigan-2019-HB4189-Introduced.html
HOUSE BILL No. 4189
February 14, 2019, Introduced by Reps. Sheppard, Webber and Coleman and referred to the Committee on Tax Policy.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending sections 117, 500, and 505 (MCL 208.1117, 208.1500, and
208.1505), section 117 as amended by 2011 PA 292, section 500 as
amended by 2016 PA 426, and section 505 as amended by 2011 PA 305,
and by adding section 402; and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 117. (1) "Tangible personal property" means that term as
defined in section 2 of the use tax act, 1937 PA 94, MCL 205.92.
(2) "Tax" means the tax imposed under this act, including
interest and penalties under this act, unless the term is given a
more limited meaning in the context of this act or a provision of
this act.
(3) "Tax-exempt person" means an organization that is exempt
from federal income tax under section 501(a) of the internal
revenue code, and a partnership, limited liability company, joint
venture, unincorporated association, or other group or combination
of organizations acting as a unit if all such organizations are
exempt from federal income tax under section 501(a) of the internal
revenue code and if all activities of the unit are exclusively
related to the charitable, educational, or other purposes or
functions that are the basis for the exemption of such
organizations from federal income tax, except the following:
(a) An organization exempt under section 501(c)(12) or (16) of
the internal revenue code.
(b) An organization exempt under section 501(c)(4) of the
internal revenue code that would be exempt under section 501(c)(12)
of the internal revenue code but for its failure to meet the
requirement in section 501(c)(12) that 85% or more of its income
must consist of amounts collected from members.
(4) "Tax year" means the calendar year, or the fiscal year
ending during the calendar year, upon the basis of which the tax
base of a taxpayer is computed under this act. If a return is made
for a fractional part of a year, tax year means the period for
which the return is made. Except for the first return required by
this act and except as otherwise provided under this subsection, a
taxpayer's tax year is for the same period as is covered by its
federal income tax return. A taxpayer that has a 52- or 53-week tax
year beginning not more than 7 days before December 31 of any year
is considered to have a tax year beginning after December of that
tax year. If the term tax year in this act is used in reference to
1 or more previous or preceding tax years and those referenced tax
years are before January 1, 2008, then those referenced tax years
are deemed those same tax years during which former 1975 PA 228 was
in effect. A taxpayer that has a fiscal tax year ending after
December 31, 2011 is considered to have 2 separate tax years as
follows: the first tax year is for the fractional part of the
fiscal tax year before January 1, 2012, and the second tax year is
for the fractional part of the fiscal tax year after December 31,
2011. Each short period tax return filed for each fractional part
of the fiscal year pursuant to this subsection is considered an
annual return under section 505.
(5) "Taxpayer" means, through December 31, 2011, a person or a
unitary business group liable for a tax, interest, or penalty under
this
act. Beginning January 1, 2012, taxpayer means either any of
the following:
(a) A person or unitary business group that has been approved
to receive, has received, or has been assigned a certificated
credit but is not subject to the tax imposed under part 2 of the
income
tax act of 1967, 1967 PA 281, MCL 206.601 to 206.713,
206.699, and that elects under section 500 to file a return and pay
the tax imposed under this act, if any.
(b) A person or unitary business group that has been approved
to receive, has received, or has been assigned a certificated
credit and that elected under section 680 of the income tax act of
1967, 1967 PA 281, MCL 206.680, to file a return and pay the tax
imposed under this act, if any. Except as otherwise provided under
section 500(7), if a person or unitary business group that elects
under section 680 of the income tax act of 1967, 1967 PA 281, MCL
206.680, to file a return and pay the tax imposed under this act is
part of a unitary business group as defined under this act, the
unitary business group as defined under this act shall file the
return and pay the tax, if any, under this act.
(c) A person or unitary business group that acquires the
rights, privileges, assets, or liabilities of another person or
member of another unitary business group that has been approved to
receive, has received, or has been assigned a certificated credit
under section 431, 435, or 437 and the surviving person or the
unitary business group of which the surviving person is a member
elected under section 680(5) of the income tax act of 1967, 1967 PA
281, MCL 206.680, to file a return and pay the tax imposed under
this act, if any.
(6) "Unitary business group" means a group of United States
persons, other than a foreign operating entity, 1 of which owns or
controls, directly or indirectly, more than 50% of the ownership
interest with voting rights or ownership interests that confer
comparable rights to voting rights of the other United States
persons, and that has business activities or operations which
result in a flow of value between or among persons included in the
unitary business group or has business activities or operations
that are integrated with, are dependent upon, or contribute to each
other. For purposes of this subsection, flow of value is determined
by reviewing the totality of facts and circumstances of business
activities and operations.
(7) "United States person" means that term as defined in
section 7701(a)(30) of the internal revenue code.
(8) "Unrelated business activity" means, for a tax-exempt
person, business activity directly connected with an unrelated
trade or business as defined in section 513 of the internal revenue
code.
Sec. 402. (1) Notwithstanding any other provision of this act,
beginning on and after the effective date of the amendatory act
that added this section, the Michigan economic growth authority or
its successor shall not modify, amend, transfer, or assign an
existing written agreement with a taxpayer for a certificated
credit, unless the modification or amendment reduces the net amount
of the credit to the taxpayer. However, the Michigan economic
growth authority or its successor may modify, amend, transfer, or
assign an existing written agreement for technical changes as long
as the modification, amendment, transfer, or assignment does not
increase the net amount of the credit as determined by the Michigan
economic growth authority or its successor. Under no circumstances
shall the Michigan economic growth authority or its successor
modify, amend, transfer, or assign an existing written agreement to
provide the taxpayer with a longer term to claim that credit.
(2) Any modifications, amendments, transfers, or assignments
to existing written agreements with a taxpayer for a certificated
credit after the effective date of the amendatory act that added
this section shall comply with the guidelines established pursuant
to section 8(13) of the Michigan economic growth authority act,
1995 PA 24, MCL 207.808.
(3) Beginning on and after January 1, 2020, a taxpayer shall
not claim more than 1 certificated credit in any tax year.
Sec. 500. (1) Except as otherwise provided in this section, a
taxpayer described under section 117(5)(a) or under section 680 of
the income tax act of 1967, 1967 PA 281, MCL 206.680, that
voluntarily elects for the taxpayer's first tax year ending after
December 31, 2011 to file a return and pay the tax imposed by this
act in order to claim a certificated credit or any unused
carryforward for that tax year shall continue to file a return and
pay the tax imposed under this act for each tax year thereafter
until that certificated credit and any carryforward from that
credit is used up. Except as otherwise provided under subsection
(7), if a person awarded a certificated credit is a member of a
unitary business group, the unitary business group, and not the
member, shall file a return and pay the tax, if any, under this act
and claim the certificated credit. Except as otherwise provided
under subsection (7), if the taxpayer that elects to file a return
and pay the tax imposed by this act in order to claim a
certificated credit or any unused carryforward of that credit for
that tax year is a unitary business group, the return filed by the
unitary business group shall include all persons included in the
unitary business group regardless of whether that person is
incorporated. Notwithstanding any other provision of this act or
part 2 or 3 of the income tax act of 1967, 1967 PA 281, MCL 206.601
to 206.713, in the case of a flow-through entity that has made an
election under this section, each member of the flow-through entity
that does not file as a member of a unitary business group with the
flow-through entity shall disregard all items attributable to that
member's ownership interest in the electing flow-through entity for
all purposes of part 2 of the income tax act of 1967, 1967 PA 281,
MCL 206.601 to 206.699, and the electing flow-through entity shall
not be subject to the tax withholding provisions of section 703(4)
of the income tax act of 1967, 1967 PA 281, MCL 206.703, with
respect to its members that are corporations.
(2) A taxpayer with a certificated credit under section 435 or
437, which certificated credit or any unused carryforward may be
claimed in a tax year ending after December 31, 2011 may elect to
pay the tax imposed by this act in the tax year in which that
certificated credit may be claimed in lieu of the tax imposed under
part 2 of the income tax act of 1967, 1967 PA 281, MCL 206.601 to
206.699. If a person with a certificated credit under section 435
or 437 that elects under this subsection to pay the tax imposed by
this act is a member of a unitary business group, the unitary
business group, and not the member, shall file a return and pay the
tax, if any, under this act and claim that certificated credit.
(3) A taxpayer with a certificated credit under section 435 or
437 that elects under subsection (2) after the taxpayer's first tax
year ending after December 31, 2011 to pay the tax imposed by this
act may claim any other certificated credit that taxpayer would be
eligible for in the year in which the taxpayer claims a
certificated credit under section 435 or 437, but not any
certificated credit that would have accrued in any year before the
election under subsection (2). A taxpayer with a certificated
credit under section 437(10) that elects under subsection (2) after
the taxpayer's first tax year after December 31, 2011 to pay the
tax imposed by this act shall continue to file a return and pay the
tax imposed under this act for each tax year thereafter until the
certificated credit under section 437(10) is complete and that
credit is used up. When the taxpayer's certificated credit under
section 435 or 437 that was the basis for the taxpayer's election
under subsection (2) is extinguished, the taxpayer is no longer
eligible to pay the tax under this act and may no longer claim any
other remaining certificated credits.
(4) For tax years that begin after December 31, 2011, a
taxpayer's tax liability under this act, after application of all
credits, deductions, and exemptions, shall be the greater of the
following:
(a) The amount of the taxpayer's tax liability under this act,
notwithstanding the calculation required under this section, after
application of all credits, deductions, and exemptions and any
carryforward of any unused credit as prescribed in this act.
(b) An amount equal to the taxpayer's tax liability as
computed pursuant to part 2 of the income tax act of 1967, 1967 PA
281, MCL 206.601 to 206.699, after application of all credits,
deductions, and exemptions under part 2 of the income tax act of
1967, 1967 PA 281, MCL 206.601 to 206.699, as if the taxpayer were
subject to the tax imposed under part 2 of the income tax act of
1967, 1967 PA 281, MCL 206.601 to 206.699, less the amount of the
taxpayer's certificated credits, including any unused carryforward
of a certificated credit, that the taxpayer was allowed to claim
for the tax year under this act. However, in calculating the amount
under this subdivision, the following apply:
(i) A taxpayer described under section 117(5)(a) shall not
include a deduction for any business loss under section 623(4) of
the income tax act of 1967, 1967 PA 281, MCL 206.623, for any prior
year in which the taxpayer was not subject to the tax levied under
this act.
(ii) A taxpayer shall not include any nonrefundable
certificated credit to the extent that credit exceeds the
taxpayer's tax liability. Any nonrefundable credit remaining after
application of the limitation in this subparagraph may be carried
forward.
(iii) For a taxpayer that is a partnership or subchapter S
corporation, business income includes payments and items of income
and expense that are attributable to business activity of the
partnership or S corporation and separately reported to the
members.
(5) If the result of the calculation under subsection (4) is
negative, the taxpayer shall be refunded that amount.
(6) A taxpayer with a certificated credit under subsection (7)
or section 435 or 437 that elects to pay the tax under this act may
elect to claim a refundable credit as provided under section 510.
If a refundable credit is claimed under section 510, that credit
shall not be used to calculate a taxpayer's tax liability under
subsection (4).
(7) Subject to the limitations provided under this subsection,
a taxpayer that is a member of a unitary business group and that
has a certificated credit under sections 431 and 434(2) and (5) is
not required to file a combined return as a unitary business group
and may elect to file a separate return and pay the tax, if any,
under this act and claim the certificated credit under section
434(5) as provided under this subsection. A taxpayer that elects to
file a separate return as provided under this subsection and redeem
a voucher certificate under a voucher agreement entered pursuant to
this subsection and proceeding from an agreement entered pursuant
to section 434(5) for an amount equal to the employment expenses
and related engineering product development and administrative
costs for the support of integrated battery cells, anodes and
cathodes, and cell assembly shall create an additional 100 new jobs
in this state, for a total of 400 new jobs, and the maximum
allowable amount redeemed under this subsection or under section
510 shall not exceed $25,000,000.00 per year for no more than 3
years. A taxpayer that elects to file as provided under this
subsection and redeem a voucher certificate under a voucher
agreement entered pursuant to this subsection and proceeding from
an agreement entered pursuant to section 434(5) shall not claim a
credit for any agreement entered pursuant to section 431 or 434(2).
(8) A taxpayer with a certificated credit granted under
section 36109 of the natural resources and environmental protection
act, 1994 PA 451, MCL 324.36109, which certificated credit had been
claimed in a previous tax year under part 1 of the income tax act
of 1967, 1967 PA 281, MCL 206.1 to 206.532, but that certificated
credit is no longer eligible to be claimed under part 1 of the
income tax act of 1967, 1967 PA 281, MCL 206.1 to 206.532, as a
result of the death occurring after December 31, 2011 of an
individual farmland owner, or an individual considered the farmland
owner under section 36109(1)(d) of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.36109, and the
transfer of the ownership of the farmland property subject to the
farmland development rights agreement upon which that certificated
credit is based into an estate or trust, may elect to pay the tax
imposed by this act in the first tax year in which that
certificated credit may be claimed under this act. A taxpayer that
elects under this subsection to pay the tax imposed by this act
shall continue to file a return and pay the tax imposed under this
act for each tax year thereafter until the certificated credit
granted under section 36109 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.36109, is
complete and that credit is used up, or the taxpayer no longer owns
the property subject to the agreement, whichever occurs first. When
the taxpayer's certificated credit under section 36109 of the
natural resources and environmental protection act, 1994 PA 451,
MCL 324.36109, that was the basis for the taxpayer's election under
this subsection is extinguished, or the taxpayer no longer owns
that property under the agreement, whichever occurs first, the
taxpayer is no longer eligible to pay the tax under this act and
may no longer claim any other remaining certificated credits.
(9) A taxpayer described under section 117(5)(c) may, only for
the first tax year ending after the effective date of the
acquisition of a certificated credit or credits under section 431,
435, or 437 resulting from that transaction, elect to pay the tax
imposed by this act in lieu of the tax imposed under part 2 of the
income tax act of 1967, 1967 PA 281, MCL 206.601 to 206.699. A
taxpayer that elects pursuant to this subsection to pay the tax
imposed by this act shall continue to file a return and pay the tax
imposed under this act for each tax year thereafter until that
certificated credit and any carryforward from that credit is used
up. The terms, conditions, and amount of a certificated credit that
were attributable to the person or member of a unitary business
group whose existence was terminated by the transaction shall
continue and shall not be expanded in any manner that would
increase the net amount of that certificated credit as a result of
an election made under this subsection. A taxpayer that elects
pursuant to this subsection to pay the tax imposed by this act may
claim any other certificated credit that the former taxpayer whose
existence was terminated by the transaction would have been
eligible to claim in the tax year in which the taxpayer claims the
certificated credit under section 431, 435, or 437, but not any
certificated credit that would have accrued in any tax year before
the election under this subsection. A taxpayer that elects pursuant
to this subsection to pay the tax imposed by this act is not
eligible to claim any other certificated credit for which an
election could have been made by the taxpayer under subsection (1)
for the taxpayer's first tax year ending after December 31, 2011.
When the taxpayer's certificated credit under section 431, 435, or
437 that was the basis for the taxpayer's election under this
subsection is extinguished, the taxpayer is no longer eligible to
pay the tax under this act and may no longer claim any other
remaining certificated credits.
(10) Beginning on and after January 1, 2020, a taxpayer shall
only claim 1 certificated credit per tax year.
Sec.
505. (1) An Except as
otherwise provided under this
subsection, an annual or final return shall be filed with the
department in the form and content prescribed by the department by
the last day of the fourth month after the end of the taxpayer's
tax year. Any final liability shall be remitted by the last day of
the fourth month after the end of the taxpayer's tax year. A
taxpayer that elects to file a return under this act pursuant to
section 680(5) of the income tax act of 1967, 1967 PA 281, MCL
206.680, for a tax year ending before the enactment date of the
amendatory act that added this language shall notify the department
of its election and file an annual return for that tax year and
each tax year thereafter, if applicable, within 4 months after
making the election and shall include a copy of the corresponding
amended return or returns filed pursuant to part 2 of the income
tax act of 1967, 1967 PA 281, MCL 206.601 to 206.699. The
department may require documentation from the taxpayer that elects
to file a return under this act pursuant to section 680(5) of the
income tax act of 1967, 1967 PA 281, MCL 206.680, to support the
transaction, the acquisition of the certificated credit or credits
that are the basis for the election, and a determination that the
election by the Michigan economic growth authority or its successor
that the election will reduce the net liability to this state. A
taxpayer, other than a taxpayer subject to the tax imposed under
chapter 2A or 2B, whose apportioned or allocated gross receipts are
less than $350,000.00 does not need to file a return or pay the tax
imposed under this act.
(2) If a taxpayer has apportioned or allocated gross receipts
for a tax year of less than 12 months, the amount in subsection (1)
shall be multiplied by a fraction, the numerator of which is the
number of months in the tax year and the denominator of which is
12.
(3) The department, upon application of the taxpayer and for
good cause shown, may extend the date for filing the annual return.
Interest at the rate under section 23(2) of 1941 PA 122, MCL
205.23, shall be added to the amount of the tax unpaid for the
period of the extension. The treasurer shall require with the
application payment of the estimated tax liability unpaid for the
tax period covered by the extension.
(4) If a taxpayer is granted an extension of time within which
to file the federal income tax return for any tax year, the filing
of a copy of the request for extension together with a tentative
return and payment of an estimated tax with the department by the
due date provided in subsection (1) shall automatically extend the
due date for the filing of an annual or final return under this act
until the last day of the eighth month following the original due
date of the return. Interest at the rate under section 23(2) of
1941 PA 122, MCL 205.23, shall be added to the amount of the tax
unpaid for the period of the extension.
Enacting section 1. The Michigan business tax act, 2007 PA 36,
MCL 208.1101 to 208.1601, is repealed effective for tax years that
begin after December 31, 2031.
Enacting section 2. This amendatory act takes effect 90 days
after the date it is enacted into law.
