Bill Text: MI HB5183 | 2011-2012 | 96th Legislature | Introduced

---

Bill Title: Income tax; credit; sunset on venture investment credit; eliminate. Amends sec. 278 of 1967 PA 281 (MCL 206.278).

Spectrum: Partisan Bill (Democrat 8-0)

Status: (Introduced - Dead) 2011-11-30 - Printed Bill Filed 11/30/2011 [HB5183 Detail]

Download: Michigan-2011-HB5183-Introduced.html

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 5183

 

November 29, 2011, Introduced by Reps. Lipton, Roy Schmidt, Barnett, Slavens, Kandrevas, Constan, Switalski and Brown and referred to the Committee on Tax Policy.

 

     A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 278 (MCL 206.278), as amended by 2011 PA 38.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 278. (1) Subject to the limitations provided under this

 

section, a taxpayer that makes a qualified investment after

 

December 31, 2010 and before January 1, 2012 in a qualified

 

business may claim a credit against the tax imposed by this act

 

equal to 25% of the qualified investment made during the tax year.

 

     (2) To qualify for the credit under this section, the taxpayer

 

shall request certification from the Michigan strategic fund within

 

60 days of making the investment. A taxpayer shall not claim a

 

credit under this section unless the Michigan strategic fund has

 

issued a certificate to the taxpayer. The board shall not approve a

 

credit under this section for a taxpayer who has been convicted of

 

a felony involving a fiduciary obligation or the conversion or

 

misappropriation of funds or insurance accounts, theft, deceit,

 

fraud, misrepresentation, or corruption. The Michigan strategic

 

fund shall forward a copy of each certificate received pursuant to

 

this subsection to the governor, the president of the Michigan

 

strategic fund, the chairperson of the senate finance committee,

 

the chairperson of the house tax policy committee, the director of

 

the senate fiscal agency, and the director of the house fiscal

 

agency. The requirements of section 28(1)(f) of 1941 PA 122, MCL

 

205.28, do not apply to the disclosure required by this subsection.

 

The Michigan strategic fund shall not certify more than

 

$1,000,000.00 in qualified investments in any 1 qualified business.

 

The taxpayer shall attach the certificate to the annual return

 

filed under this act on which a credit under this section is

 

claimed. The certificate required under this subsection shall

 

specify all of the following:

 

     (a) The total amount of investment made during the tax year by

 

the taxpayer in each qualified business.

 

     (b) The total amount of qualified investments made in each

 

qualified business if different from the previous amount.

 

     (c) The total amount of the credit under this section that the

 

taxpayer is allowed to claim for the designated tax year.

 

     (3) A taxpayer shall not claim a credit of more than

 

$250,000.00 based on an investment in any 1 qualified business and

 

shall not claim a credit of more than $250,000.00 for qualified

 

investments in all qualified businesses in any 1 year. The credit

 

allowed under this section shall be taken by the taxpayer in equal

 

installments over 2 years beginning with the tax year in which the

 

certification was issued.

 

     (4) The total amount of credits that the Michigan strategic

 

fund may certify under this section shall not exceed $9,000,000.00.

 

     (5) If the amount of the credit allowed under this section

 

exceeds the tax liability of the taxpayer for the tax year, that

 

portion of the credit that exceeds the tax liability of the

 

taxpayer for the tax year shall not be refunded but may be carried

 

forward to offset tax liability under this act in subsequent tax

 

years for a period not to exceed 5 tax years or until used up,

 

whichever occurs first.

 

     (6) The board shall develop an application and approval

 

process in order to certify investments under this section and

 

adopt a program describing parameters and criteria to be used for

 

approving investments. As part of that program adoption, the board

 

may determine and describe the conditions to be met to be

 

considered an investment alongside or through an approved angel

 

group, seed capital firm, or venture capital firm.

 

     (7) A taxpayer who has not paid or entered into an installment

 

agreement regarding a final assessment of an unpaid liability for a

 

state tax for which all rights of appeal have been exhausted or who

 

is currently in a bankruptcy proceeding is not eligible to claim a

 

credit under this section.

 

     (8) As used in this section:

 

     (a) "Board" means the board of directors of the Michigan

 

strategic fund.

 

     (b) "Michigan strategic fund" means the Michigan strategic

 

fund as described in the Michigan strategic fund act, 1984 PA 270,

 

MCL 125.2001 to 125.2094.

 

     (c) "Qualified business" means a business that the board

 

certifies as in compliance with all of the following at the time of

 

the investment:

 

     (i) The business is a seed or early stage business as defined

 

in section 3 of the Michigan early stage venture investment act of

 

2003, 2003 PA 296, MCL 125.2233.

 

     (ii) The business has its headquarters in this state, is

 

domiciled in this state, and has a majority of its employees

 

working in this state.

 

     (iii) The business has a preinvestment valuation of less than

 

$10,000,000.00 and has fewer than 100 full-time equivalent

 

employees.

 

     (iv) Except as otherwise provided under this subparagraph, the

 

business has been in existence less than 5 years; or, for a

 

business in which the business activity is derived from research at

 

an institution of higher education located within this state or an

 

organization exempt from federal taxation under section 501(c)(3)

 

of the internal revenue code and that is located within this state,

 

the business has been in existence less than 10 years. As used in

 

this subparagraph, a public or private college or university that

 

awards a bachelor's degree or other degrees is an institution of

 

higher education.

 

     (v) The business is not a retail establishment as described in

 

section 44-45 – retail trade, of the North American industry

 

classification system, United States, 1997, published by the office

 

of management and budget.

 

     (vi) The business has not claimed a credit under section 431,

 

455, 457, or 459 of the Michigan business tax act, 2007 PA 36, MCL

 

208.1431, 208.1455, 208.1457, and 208.1459.

 

     (d) "Qualified investment" means, except as otherwise provided

 

under this subdivision, an investment of at least $20,000.00

 

certified by the Michigan strategic fund that is made alongside of,

 

or through, a seed venture capital or angel investor group that is

 

registered with the Michigan strategic fund and is not in a

 

business in which any member of the investor's family is an

 

employee or owner of the business or in which the investor or any

 

member of the investor's family has a preexisting fiduciary

 

relationship with the business. Qualified investment does not

 

include an investment in a business that engages in life sciences

 

technology unless those activities are included in the definition

 

of life sciences as that term is defined under section 88a of the

 

Michigan strategic fund act, 1984 PA 270, MCL 125.2088a.