Bill Text: MI HB6069 | 2023-2024 | 102nd Legislature | Introduced
Bill Title: Use tax: collections; tax on certain services; impose. Amends secs. 3 & 21 of 1937 PA 94 (MCL 205.93 & 205.111) & adds sec. 3d.
Spectrum: Partisan Bill (Democrat 13-0)
Status: (Introduced) 2024-11-13 - Bill Electronically Reproduced 11/13/2024 [HB6069 Detail]
Download: Michigan-2023-HB6069-Introduced.html
HOUSE BILL NO. 6069
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending sections 3 and 21 (MCL 205.93 and 205.111), section 3 as amended by 2015 PA 124 and section 21 as amended by 2023 PA 175, and by adding section 3d.
the people of the state of michigan enact:
Sec. 3. (1) There is levied upon and there shall be collected from every person in this state a specific tax, including both the local community stabilization share and the state share, for the privilege of using, storing, or consuming tangible personal property in this state at a total combined rate equal to 6% of the price of the property or services specified in section 3a, or 3b, or 3d. The tax levied under this act applies to a person who acquires tangible personal property or services that are subject to the tax levied under this act for any tax-exempt use who subsequently converts the tangible personal property or service to a taxable use, including an interim taxable use. If tangible personal property or services are converted to a taxable use, the tax levied under this act shall be imposed without regard to any subsequent tax-exempt use. Penalties and interest shall be added to the tax if applicable as provided in this act. For the purpose of the proper administration of this act and to prevent the evasion of the tax, all of the following shall be presumed:
(a) That tangible personal property purchased is subject to the tax if brought into this state within 90 days of the purchase date and is considered as acquired for storage, use, or other consumption in this state.
(b) That tangible personal property used solely for personal, nonbusiness purposes that is purchased outside of this state and that is not an aircraft is exempt from the tax levied under this act if 1 or more of the following conditions are satisfied:
(i) The property is purchased by a person who is not a resident of this state at the time of purchase and is brought into this state more than 90 days after the date of purchase.
(ii) The property is purchased by a person who is a resident of this state at the time of purchase and is brought into this state more than 360 days after the date of purchase.
(2) The tax imposed by this section for the privilege of using, storing, or consuming a vehicle, ORV, manufactured housing, aircraft, snowmobile, or watercraft shall be collected before the transfer of the vehicle, ORV, manufactured housing, aircraft, snowmobile, or watercraft, except a transfer to a licensed dealer or retailer for purposes of resale that arises by reason of a transaction made by a person who does not transfer vehicles, ORVs, manufactured housing, aircraft, snowmobiles, or watercraft in the ordinary course of his or her business done in this state. The tax on a vehicle, ORV, snowmobile, and watercraft shall must be collected by the secretary of state before the transfer of the vehicle, ORV, snowmobile, or watercraft registration. The tax on manufactured housing shall must be collected by the department of licensing and regulatory affairs, mobile home manufactured housing commission, or its agent before the transfer of the certificate of title. The tax on an aircraft shall must be collected by the department. of treasury. The price tax base of a new or previously owned car or truck held for resale by a dealer and that is not exempt under section 4(1)(c) is the purchase price of the car or truck multiplied by 2.5% plus $30.00 per month beginning with the month that the dealer uses the car or truck in a nonexempt manner.
(3) The following transfers or purchases are not subject to use tax:
(a) A transaction or a portion of a transaction if the transferee or purchaser is the spouse, mother, father, brother, sister, child, stepparent, stepchild, stepbrother, stepsister, grandparent, grandchild, legal ward, or a legally appointed guardian with a certified letter of guardianship, of the transferor.
(b) A transaction or a portion of a transaction if the transfer is a gift to a beneficiary in the administration of an estate.
(c) If a vehicle, ORV, manufactured housing, aircraft, snowmobile, or watercraft that has once been subjected to the Michigan sales or use tax is transferred in connection with the organization, reorganization, dissolution, or partial liquidation of an incorporated or unincorporated business and the beneficial ownership is not changed.
(d) If an insurance company licensed to conduct business in this state acquires ownership of a late model distressed vehicle as defined in section 12a of the Michigan vehicle code, 1949 PA 300, MCL 257.12a, 257.1 to 257.923, through payment of damages in response to a claim or when if the person who owned the vehicle before the insurance company reacquires ownership from the company as part of the settlement of a claim.
(4) The department may utilize the services, information, or records of any other department or agency of state government or of the authority in the performance of its duties under this act, and other departments or agencies of state government and the authority are required to shall furnish those services, information, or records upon the request of the department.
(5) Beginning on October 1, 2015, the specific tax levied under subsection (1) includes both a state share tax levied by this state and a local community stabilization share tax authorized by 2014 PA 80 and levied by the authority, which replaces the reduced state share at the following rates in each of the following state fiscal years:
(a) For fiscal year 2015-2016, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $96,400,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(b) For fiscal year 2016-2017, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $380,900,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(c) For fiscal year 2017-2018, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $410,800,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(d) For fiscal year 2018-2019, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $438,000,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(e) For fiscal year 2019-2020, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $465,900,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(f) For fiscal year 2020-2021, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $491,500,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(g) For fiscal year 2021-2022, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $521,300,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(h) For fiscal year 2022-2023, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $548,000,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(i) For fiscal year 2023-2024, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $561,700,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(j) For fiscal year 2024-2025, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $569,800,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(k) For fiscal year 2025-2026, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $571,400,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(l) For fiscal year 2026-2027, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $572,200,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(m) For fiscal year 2027-2028, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate $572,600,000.00 in revenue and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(n) For fiscal year 2028-2029 and each fiscal year thereafter, the local community stabilization share tax rate to be levied by the authority is that rate calculated by the department of treasury on behalf of the authority sufficient to generate the amount distributed under this section in the immediately preceding year adjusted by the personal property growth factor and the state share tax rate is that rate determined by subtracting the local community stabilization share tax rate from 6%.
(6) The state share includes the portion of the use tax imposed at the additional rate of 2% approved by the electors of this state on March 15, 1994 and dedicated for aid to schools under section 21(2). The local community stabilization share does not include the portion of the use tax imposed at the additional rate of 2% approved by the electors of this state on March 15, 1994.
(7) The total combined rate of the tax levied by this state and the authority under this act, including both the state share, as reduced by 2014 PA 80, and the local community stabilization share, shall not exceed the constitutional limit of 6% under section 8 of article IX of the state constitution of 1963. The authority shall not increase any tax or tax rate, but is authorized to and shall levy the local community stabilization share at the rate provided in subsection (5).
Sec. 3d. (1) Except as otherwise provided in subsection (2), beginning January 1, 2026, the use or consumption of any service described in subdivisions (a) to (g) that is not already taxed under section 3a or 3b is taxed under this act in the same manner as tangible personal property is taxed under this act:
(a) Accommodation and food services, as described in NAICS sector code 72.
(b) Administrative and support and waste management and remediation services, as described in NAICS sector code 56.
(c) Arts, entertainment, and recreation, as described in NAICS sector code 71.
(d) Educational services, as described in NAICS sector code 61.
(e) Leasing of real estate, as described in NAICS industry group code 5311.
(f) Leasing of nonfinancial intangible assets (except copyrighted works), as described in NAICS subsector code 533.
(g) Professional, scientific, and technical services, as described in NAICS sector code 54.
(2) The following services are not subject to tax under this section:
(a) Construction, as described in NAICS sector code 23.
(b) Transportation and warehousing, as described in NAICS sector codes 48 and 49.
(c) Health care and social assistance, as described in NAICS sector code 62.
(d) Other services (except public administration), as described in NAICS sector code 81.
(3) Subsection (2) does not exempt the use, storage, or consumption of tangible personal property from otherwise being taxed under this act, regardless of whether the tangible personal property is used, stored, or consumed in connection with services described in subsection (2).
(4) A service is subject to tax under this section based on the description of that service in the applicable NAICS code and not the classification of the establishment providing that service.
(5) For the fiscal year ending September 30, 2025, there is appropriated to the department the sum of $100,000.00 to begin implementing the requirements of the amendatory act that added this section. Any portion of this amount that is not expended in the fiscal year ending September 30, 2025 must not lapse to the general fund but must be carried forward in a work project account that complies with section 451a of the management and budget act, 1984 PA 431, MCL 18.1451a.
(6) The services set forth in subsection (1) must be sourced as products as provided in section 20.
(7) As used in this section, "NAICS" means North American Industry Classification System, 2022, as produced by the United States Office of Management and Budget.
Sec. 21. (1) Except as otherwise provided in this section, all money received and collected under this act must be deposited by the department of treasury in the state treasury to the credit of the general fund, to be disbursed only by appropriations by the legislature.
(2) The collections from the use tax imposed at the additional rate of 2% approved by the electors on March 15, 1994 must be deposited in the state school aid fund.
(3) In addition to the money deposited in the state school aid fund under subsection (2), from the money received and collected under this act for the state share, an amount equal to the sum of the following, as determined by the department, must be deposited in the state school aid fund:
(a) All revenue lost under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, as a result of the exemption of personal property under sections 9m, 9n, and 9o of the general property tax act, 1893 PA 206, MCL 211.9m, 211.9n, and 211.9o.
(b) All revenue lost from basic school operating mills as a result of the exemption of personal property under sections 9m, 9n, and 9o of the general property tax act, 1893 PA 206, MCL 211.9m, 211.9n, and 211.9o.
(c) All revenue lost to the state school aid fund as a result of the exemption under section 4(1)(gg).
(d) All revenue lost to the state school aid fund as a result of the exemption under section 4cc. A person that claims an exemption under section 4cc shall report the purchase price of the data center equipment as defined in section 4cc and any other information necessary to determine the amount of revenue lost to the state school aid fund as a result of the exemption under section 4cc annually on a form at the time and in a manner prescribed by the department. The report required under this subdivision must not include any remittance for tax and does not constitute a return or otherwise alleviate the person's obligations under section 6.
(e) All revenue lost to the state school aid fund as a result of the exclusion under section 2(1)(f)(xv).
(4) Money received and collected under this act for the local community stabilization share is not state funds, must not be credited to the state treasury, and must be transmitted to the authority for deposit in the treasury of the authority, to be disbursed by the authority only as authorized under the local community stabilization authority act, 2014 PA 86, MCL 123.1341 to 123.1362. The local community stabilization share is a local tax, not a state tax, and money received and collected for the local community stabilization share is money of the authority and not money of this state.
(5) Beginning October 1, 2016 and the first day of each calendar quarter thereafter, from the money received and collected under this act for the state share, an amount equal to the collections for the calendar quarter that is 2 calendar quarters immediately preceding the current calendar quarter of the tax imposed under this act at the additional rate of 2% approved by the electors on March 15, 1994 from the use, storage, or consumption of aviation fuel must be distributed as follows:
(a) An amount equal to 35% of the collections of the tax imposed at a rate of 2% on the use, storage, or consumption of aviation fuel must be deposited in the state aeronautics fund and must be expended, on appropriation, only for those purposes authorized in the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.1 to 259.208.
(b) An amount equal to 65% of the collections of the tax imposed at a rate of 2% on the use, storage, or consumption of aviation fuel must be deposited in the qualified airport fund and must be expended, on appropriation, only for those purposes authorized under section 35 of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.35.
(6) The department shall, on an annual basis, reconcile the amounts distributed under subsection (5) during each fiscal year with the amounts actually collected for a particular fiscal year and shall make any necessary adjustments, positive or negative, to the amounts to be distributed for the next successive calendar quarter that begins January 1. The state treasurer or the state treasurer's designee shall annually provide to the operator of each qualified airport a report of the reconciliation performed under this subsection. The reconciliation report is subject to the confidentiality restrictions and penalties provided in section 28(1)(f) of 1941 PA 122, MCL 205.28.
(7) Beginning with the fiscal year ending September 30, 2024 and each fiscal year thereafter, from the money received and collected under this act for the state share, $75,000,000.00 must be deposited into the local government reimbursement fund created in section 3a of the Michigan trust fund act, 2000 PA 489, MCL 12.253a.
(8) Beginning January 1, 2026, from the money received and collected under this act for the state share, an amount equal to the collections of the tax imposed at a rate of 4% on services under section 3d must be expended, on appropriation, only for purposes of water infrastructure and transportation infrastructure. Not less than 30% of the amount expended must be for water infrastructure.
(9) (8) As used in this section:
(a) "Aviation fuel" means fuel as that term is defined in section 4 of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.4.
(b) "Qualified airport" means that term as defined in section 109 of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.109.
(c) "Qualified airport fund" means the qualified airport fund created in section 34(2) of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.34.
(d) "State aeronautics fund" means the state aeronautics fund created in section 34(1) of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.34.
(e) "State school aid fund" means the state school aid fund established in section 11 of article IX of the state constitution of 1963.
(f) "Water infrastructure" means public infrastructure projects that enhance water safety, access to clean and safe water, affordability of drinking water, and flood resilience, including, but not limited to, projects to do any of the following:
(i) Provide clean, safe, and affordable water and sanitation.
(ii) Ensure clean and adequate groundwater and surface water sources for drinking water.
(iii) Address public health risks from environmental contamination.
(iv) Repair or improve public water treatment and supply systems.
(v) Replace lead pipes or other unsafe water lines associated with a public drinking water system.
(vi) Repair or improve stormwater systems, sewers, septic systems, or other wastewater treatment systems.
(vii) Improve efficiency, conservation, and sustainability.
