Bill Text: MI HB6104 | 2009-2010 | 95th Legislature | Introduced
Bill Title: Michigan business tax; rate; business income tax rate; reduce. Amends sec. 201 of 2007 PA 36 (MCL 208.1201). TIE BAR WITH: HB 5249'09, HB 6103'10, HB 6105'10, HB 6106'10, HB 6107'10, HB 6108'10, HB 6109'10, HB 6110'10, HB 6111'10, HB 6112'10, HB 6113'10, HB 6114'10, HB 6115'10, HB 6116'10, HB 6117'10, HB 6118'10, HB 6119'10
Spectrum: Partisan Bill (Republican 19-0)
Status: (Introduced - Dead) 2010-05-05 - Printed Bill Filed 05/05/2010 [HB6104 Detail]
Download: Michigan-2009-HB6104-Introduced.html
HOUSE BILL No. 6104
May 4, 2010, Introduced by Reps. McMillin, Amash, Genetski, Agema, DeShazor, Haveman, Paul Scott, Calley, Green, Meekhof, Meltzer, Walsh, Daley, Bolger, Crawford, Lund, Rogers, Kowall and Booher and referred to the Committee on Tax Policy.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 201 (MCL 208.1201), as amended by 2009 PA 135.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 201. (1) Except as otherwise provided in this act, there
is levied and imposed a business income tax on every taxpayer with
business activity within this state unless prohibited by 15 USC 381
to 384. The business income tax is imposed on the business income
tax base, after allocation or apportionment to this state, at the
rate
of following rates in the
following circumstances:
(a) For tax years that begin after December 31, 2007 and
before January 1, 2011, 4.95%.
(b) For tax years that begin after December 31, 2010, 4.50%.
(2) The business income tax base means a taxpayer's business
income subject to the following adjustments, before allocation or
apportionment, and the adjustments in subsections (5), (6), and (7)
after allocation or apportionment:
(a) Add interest income and dividends derived from obligations
or securities of states other than this state, in the same amount
that was excluded from federal taxable income, less the related
portion of expenses not deducted in computing federal taxable
income because of sections 265 and 291 of the internal revenue
code.
(b) Add all taxes on or measured by net income and the tax
imposed under this act to the extent the taxes were deducted in
arriving at federal taxable income.
(c) Add any carryback or carryover of a net operating loss to
the extent deducted in arriving at federal taxable income.
(d) To the extent included in federal taxable income, deduct
dividends and royalties received from persons other than United
States persons and foreign operating entities, including, but not
limited to, amounts determined under section 78 of the internal
revenue code or sections 951 to 964 of the internal revenue code.
(e) To the extent included in federal taxable income, add the
loss or subtract the income from the business income tax base that
is attributable to another entity whose business activities are
taxable under this section or would be subject to the tax under
this section if the business activities were in this state.
(f) Except as otherwise provided under this subdivision, to
the extent deducted in arriving at federal taxable income, add any
royalty, interest, or other expense paid to a person related to the
taxpayer by ownership or control for the use of an intangible asset
if the person is not included in the taxpayer's unitary business
group. The addition of any royalty, interest, or other expense
described under this subdivision is not required to be added if the
taxpayer can demonstrate that the transaction has a nontax business
purpose other than avoidance of this tax, is conducted with arm's-
length pricing and rates and terms as applied in accordance with
sections 482 and 1274(d) of the internal revenue code, and
satisfies 1 of the following:
(i) Is a pass through of another transaction between a third
party and the related person with comparable rates and terms.
(ii) Results in double taxation. For purposes of this
subparagraph, double taxation exists if the transaction is subject
to tax in another jurisdiction.
(iii) Is unreasonable as determined by the treasurer, and the
taxpayer agrees that the addition would be unreasonable based on
the taxpayer's facts and circumstances.
(iv) The related person recipient of the transaction is
organized under the laws of a foreign nation which has in force a
comprehensive income tax treaty with the United States.
(g) To the extent included in federal taxable income, deduct
interest income derived from United States obligations.
(h) To the extent included in federal taxable income, deduct
any earnings that are net earnings from self-employment as defined
under section 1402 of the internal revenue code of the taxpayer or
a partner or limited liability company member of the taxpayer
except to the extent that those net earnings represent a reasonable
return on capital.
(i) Subject to the limitation provided under this subdivision,
if the book-tax differences for the first fiscal period ending
after July 12, 2007 result in a deferred liability for a person
subject to tax under this act, deduct the following percentages of
the total book-tax difference for each qualifying asset, for each
of the successive 15 tax years beginning with the 2015 tax year:
(i) For the 2015 through 2019 tax years, 4%.
(ii) For the 2020 through 2024 tax years, 6%.
(iii) For the 2025 through 2029 tax years, 10%.
(j) For tax years that begin after December 31, 2009, to the
extent included in federal taxable income, deduct the amount of a
charitable contribution made to the advance tuition payment fund
created under section 9 of the Michigan education trust act, 1986
PA 316, MCL 390.1429.
(3) The deduction under subsection (2)(i) shall not exceed the
amount necessary to offset the net deferred tax liability of the
taxpayer as computed in accordance with generally accepted
accounting principles which would otherwise result from the
imposition of the business income tax under this section and the
modified gross receipts tax under section 203 if the deduction
provided under this subdivision were not allowed. The deduction
under subsection (2)(i) is intended to flow through and reduce the
surcharge imposed and levied under section 281. For purposes of the
calculation of the deduction under subsection (2)(i), a book-tax
difference shall only be used once in the calculation of the
deduction arising from the taxpayer's business income tax base
under this section and once in the calculation of the deduction
arising from the taxpayer's modified gross receipts tax base under
section 203. The adjustment under subsection (2)(i) shall be
calculated without regard to the federal effect of the deduction.
If the adjustment under subsection (2)(i) is greater than the
taxpayer's business income tax base, any adjustment that is unused
may be carried forward and applied as an adjustment to the
taxpayer's business income tax base before apportionment in future
years. In order to claim this deduction, the department may require
the taxpayer to report the amount of this deduction on a form as
prescribed by the department that is to be filed on or after the
date that the first quarterly return and estimated payment are due
under this act. As used in subsection (2)(i) and this subsection:
(a) "Book-tax difference" means the difference, if any,
between the person's qualifying asset's net book value shown on the
person's books and records for the first fiscal period ending after
July 12, 2007 and the qualifying asset's tax basis on that same
date.
(b) "Qualifying asset" means any asset shown on the person's
books and records for the first fiscal period ending after July 12,
2007, in accordance with generally accepted accounting principles.
(4) For purposes of subsections (2) and (3), the business
income of a unitary business group is the sum of the business
income of each person, other than a foreign operating entity or a
person subject to the tax imposed under chapter 2A or 2B, included
in the unitary business group less any items of income and related
deductions arising from transactions including dividends between
persons included in the unitary business group.
(5) Deduct any available business loss incurred after December
31, 2007. As used in this subsection, "business loss" means a
negative business income taxable amount after allocation or
apportionment. The business loss shall be carried forward to the
year immediately succeeding the loss year as an offset to the
allocated or apportioned business income tax base, then
successively to the next 9 taxable years following the loss year or
until the loss is used up, whichever occurs first, but for not more
than 10 taxable years after the loss year.
(6) Deduct any gain from the sale of any residential rental
units in this state to a qualified affordable housing project that
enters an agreement to operate the residential rental units as rent
restricted units for a minimum of 15 years. If the qualified
affordable housing project does not agree to operate all of the
residential rental units as rent restricted units, the deduction
under this subsection is limited to an amount equal to the gain
from the sale multiplied by a fraction, the numerator of which is
the number of those residential rental units purchased that are to
be operated as a rent restricted unit and the denominator is the
number of all residential rental units purchased. In order to claim
this deduction, the department may require the taxpayer and the
qualified affordable housing project to report the amount of this
deduction on a form as prescribed by the department that is to be
signed by both the taxpayer and the qualified affordable housing
project and filed with the taxpayer's annual return. The department
shall record a lien against the property subject to the operation
agreement for the total amount of the deduction allowed under this
subsection. The department shall notify the qualified affordable
housing project of the maximum amount of the lien that the
qualified affordable housing project may be liable for if the
qualified affordable housing project fails to qualify and operate
as provided in the operation agreement within 15 years after the
purchase. The lien shall become payable in an amount as provided
under this subsection to the state by the qualified affordable
housing project if the qualified affordable housing project fails
to qualify as a qualified affordable housing project and fails to
operate all or some of the residential rental units as rent
restricted units in accordance with the operation agreement entered
upon the purchase of those units within 15 years after the
deduction is claimed by a taxpayer under this subsection. An amount
equal to the product of 100% of the amount of the deduction allowed
under this subsection multiplied by a fraction, the numerator of
which is the difference between 15 and the number of years the
affordable housing project qualified and operated rent restricted
units in accordance with the agreement and the denominator is 15,
shall be added back to the tax liability of the qualified
affordable housing project for the tax year that the qualified
affordable housing project fails to comply with the agreement.
(7) Subject to the limitations provided in this subsection,
for a person that is a qualified affordable housing project, deduct
an amount equal to the product of that person's taxable income that
is attributable to residential rental units in this state owned by
the qualified affordable housing project multiplied by a fraction,
the numerator of which is the number of rent restricted units in
this state owned by that qualified affordable housing project and
the denominator of which is the number of all residential rental
units in this state owned by the qualified affordable housing
project. The amount of the deduction calculated under this
subsection shall be reduced by the amount of limited dividends or
other distributions made to the partners, members, or shareholders
of the qualified affordable housing project. Taxable income that is
attributable to residential rental units does not include income
received by the management, construction, or development company
for completion and operation of the project and those rental units.
(8) If a qualified affordable housing project no longer meets
the requirements of subsection (9)(b) or fails to operate those
residential rental units as rent restricted units in accordance
with the operation agreement and the requirements of subsection
(9)(c), the taxpayer is entitled to the deductions under
subsections (6) and (7) as long as the qualified affordable housing
project continues to offer some of the residential rental units
purchased as rent restricted units in accordance with the operation
agreement.
(9) For purposes of subsections (6), (7), and (8) and this
subsection:
(a) "Limited dividend housing association" means a limited
dividend housing association, corporation, or cooperative organized
and qualified pursuant to chapter 7 of the state housing
development authority act of 1966, 1966 PA 346, MCL 125.1491 to
125.1496.
(b) "Qualified affordable housing project" means a person that
is organized, qualified, and operated as a limited dividend housing
association that has a limitation on the amount of dividends or
other distributions that may be distributed to its owners in any
given year and has received funding, subsidies, grants, operating
support, or construction or permanent funding through 1 or more of
the following sources and programs:
(i) Mortgage or other financing provided by the Michigan state
housing development authority created in section 21 of the state
housing development authority act of 1966, 1966 PA 346, MCL
125.1421, the United States department of housing and urban
development, the United States department of agriculture for rural
housing service, the Michigan interfaith housing trust fund,
Michigan housing and community development fund, federal home loan
bank, housing commission loan, community development financial
institution, or mortgage or other funding or guaranteed by Fannie,
Ginnie, federal housing association, United States department of
agriculture, or federal home loan mortgage corporation.
(ii) A tax-exempt bond issued by a nonprofit organization,
local governmental unit, or other authority.
(iii) A payment in lieu of tax agreement or other tax abatement.
(iv) Funding from the state or a local governmental unit
through a HOME investments partnership program authorized under 42
USC 12741 to 12756.
(v) A grant or other funding from a federal home loan bank's
affordable housing program.
(vi) Financing or funding under the new markets tax credit
program under section 45D of the internal revenue code.
(vii) Financed in whole or in part under the United States
department of housing and urban development's hope VI program as
authorized by section 803 of the national affordable housing act,
42 USC 8012.
(viii) Financed in whole or in part under the United States
department of housing and urban development's section 202 program
authorized by section 202 of the national housing act, 12 USC
1701q.
(ix) Financing or funding under the low-income housing tax
credit program under section 42 of the internal revenue code.
(x) Financing or other subsidies from any new programs similar
to any of the above.
(c) "Rent restricted unit" means any residential rental unit's
rental income is restricted in accordance with section 42(g)(1) of
the internal revenue code as if it was a qualified low-income
housing project, or receives rental assistance in the form of HUD
section 8 subsidies or HUD housing assistance program subsidies, or
rental assistance from the United States department of agriculture
rural housing programs, or from any of the other programs described
under subdivision (b).
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 95th Legislature are
enacted into law:
(a) House Bill No. 5249.
(b) Senate Bill No.____ or House Bill No. 6103(request no.
05669'09).
(c) Senate Bill No.____ or House Bill No. 6105(request no.
05670'09).
(d) Senate Bill No.____ or House Bill No. 6106(request no.
05671'09).
(e) Senate Bill No.____ or House Bill No. 6107(request no.
05672'09).
(f) Senate Bill No.____ or House Bill No. 6112(request no.
05673'09).
(g) Senate Bill No.____ or House Bill No. 6113(request no.
05675'09*).
(h) Senate Bill No.____ or House Bill No. 6109(request no.
05676'09).
(i) Senate Bill No.____ or House Bill No. 6110(request no.
05677'09).
(j) Senate Bill No.____ or House Bill No. 6116(request no.
05678'09).
(k) Senate Bill No.____ or House Bill No. 6114(request no.
05679'09).
(l) Senate Bill No.____ or House Bill No. 6117(request no.
05680'09).
(m) Senate Bill No.____ or House Bill No. 6108(request no.
05681'09).
(n) Senate Bill No.____ or House Bill No. 6119(request no.
05930'10).
(o) Senate Bill No.____ or House Bill No. 6111(request no.
05931'10).
(p) Senate Bill No.____ or House Bill No. 6115(request no.
05932'10).
(q) Senate Bill No.____ or House Bill No. 6118(request no.
05933'10).
