Bill Text: MI SB0082 | 2009-2010 | 95th Legislature | Introduced
Bill Title: Income tax; credit; carryforward of certain historic preservation tax credits; extend to 30 years. Amends sec. 266 of 1967 PA 281 (MCL 206.266).
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2009-01-27 - Referred To Committee On Finance [SB0082 Detail]
Download: Michigan-2009-SB0082-Introduced.html
SENATE BILL No. 82
January 27, 2009, Introduced by Senator CLARKE and referred to the Committee on Finance.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 266 (MCL 206.266), as amended by 2008 PA 447.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 266. (1) A qualified taxpayer with a rehabilitation plan
certified after December 31, 1998 may credit against the tax
imposed by this act the amount determined pursuant to subsection
(2) for the qualified expenditures for the rehabilitation of a
historic resource pursuant to the rehabilitation plan in the year
in which the certification of completed rehabilitation of the
historic resource is issued. Only those expenditures that are paid
or incurred during the time periods prescribed for the credit under
section 47(a)(2) of the internal revenue code and any related
treasury regulations shall be considered qualified expenditures.
(2) The credit allowed under this section shall be 25% of the
qualified expenditures that are eligible, or would have been
eligible except that the taxpayer elected to transfer the credit
under subsection (12), for the credit under section 47(a)(2) of the
internal revenue code if the taxpayer is eligible for the credit
under section 47(a)(2) of the internal revenue code or, if the
taxpayer is not eligible for the credit under section 47(a)(2) of
the internal revenue code, 25% of the qualified expenditures that
would qualify under section 47(a)(2) of the internal revenue code
except that the expenditures are made to a historic resource that
is not eligible for the credit under section 47(a)(2) of the
internal revenue code, subject to both of the following:
(a) A taxpayer with qualified expenditures that are eligible
for the credit under section 47(a)(2) of the internal revenue code
may not claim a credit under this section for those qualified
expenditures unless the taxpayer has claimed and received a credit
for those qualified expenditures under section 47(a)(2) of the
internal revenue code or the taxpayer has elected to transfer the
credit under subsection (12).
(b) A credit under this section shall be reduced by the amount
of a credit received by the taxpayer for the same qualified
expenditures under section 47(a)(2) of the internal revenue code.
(3) To be eligible for the credit under this section, the
taxpayer shall apply to and receive from the Michigan historical
center certification that the historic significance, the
rehabilitation plan, and the completed rehabilitation of the
historic resource meet the criteria under subsection (6) and either
of the following:
(a) All of the following criteria:
(i) The historic resource contributes to the significance of
the historic district in which it is located.
(ii) Both the rehabilitation plan and completed rehabilitation
of the historic resource meet the federal secretary of the
interior's standards for rehabilitation and guidelines for
rehabilitating historic buildings, 36 CFR part 67.
(iii) All rehabilitation work has been done to or within the
walls, boundaries, or structures of the historic resource or to
historic resources located within the property boundaries of the
resource.
(b) The taxpayer has received certification from the national
park service that the historic resource's significance, the
rehabilitation plan, and the completed rehabilitation qualify for
the credit allowed under section 47(a)(2) of the internal revenue
code.
(4) If a qualified taxpayer is eligible for the credit allowed
under section 47(a)(2) of the internal revenue code, the qualified
taxpayer shall file for certification with the center to qualify
for the credit allowed under section 47(a)(2) of the internal
revenue code. If the qualified taxpayer has previously filed for
certification with the center to qualify for the credit allowed
under section 47(a)(2) of the internal revenue code, additional
filing for the credit allowed under this section is not required.
(5) The center may inspect a historic resource at any time
during the rehabilitation process and may revoke certification of
completed rehabilitation if the rehabilitation was not undertaken
as represented in the rehabilitation plan or if unapproved
alterations to the completed rehabilitation are made during the 5
years after the tax year in which the credit was claimed. The
center shall promptly notify the department of a revocation.
(6) Qualified expenditures for the rehabilitation of a
historic resource may be used to calculate the credit under this
section if the historic resource meets 1 of the criteria listed in
subdivision (a) and 1 of the criteria listed in subdivision (b):
(a) The resource is 1 of the following during the tax year in
which a credit under this section is claimed for those qualified
expenditures:
(i) Individually listed on the national register of historic
places or state register of historic sites.
(ii) A contributing resource located within a historic district
listed on the national register of historic places or the state
register of historic sites.
(iii) A contributing resource located within a historic district
designated by a local unit pursuant to an ordinance adopted under
the local historic districts act, 1970 PA 169, MCL 399.201 to
399.215.
(b) The resource meets 1 of the following criteria during the
tax year in which a credit under this section is claimed for those
qualified expenditures:
(i) The historic resource is located in a designated historic
district in a local unit of government with an existing ordinance
under the local historic districts act, 1970 PA 169, MCL 399.201 to
399.215.
(ii) The historic resource is located in an incorporated local
unit of government that does not have an ordinance under the local
historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and
has a population of less than 5,000.
(iii) The historic resource is located in an unincorporated
local unit of government.
(iv) The historic resource is located in an incorporated local
unit of government that does not have an ordinance under the local
historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and is
located within the boundaries of an association that has been
chartered under 1889 PA 39, MCL 455.51 to 455.72.
(v) The historic resource is subject to a historic
preservation easement.
(7) A credit amount assigned under section 39c(7) of former
1975 PA 228 or section 435 of the Michigan business tax act, 2007
PA 36, MCL 208.1435, may be claimed against the partner's,
member's, or shareholder's tax liability under this act as provided
in section 39c(7) of former 1975 PA 228 or section 435 of the
Michigan business tax act, 2007 PA 36, MCL 208.1435.
(8)
If For projects for which
a certificate of completed
rehabilitation is issued before January 1, 2007, if the credit
allowed under this section for the tax year and any unused
carryforward of the credit allowed by this section exceed the
taxpayer's tax liability for the tax year, that portion that
exceeds the tax liability for the tax year shall not be refunded
but may be carried forward to offset tax liability in subsequent
tax years for 10 years or until used up, whichever occurs first.
For projects for which a certificate of completed rehabilitation is
issued after December 31, 2006, if the credit allowed under this
section for the tax year and any unused carryforward of the credit
allowed by this section exceed the taxpayer's tax liability for the
tax year, that portion that exceeds the tax liability for the tax
year shall not be refunded but may be carried forward to offset tax
liability in subsequent tax years for 30 years or until used up,
whichever occurs first. For projects for which a certificate of
completed rehabilitation is issued for a tax year beginning after
December 31, 2008 and for which the credit amount allowed is less
than $250,000.00, a qualified taxpayer may elect to forgo the
carryover period and receive a refund of the amount of the credit
that exceeds the qualified taxpayer's tax liability. The amount of
the refund shall be equal to 90% of the amount of the credit that
exceeds the qualified taxpayer's tax liability. An election under
this subsection shall be made in the year that a certificate of
completed rehabilitation is issued and shall be irrevocable.
(9) For tax years beginning before January 1, 2009, if a
taxpayer sells a historic resource for which a credit under this
section was claimed less than 5 years after the year in which the
credit was claimed, the following percentage of the credit amount
previously claimed relative to that historic resource shall be
added back to the tax liability of the taxpayer in the year of the
sale:
(a) If the sale is less than 1 year after the year in which
the credit was claimed, 100%.
(b) If the sale is at least 1 year but less than 2 years after
the year in which the credit was claimed, 80%.
(c) If the sale is at least 2 years but less than 3 years
after the year in which the credit was claimed, 60%.
(d) If the sale is at least 3 years but less than 4 years
after the year in which the credit was claimed, 40%.
(e) If the sale is at least 4 years but less than 5 years
after the year in which the credit was claimed, 20%.
(f) If the sale is 5 years or more after the year in which the
credit was claimed, an addback to the taxpayer's tax liability
shall not be made.
(10) For tax years beginning before January 1, 2009, if a
certification of completed rehabilitation is revoked under
subsection (5) less than 5 years after the year in which a credit
was claimed, the following percentage of the credit amount
previously claimed relative to that historic resource shall be
added back to the tax liability of the taxpayer in the year of the
revocation:
(a) If the revocation is less than 1 year after the year in
which the credit was claimed, 100%.
(b) If the revocation is at least 1 year but less than 2 years
after the year in which the credit was claimed, 80%.
(c) If the revocation is at least 2 years but less than 3
years after the year in which the credit was claimed, 60%.
(d) If the revocation is at least 3 years but less than 4
years after the year in which the credit was claimed, 40%.
(e) If the revocation is at least 4 years but less than 5
years after the year in which the credit was claimed, 20%.
(f) If the revocation is 5 years or more after the year in
which the credit was claimed, an addback to the taxpayer's tax
liability shall not be made.
(11) For tax years beginning after December 31, 2008, if a
certificate of completed rehabilitation is revoked under subsection
(5) or if the historic resource is sold or disposed of less than 5
years after being placed in service as defined in section 47(b)(1)
of the internal revenue code and related treasury regulations, the
following percentage of the credit amount previously claimed
relative to that historic resource shall be added back to the tax
liability of the qualified taxpayer that received the certificate
of completed rehabilitation and not the assignee in the year of the
revocation:
(a) If the revocation is less than 1 year after the historic
resource is placed in service, 100%.
(b) If the revocation is at least 1 year but less than 2 years
after the historic resource is placed in service, 80%.
(c) If the revocation is at least 2 years but less than 3
years after the historic resource is placed in service, 60%.
(d) If the revocation is at least 3 years but less than 4
years after the historic resource is placed in service, 40%.
(e) If the revocation is at least 4 years but less than 5
years after the historic resource is placed in service, 20%.
(f) If the revocation is at least 5 years or more after the
historic resource is placed in service, an addback to the qualified
taxpayer tax liability shall not be required.
(12) A qualified taxpayer who receives a certificate of
completed rehabilitation after December 31, 2008 may elect to forgo
claiming the credit and transfer the credit along with the
ownership of the property for which the credit may be claimed to a
new owner. The new owner shall be treated as the qualified taxpayer
having incurred the rehabilitation costs and shall be subject to
the recapture provisions under subsection (11) if the new owner
sells or disposes of the property within 5 years after the new
owner acquired the property. For purposes of this subsection and
subsection (11), the placed in service date for a new owner is the
date the new owner acquired the property for which the credit is
claimed.
(13) The department of history, arts, and libraries through
the Michigan historical center may impose a fee to cover the
administrative cost of implementing the program under this section.
(14) The qualified taxpayer shall attach all of the following
to the qualified taxpayer's annual return under this act:
(a) Certification of completed rehabilitation.
(b) Certification of historic significance related to the
historic resource and the qualified expenditures used to claim a
credit under this section.
(c) A completed assignment form if the qualified taxpayer is
an assignee under section 39c of former 1975 PA 228 or section 435
of the Michigan business tax act, 2007 PA 36, MCL 208.1435, of any
portion of a credit allowed under that section.
(15) The department of history, arts, and libraries shall
promulgate rules to implement this section pursuant to the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328.
(16) The total of the credits claimed under this section and
section 39c of former 1975 PA 228 or section 435 of the Michigan
business tax act, 2007 PA 36, MCL 208.1435, for a rehabilitation
project shall not exceed 25% of the total qualified expenditures
eligible for the credit under this section for that rehabilitation
project.
(17) The department of history, arts, and libraries through
the Michigan historical center shall report all of the following to
the legislature annually for the immediately preceding state fiscal
year:
(a) The fee schedule used by the center and the total amount
of fees collected.
(b) A description of each rehabilitation project certified.
(c) The location of each new and ongoing rehabilitation
project.
(18) As used in this section:
(a) "Contributing resource" means a historic resource that
contributes to the significance of the historic district in which
it is located.
(b) "Historic district" means an area, or group of areas not
necessarily having contiguous boundaries, that contains 1 resource
or a group of resources that are related by history, architecture,
archaeology, engineering, or culture.
(c) "Historic resource" means a publicly or privately owned
historic building, structure, site, object, feature, or open space
located within a historic district designated by the national
register of historic places, the state register of historic sites,
or a local unit acting under the local historic districts act, 1970
PA 169, MCL 399.201 to 399.215; or that is individually listed on
the state register of historic sites or national register of
historic places and includes all of the following:
(i) An owner-occupied personal residence or a historic resource
located within the property boundaries of that personal residence.
(ii) An income-producing commercial, industrial, or residential
resource or a historic resource located within the property
boundaries of that resource.
(iii) A resource owned by a governmental body, nonprofit
organization, or tax-exempt entity that is used primarily by a
taxpayer lessee in a trade or business unrelated to the
governmental body, nonprofit organization, or tax-exempt entity and
that is subject to tax under this act.
(iv) A resource that is occupied or utilized by a governmental
body, nonprofit organization, or tax-exempt entity pursuant to a
long-term lease or lease with option to buy agreement.
(v) Any other resource that could benefit from rehabilitation.
(d) "Local unit" means a county, city, village, or township.
(e) "Long-term lease" means a lease term of at least 27.5
years for a residential resource or at least 31.5 years for a
nonresidential resource.
(f) "Michigan historical center" or "center" means the state
historic preservation office of the Michigan historical center of
the department of history, arts, and libraries or its successor
agency.
(g) "Open space" means undeveloped land, a naturally
landscaped area, or a formal or man-made landscaped area that
provides a connective link or a buffer between other resources.
(h) "Person" means an individual, partnership, corporation,
association, governmental entity, or other legal entity.
(i) "Qualified expenditures" means capital expenditures that
qualify, or would qualify except that the taxpayer elected to
transfer the credit under subsection (12), for a rehabilitation
credit under section 47(a)(2) of the internal revenue code if the
taxpayer is eligible for the credit under section 47(a)(2) of the
internal revenue code or, if the taxpayer is not eligible for the
credit under section 47(a)(2) of the internal revenue code, the
qualified expenditures that would qualify under section 47(a)(2) of
the internal revenue code except that the expenditures are made to
a historic resource that is not eligible for the credit under
section 47(a)(2) of the internal revenue code, that were paid.
Qualified expenditures do not include capital expenditures for
nonhistoric additions to a historic resource except an addition
that is required by state or federal regulations that relate to
historic preservation, safety, or accessibility.
(j) "Qualified taxpayer" means a person that is an assignee
under section 39c of former 1975 PA 228 or section 435 of the
Michigan business tax act, 2007 PA 36, MCL 208.1435, or either owns
the resource to be rehabilitated or has a long-term lease agreement
with the owner of the historic resource and that has qualified
expenditures for the rehabilitation of the historic resource equal
to or greater than 10% of the state equalized valuation of the
property. If the historic resource to be rehabilitated is a portion
of a historic or nonhistoric resource, the state equalized
valuation of only that portion of the property shall be used for
purposes of this subdivision. If the assessor for the local tax
collecting unit in which the historic resource is located
determines the state equalized valuation of that portion, that
assessor's determination shall be used for purposes of this
subdivision. If the assessor does not determine that state
equalized valuation of that portion, qualified expenditures, for
purposes of this subdivision, shall be equal to or greater than 5%
of the appraised value as determined by a certified appraiser. If
the historic resource to be rehabilitated does not have a state
equalized valuation, qualified expenditures for purposes of this
subdivision shall be equal to or greater than 5% of the appraised
value of the resource as determined by a certified appraiser.
(k) "Rehabilitation plan" means a plan for the rehabilitation
of a historic resource that meets the federal secretary of the
interior's standards for rehabilitation and guidelines for
rehabilitation of historic buildings under 36 CFR part 67.
