SENATE BILL No. 143

 

 

February 5, 2013, Introduced by Senators PAPPAGEORGE, PROOS, COLBECK, NOFS, GREEN, BRANDENBURG, ROBERTSON, MARLEAU, JANSEN and HILDENBRAND and referred to the Committee on Finance.

 

 

 

     A bill to amend 1933 PA 167, entitled

 

"General sales tax act,"

 

by amending section 1a (MCL 205.51a), as amended by 2008 PA 438.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1a. As used in this act:

 

     (a) "Alcoholic beverage" means a beverage suitable for human

 

consumption that contains 1/2 of 1% or more of alcohol by volume.

 

     (b) "Computer" means an electronic device that accepts

 

information in digital or similar form and manipulates it for a

 

result based on a sequence of instructions.

 

     (c) "Computer software" means a set of coded instructions

 

designed to cause a computer or automatic data processing equipment

 

to perform a task.

 

     (d) "Delivered electronically" means delivered from the seller

 

to the purchaser by means other than tangible storage media.

 

     (e) "Delivery charges" means charges by the seller for

 

preparation and delivery to a location designated by the purchaser

 

of tangible personal property or services. Delivery charges

 

include, but are not limited to, transportation, shipping, postage,

 

handling, crating, and packing. Beginning September 1, 2004,

 

delivery charges do not include the charges for delivery of direct

 

mail if the charges are separately stated on an invoice or similar

 

billing document given to the purchaser. If a shipment includes

 

both exempt property and taxable property, the seller shall

 

allocate the delivery charge using 1 of the following methods:

 

     (i) Multiply the delivery price by a fraction, the numerator of

 

which is the total sales prices of the taxable property and the

 

denominator of which is the total sales prices of all property in

 

the shipment.

 

     (ii) Multiply the delivery price by a fraction, the numerator

 

of which is the total weight of the taxable property and the

 

denominator of which is the total weight of all property in the

 

shipment.

 

     (f) "Dietary supplement" means any product, other than

 

tobacco, intended to supplement the diet that is all of the

 

following:

 

     (i) Required to be labeled as a dietary supplement identifiable

 

by the "supplemental facts" box found on the label as required by

 

21 CFR 101.36.

 

     (ii) Contains 1 or more of the following dietary ingredients:

 

     (A) A vitamin.

 

     (B) A mineral.

 

     (C) An herb or other botanical.

 

     (D) An amino acid.

 

     (E) A dietary substance for use by humans to supplement the

 

diet by increasing the total dietary intake.

 

     (F) A concentrate, metabolite, constituent, extract, or

 

combination of any ingredient listed in sub-subparagraphs (A)

 

through (E).

 

     (iii) Intended for ingestion in tablet, capsule, powder,

 

softgel, gelcap, or liquid form, or if not intended for ingestion

 

in 1 of those forms, is not represented as conventional food or for

 

use as a sole item of a meal or of the diet.

 

     (g) "Direct mail" means printed material delivered or

 

distributed by United States mail or other delivery service to a

 

mass audience or to addressees on a mailing list provided by the

 

purchaser or at the direction of the purchaser when the cost of the

 

items are not billed directly to the recipients, including tangible

 

personal property supplied directly or indirectly by the purchaser

 

to the direct mail seller for inclusion in the package containing

 

the printed material, but not including multiple items of printed

 

material delivered to a single address.

 

     (h) "Drug" means a compound, substance, or preparation, or any

 

component of a compound, substance, or preparation, other than food

 

or food ingredients, dietary supplements, or alcoholic beverages,

 

intended for human use that is 1 or more of the following:

 

     (i) Recognized in the official United States pharmacopoeia,

 

official homeopathic pharmacopoeia of the United States, or

 

official national formulary, or in any of their supplements.

 

     (ii) Intended for use in the diagnosis, cure, mitigation,

 

treatment, or prevention of disease.

 

     (iii) Intended to affect the structure or any function of the

 

body.

 

     (i) "Durable medical equipment" means equipment for home use,

 

other than mobility enhancing equipment, dispensed pursuant to a

 

prescription, including durable medical equipment repair or

 

replacement parts, that does all of the following:

 

     (i) Can withstand repeated use.

 

     (ii) Is primarily and customarily used to serve a medical

 

purpose.

 

     (iii) Is not useful generally to a person in the absence of

 

illness or injury.

 

     (iv) Is not worn in or on the body.

 

     (j) "Durable medical equipment repair or replacement parts"

 

includes all components or attachments used in conjunction with

 

durable medical equipment.

 

     (k) "Electronic" means relating to technology having

 

electrical, digital, magnetic, wireless, optical, electromagnetic,

 

or similar capabilities.

 

     (l) "Lease or rental" means any transfer of possession or

 

control of tangible personal property for a fixed or indeterminate

 

term for consideration and may include future options to purchase

 

or extend. This definition applies only to leases and rentals

 

entered into after September 1, 2004 and has no retroactive impact

 

on leases and rentals that existed on that date. Lease or rental

 

does not include the following subparagraphs (i) through (iii) and

 

includes subparagraph (iv):

 

     (i) A transfer of possession or control of tangible personal

 

property under a security agreement or deferred payment plan that

 

requires the transfer of title upon completion of the required

 

payments.

 

     (ii) A transfer of possession or control of tangible personal

 

property under an agreement requiring transfer of title upon

 

completion of the required payments and payment of an option price

 

that does not exceed $100.00 or 1% of the total required payments,

 

whichever is greater.

 

     (iii) The provision of tangible personal property along with an

 

operator for a fixed or indeterminate period of time, where that

 

operator is necessary for the equipment to perform as designed. To

 

be necessary, an operator must do more than maintain, inspect, or

 

set up the tangible personal property.

 

     (iv) An agreement covering motor vehicles or trailers if the

 

amount of consideration may be increased or decreased by reference

 

to the amount realized upon sale or disposition of the property as

 

defined in section 7701(h)(1) of the internal revenue code, 26 USC

 

7701.

 

     (m) "Mobility enhancing equipment" means equipment, other than

 

durable medical equipment or a motor vehicle or equipment on a

 

motor vehicle normally provided by a motor vehicle manufacturer,

 

dispensed pursuant to a prescription, including repair or

 

replacement parts for that equipment, that is all of the following:

 

     (i) Primarily and customarily used to provide or increase the

 

ability to move from 1 place to another and is appropriate for use

 

at home or on a motor vehicle.

 

     (ii) Not generally used by a person with normal mobility.

 

     (n) "Prescription" means an order, formula, or recipe, issued

 

in any form of oral, written, electronic, or other means of

 

transmission by a licensed physician or other health professional

 

as defined in section 3501 of the insurance code of 1956, 1956 PA

 

218, MCL 500.3501. For a hearing aid, prescription includes an

 

order, instruction, or direction of a hearing aid dealer or

 

salesperson licensed under article 13 of the occupational code,

 

1980 PA 299, MCL 339.1301 to 339.1309.

 

     (o) "Prewritten computer software" means computer software,

 

including prewritten upgrades, that is delivered by any means and

 

that is not designed and developed by the author or other creator

 

to the specifications of a specific purchaser. Prewritten computer

 

software does not include granting the right to use prewritten

 

software installed on another person's server. Prewritten computer

 

software includes the following:

 

     (i) Any combination of 2 or more prewritten computer software

 

programs or portions of prewritten computer software programs.

 

     (ii) Computer software designed and developed by the author or

 

other creator to the specifications of a specific purchaser if it

 

is sold to a person other than that specific purchaser.

 

     (iii) The modification or enhancement of prewritten computer

 

software or portions of prewritten computer software where the

 

modification or enhancement is designed and developed to the

 

specifications of a specific purchaser unless there is a

 

reasonable, separately stated charge or an invoice or other

 

statement of the price is given to the purchaser for the

 

modification or enhancement. If a person other than the original

 

author or creator modifies or enhances prewritten computer

 

software, that person is considered to be the author or creator of

 

only that person's modifications or enhancements.

 

     (p) "Prosthetic device" means a replacement, corrective, or

 

supportive device, other than contact lenses and dental prosthesis,

 

dispensed pursuant to a prescription, including repair or

 

replacement parts for that device, worn on or in the body to do 1

 

or more of the following:

 

     (i) Artificially replace a missing portion of the body.

 

     (ii) Prevent or correct a physical deformity or malfunction of

 

the body.

 

     (iii) Support a weak or deformed portion of the body.

 

     (q) "Tangible personal property" means personal property that

 

can be seen, weighed, measured, felt, or touched or that is in any

 

other manner perceptible to the senses and includes electricity,

 

water, gas, steam, and prewritten computer software.

 

     (r) "Tobacco" means cigarettes, cigars, chewing or pipe

 

tobacco, or any other item that contains tobacco.

 

     Enacting section 1. Section 1a of the general sales tax act,

 

1933 PA 167, MCL 205.51a, as amended by this amendatory act, is

 

curative and is intended to express the original intent of the

 

legislature concerning the taxation of prewritten computer software

 

under the general sales tax act, 1933 PA 167, MCL 205.51 to 205.78.