Bill Text: MI SB0675 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Income tax; administration; tax base and sales factor for a foreign person; clarify. Amends sec. 625 of 1967 PA 281 (MCL 206.625).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2011-11-09 - Referred To Committee On Finance [SB0675 Detail]

Download: Michigan-2011-SB0675-Introduced.html

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SENATE BILL No. 675

 

 

September 15, 2011, Introduced by Senator ROBERTSON and referred to the Committee on Finance.

 

 

 

     A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 625 (MCL 206.625), as added by 2011 PA 38.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 625. (1) Except as otherwise provided in this section,

 

the following are exempt from the tax imposed by this part:

 

     (a) The United States, this state, other states, and the

 

agencies, political subdivisions, and enterprises of the United

 

States, this state, and other states.

 

     (b) A person who is exempt from federal income tax under the

 

internal revenue code except the following:

 

     (i) An organization included under section 501(c)(12) or

 

501(c)(16) of the internal revenue code.

 

     (ii) An organization exempt under section 501(c)(4) of the

 

internal revenue code that would be exempt under section 501(c)(12)

 

of the internal revenue code except that it failed to meet the

 

requirements in section 501(c)(12) that 85% or more of its income

 

consist of amounts collected from members.

 

     (iii) The tax base attributable to unrelated business activities

 

giving rise to the unrelated business taxable income of an exempt

 

person.

 

     (c) A foreign person that is domiciled in a member country of

 

the North American free trade agreement is not subject to taxation

 

under this part if the foreign person is domiciled in a subnational

 

jurisdiction that does not impose an income tax on a similarly

 

situated person domiciled in this state whose presence in the

 

foreign country is the same as the foreign person's presence in the

 

United States. If a qualifying foreign person is domiciled in a

 

subnational jurisdiction that does not impose an income tax on

 

businesses, but instead imposes some other type of subnational

 

business tax, that foreign person is not subject to taxation under

 

this part if that subnational business tax is not imposed on a

 

similarly situated person domiciled in this state whose presence in

 

the foreign country is the same as the foreign person's presence in

 

the United States.

 

     (2) Notwithstanding any other provision of this part to the

 

contrary, a foreign person subject to tax under this part shall

 

calculate its corporate income tax base under this section. Except

 

as otherwise provided in this section, the corporate income tax

 

base of a foreign person is subject to all adjustments and other

 

provisions of this part. However, the corporate income tax base

 

shall not include proceeds net income from sales of tangible

 

personal property where title passes outside the United States.

 

     (3) Except as otherwise provided in this section, the

 

corporate income tax base of a foreign person includes the sum of

 

business income and the adjustments under section 623 that are

 

related to United States business activity.

 

     (4) The sales factor for a foreign person is a fraction, the

 

numerator of which is the taxpayer's total sales in this state

 

where title passes inside the United States during the tax year and

 

the denominator of which is the taxpayer's total sales in the

 

United States where title passes inside the United States during

 

the tax year. For purposes of this subsection, for sales of

 

tangible personal property, only those sales where title passes

 

inside the United States shall be used in the sales factor, and for

 

sales of property other than tangible personal property, those

 

sales shall be apportioned in accordance with chapter 14.

 

     (5) As used in this section:

 

     (a) "Business income" means, for a foreign person, gross

 

income attributable to the taxpayer's United States business

 

activity and gross income derived from sources within the United

 

States minus the deductions allowed under the internal revenue code

 

that are related to that gross income. Gross income includes the

 

proceeds from sales shipped or delivered to any purchaser within

 

the United States and for which title transfers within the United

 

States; proceeds from services performed within the United States;

 

and a pro rata proportion of the proceeds from services performed

 

both within and outside the United States to the extent the

 

recipient receives benefit of the services within the United

 

States.

 

     (b) "Domiciled" means the location of the headquarters of the

 

trade or business from which the trade or business of the foreign

 

person is principally managed and directed.

 

     (c) "Foreign person" means a person formed under the laws of a

 

foreign country or a political subdivision of a foreign country,

 

whether or not the person is subject to taxation under the internal

 

revenue code.

 

     Enacting section 1. This amendatory act takes effect January

 

1, 2012.