Bill Text: MI SB0829 | 2013-2014 | 97th Legislature | Engrossed
Bill Title: Taxation; excise taxes; tax on certain owners of exempt eligible personal property; create. Creates new act & repeals 2012 PA 406 (MCL 123.1241 - 123.1247). TIE BAR WITH: SB 0822'14
Spectrum: Bipartisan Bill
Status: (Passed) 2014-04-22 - Assigned Pa 0092'14 With Immediate Effect [SB0829 Detail]
Download: Michigan-2013-SB0829-Engrossed.html
SB-0829, As Passed House, March 25, 2014
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 829
A bill to levy a specific tax on certain personal property; to
provide for the administration, collection, and distribution of the
specific tax; to provide for an exemption from that specific tax;
to impose certain duties on persons and certain state departments;
to impose penalties; and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the "state
essential services assessment act".
Sec. 3. As used in this act:
(a) "Acquisition cost" means the fair market value of personal
property at the time of acquisition by the current owner, including
the cost of freight, sales tax, and installation, and other
capitalized costs, except capitalized interest. There is a
rebuttable presumption that the acquisition price paid by the
current owner for personal property, and any costs of freight,
sales tax, and installation, and other capitalized costs, except
capitalized interest, reflect the fair market value of the personal
property. For property described in subdivision (e)(i) that would
otherwise be exempt under section 7k of the general property tax
act, 1893 PA 206, MCL 211.7k, and for property described in
subdivision (e)(iii), acquisition cost means 1/2 of the fair market
value of that personal property at the time of acquisition by the
current owner. The acquisition cost for personal property exempt
under the renaissance zone act, 1996 PA 376, MCL 125.2681 to
125.2696, is $0.00 except for the 3 years immediately preceding the
expiration of the exemption of that personal property under the
renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696, during
which period of time the acquisition cost for that personal
property means the fair market value of that personal property at
the time of acquisition by the current owner multiplied by the
percentage reduction in the exemption as provided in section 9(3)
of the renaissance zone act, 1996 PA 376, MCL 125.2689. The state
tax commission may provide guidelines for circumstances in which
the actual acquisition price is not determinative of fair market
value and the basis of determining fair market value in those
circumstances, including when that property is idle, obsolete, or
surplus.
(b) "Assessment" means the state essential services assessment
levied under section 5.
(c) "Assessment year" means the year in which the state
essential services assessment levied under section 5 is due.
(d) "Eligible claimant" means a person that claims an
exemption for eligible personal property.
(e) "Eligible personal property" means all of the following:
(i) Personal property exempt under section 9m or 9n of the
general property tax act, 1893 PA 206, MCL 211.9m and 211.9n.
(ii) Personal property exempt under section 9f of the general
property tax act, 1893 PA 206, MCL 211.9f, which exemption was
approved under section 9f of the general property tax act, 1893 PA
206, MCL 211.9f, after 2013, unless both of the following
conditions are satisfied:
(A) The application for the exemption was filed with the
eligible local assessing district or next Michigan development
corporation before August 5, 2014.
(B) The resolution approving the exemption states that the
project is expected to have total new personal property of over
$25,000,000.00 within 5 years of the adoption of the resolution by
the eligible local assessing district or next Michigan development
corporation.
(iii) Personal property subject to an extended industrial
facilities exemption certificate under section 11a of 1974 PA 198,
MCL 207.561a.
(iv) Personal property subject to an extended exemption under
section 9f(8) of the general property tax act, 1893 PA 206, MCL
211.9f.
(f) "Fund board" means the board of directors of the Michigan
Senate Bill No. 829 (H-1) as amended March 25, 2014
strategic fund created under the Michigan strategic fund act, 1984
PA 270, MCL 125.2001 to 125.2094.
(g) "Michigan economic development corporation" means the
Michigan economic development corporation, the public body
corporate created under section 28 of article VII of the state
constitution of 1963 and the urban cooperation act of 1967, 1967
(Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual interlocal
agreement effective April 5, 1999, and subsequently amended,
between local participating economic development corporations
formed under the economic development corporations act, 1974 PA
338, MCL 125.1601 to 125.1636, and the Michigan strategic fund.
(h) "Michigan strategic fund" means the Michigan strategic
fund created under the Michigan strategic fund act, 1984 PA 270,
MCL 125.2001 to 125.2094.
(i) "Next Michigan development corporation" means that term as
defined under the next Michigan development act, 2010 PA 275, MCL
125.2951 to 125.2959.
Sec. 5. (1) Beginning January 1, 2016, the state essential
services assessment is levied on all eligible personal property as
provided in this section.
(2) The assessment under this section is a state specific tax
on the eligible personal property owned by, leased to, or in the
possession of an eligible claimant on December 31 of the year
immediately preceding the assessment year and shall be calculated
as follows:
(a) For eligible personal property [acquired] by the eligible
claimant in a year 1 to 5 years before the assessment year,
Senate Bill No. 829 (H-1) as amended March 25, 2014
multiply the acquisition cost of the eligible personal property by
2.4 mills.
(b) For eligible personal property [acquired] by the eligible
claimant in a year 6 to 10 years before the assessment year,
multiply the acquisition cost of the eligible personal property by
1.25 mills.
(c) For eligible personal property [acquired] by the eligible
claimant in a year more than 10 years before the assessment year,
multiply the acquisition cost of the eligible personal property by
0.9 mills.
Sec. 7. (1) The department of treasury shall collect and
administer the assessment as provided in this section.
(2) Not later than May 1 in each assessment year, the
department of treasury shall make available in electronic form to
each eligible claimant a statement for calculation of the
assessment as provided in section 5.
(3) Not later than September 15 in each assessment year, each
eligible claimant shall submit electronically to the department of
treasury the completed statement and full payment of the assessment
levied under section 5 for that assessment year as calculated in
section 5(2). The department of treasury may waive or delay the
electronic filing requirement at its discretion. A statement
submitted by an eligible claimant shall include all of the eligible
claimant's eligible personal property located in this state subject
to the assessment levied under section 5 and, beginning in 2019,
specify the location of that property on December 31 of the year
immediately preceding the assessment year.
(4) If an eligible claimant does not submit the statement and
full payment of the assessment levied under section 5 by September
15, the department of treasury shall issue a notice to the eligible
claimant not later than October 15. The notice shall include a
statement explaining the consequences of nonpayment as set forth in
subsection (5) and instructing the eligible claimant of its
potential responsibility under subsection (5)(e). An eligible
claimant shall submit payment in full by November 1 of the
assessment year along with a penalty of 1% per week on the unpaid
balance for each week payment is not made in full up to a maximum
of 5% of the total amount due and unpaid. For the eligible
claimant's first assessment year, the penalty shall be waived if
the eligible claimant submits the statement and full payment of the
assessment levied under section 5 within 7 business days of
September 15.
(5) If an eligible claimant does not submit payment in full
and any penalty due under subsection (4) by November 1, all of the
following shall apply:
(a) The state tax commission shall direct the assessor to
rescind for the assessment year any exemption described in section
9m or 9n of the general property tax act, 1893 PA 206, MCL 211.9m
and 211.9n, granted for the eligible personal property.
(b) The state tax commission shall rescind for the assessment
year any exemption under section 9f of the general property tax
act, 1893 PA 206, MCL 211.9f, which exemption was approved under
section 9f of the general property tax act, 1893 PA 206, MCL
211.9f, after 2013.
(c) The state tax commission shall rescind for the assessment
year any exemption for eligible personal property subject to an
extended industrial facilities exemption certificate under section
11a of 1974 PA 198, MCL 207.561a.
(d) The state tax commission shall rescind for the assessment
year any extended exemption for eligible personal property under
section 9f(8)(a) of the general property tax act, 1893 PA 206, MCL
211.9f.
(e) The claimant shall file not later than November 10 a
statement under section 19 of the general property tax act, 1893 PA
206, MCL 211.19, for all property for which the exemption has been
rescinded under this section.
(f) All taxes due as a result of a rescission by the
department of treasury or by the state tax commission under
subdivisions (a) to (d) that were not billed under the general
property tax act, 1893 PA 206, MCL 211.1 to 211.155, or under 1974
PA 198, MCL 207.551 to 207.572, on the summer bill shall be billed
under the general property tax act, 1893 PA 206, MCL 211.1 to
211.155, or under 1974 PA 198, MCL 207.551 to 207.572, on the
winter tax bill.
(g) A person who files a statement under section 7 shall
provide access to the books and records relating to the
description; the date of purchase, lease, or acquisition; and the
purchase price, lease amount, or value of all industrial personal
property and commercial personal property owned by, leased by, or
in the possession of that person or a related entity if requested
by the assessor of the local tax collecting unit, county
equalization department, or department of treasury for the year in
which the statement is filed and the immediately preceding 3 years.
(6) An eligible claimant may appeal an assessment levied under
section 5 or a penalty or rescission under this section to the
state tax commission by filing a petition not later than December
31 in that tax year. The department of treasury may appeal to the
state tax commission by filing a petition for the current calendar
year and 3 immediately preceding calendar years. The state tax
commission shall decide any appeal based on the written petition
and the written recommendation of state tax commission staff and
any other relevant information. The department of treasury or any
eligible claimant may appeal the decision of the state tax
commission to the Michigan tax tribunal.
Sec. 9. (1) The fund board may adopt a resolution to exempt
from the assessment under this act eligible personal property
designated in the resolution as provided in this section and
described in subsection (3)(c) that is owned by, leased to, or in
the possession of an eligible claimant. In the resolution, the fund
board may determine that the eligible personal property designated
in the resolution shall be subject to the alternative state
essential services assessment under the alternative state essential
services assessment act. The resolution shall not be approved if
the state treasurer, or his or her designee to the fund board,
votes against the resolution.
(2) An exemption under this section is effective in the
assessment year immediately succeeding the year in which the fund
board adopts the resolution under subsection (1) and shall continue
in effect for a period specified in the resolution. A copy of the
resolution shall be filed with the state tax commission.
(3) The fund board shall provide for a detailed application,
approval, and compliance process published and available on the
fund's website. The detailed application, approval, and compliance
process shall, at a minimum, contain the following:
(a) An eligible claimant, or a next Michigan development
corporation on behalf of an eligible claimant, may apply for an
exemption to the assessment in a form and manner determined by the
fund board.
(b) After receipt of an application, the fund may enter into
an agreement with an eligible claimant if the eligible claimant
agrees to make certain investments of eligible personal property in
this state.
(c) An eligible claimant shall present a business plan or
demonstrate that a minimum of $25,000,000.00 will be invested in
additional eligible personal property in this state during the
duration of the written agreement.
(d) The written agreement shall provide in a clear and concise
manner all of the conditions imposed, including specific time
frames, on the eligible claimant, to receive the exemption to the
assessment under this section.
(e) The written agreement shall provide that the exemption
under this section is revoked if the eligible claimant fails to
comply with the provisions of the written agreement.
(f) The written agreement shall provide for a repayment
provision on the exemption to the assessment if the eligible
claimant fails to comply with the provisions of the written
agreement.
(g) The written agreement shall provide for an audit provision
that requires the fund to verify that the specific time frames for
the investment have been met.
(4) The fund board shall consider the following criteria to
the extent reasonably applicable to the type of investment proposed
when approving an exemption to the assessment:
(a) Out-of-state competition.
(b) Net-positive return to this state.
(c) Level of investment made by the eligible claimant.
(d) Business diversification.
(e) Reuse of existing facilities.
(f) Near-term job creation or significant job retention as a
result of the investment made in eligible personal property.
(g) Strong links to Michigan suppliers.
(h) Whether the project is in a local unit of government that
contains an eligible distressed area as that term is defined in
section 11 of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1411.
(5) The fund board, or the Michigan economic development
corporation, may charge actual and reasonable fees for costs
associated with administering the activities authorized under this
section.
Sec. 11. (1) Proceeds of the assessment collected under
section 7 shall be credited to the general fund.
(2) Beginning in fiscal year 2014-2015 and each fiscal year
thereafter, the legislature shall appropriate funds in an amount
equal to the necessary expenses incurred by the department of
treasury in implementing this act.
Enacting section 1. The local unit of government essential
services special assessment act, 2012 PA 406, MCL 123.1241 to
123.1247, is repealed.
Enacting section 2. This act does not take effect unless
Senate Bill No. 822 of the 97th Legislature is approved by a
majority of the qualified electors of this state voting on the
question at an election to be held on the August regular election
date in 2014.
Enacting section 3. The legislature declares that stable local
government funding and a tax system that allows individuals, small
businesses, and large businesses to thrive and create jobs in this
state are priorities of state government. The legislature also
declares that all state priorities should be considered in enacting
any legislation that has a fiscal impact and that any costs should
be managed in a fiscally responsible way. In furtherance of these
objectives, the legislature has reduced the state use tax under
section 3 of the use tax act, 1937 PA 94, MCL 205.93, and replaced
the portion reduced with a use tax levied by the local community
stabilization authority on behalf of local units of government
throughout this state to provide more stable funding for local
units of government than exists today. It is the intent of the
legislature to offset the fiscal impact on the state general fund
resulting from the reduction of the state use tax with new revenue
generated by the assessment levied under this act and with new
revenue resulting from the expiration of over $630,000,000.00 in
expiring refundable tax credits that were awarded to individual
businesses under tax laws enacted by past legislatures.
