Michigan-2013-SB0829-Engrossed

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.

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.

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.

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.

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.

(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