HOUSE BILL No. 5475 March 7, 2000, Introduced by Reps. Gosselin, Vander Roest, Ehardt, Julian, Gilbert, Bishop, Voorhees and Sanborn and referred to the Committee on Tax Policy. A bill to amend 1933 PA 167, entitled "General sales tax act," by amending section 1 (MCL 205.51), as amended by 1999 PA 116. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. (1) As used in this act: 2 (a) "Person" means an individual, firm, partnership, joint 3 venture, association, social club, fraternal organization, munic- 4 ipal or private corporation whether organized for profit or not, 5 company, estate, trust, receiver, trustee, syndicate, the United 6 States, this state, county, or any other group or combination 7 acting as a unit, and includes the plural as well as the singular 8 number, unless the intention to give a more limited meaning is 9 disclosed by the context. 10 (b) "Sale at retail" means a transaction by which the 11 ownership of tangible personal property is transferred for 05781'00 CSC 2 1 consideration, if the transfer is made in the ordinary course of 2 the transferor's business and is made to the transferee for con- 3 sumption or use, or for any purpose other than for resale, or for 4 lease, if the rental receipts are taxable under the use tax act, 5 1937 PA 94, MCL 205.91 to 205.111, in the form of tangible per- 6 sonal property to a person licensed under this act, or for demon- 7 stration purposes or lending or leasing to a public or parochial 8 school offering a course in automobile driving. However, a vehi- 9 cle purchased by the school shall be certified for driver educa- 10 tion and shall not be reassigned for personal use of the school's 11 administrative personnel. For a dealer selling a new car or 12 truck, the exemption for demonstration purposes shall be deter- 13 mined by the number of new cars and trucks sold during the cur- 14 rent calendar year or the immediately preceding year without 15 regard to specific make or style in accordance with the following 16 schedule of 0 to 25, 2 units; 26 to 100, 7 units; 101 to 500, 20 17 units; 501 or more, 25 units; but not to exceed 25 cars and 18 trucks in a calendar year for demonstration purposes. 19 (c) "Sale at retail" includes a conditional sale, install- 20 ment lease sale, or other transfer of property if title is 21 retained as security for the purchase price but is intended to be 22 transferred later. 23 (d) "Sale at retail" includes the sale of electricity, natu- 24 ral or artificial gas, or steam if the sale is made to the con- 25 sumer or user for consumption or use rather than for resale. 26 Sale at retail also includes the sale of a prepaid telephone 27 calling card or a prepaid authorization number for telephone use, 05781'00 3 1 rather than for resale. Sale at retail also includes the 2 reauthorization of a prepaid telephone calling card or a prepaid 3 authorization number. Sale at retail does not include the sale 4 of water through water mains or the sale of water delivered in 5 bulk tanks in quantities of not less than 500 gallons. 6 (e) "Sale at retail" includes computer software offered for 7 general sale to the public or software modified or adapted to the 8 user's needs or equipment by the seller, only if the software is 9 available for sale from a seller of software on an as is basis or 10 as an end product without modification or adaptation. Sale at 11 retail does not include specific charges for technical support or 12 for adapting or modifying prewritten, standard, or canned com- 13 puter software programs to a purchaser's needs or equipment if 14 those charges are separately stated and identified. Sale at 15 retail does not include computer software originally designed for 16 the exclusive use and special needs of the purchaser. As used in 17 this subdivision, "computer software" means a set of statements 18 or instructions that when incorporated in a machine usable medium 19 is capable of causing a machine or device having information pro- 20 cessing capabilities to indicate, perform, or achieve a particu- 21 lar function, task, or result. 22 (f) "Sale at retail" includes the sale of tangible personal 23 property by an industrial laundry under a sale, rental, or serv- 24 ice agreement with a term of at least 5 days. 25 (g) "Sale at retail" does not include an isolated transac- 26 tion by a person not licensed or required to be licensed under 05781'00 4 1 this act, in which tangible personal property is offered for 2 sale, sold, transferred, and delivered by the owner. 3 (h) "Sale at retail" does not include a commercial advertis- 4 ing element if the commercial advertising element is used to 5 create or develop a print, radio, television, or other advertise- 6 ment, the commercial advertising element is discarded or returned 7 to the provider after the advertising message is completed, and 8 the commercial advertising element is custom developed by the 9 provider for the purchaser. As used in this subdivision, 10 "commercial advertising element" means a negative or positive 11 photographic image, an audiotape or videotape master, a layout, a 12 manuscript, writing of copy, a design, artwork, an illustration, 13 retouching, and mechanical or keyline instructions. Sale at 14 retail includes black and white or full color process separation 15 elements, an audiotape reproduction, or a videotape 16 reproduction. 17 (i) "Gross proceeds" means the amount received in money, 18 credits, subsidies, property, or other money's worth in consider- 19 ation of a sale at retail within this state, without a deduction 20 for the cost of the property sold, the cost of material used, the 21 cost of labor or service purchased, an amount paid for interest 22 or a discount, a tax paid on cigarettes or tobacco products at 23 the time of purchase, a tax paid on beer or liquor at the time of 24 purchase, or other expenses BUT WITH A DEDUCTION FOR THE FEDERAL 25 ROAD TAX PAID ON FUEL OIL AT THE TIME OF PURCHASE. Also, a 26 deduction is not allowed for losses. Gross proceeds do not 27 include an amount received or billed by the taxpayer for 05781'00 5 1 remittance to the employee as a gratuity or tip, if the gratuity 2 or tip is separately identified and itemized on the guest check 3 or billed to the customer. In a taxable sale at retail of a 4 motor vehicle, if another motor vehicle is used as part payment 5 of the purchase price, the value of the motor vehicle used as 6 part payment of the purchase price shall be that value agreed to 7 by the parties to the sale as evidenced by the signed statement 8 executed pursuant to section 251 of the Michigan vehicle code, 9 1949 PA 300, MCL 257.251. A credit or refund for returned goods 10 or a refund less an allowance for use made for a motor vehicle 11 returned under 1986 PA 87, MCL 257.1401 to 257.1410, as certified 12 by the manufacturer on a form provided by the department of trea- 13 sury, may be deducted. 14 (j) "Business" includes an activity engaged in by a person 15 or caused to be engaged in by that person with the object of 16 gain, benefit, or advantage, either direct or indirect. 17 (k) "Tax year" or "taxable year" means the fiscal year of 18 the state or the taxpayer's fiscal year if permission is obtained 19 by the taxpayer from the department to use the taxpayer's fiscal 20 year as the tax period instead. 21 (l) "Department" means the revenue division of the depart- 22 ment of treasury. 23 (m) "Taxpayer" means a person subject to a tax under this 24 act. 25 (n) "Tax" includes a tax, interest, or penalty levied under 26 this act. 05781'00 6 1 (o) "Textiles" means goods that are made of or incorporate 2 woven or nonwoven fabric, including, but not limited to, 3 clothing, shoes, hats, gloves, handkerchiefs, curtains, towels, 4 sheets, pillows, pillow cases, tablecloths, napkins, aprons, 5 linens, floor mops, floor mats, and thread. Textiles also 6 include materials used to repair or construct textiles, or other 7 goods used in the rental, sale, or cleaning of textiles. 8 (2) If the department determines that it is necessary for 9 the efficient administration of this act to regard an unlicensed 10 person, including a salesperson, representative, peddler, or can- 11 vasser as the agent of the dealer, distributor, supervisor, or 12 employer under whom the unlicensed person operates or from whom 13 the unlicensed person obtains the tangible personal property sold 14 by the unlicensed person, irrespective of whether the unlicensed 15 person is making sales on the unlicensed person's own behalf or 16 on behalf of the dealer, distributor, supervisor, or employer, 17 the department may so regard the unlicensed person and may regard 18 the dealer, distributor, supervisor, or employer as making sales 19 at retail at the retail price for the purposes of this act. 05781'00 Final page. CSC