SENATE BILL No. 989

February 10, 2000, Introduced by Senator EMMONS and referred to the Committee on

Finance.

A bill to amend 1937 PA 94, entitled

"Use tax act,"

by amending section 2 (MCL 205.92), as amended by 1998 PA 366.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 2. 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 or not organized for profit,

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 the plural as well as the singular number,

8 unless the intention to give a more limited meaning is disclosed

9 by the context.

10 (b) "Use" means the exercise of a right or power over

11 tangible personal property incident to the ownership of that

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1 property including transfer of the property in a transaction

2 where possession is given.

3 (c) "Storage" means a keeping or retention of property in

4 this state for any purpose after the property loses its inter-

5 state character.

6 (d) "Seller" means the person from whom a purchase is made

7 and includes every person selling tangible personal property or

8 services for storage, use, or other consumption in this state.

9 If, in the opinion of the department, it is necessary for the

10 efficient administration of this act to regard a salesperson,

11 representative, peddler, or canvasser as the agent of a dealer,

12 distributor, supervisor, or employer under whom the person oper-

13 ates or from whom he or she obtains tangible personal property or

14 services sold by him or her for storage, use, or other consump-

15 tion in this state, irrespective of whether or not he or she is

16 making the sales on his or her own behalf or on behalf of the

17 dealer, distributor, supervisor, or employer, the department may

18 so consider him or her, and may consider the dealer, distributor,

19 supervisor, or employer as the seller for the purpose of this

20 act.

21 (e) "Purchase" means to acquire for a consideration, whether

22 the acquisition is effected by a transfer of title, of posses-

23 sion, or of both, or a license to use or consume; whether the

24 transfer is absolute or conditional, and by whatever means the

25 transfer is effected; and whether consideration is a price or

26 rental in money, or by way of exchange or barter.

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1 (f) "Price" means the aggregate value in money of anything

2 paid or delivered, or promised to be paid or delivered, by a

3 consumer to a seller in the consummation and complete performance

4 of the transaction by which tangible personal property or serv-

5 ices are purchased or rented for storage, use, or other consump-

6 tion in this state, without a deduction for the cost of the prop-

7 erty sold, cost of materials used, labor or service cost, inter-

8 est or discount paid, or any other expense. The price of tangi-

9 ble personal property, for affixation to real estate, withdrawn

10 by a construction contractor from inventory available for sale to

11 others or made available by publication or price list as a fin-

12 ished product for sale to others is the finished goods inventory

13 value of the property. If a construction contractor manufac-

14 tures, fabricates, or assembles tangible personal property before

15 affixing it to real estate, the price of the property is equal to

16 the sum of the materials cost of the property and the cost of

17 labor to manufacture, fabricate, or assemble the property but

18 does not include the cost of labor to cut, bend, assemble, or

19 attach property at the site of affixation to real estate. For

20 the purposes of the preceding sentence, for property withdrawn by

21 a construction contractor from inventory available for sale to

22 others or made available by publication or price list as a fin-

23 ished product for sale to others, the materials cost of the prop-

24 erty means the finished goods inventory value of the property.

25 For purposes of this subdivision, "manufacture" means to convert

26 or condition tangible personal property by changing the form,

27 composition, quality, combination, or character of the property

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1 and "fabricate" means to modify or prepare tangible personal

2 property for affixation or assembly. The price of a motor vehi-

3 cle, trailer coach, or titled watercraft is the full retail price

4 of the motor vehicle, trailer coach, or titled watercraft being

5 purchased. The tax collected by the seller from the consumer or

6 lessee under this act is not considered part of the price, but is

7 a tax collection for the benefit of the state, and a person other

8 than the state shall not derive a benefit from the collection or

9 payment of this tax. A price does not include an assessment

10 imposed under the convention and tourism marketing act, 1980

11 PA 383, MCL 141.881 to 141.889, 1974 PA 263, MCL 141.861 to

12 141.867, the state convention facility development act, 1985

13 PA 106, MCL 207.621 to 207.640, the regional tourism marketing

14 act, 1989 PA 244, MCL 141.891 to 141.900, 1991 PA 180,

15 MCL 207.751 to 207.759, or the community convention or tourism

16 marketing act, 1980 PA 395, MCL 141.871 to 141.880, that was

17 added to charges for rooms or lodging otherwise subject, pursuant

18 to section 3a, to tax under this act. Price does not include

19 specific charges for technical support or for adapting or modify-

20 ing prewritten, standard, or canned computer software programs to

21 a purchaser's needs or equipment if the charges are separately

22 stated and identified. The tax imposed under this act shall not

23 be computed or collected on rental receipts if the tangible per-

24 sonal property rented or leased has previously been subjected to

25 a Michigan sales or use tax when purchased by the lessor.

26 (g) "Consumer" means the person who has purchased tangible

27 personal property or services for storage, use, or other

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1 consumption in this state and includes a person acquiring

2 tangible personal property if engaged in the business of con-

3 structing, altering, repairing, or improving the real estate of

4 others.

5 (h) "Business" means all activities engaged in by a person

6 or caused to be engaged in by a person with the object of gain,

7 benefit, or advantage, either direct or indirect.

8 (i) "Department" means the revenue division of the depart-

9 ment of treasury.

10 (j) "Tax" includes all taxes, interest, or penalties levied

11 under this act.

12 (k) "Tangible personal property" includes computer software

13 offered for general use by the public or software modified or

14 adapted to the user's needs or equipment by the seller, only if

15 the software is available from a seller of software on an as is

16 basis or as an end product without modification or adaptation.

17 Tangible personal property does not include computer software

18 originally designed for the exclusive use and special needs of

19 the purchaser. As used in this subdivision, "computer software"

20 means a set of statements or instructions that when incorporated

21 in a machine usable medium is capable of causing a machine or

22 device having information processing capabilities to indicate,

23 perform, or achieve a particular function, task, or result.

24 (l) "TANGIBLE PERSONAL PROPERTY" BEGINNING SEPTEMBER 20,

25 1999, INCLUDES ELECTRICITY, NATURAL OR ARTIFICIAL GAS, OR STEAM

26 AND ALSO THE TRANSMISSION AND DISTRIBUTION OF ELECTRICITY,

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1 WHETHER THE ELECTRICITY IS PURCHASED FROM THE DELIVERING UTILITY

2 OR FROM ANOTHER PROVIDER.

3 (M) (l) "Tangible personal property" does not include a

4 commercial advertising element if the commercial advertising ele-

5 ment is used to create or develop a print, radio, television, or

6 other advertisement, the commercial advertising element is dis-

7 carded or returned to the provider after the advertising message

8 is completed, and the commercial advertising element is custom

9 developed by the provider for the purchaser. As used in this

10 subdivision, "commercial advertising element" means a negative or

11 positive photographic image, an audiotape or videotape master, a

12 layout, a manuscript, writing of copy, a design, artwork, an

13 illustration, retouching, and mechanical or keyline

14 instructions. "Tangible personal property" includes black and

15 white or full color process separation elements, an audiotape

16 reproduction, or a videotape reproduction.

17 (N) (m) "Textiles" means goods that are made of or incor-

18 porate woven or nonwoven fabric, including, but not limited to,

19 clothing, shoes, hats, gloves, handkerchiefs, curtains, towels,

20 sheets, pillows, pillowcases, tablecloths, napkins, aprons,

21 linens, floor mops, floor mats, and thread. Textiles also

22 include materials used to repair or construct textiles, or other

23 goods used in the rental, sale, or cleaning of textiles.

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