June 16, 2005, Introduced by Reps. Steil, Sheen and Drolet and referred to the Committee on Tax Policy.
A bill to amend 1975 PA 228, entitled
"Single business tax act,"
(MCL 208.1 to 208.145) by adding section 35d.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 35d. (1) For tax years that begin on or after January 1,
2006, a taxpayer that is an industrial processor or a research and
development company may claim a credit equal to 35% of the property
taxes paid in the tax year by the taxpayer on tangible personal
property used for industrial processing, including research or
experimental activities. Except as otherwise provided in subsection
(9)(a), tangible personal property used by an industrial processor
or research and development company for industrial processing
includes property described in section 4t(4) of the general sales
tax act, 1933 PA 167, MCL 205.54t, and excludes property described
in section 4t(5) of the general sales tax act, 1933 PA 167, MCL
205.54t.
(2) Personal property taxes paid on any tangible personal
property, including property used for industrial processing or
research or experimental activities, that has as its primary
purpose the support of sales at retail of tangible personal
property, other than sales to employees, or other commercial
activities shall not be used in the calculation of the credit under
subsections (4) to (6).
(3) To qualify for the credit under this section for an item
of tangible personal property, a taxpayer that is otherwise
eligible to claim the credit allowed under this section shall file
within the time required the statement of personal property
described in section 19 of the general property tax act, 1893 PA
206, MCL 211.19, for that item of tangible personal property used
for industrial processing or for a research or experimental
activity for the location at which the tangible personal property
that is the basis of the credit allowed under this section is
located. Taxpayers shall claim and calculate the credit in the
manner prescribed in subsections (4) to (6).
(4) For a taxpayer that is an industrial processor whose only
significant business activity is industrial processing and
activities that support its industrial processing, the amount of
personal property taxes used to calculate the credit allowed under
subsection (1) shall be 90% of the personal property taxes paid and
reported on personal property by the industrial processor.
(5) A taxpayer that is an industrial processor that is not
subject to subsection (4) or (6) shall complete and file within the
time required by section 19 of the general property tax act, 1893
PA 206, MCL 211.19, statements of personal property separately for
both the property used for industrial processing and property used
for other purposes and shall claim the credit as provided in
subsection (1) on personal property used for industrial processing
and separately reported as required by this subsection.
(6) A taxpayer that is a research and development company
shall complete and file within the time required the statement of
personal property described in section 19 of the general property
tax act, 1893 PA 206, MCL 211.19, separately for the property used
for research or experimental activities and the property used for
other purposes and shall calculate the credit allowed under
subsection (1) based on taxes paid for research or experimental
property and separately reported as required in this subsection.
(7) If the credit allowed under this section exceeds the tax
liability of the taxpayer for the tax year, the excess shall be
refunded to the taxpayer. The state treasurer shall establish a
reserve account in the department to fund and provide for payment
of the amount of refunds for credits under this section that are
attributable to the fiscal years ending in the tax years for which
credits are claimed.
(8) An affiliated group as defined in this act, a controlled
group of corporations as defined in section 1563 of the internal
revenue code and further described in 26 CFR 1.414(b)-1 and
1.414(c)-1 to 1.414(c)-5, or an entity under common control as
defined by the internal revenue code shall not claim the credit
allowed by this section as a research and development company
unless the business activities of the entities are consolidated for
the purpose of determining whether the taxpayer is a research and
development company. For purposes of this subsection, business
activities include all activities within and outside of this state.
(9) As used in this section:
(a) "Industrial processing" means that term as defined in
section 4t(7)(a) of the general sales tax act, 1933 PA 167, MCL
205.54t, and described in section 4t(3) of the general sales tax
act, 1933 PA 167, MCL 205.54t, and excludes those activities
described in section 4t(6) of the general sales tax act, 1933 PA
167, MCL 205.54t, except that for purposes of this section,
industrial processing includes tangible personal property used for
the receiving and storage of materials purchased by an industrial
processor or used at a fixed location for the preservation,
maintenance, warehousing, or shipping of a finished good.
(b) "Industrial processor" means that term as defined in
section 4t(7)(b) of the general sales tax act, 1933 PA 167, MCL
205.54t, but does not include a public utility.
(c) "Property taxes" means a tax levied under any of the
following acts:
(i) The general property tax act, 1893 PA 206, MCL 211.1 to
211.157.
(ii) 1974 PA 198, MCL 207.551 to 207.572.
(iii) The obsolete property rehabilitation act, 2000 PA 146, MCL
125.2781 to 125.2797.
(d) "Research or experimental activities" means that term as
defined in section 4t(7)(e) of the general sales tax act, 1933 PA
167, MCL 205.54t.
(e) "Research and development company" means a taxpayer that
is exclusively performing research or experimental activities.