HB-5125, As Passed House, October 11, 2007

SUBSTITUTE FOR

HOUSE BILL NO. 5125

     A bill to amend 2007 PA 36, entitled

"Michigan business tax act,"

by amending section 433 (MCL 208.1433).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 433. (1) A taxpayer that is a business located and

conducting business activity within a renaissance zone may claim a

credit against the tax imposed by this act for the tax year to the

extent and for the duration provided pursuant to the Michigan

renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696, equal

to the lesser of the following:

     (a) The tax liability attributable to business activity

conducted within a renaissance zone in the tax year.

     (b) Ten percent of adjusted services performed in a designated

renaissance zone.

     (c) For a taxpayer located and conducting business activity in

a renaissance zone before December 31, 2002, the product of the

following:

     (i) The credit claimed under section 39b of former 1975 PA 228

for the tax year ending in 2007.

     (ii) The ratio of the taxpayer's payroll in this state in the

tax year divided by the taxpayer's payroll in this state in its tax

year ending in 2007 under former 1975 PA 228.

     (iii) The ratio of the taxpayer's renaissance zone business

activity factor for the tax year divided by the taxpayer's

renaissance zone business activity factor for its tax year ending

in 2007 under section 39b of former 1975 PA 228.

     (2) Any portion of the taxpayer's tax liability that is

attributable to illegal activity conducted in the renaissance zone

shall not be used to calculate a credit under this section.

     (3) The credit allowed under this section continues through

the tax year in which the renaissance zone designation expires.

     (4) If the amount of the credit allowed under this section

exceeds the tax liability of the taxpayer for the tax year, that

portion of the credit that exceeds the tax liability shall not be

refunded.

     (5) A taxpayer that claims a credit under this section shall

not employ, pay a speaker fee to, or provide any remuneration,

compensation, or consideration to any person employed by the state,

the state administrative board created in 1921 PA 2, MCL 17.1 to

17.3, or the renaissance zone review board created in 1996 PA 376,

MCL 125.2681 to 125.2696, whose employment relates or related in

any way to the authorization or enforcement of the credit allowed

under this section for any year in which the taxpayer claims a

credit under this section and for the 3 years after the last year

that a credit is claimed.

     (6) To be eligible for the credit allowed under this section,

an otherwise qualified taxpayer shall file an annual return under

this act in a format determined by the department.

     (7) Any portion of the taxpayer's tax liability that is

attributable to business activity related to the operation of a

casino, and business activity that is associated or affiliated with

the operation of a casino, including, but not limited to, the

operation of a parking lot, hotel, motel, or retail store, shall

not be used to calculate a credit under this section.

     (8) For purposes of this section, taxpayer includes a person

subject to the tax imposed under chapters 2A and 2B.

(9) (8) As used in this section:

     (a) "Adjusted services performed in a designated renaissance

zone" means either of the following:

     (i) Except as provided in subparagraph (ii), the sum of the

taxpayer's payroll for services performed in a designated

renaissance zone plus an amount equal to the amount deducted in

arriving at federal taxable income for the tax year for

depreciation, amortization, or immediate or accelerated write-off

for tangible property exempt under section 7ff of the general

property tax act, 1893 PA 206, MCL 211.7ff, in the tax year or, for

new property, in the immediately following tax year.

     (ii) For a partnership, limited liability company, S

corporation, or individual, the amount determined under

subparagraph (i) plus the product of the following as related to the

taxpayer if greater than zero:

     (A) Business income.

     (B) The ratio of the taxpayer's total sales in this state

during the tax year divided by the taxpayer's total sales

everywhere during the tax year.

     (C) The renaissance zone business activity factor.

     (b) "Casino" means a casino regulated by this state pursuant

to the Michigan gaming control and revenue act, the Initiated Law

of 1996 1996 IL 1, MCL 432.201 to 432.226.

     (c) "New property" means property that has not been subject

to, or exempt from, the collection of taxes under the general

property tax act, 1893 PA 206, MCL 211.1 to 211.157, and has not

been subject to, or exempt from, ad valorem property taxes levied

in another state, except that receiving an exemption as inventory

property does not disqualify property.

     (d) "Payroll" means total salaries and wages before deducting

any personal or dependency exemptions.

     (e) "Renaissance zone" means that term as defined in the

Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to

125.2696.

     (f) "Renaissance zone business activity factor" means a

fraction, the numerator of which is the ratio of the average value

of the taxpayer's property located in a designated renaissance zone

to the average value of the taxpayer's property in this state plus

the ratio of the taxpayer's payroll for services performed in a

designated renaissance zone to all of the taxpayer's payroll in

this state and the denominator of which is 2.

     (g) "Tax liability attributable to business activity conducted

within a renaissance zone" means the taxpayer's tax liability

multiplied by the renaissance zone business activity factor.

     Enacting section 1. This amendatory act takes effect January

1, 2008.

     Enacting section 2. This amendatory act does not take effect

unless House Bill No. 5126 of the 94th Legislature is enacted into

law.