HB-5198, As Passed House, September 18, 2007

SUBSTITUTE FOR

HOUSE BILL NO. 5198

     A bill to amend 1937 PA 94, entitled

"Use tax act,"

by amending the title and sections 3a and 5 (MCL 205.93a and

205.95), sections 3a and 5 as amended by 2004 PA 172, and by adding

section 4z.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

     An act to provide for the levy, assessment, and collection of

a specific excise tax on the storage, use, or consumption in this

state of tangible personal property and certain services; to

appropriate the proceeds thereof; and of that tax; to prescribe

penalties; for violations of the provisions of this act and to make

appropriations.

     Sec. 3a. (1) The use or consumption of the following is taxed

under this act in the same manner as tangible personal property is

taxed under this act:

     (a) Except as provided in section 3b, intrastate telephone,

telegraph, leased wire, and other similar communications, including

local telephone exchange and long distance telephone service that

both originates and terminates in Michigan this state, and

telegraph, private line, and teletypewriter service between places

in Michigan this state, but excluding telephone service by coin-

operated installations, switchboards, concentrator-identifiers,

interoffice circuitry and their accessories for telephone answering

service, and directory advertising proceeds.

     (b) Rooms or lodging furnished by hotelkeepers, motel

operators, and other persons furnishing accommodations that are

available to the public on the basis of a commercial and business

enterprise, irrespective of whether or not membership is required

for use of the accommodations, except rooms and lodging rented for

a continuous period of more than 1 month. As used in this act,

"hotel" or "motel" means a building or group of buildings in which

the public may obtain accommodations for a consideration,

including, without limitation, such establishments as inns, motels,

tourist homes, tourist houses or courts, lodging houses, rooming

houses, nudist camps, apartment hotels, resort lodges and cabins,

camps operated by other than nonprofit organizations but not

including those licensed under 1973 PA 116, MCL 722.111 to 722.128,

and any other building or group of buildings in which

accommodations are available to the public, except accommodations

rented for a continuous period of more than 1 month and

accommodations furnished by hospitals or nursing homes.

     (c) Except as provided in section 3b, interstate telephone

communications that either originate or terminate in this state and

for which the charge for the service is billed to a Michigan

service address in this state or phone number by the provider

either within or outside this state including calls between this

state and any place within or without the United States of America

outside of this state. However, if the tax under this act is levied

at a rate of 6%, this subdivision does not apply to a wide area

telecommunication service or a similar type service, an 800 prefix

service or similar type service, an interstate private network and

related usage charges, or an international call either inbound or

outbound.

     (d) The laundering or cleaning of textiles under a sale,

rental, or service agreement with a term of at least 5 days. This

subdivision does not apply to the laundering or cleaning of

textiles used by a restaurant or retail sales business. As used in

this subdivision, "restaurant" means a food service establishment

defined and licensed under the food law of 2000, 2000 PA 92, MCL

289.1101 to 289.8111.

     (e) The transmission and distribution of electricity, whether

the electricity is purchased from the delivering utility or from

another provider, if the sale is made to the consumer or user of

the electricity for consumption or use rather than for resale.

     (f) For a manufacturer who affixes its product to real estate

and maintains an inventory of its product that is available for

sale to others by publication or price list, the direct production

costs and indirect production costs of the product affixed to the

real estate that are incident to and necessary for production or

manufacturing operations or processes, as defined by the

department.

     (g) For a manufacturer who affixes its product to real estate

but does not maintain an inventory of its product available for

sale to others or make its product available for sale to others by

publication or price list, the sum of the materials cost of the

property and the cost of labor to manufacture, fabricate, or

assemble the property, but does not include the cost of labor to

cut, bend, assemble, or attach the property at the site for

affixation to real estate.

     (2) If charges for intrastate telecommunications services or

telecommunications services between this state and another state

and other billed services not subject to the tax under this act are

aggregated with and not separately stated from charges for

telecommunications services that are subject to the tax under this

act, the nontaxable telecommunications services and other

nontaxable billed services are subject to the tax under this act

unless the service provider can reasonably identify charges for

telecommunications services not subject to the tax under this act

from its books and records that are kept in the regular course of

business.

     (3) If charges for intrastate telecommunications services or

telecommunications services between this state and another state

and other billed services not subject to the tax under this act are

aggregated with and not separately stated from telecommunications

services that are subject to the tax under this act, a customer may

not rely upon the nontaxability of those telecommunications

services and other billed services unless the customer's service

provider separately states the charges for nontaxable

telecommunications services and other nontaxable billed services

from taxable telecommunications services or the service provider

elects, after receiving a written request from the customer in the

form required by the provider, to provide verifiable data based

upon the service provider's books and records that are kept in the

regular course of business that reasonably identify the nontaxable

services.

     (4) There is appropriated to the department of treasury for

the 2006-2007 state fiscal year the sum of $1.00 to implement the

requirements of the amendatory act that added this subsection.

(5) (4) As used in this section:

     (a) "Fabricate" means to modify or prepare tangible personal

property for affixation or assembly.

     (b) "Manufacture" means to convert or condition tangible

personal property by changing the form, composition, quality,

combination, or character of the property.

     (c) "Manufacturer" means a person who manufactures,

fabricates, or assembles tangible personal property.

     Sec. 4z. The tax under this act does not apply to the sale of

tangible personal property or services to a qualified disabled

veteran. As used in this section:

     (a) "Qualified disabled veteran" means a veteran with a

service-connected disability.

     (b) "Service-connected disability" means a disability incurred

or aggravated in the line of duty in the active military, naval, or

air service as described in 38 USC 101(16).

     (c) "Veteran" means a person who served in the active

military, naval, or air service and who was discharged or released

from his or her service under conditions other than dishonorable.

     Sec. 5. (1) Except as otherwise provided in this subsection or

subsection (5), a person engaged in the business of selling

tangible personal property for storage, use, or other consumption

in this state shall register with the department and give the name

and address of each agent operating in this state, the location of

all distribution or sales houses or offices or other places of

business in this state, and any other information that the

department requires relevant to the enforcement of this act.

However, a seller holding a sales tax license obtained under the

general sales tax act, 1933 PA 167, MCL 205.51 to 205.78, is not

required to separately register with the department under this act.

Every seller shall source sales in accordance with section 20 and

collect the tax imposed by this act from the consumer.

     (2) The corporation, securities, and land development bureau

of the department of consumer and industry services labor and

economic growth shall not issue to any foreign corporation engaged

in the business of selling tangible personal property a certificate

of authority to do business in this state or approve and file the

proposed articles of incorporation submitted to it by any domestic

corporation authorizing or permitting that corporation to conduct

any business of selling tangible personal property unless the

corporation submits with the application for the certificate of

authority or proposed articles of incorporation an application for

registration of the corporation under this act or an application

for a sales tax license under the general sales tax act, 1933 PA

167, MCL 205.51 to 205.78. The application shall be transmitted to

the department by the corporation, securities, and land development

bureau.

     (3) A domestic corporation or a foreign corporation authorized

to transact business in this state that submits a certificate of

dissolution or requests a certificate of withdrawal from this state

shall request a certificate from the department stating that taxes

are not due under section 27a of 1941 PA 122, MCL 205.27a, not more

than 60 days after submitting the certificate of dissolution or

requesting the certificate of withdrawal. A corporation that does

not request a certificate stating that taxes are not due is subject

to the same penalties under section 24 of 1941 PA 122, MCL 205.24,

that a taxpayer would be subject to for failure to file a return.

     (4) A lessor may elect to pay use tax on receipts from the

rental or lease of the tangible personal property in lieu of

payment of sales or use tax on the full cost of the property at the

time it is acquired. For tax years that begin after December 31,

2001, in order to make a valid election under this subsection, a

lessor of tangible personal property that is an aircraft shall

obtain a use tax registration by the earlier of the date set for

the first payment of use tax under the lease or rental agreement or

90 days after the lessor first brings the aircraft into this state.

     (5) A seller registered under the streamlined sales and use

tax agreement who is not otherwise subject to the tax under this

act is not required to register under this section because of the

registration under the streamlined sales and use tax agreement.

     Enacting section 1. This amendatory act takes effect October

1, 2007.

     Enacting section 2. This amendatory act does not take effect

unless House Bill No. 5194 of the 94th Legislature is enacted into

law.