HB-6611, As Passed House, December 4, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 6611

A bill to amend 2007 PA 36, entitled

"Michigan business tax act,"

(MCL 208.1101 to 208.1601) by adding section 434.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 434. (1) The Michigan economic growth authority is

authorized to enter into agreements to provide tax credits

available under this section to stimulate the domestic

commercialization and affordability of high-power energy batteries,

the lack of which today is limiting hybrid, plug-in hybrid battery-

electric, and fuel cell vehicle applications, and to help insure

that job growth from battery technology and commercial production

develops alongside advanced vehicle technology development and

renewable power generation initiatives both within and outside the

transportation sector.

House Bill No. 6611 (H-2) as amended December 4, 2008

(2) Subject to the limitations provided under this section,

for tax years that begin on or after January 1, 2010 and end before

January 1, 2015, a taxpayer that has entered into an agreement with

the Michigan economic growth authority that provides that the

taxpayer will manufacture plug-in traction battery packs in this

state may claim a credit against the tax imposed by this act for

the manufacture of those plug-in traction battery packs as provided

in this section. The Michigan economic growth authority may enter

into more than 1 agreement under this section. However, the total

number of plug-in traction battery packs eligible for all credits

under all agreements allowed under this section shall not exceed

the number of plug-in traction battery packs eligible for a credit

as provided in this section. A taxpayer shall not claim a credit

under this section for more than 3 years. The total of all credits

allowed under this section shall be as follows:

(a) For tax years beginning after December 31, 2010 and ending

before January 1, 2012, $500.00 for an equivalent of 4 kilowatt

hours of battery capacity plus $125.00 for each kilowatt hour of

battery capacity in excess of 4 kilowatt hours of battery capacity

not to exceed $2,000.00 for each plug-in traction battery pack. The

total number of traction battery packs shall not exceed 20,000

plug-in traction battery pack units under this subdivision.

(b) For tax years beginning after December 31, 2011 and ending

before January 1, 2013, $375.00 for an equivalent of 4 kilowatt

hours of battery capacity plus $93.75 for each kilowatt hour of

battery capacity [ ] in excess of 4 kilowatt hours of battery

capacity not to exceed $1,500.00 for each plug-in traction battery

pack. The total number of traction battery packs shall not exceed

40,000 plug-in traction battery pack units under this subdivision.

A single taxpayer shall not claim a credit for more than 25,000

plug-in traction battery pack units under this subdivision. The

number of battery pack units not used for credits under this

subdivision may be added to the total number of battery pack units

for which a credit is available under this subdivision, and the

credits for those units shall be calculated as described in this

subdivision and shall be in addition to the maximums allowed for

any 1 taxpayer under this section.

before January 1, 2014, $375.00 for an equivalent of 4 kilowatt

hours of battery capacity plus $93.75 for each kilowatt hour of

battery capacity in excess of 4 kilowatt hours not to exceed

$1,500.00 for each plug-in traction battery pack. The total number

of traction battery packs shall not exceed 40,000 plug-in traction

battery pack units under this subdivision. A single taxpayer shall

not claim a credit for more than 25,000 plug-in traction battery

pack units under this subdivision.

(d) For tax years beginning after December 31, 2013 and ending

before January 1, 2015, $375.00 for an equivalent of 4 kilowatt

hours of battery capacity plus $93.75 for each kilowatt hour of

battery capacity in excess of 4 kilowatt hours not to exceed

$1,500.00 for each plug-in traction battery pack. The total number

of traction battery packs shall not exceed 25,000 plug-in traction

battery pack units under this subdivision.

(3) For tax years that begin on or after January 1, 2012 and

House Bill No. 6611 (H-2) as amended December 4, 2008

subject to the limitations of this subsection, an authorized

business may claim a credit of up to 75% of the qualified expenses

for vehicle engineering in this state to support battery

integration, prototyping, and launch expenses incurred for tax

years that begin on or after January 1, 2009 and end before January

1, 2014. [ ]

this credit shall not exceed $15,000,000.00 per year as agreed to

and certified by the Michigan economic growth authority. Any

expenses for which a credit is claimed under this subsection shall

not be included in costs and expenses used for credits available

under sections 403 and 405 of this act. The Michigan economic

growth authority may not authorize more than $90,000,000.00 in

total credits to all authorized businesses under this subsection.

To claim the credit under this subsection, a taxpayer must

manufacture a cumulative total of at least 1,000 motor vehicles

that would qualify for the credit under section 30D of the internal

revenue code and the credit shall be available to the taxpayer only

for the following percentages of the total authorized annual

expenses:

(a) In a tax year in which the taxpayer has manufactured a

cumulative total of at least 1,000 motor vehicles [ ] and

fewer than 2,000 motor vehicles that qualify for the credit under

section 30D of the internal revenue code, 20%.

(b) In a tax year in which the taxpayer has manufactured a

cumulative total of at least 2,000 motor vehicles but fewer than

3,000 motor vehicles [ ] that qualify for the credit

under section 30D of the internal revenue code, 40%.

House Bill No. 6611 (H-2) as amended December 4, 2008

cumulative total of at least 3,000 motor vehicles [ ] but

fewer than 4,000 motor vehicles that qualify for the credit under

section 30D of the internal revenue code, 60%.

(d) In a tax year in which the taxpayer has manufactured a

cumulative total of at least 4,000 motor vehicles [ ] but

fewer than 5,000 motor vehicles that qualify for the credit under

section 30D of the internal revenue code, 80%.

(e) In a tax year in which the taxpayer has manufactured a

cumulative total of at least 5,000 motor vehicles [ ]

that qualify for the credit under section 30D of the internal

revenue code, 100%.

(4) For tax years that begin on or after January 1, 2012 and

end before January 1, 2015, a taxpayer that has entered into an

agreement with the Michigan economic growth authority that provides

that the taxpayer will engage in engineering in this state for

advanced automotive battery technologies in this state may claim a

credit under this subsection. The Michigan economic growth

authority may enter into not more than 1 agreement for advanced

battery engineering credits, and the total value of credits

available under this subsection is limited to $30,000,000.00. The

credits under this subsection shall be allowed as follows:

(a) Up to 75% of the annual and total dollar amount of the

qualified advance battery engineering expenses of an authorized

business incurred during tax years beginning on or after January 1,

2009 and ending before January 1, [2014]. The taxpayer must submit to

the Michigan economic growth authority an affidavit certifying the

amount of qualified advanced battery engineering expenses for each

year for which the credit is accrued.

(b) Notwithstanding any other provision of this section, a

taxpayer may claim no more than $10,000,000.00 in credits under

this subsection in any tax year.

allowed if the taxpayer claims credits under subsection (2) for

battery pack assembly for the tax year. Notwithstanding this

limitation, the credits available under this subsection are in

addition to any other incentives which may be authorized under the

Michigan economic growth authority act, 1995 PA 24, MCL 207.801 to

207.810, for other related or unrelated projects including the

vehicle research and development expenses authorized under

subsection (3). Any expenses for which a credit is claimed under

this subsection shall not be included in costs and expenses used

for credits available under sections 403 and 405.

(5) A taxpayer that has entered into an agreement with the

Michigan economic growth authority may claim a credit equal to 50%

of the capital investment expenses for any tax year for the

construction of an integrative cell manufacturing facility that

includes anode and cathode manufacturing and cell assembly. Not

more than 2 agreements may be entered into under this section and

the maximum allowable credit under any single agreement shall not

exceed $100,000,000.00. Not more than 25% of the maximum allowable

amount of the credit may be claimed by the taxpayer in a single tax

year, and no credit shall be claimed in a tax year beginning before

2012. However, tax credits may be based on expenses incurred in

House Bill No. 6611 (H-2) as amended December 4, 2008

prior years.

(6) The Michigan economic growth authority shall appoint a

review board to advise it about decisions concerning credits under

subsection (5). The review board shall be composed of not fewer

than 2 representatives from automotive manufacturers and 2

independent scientists or technologists. Additional experts may be

sought on an ad hoc basis to review business plans and addressable

markets. In making its recommendations, the review board shall give

preference to technologies presenting novel materials,

manufacturing, and performance qualities. The review board shall

also consider all of the following:

(a) Activities occurring exclusively in Michigan.

(b) Activities directly related to whole cell production, from

materials to large format cells, in Michigan.

established, are robust, and address global automotive market

requirements.

(7) [CREDITS UNDER THIS SECTION SHALL BE TAKEN AFTER NONREFUNDABLE

CREDITS AVAILABLE UNDER THIS ACT.] If a credit [or the sum of credits] allowed under this section exceeds the tax

liability of the taxpayer for the tax year, the taxpayer may elect

to have that portion that exceeds the tax liability of the taxpayer

refunded or to have the excess carried forward to offset tax

liability in subsequent tax years for 10 years or until used up,

whichever occurs first. Amounts carried forward shall not affect

the maximum amount of credits that may be claimed in subsequent

years.

(8) An agreement entered into for tax credits under this

section shall specify all of the following:

House Bill No. 6611 (H-2) as amended December 4, 2008

(a) For credits provided under subsection (2), the number of

plug-in traction battery packs eligible for a credit for each tax

year covered by the period of the agreement and the maximum amount

of the credit that may be claimed by the taxpayer in each tax year.

[

(b)] If the taxpayer claims a credit under subsection (3), the

qualified expenses for vehicle engineering, prototype, and launch

costs and the annual and total dollar amount of the credits that

may be claimed under subsection (3).

[(c)] If the taxpayer claims a credit under subsection (4), the

annual and total dollar amount of the credits that may be claimed

under subsection (4).

[(d)] If a taxpayer claims a credit under subsection (5), all of

the following:

(i) The location of the facility.

(ii) The estimated total cost of the facility.

(iii) The capital investment expenses that qualify for the

credit under subsection (5).

(iv) The annual and total dollar amount of the credits that may

be claimed under subsection (5).

(9) A taxpayer shall not claim a credit under this section

unless the Michigan economic growth authority has issued a

certificate to the taxpayer. The taxpayer shall attach the

certificate to the annual return filed under this act on which a

credit under this section is claimed. The certificate required

under this subsection shall state all of the following:

(a) The taxpayer is located in this state and engaged in

activity that qualifies for the credit under this section.

(b) The taxpayer's federal employer identification number or

the Michigan department of treasury number assigned to the taxpayer

and, for a taxpayer that is a unitary business group, the federal

employer identification number or Michigan department of treasury

number assigned to the member of the group engaged in this state in

the manufacturing of plug-in traction battery packs.

packs manufactured by the taxpayer during the designated tax year

and the amount of the credit under this section for which the

taxpayer is allowed to claim for the designated tax year.

(d) For credits available under subsections (3), (4), and (5),

the amount of the credit available for the tax year and such other

information as may be required by the department.

(10) As used in this section:

(a) "Advanced automotive battery technology" means a

rechargeable lithium battery that supports vehicle propulsion or

other advanced technologies as may be further defined by the

Michigan economic growth authority.

(b) "Battery cell" means the basic electrochemical unit that

provides a source of electrical energy by direct conversion of

chemical energy and consists of an assembly of electrodes,

separators, electrolyte, container, and terminals.

tax year and included in an agreement under this section that are

associated with facilities, equipment, tooling and engineering, and

manufacturing, including salaries, contract services, taxes,

utilities, raw materials, and supplies.

(d) "Michigan economic growth authority" means the Michigan

economic growth authority created in the Michigan economic growth

authority act, 1995 PA 24, MCL 207.801 to 207.810.

(e) "Plug-in traction battery pack" means an electrochemical

energy storage device that meets the following requirements:

(i) Has a traction battery capacity of not less than 4.0

kilowatt hours.

(ii) Is equipped with an electrical plug by means of which it

can be energized and recharged when plugged into an external source

of power.

(iii) Consists of standardized configuration and is mass-

produced.

(iv) Has been tested and approved by the national highway

transportation safety administration as compliant with applicable

motor vehicle and motor vehicle equipment safety standards when

installed by a mechanic with standardized training in protocols

established by the manufacturer as part of a nationwide

distribution program.

(v) Is installed in a new qualified plug-in electric drive

motor vehicle that qualifies for the credit under section 30D of

the internal revenue code.

(f) "Qualified advanced battery engineering expenses" means

that part of a taxpayer's qualified research expenses as defined

under section 41(b) of the internal revenue code related to

engineering research and development related to advanced automotive

battery technology.

(g) "Qualified expenses for vehicle engineering" means that

part of a taxpayer's expenses for activities within this state

related to integrating batteries into a motor vehicle that would

qualify for the credit under section 30D of the internal revenue

code including such qualified research expenses as defined under

section 41(b) of the internal revenue code.

(h) "Traction battery capacity" is the number of kilowatt

hours measured from a 100% state of charge to a 0% state of charge.