HB-6185, As Passed Senate, December 4, 2008

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 6185

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

by amending sections 351, 355, and 365 (MCL 206.351, 206.355, and

206.365), section 351 as amended by 2003 PA 22, section 355 as

amended by 2003 PA 48, and section 365 as amended by 2003 PA 47,

and by adding section 366.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 351. (1) Every employer in this state required under the

provisions of the internal revenue code to withhold a tax on the

compensation of an individual, except as otherwise provided, shall

deduct and withhold a tax in an amount computed by applying, except

as provided by subsection (9), the rate prescribed in section 51 to

the remainder of the compensation after deducting from compensation

the same proportion of the total amount of personal and dependency

exemptions of the individual allowed under this act that the period

of time covered by the compensation is of 1 year. The commissioner

may prescribe withholding tables that may be used by employers to

compute the amount of tax required to be withheld.

(2) Every flow-through entity in this state shall withhold a

tax in an amount computed by applying the rate prescribed in

section 51 to the share of taxable income available for

distribution of each nonresident member after deducting from that

distributive income the same proportion of the total amount of

personal and dependency exemptions of the individual allowed under

this act that the period of time covered by the distributive income

is of 1 year. If a flow-through entity is a nonresident member of a

separate flow-through entity in this state, the flow-through entity

in this state of which it is a member shall withhold the tax as

required by this subsection on behalf of the flow-through entity

that is a nonresident member and all nonresident members of that

flow-through entity that is a nonresident member.

(3) Every casino licensee shall withhold a tax in an amount

computed by applying the rate prescribed in section 51 to the

winnings of a nonresident reportable by the casino licensee under

the internal revenue code.

(4) Every race meeting licensee or track licensee shall

withhold a tax in an amount computed by applying the rate

prescribed in section 51 to a payoff price on a winning ticket of a

nonresident reportable by the race meeting licensee or track

licensee under the internal revenue code that is the result of

pari-mutuel wagering at a licensed race meeting.

(5) Every casino licensee or race meeting licensee or track

licensee shall report winnings of a resident reportable by the

casino licensee or race meeting licensee or track licensee under

the internal revenue code to the department in the same manner and

format as required under the internal revenue code.

(6) ~~The~~ Except as otherwise provided under this subsection,

all of the taxes withheld under this section shall accrue to the

state on the last day of the month in which the taxes are withheld

but shall be returned and paid to the department by the employer,

flow-through entity, casino licensee, or race meeting licensee or

track licensee within 15 days after the end of any month or as

provided in section 355, except prior to July 1, 1993, taxes

deposited pursuant to section 19(2) of 1941 PA 122, MCL 205.19, are

accrued on the last day of the filing period. For an employer or

flow-through entity that has entered into an agreement with a

community college pursuant to chapter 13 of the community college

act of 1966, 1966 PA 331, MCL 389.161 to 389.166, a portion of the

taxes withheld under this section that are attributable to each

employee in a new job created pursuant to the agreement shall

accrue to the community college on the last day of the month in

which the taxes are withheld but shall be returned and paid to the

community college by the employer or flow-through entity within 15

days after the end of any month or as provided in section 355 for

as long as the agreement remains in effect. For purposes of this

act and 1941 PA 122, MCL 205.1 to 205.31, payments made by an

employer or flow-through entity to a community college under this

subsection shall be considered income taxes paid to this state.

(7) An employer, flow-through entity, casino licensee, or race

meeting licensee or track licensee required by this section to

deduct and withhold taxes on compensation, a share of income

available for distribution on which withholding is required under

subsection (2), winning on which withholding is required under

subsection (3), or a payoff price on which withholding is required

under subsection (4) holds the amount of tax withheld as a trustee

for the state , is liable for the payment of the tax to the state ,

or, if applicable, to the community college and is not liable to

any individual for the amount of the payment.

(8) An employer in this state is not required to deduct and

withhold a tax on the compensation paid to a nonresident individual

employee, who, under section 256, may claim a tax credit equal to

or in excess of the tax estimated to be due for the tax year or is

exempted from liability for the tax imposed by this act. In each

tax year, the nonresident individual shall furnish to the employer,

on a form approved by the department, a verified statement of

nonresidence.

(9) An employer, flow-through entity, casino licensee, or race

meeting licensee or track licensee required to withhold a tax under

this act, by the fifteenth day of the following month, shall

provide the department with a copy of any exemption certificate on

which the employee, nonresident member, or person subject to

withholding under subsection (3) or (4) claims more than 9 personal

or dependency exemptions, claims a status that exempts the

employee, nonresident member, or person subject to withholding

under subsection (3) or (4) from withholding under this section, or

elects to pay the tax imposed by this act calculated under section

51a.

(10) An employer shall deduct and withhold the tax imposed by

this act calculated under section 51a for a resident who files an

exemption certificate under subsection (9) to elect to pay the tax

calculated under section 51a.

(11) The exemption certificate required by this section shall

include the following statement, "Electing to file using the no-

form option may not be for everyone who is eligible. If a taxpayer

chooses the no-form option, he or she may not be eligible for some

of the credits allowed under this act including the property tax

credit allowed under sections 520 and 522, the tuition tax credit

allowed under section 274, and the city income tax credit allowed

under section 257.".

(12) As used in this section:

(a) "Casino" means that term as defined in section 110.

(b) "Casino licensee" means a person licensed to operate a

casino under the Michigan gaming control and revenue act, ~~the~~

~~Initiated Law of~~ 1996 IL 1, MCL 432.201 to 432.226.

to whom a race meeting license or track license is issued pursuant

to section 8 of the horse racing law of 1995, 1995 PA 279, MCL

431.308.

Sec. 355. (1) All provisions relating to the administration,

collection, and enforcement of this act apply to the employer,

flow-through entity, casino licensee, or race meeting licensee or

track licensee required to withhold taxes and to the taxes required

to be withheld. If the department has reasonable grounds to believe

that an employer, flow-through entity, casino licensee, or race

meeting licensee or track licensee will not pay taxes withheld to

the state or, if applicable, to the community college, as

prescribed by this act, or to provide a more efficient

administration, the department may require the employer, flow-

through entity, casino licensee, or race meeting licensee or track

licensee to make the return and pay to the department or, if

applicable, to the community college, the tax deducted and withheld

at other than monthly periods, or from time to time, or require the

employer, flow-through entity, casino licensee, or race meeting

licensee or track licensee to deposit the tax in a bank approved by

the department in a separate account, in trust for the department

or, if applicable, the community college, and payable to the

department , or the community college, and to keep the amount of

the taxes in the account until payment over to the department or

the community college.

(2) Every publicly traded partnership as that term is defined

under section 7704 of the internal revenue code that has equity

securities registered with the securities and exchange commission

under section 12 of title I of the securities and exchange act of

1934, ~~chapter 404, 48 Stat. 881, 15 U.S.C.~~ 15 USC 78l, shall file on

or before each August 31 all unitholder information from the

publicly traded partnership's schedule K-1 for the immediately

preceding calendar year by paper or electronic format on a form

prescribed by the department.

(3) As used in this section:

(a) "Casino" means that term as defined in section 110.

(b) "Casino licensee" means a person licensed to operate a

casino under the Michigan gaming control and revenue act, ~~the~~

~~Initiated Law of~~ 1996 IL 1, MCL 432.201 to 432.226.

to whom a race meeting license or track license is issued pursuant

to section 8 of the horse racing law of 1995, 1995 PA 279, MCL

431.308.

Sec. 365. (1) Every employer, flow-through entity, casino

licensee, and race meeting licensee and track licensee required by

this act to deduct and withhold taxes for a tax year on

compensation, share of income available for distribution, winnings,

or payoff on a winning ticket shall furnish to each employee,

nonresident member, or person with winnings or a payoff on a

winning ticket subject to withholding under this act on or before

January 31 of the succeeding year a statement in duplicate of the

total compensation, share of income available for distribution,

winnings, or payoff on a winning ticket paid during the tax year

and the amount deducted or withheld. However, if employment is

terminated before the close of a calendar year by an employer who

goes out of business or permanently ceases to be an employer in

this state, or a flow-through entity, casino licensee, race meeting

licensee, or track licensee goes out of business or permanently

ceases to be a flow-through entity, casino licensee, race meeting

licensee, or track licensee before the close of a calendar year,

then the statement required by this subsection shall be issued

within 30 days after the last compensation, share of income

available for distribution, winnings, or payoff of a winning ticket

is paid. A duplicate of a statement made pursuant to this section

and an annual reconciliation return, MI-W3, shall be filed with the

department by February 28 of the succeeding year except that an

employer, flow-through entity, casino licensee, and race meeting

licensee and track licensee who goes out of business or permanently

ceases to be an employer, flow-through entity, casino licensee, and

race meeting licensee and track licensee shall file the statement

and the annual reconciliation return within 30 days after going out

of business or permanently ceasing to be an employer, flow-through

entity, casino licensee, and race meeting licensee and track

licensee.

(2) Every employer, flow-through entity, casino licensee, and

race meeting licensee and track licensee required by this act to

deduct or withhold taxes from compensation, share of income

available for distribution, winnings, or payoff on a winning ticket

shall make a return or report in form and content and at times as

prescribed by the department. An employer or flow-through entity

that has entered into an agreement with a community college

pursuant to chapter 13 of the community college act of 1966, 1966

PA 331, MCL 389.161 to 389.166, and is required to deduct or

withhold taxes from compensation and make payments to a community

college pursuant to the agreement for a portion of those taxes

withheld shall, for as long as the agreement remains in effect,

delineate in the return or report required under this subsection

between the amount deducted or withheld and paid to the state and

that amount paid to a community college.

(3) Every employee, nonresident member, or person with

winnings or a payoff on a winning ticket subject to withholding

under this act shall furnish to his or her employer, flow-through

entity, casino licensee, and race meeting licensee and track

licensee information required for the employer, flow-through

entity, casino licensee, and race meeting licensee and track

licensee to make an accurate withholding. An employee, nonresident

member, or person with winnings or a payoff on a winning ticket

subject to withholding under this act shall file with his or her

employer, flow-through entity, casino licensee, and race meeting

licensee and track licensee revised information within 10 days

after a decrease in the number of exemptions or a change in status

from a nonresident to a resident. An employee shall file revised

information with his or her employer within 10 days after the

employee completes the residency requirements under section

31(11)(d), and when a change of status occurs from resident of a

renaissance zone to nonresident of a renaissance zone. Within 10

days after an employer receives revised information from an

employee who completes the residency requirements under section

31(11)(d), the employer shall forward a copy of that revised

information to the department. The employee, nonresident member, or

person with winnings or a payoff on a winning ticket subject to

withholding under this act may file revised information when the

number of exemptions increases or when a change in status occurs

from that of a resident of this state to a nonresident of this

state. Revised information shall not be given retroactive effect

for withholding purposes. An employer, flow-through entity, casino

licensee, and race meeting licensee and track licensee shall rely

on this information for withholding purposes unless directed by the

department to withhold on some other basis. If an employee,

nonresident member, or person with winnings or a payoff on a

winning ticket subject to withholding under this act fails or

refuses to furnish information, the employer, flow-through entity,

casino licensee, and race meeting licensee and track licensee shall

withhold the full rate of tax from the employee's total

compensation, the nonresident member's share of income available

for distribution, or the winnings of a person with winnings or a

payoff on a winning ticket subject to withholding under this act.

As used in this subsection, "renaissance zone" means a renaissance

zone designated pursuant to the Michigan renaissance zone act, 1996

PA 376, MCL 125.2681 to 125.2696.

(4) As used in this section:

(a) "Casino" means that term as defined in section 110.

(b) "Casino licensee" means a person licensed to operate a

casino under the Michigan gaming control and revenue act, ~~the~~

~~Initiated Law of~~ 1996 IL 1, MCL 432.201 to 432.226.

to whom a race meeting license or track license is issued pursuant

to section 8 of the horse racing law of 1995, 1995 PA 279, MCL

431.308.

Sec. 366. By July 1 of each year, based on the information

received from each community college district pursuant to section

163 of the community college act of 1966, 1966 PA 331, MCL 389.163,

the department shall submit to the governor, the clerk of the house

of representatives, the secretary of the senate, the chairperson of

each standing committee that has jurisdiction over economic

development issues, the chairperson of each legislative budget

subcommittee that has jurisdiction over economic development

issues, and the president of the Michigan strategic fund an annual

report concerning the operation and effectiveness of the new jobs

training programs and the corresponding withholding requirements

under this chapter. The report shall include all of the following:

(a) The number of community colleges participating in the new

jobs training program and the names of those colleges.

(b) The number of employers that have entered into agreements

with community colleges pursuant to the new jobs training program

and the names of those employers organized by major industry group

under the standard industrial classification code as compiled by

the United States department of labor.

withholding each employer described in subdivision (b) has remitted

to the community college district.

(d) The total amount of new jobs training revenue bonds each

community college district has authorized, issued, or sold.

(e) The total amount of each community college district's debt

related to agreements at the end of the calendar year.

(f) The number of degrees or certificates awarded to program

participants in the calendar year.

(g) The number of individuals who entered a program at each

community college district in the calendar year; who completed the

program in the calendar year; and who were enrolled in a program at

the end of the calendar year.

(h) The number of individuals who completed a program and were

hired by an employer described in subdivision (b) to fill new jobs.

Enacting section 1. This amendatory act does not take effect

unless Senate Bill No. 1342 of the 94th Legislature is enacted into

law.