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SB-0094, As Passed House, May 23, 2007

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 94

A bill to provide for the imposition, levy, computation,

collection, assessment, reporting, payment, and enforcement of

taxes on certain commercial, business, and financial activities; to

prescribe the powers and duties of public officers and state

departments; to provide for the inspection of certain taxpayer

records; to provide for interest and penalties; to provide

exemptions, credits, and refunds; to provide for the disposition of

funds; to provide for the interrelation of this act with other

acts; to make appropriations; and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

CHAPTER 1

Sec. 101. (1) This act shall be known and may be cited as the

"Michigan business tax act".

(2) It is the intent of the legislature that the tax levied

under this act and the various credits available under this act

will serve to improve the economic condition of this state, foster

continued and diverse economic growth in this state, and enable

this state to compete fairly and effectively in the world

marketplace for economic development opportunities that will

provide for and protect the health, safety, and welfare of the

citizens of this state, now and in the future.

Sec. 103. A term used in this act and not defined differently

shall have the same meaning as when used in comparable context in

the laws of the United States relating to federal income taxes in

effect for the tax year unless a different meaning is clearly

required. A reference in this act to the internal revenue code

includes other provisions of the laws of the United States relating

to federal income taxes.

Sec. 105. (1) "Business activity" means a transfer of legal or

equitable title to or rental of property, whether real, personal,

or mixed, tangible or intangible, or the performance of services,

or a combination thereof, made or engaged in, or caused to be made

or engaged in, whether in intrastate, interstate, or foreign

commerce, with the object of gain, benefit, or advantage, whether

direct or indirect, to the taxpayer or to others, but does not

include the services rendered by an employee to his or her employer

or services as a director of a corporation. Although an activity of

a taxpayer may be incidental to another or others of his or her

business activities, each activity shall be considered to be

business engaged in within the meaning of this act.

(2) "Business income" means that part of federal taxable

income derived from business activity. For a partnership or S

corporation, business income includes payments and items of income

and expense that are attributable to business activity of the

partnership or S corporation and separately reported to the

partners or shareholders. For an organization exempt under section

501(c)(12) of the internal revenue code, business income equals

what that organization's federal taxable income would be if that

organization was not exempt under the internal revenue code, less

capital credits paid to members of that organization, and less

income resulting from a charge approved by a state or federal

regulatory agency that is restricted for a specified purpose and

refunded by the state or regulatory agency if it is not used for

the specified purpose. For a tax-exempt person, business income

means only that part of federal taxable income derived from

unrelated business activity.

Sec. 107. (1) "Client" means an entity whose employment

operations are managed by a professional employer organization.

(2) "Compensation" means all wages, salaries, fees, bonuses,

commissions, other payments made in the tax year on behalf of or

for the benefit of employees, officers, or directors of the

taxpayers, and any earnings that are net earnings from self-

employment as defined under section 1402 of the internal revenue

code of the taxpayer or a partner or limited liability company

member of the taxpayer. Compensation includes, but is not limited

to, payments that are subject to or specifically exempt or excepted

from withholding under sections 3401 to 3406 of the internal

revenue code. Compensation, for the client of a professional

employer organization, includes payments to the professional

employer organization for the compensation of professional employer

services. Compensation also includes, on a cash or accrual basis

consistent with the taxpayer's method of accounting for federal

income tax purposes, payments to a pension, retirement, or profit

sharing plan, and payments for insurance for which employees are

the beneficiaries, including payments under health and welfare and

noninsured benefit plans and payment of fees for the administration

of health and welfare and noninsured benefit plans. Compensation

for a taxpayer licensed under article 25 or 26 of the occupational

code, 1980 PA 299, MCL 339.2501 to 339.2518 and 339.2601 to

339.2637, includes payments to an independent contractor licensed

under article 25 or 26 of the occupational code, 1980 PA 299, MCL

339.2501 to 339.2518 and 339.2601 to 339.2637. Compensation does

not include any of the following:

(a) Discounts on the price of the taxpayer's merchandise or

services sold to the taxpayer's employees, officers, or directors

that are not available to other customers.

(b) Except as otherwise provided in this subsection, payments

to an independent contractor.

funds.

(d) The employer's portion of payments under the federal

insurance contributions act, chapter 21 of subtitle C of the

internal revenue code, 26 USC 3101 to 3128, the railroad retirement

tax act, chapter 22 of subtitle C of the internal revenue code, 26

USC 3201 to 3233, and similar social insurance programs.

(e) Payments, including self-insurance payments, for worker's

compensation insurance or federal employers' liability act

insurance pursuant to 45 USC 51 to 60.

(f) For a professional employer organization, payments to the

officers and employees of a professional employer organization for

services performed for a client.

(3) "Corporation" means a taxpayer that is required or has

elected to file as a corporation under the internal revenue code.

(4) "Department" means the department of treasury.

(5) "Depository financial institution" means that term as

defined under chapter 2B.

Sec. 109. (1) "Employee" means an employee as defined in

section 3401(c) of the internal revenue code. A person from whom an

employer is required to withhold for federal income tax purposes is

prima facie considered an employee.

(2) "Employer" means an employer as defined in section 3401(d)

of the internal revenue code. A person required to withhold for

federal income tax purposes is prima facie considered an employer.

(3) "Federal taxable income" means taxable income as defined

in section 63 of the internal revenue code.

Sec. 111. (1) "Gross receipts" means the entire amount

received by the taxpayer from any activity whether in intrastate,

interstate, or foreign commerce carried on for direct or indirect

gain, benefit, or advantage to the taxpayer or to others except for

the following:

(a) Proceeds from sales by a principal that the taxpayer

collects in an agency capacity solely on behalf of the principal

and delivers to the principal.

(b) Amounts received by the taxpayer as an agent solely on

behalf of the principal that are expended by the taxpayer for any

of the following:

(i) The performance of a service by a third party for the

benefit of the principal that is required by law to be performed by

a licensed person.

(ii) The performance of a service by a third party for the

benefit of the principal that the taxpayer has not undertaken a

contractual duty to perform.

(iii) Principal and interest under a mortgage loan or land

contract, lease or rental payments, or taxes, utilities, or

insurance premiums relating to real or personal property owned or

leased by the principal.

(iv) A capital asset of a type that is, or under the internal

revenue code will become, eligible for depreciation, amortization,

or accelerated cost recovery by the principal for federal income

tax purposes, or for real property owned or leased by the

principal.

(v) Property not described under subparagraph (iv) that is

purchased by the taxpayer on behalf of the principal and that the

taxpayer does not take title to or use in the course of performing

its contractual business activities.

(vi) Fees, taxes, assessments, levies, fines, penalties, or

other payments established by law that are paid to a governmental

entity and that are the legal obligation of the principal.

corporation engaged in the international operation of aircraft

under section 883(a) of the internal revenue code.

(d) Amounts received by an advertising agency used to acquire

advertising media time, space, production, or talent on behalf of

another person.

(e) Notwithstanding any other provision of this section,

amounts received by a taxpayer that manages real property owned by

the taxpayer's client that are deposited into a separate account

kept in the name of the taxpayer's client and that are not

reimbursements to the taxpayer and are not indirect payments for

management services that the taxpayer provides to that client.

(f) Proceeds from the taxpayer's transfer of an account

receivable if the sale that generated the account receivable was

included in gross receipts for federal income tax purposes. This

subdivision does not apply to a taxpayer that during the tax year

both buys and sells any receivables.

(g) Proceeds from any of the following:

(i) The original issue of stock or equity instruments.

(ii) The original issue of debt instruments.

(h) Refunds from returned merchandise.

(i) Cash and in-kind discounts.

(j) Trade discounts.

(k) Federal, state, or local tax refunds.

(l) Security deposits.

(m) Payment of the principal portion of loans.

(n) Value of property received in a like-kind exchange.

(o) Proceeds from a sale, transaction, exchange, involuntary

conversion, or other disposition of tangible, intangible, or real

property that is a capital asset as defined in section 1221(a) of

the internal revenue code or land that qualifies as property used

in the trade or business as defined in section 1231(b) of the

internal revenue code, less any gain from the disposition to the

extent that gain is included in federal taxable income.

(p) The proceeds from a policy of insurance, a settlement of a

claim, or a judgment in a civil action less any proceeds under this

subdivision that are included in federal taxable income.

(2) "Insurance company" means an authorized insurer as defined

in section 106 of the insurance code of 1956, 1956 PA 218, MCL

500.106.

(3) "Internal revenue code" means the United States internal

revenue code of 1986 in effect on January 1, 2008 or, at the option

of the taxpayer, in effect for the tax year.

(4) "Officer" means an officer of a corporation other than a

subchapter S corporation, including all of the following:

(a) The chairperson of the board.

(b) The president, vice president, secretary, or treasurer of

the corporation or board.

subdivisions (a) and (b).

Sec. 113. (1) "Partner" means a partner or member of a

partnership.

(2) "Partnership" means a taxpayer that is required to or has

elected to file as a partnership for federal income tax purposes.

(3) "Person" means an individual, firm, bank, financial

institution, depository financial institution, insurance company,

limited partnership, limited liability partnership, copartnership,

partnership, joint venture, association, corporation, subchapter S

corporation, limited liability company, receiver, estate, trust, or

any other group or combination of groups acting as a unit.

(4) "Professional employer organization" means a person that

provides professional employer services.

(5) "Professional employer services" means an arrangement to

which all of the following apply:

(a) Employees of a professional employer organization are

assigned to work at a client company.

(b) Employment responsibilities are shared by the professional

employer organization and the client company.

or continuing nature, rather than temporary or seasonal in nature.

(d) A majority of the workforce at a client company work site

or a majority of the personnel of a specialized group within that

workforce consists of assigned employees of the professional

employer organization.

(6) Professional employer services do not include services

that provide temporary employees, independent contractors,

personnel placement services, managed services, payroll services

that do not involve employee staffing or leasing, the sharing of

employees by commonly owned companies within the meaning of section

414(b) or (c) of the internal revenue code, or other similar groups

that do not meet the requirements of subsection (5).

(7) "Revenue mile" means the transportation for a

consideration of 1 net ton in weight or 1 passenger the distance of

1 mile.

Sec. 115. (1) "Sale" or "sales" means, except as provided in

subdivision (d), the amounts received by the taxpayer as

consideration from the following:

(a) The transfer of title to, or possession of, property that

is stock in trade or other property of a kind that would properly

be included in the inventory of the taxpayer if on hand at the

close of the tax period or property held by the taxpayer primarily

for sale to customers in the ordinary course of the taxpayer's

trade or business. For intangible property, the amounts received

shall be limited to any gain received from the disposition of that

property.

(b) The performance of services that constitute business

activities other than those included in subdivision (a), or any

combination of business activities described in this subsection.

intangible property, including interest, that constitutes business

activity.

(d) For taxpayers not engaged in any other business

activities, sales include interest, dividends, and other income

from investment assets and activities and from trading assets and

activities.

(2) "Shareholder" means a person who owns outstanding stock in

a business or is a member of a business entity that files as a

corporation for federal income tax purposes. An individual is

considered as the owner of the stock owned, directly or indirectly,

by or for family members as defined by section 318(a)(1) of the

internal revenue code.

(3) "State" means any state of the United States, the District

of Columbia, the Commonwealth of Puerto Rico, any territory or

possession of the United States, and any foreign country, or a

political subdivision of any of the foregoing.

Sec. 117. (1) "Tangible personal property" means that term as

defined in section 2 of the use tax act, 1937 PA 94, MCL 205.92.

(2) "Tax" means the tax imposed under this act, including

interest and penalties under this act, unless the term is given a

more limited meaning in the context of this act or a provision of

this act.

(3) "Tax-exempt person" means an organization that is exempt

from federal income tax under section 501(a) of the internal

revenue code, and a partnership, limited liability company, joint

venture, unincorporated association, or other group or combination

of organizations acting as a unit if all such organizations are

exempt from federal income tax under section 501(a) of the internal

revenue code and if all activities of the unit are exclusively

related to the charitable, educational, or other purposes or

functions that are the basis for the exemption of such

organizations from federal income tax, except the following:

(a) An organization exempt under section 501(c)(12) or (16) of

the internal revenue code.

(b) An organization exempt under section 501(c)(4) of the

internal revenue code that would be exempt under section 501(c)(12)

of the internal revenue code but for its failure to meet the

requirement in section 501(c)(12) that 85% or more of its income

must consist of amounts collected from members.

(4) "Tax year" means the calendar year, or the fiscal year

ending during the calendar year, upon the basis of which the tax

base of a taxpayer is computed under this act. If a return is made

for a fractional part of a year, tax year means the period for

which the return is made. Except for the first return required by

this act, a taxpayer's tax year is for the same period as is

covered by its federal income tax return. A taxpayer that has a 52-

or 53-week tax year beginning not more than 7 days before December

31 of any year is considered to have a tax year beginning after

December of that tax year.

(5) "Taxpayer" means a person or a unitary business group

liable for a tax, interest, or penalty under this act.

(6) "Temporary employee" means a person employed under an

arrangement by which a professional employer organization hires its

own employees and assigns them to a client company to support or

supplement the client's workforce in a special work situation,

including, but not limited to, the following:

(a) An employee absence.

(b) A temporary skill shortage.

(d) A special assignment or project.

(7) "Unitary business group" means a group of United States

persons, 1 of which owns or controls, directly or indirectly, more

than 50% of the ownership interest with voting rights of the other

United States persons, that has business activities or operations

which result in a flow of value between persons included in the

unitary business group or multiple persons or in a flow of value

within a single legal entity regardless of whether each entity is a

sole proprietorship, corporation, partnership, limited liability

company, trust, or other person under this act. For purposes of

this subsection, flow of value is determined by reviewing the

totality of facts and circumstances of business activities and

operations as follows:

(a) Activities that evidence a flow of value between related

persons include, but are not limited to, assisting in the

acquisition of equipment, assisting with filling personnel needs,

lending funds or guaranteeing loans, interplay in the area of

business expansion, providing technical assistance, supervising,

providing general operational guidance, providing overall

operational strategic advice, or common use of trade names and

patents. Flow of value must be more than the flow of funds arising

out of passive investment and consists of more than occasional

financial oversight.

(b) Transactions separately accounted for may evidence a flow

of value. The fact that a business uses or can use a separate

accounting system, including, but not limited to, separate

accounting between divisions of a single legal entity, between

multiple persons under common ownership, on an arm's length basis,

on a geographical basis, or by business function, does not

determine whether a group is a unitary business group.

(8) "United States person" means that term as defined in

section 7701(a)(30) of the internal revenue code.

(9) "Unrelated business activity" means, for a tax-exempt

person, business activity directly connected with an unrelated

trade or business as defined in section 513 of the internal revenue

code.

CHAPTER 2

Sec. 201. (1) Except as otherwise provided in this act, there

is levied and imposed a business income tax on every taxpayer with

business activity within this state unless prohibited by 15 USC 381

to 384. The business income tax is imposed on the business income

tax base, after allocation or apportionment to this state, at the

rate of 6.95%.

(2) The business income tax base means a taxpayer's business

income subject to the following adjustments, before allocation or

apportionment, and the adjustments in subsections (3), (4), and (5)

after allocation or apportionment:

(a) Add interest income and dividends derived from obligations

or securities of states other than this state, in the same amount

that was excluded from federal taxable income, less the related

portion of expenses not deducted in computing federal taxable

income because of sections 265 and 291 of the internal revenue

code.

(b) Add all taxes on or measured by net income and the tax

imposed under this act to the extent the taxes were deducted in

arriving at federal taxable income.

the extent deducted in arriving at federal taxable income.

(d) To the extent included in federal taxable income, deduct

dividends and royalties received from persons other than United

States persons, including, but not limited to, amounts determined

under section 78 of the internal revenue code or sections 951 to

964 of the internal revenue code.

(e) To the extent included in federal taxable income, add the

loss or subtract the income from the business income tax base that

is attributable to another entity whose business activities are

taxable under this section or would be subject to the tax under

this section if the business activities were in this state.

(f) To the extent deducted arriving at federal taxable income,

add any royalty, interest, or other expense paid to a person

related to the taxpayer by ownership or control for the use of an

intangible asset if the person is not included in the taxpayer's

unitary business group.

(g) To the extent included in federal taxable income, for a

noncorporate entity deduct interest income derived from United

States obligations.

(h) For the 2008 tax year, if the book-tax difference results

in a deferred liability, account for the book-tax difference as an

asset on the taxpayer's books and records. For each tax year after

the 2008 tax year, adjust to the extent necessary to reflect a 10-

year amortization of the book-tax difference for each qualifying

asset on the taxpayer's books and records, in equal installments

over each of the 10 tax years beginning with the 2013 tax year. If

the adjustment under this subdivision is greater than the

taxpayer's business income tax base, any adjustment that is unused

may be carried forward and applied as an adjustment to the

taxpayer's business income before apportionment in future years. As

used in this subdivision:

(i) "Book-tax difference" means the difference, if any, between

the taxpayer's qualifying asset's net book value shown on the

taxpayer's books and records on December 31, 2007, and the

qualifying asset's adjusted federal tax basis on December 31, 2007.

(ii) "Qualifying asset" means any asset shown on the taxpayer's

books and records on December 31, 2007, in accordance with

generally accepted accounting principles.

(3) Deduct any available business loss. As used in this

subsection, "business loss" means a negative business income

taxable amount after allocation or apportionment. The business loss

shall be carried forward to the year immediately succeeding the

loss year as an offset to the allocated or apportioned business

income tax base, then successively to the next 19 taxable years

following the loss year or until the loss is used up, whichever

occurs first, but for not more than 20 taxable years after the loss

year.

(4) The business income tax base of a unitary business group

is the sum of the business income tax base of each person included

in the unitary business group less any items of income and related

deductions arising from transactions including dividends between

persons included in the unitary business group.

Sec. 203. (1) Except as otherwise provided in this act, there

is levied and imposed a net worth tax on every taxpayer with

business activity within this state at a rate of 0.488% on each

taxpayer's net worth tax base allocated and apportioned to this

state. The tax imposed under this section is not a tax on business

income and is imposed to the fullest extent permitted by the United

States constitution without regard to whether a taxpayer is subject

to the business income tax imposed under section 201.

(2) Except as otherwise provided under subsection (3), net

worth tax base means a taxpayer's net worth.

(3) A member of an affiliated group shall add to its net worth

tax base all indebtedness owed to another member of the affiliated

group. If any part of the capital of the creditor is capital

borrowed from a source other than a member of the affiliated group,

the debtor, which is required under this subsection to include in

its net worth tax base the amount of debt by reason of being a

member of the affiliated group of the creditor, may deduct from the

debt included a proportionate part determined on the basis of the

ratio of the borrowed capital of the creditor to the total assets

of the creditor. If the creditor is also taxable under this

section, the creditor is allowed to deduct from the total of its

net worth tax base the amount of any debt owed to it by a member of

the affiliated group to the extent that the debt has been included

in the net worth tax base of the debtor reporting for taxation

under the provisions of this section.

(4) For a taxpayer required to charge any amount to equity

under financial accounting standards statement number 158, that

taxpayer shall compute its net worth in accordance with generally

accepted accounting principles in effect prior to January 1, 2008

for defined benefit pension and other postretirement benefit plans.

(5) As used in this section:

(a) "Affiliated group" means 2 or more United States persons,

1 of which owns or controls, directly or indirectly, more than 50%

of the ownership interest with voting rights of the other United

States persons.

(b) "Indebtedness" means all loans, credits, goods, supplies,

or other capital of any nature, other than indebtedness endorsed,

guaranteed, or otherwise supported by a member of the affiliated

group.

section for a unitary business group, a 501(c)(12) organization, or

an electric or natural gas public utility company, the difference

between total assets less total liabilities, computed in accordance

with generally accepted accounting principles. If the taxpayer does

not maintain its books and records in accordance with generally

accepted accounting principles, net worth shall be computed in

accordance with the books and records used by the taxpayer, so long

as the method fairly reflects the taxpayer's net worth for purposes

of the tax levied by this part. For a unitary business group, "net

worth" means the difference between the total assets less the total

liabilities of the unitary business group at the close of business

on the last day of the tax year as shown by a pro forma

consolidated balance sheet including all persons included in the

unitary business group. The pro forma consolidated balance sheet

shall be prepared in accordance with generally accepted accounting

principles wherein transactions and holdings between persons

included in the unitary business group and holdings in nondomestic

persons have been eliminated. For an organization exempt under

section 501(c)(12) of the internal revenue code, "net worth" means

the difference between total assets less investments in other

organizations, less total liabilities of the 501(c)(12)

organization computed in accordance with generally accepted

accounting principles, less income collected and accumulated for a

specified purpose in accordance with an order from a state or

federal regulatory agency that must be refunded if not used for the

specified purpose. An electric or natural gas public utility

company, when computing its net worth, shall exclude the excess of

regulatory assets over regulatory liabilities.

Sec. 205. (1) Except as otherwise provided under subsection

(2), a taxpayer that has a physical presence in this state for a

period of more than 1 day during the tax year has substantial nexus

in this state and is subject to the tax under this act.

(2) If a final order of a court of competent jurisdiction for

which all rights of appeal have been exhausted or have expired

holds that a physical presence is not required to impose a business

income or business activity tax, then the minimum nexus standard

defined by the courts as necessary to establish nexus shall apply

for each tax year after the final holding and the tax under this

act shall be imposed to the fullest extent permitted by the United

States constitution.

(3) As used in this section, "physical presence" means any

activity conducted on behalf of the taxpayer by the taxpayer's

employee, agent, or independent contractor acting in a

representative capacity. Physical presence does not include the

activities of professionals providing services in a professional

capacity or other service providers if the activity is not

significantly associated with the taxpayer's ability to establish

and maintain a market in this state.

Sec. 207. (1) Except as otherwise provided in this section,

the following are exempt from the tax imposed by this act:

(a) The United States, this state, other states, and the

agencies, political subdivisions, and enterprises of the United

States, this state, and other states.

(b) A person who is exempt from federal income tax under the

internal revenue code, and a partnership, limited liability

company, joint venture, general partnership, limited partnership,

unincorporated association, or other group or combination of

entities acting as a unit if the activities of the entity are

exclusively related to the charitable, educational, or other

purpose or function that is the basis for the exemption under the

internal revenue code from federal income taxation of the partners

or members and if all of the partners or members of the entity are

exempt from federal income tax under the internal revenue code,

except the following:

(i) An organization included under section 501(c)(12) or

501(c)(16) of the internal revenue code.

(ii) An organization exempt under section 501(c)(4) of the

internal revenue code that would be exempt under section 501(c)(12)

of the internal revenue code except that it failed to meet the

requirements in section 501(c)(12) that 85% or more of its income

consist of amounts collected from members.

(iii) The tax base attributable to the activities giving rise to

the unrelated taxable business income of an exempt person.

this subdivision, "nonprofit cooperative housing corporation" means

a cooperative housing corporation that is engaged in providing

housing services to its stockholders and members and that does not

pay dividends or interest on stock or membership investment but

that does distribute all earnings to its stockholders or members.

The exemption under this subdivision does not apply to a business

activity of a nonprofit cooperative housing corporation other than

providing housing services to its stockholders and members.

(d) That portion of the tax base attributable to the

production of agricultural goods by a person whose primary activity

is the production of agricultural goods. "Production of

agricultural goods" means commercial farming, including, but not

limited to, cultivation of the soil; growing and harvesting of an

agricultural, horticultural, or floricultural commodity; dairying;

raising of livestock, bees, fish, fur-bearing animals, or poultry;

or turf or tree farming, but does not include the marketing at

retail of agricultural goods except for sales of nursery stock

grown by the seller and sold to a nursery dealer licensed under

section 9 of the insect pest and plant disease act, 1931 PA 189,

MCL 286.209.

(e) Except as provided in subsection (2), a farmers'

cooperative corporation organized within the limitations of section

98 of 1931 PA 327, MCL 450.98, that was at any time exempt under

subdivision (b) because the corporation was exempt from federal

income taxes under section 521 of the internal revenue code and

that would continue to be exempt under section 521 of the internal

revenue code except for either of the following activities:

(i) The corporation's repurchase from nonproducer customers of

portions or components of commodities the corporation markets to

those nonproducer customers and the corporation's subsequent

manufacturing or marketing of the repurchased portions or

components of the commodities.

(ii) The corporation's incidental or emergency purchases of

commodities from nonproducers to facilitate the manufacturing or

marketing of commodities purchased from producers.

(f) That portion of the tax base attributable to the direct

and indirect marketing activities of a farmers' cooperative

corporation organized within the limitations of section 98 of 1931

PA 327, MCL 450.98, if those marketing activities are provided on

behalf of the members of that corporation and are related to the

members' direct sales of their products to third parties or, for

livestock, are related to the members' direct or indirect sales of

that product to third parties. Marketing activities for a product

that is not livestock are not exempt under this subdivision if the

farmers' cooperative corporation takes physical possession of the

product. As used in this subdivision, "marketing activities" means

activities that include, but are not limited to, all of the

following:

(i) Activities under the agricultural commodities marketing

act, 1965 PA 232, MCL 290.651 to 290.674, and the agricultural

marketing and bargaining act, 1972 PA 344, MCL 290.701 to 290.726.

(ii) Dissemination of market information.

(iii) Establishment of price and other terms of trade.

(iv) Promotion.

(v) Research relating to members' products.

(g) That portion of the tax base attributable to the services

provided by an attorney-in-fact to a reciprocal insurer pursuant to

chapter 72 of the insurance code of 1956, 1956 PA 218, MCL 500.7200

to 500.7234.

(h) That portion of the tax base attributable to a multiple

employer welfare arrangement that provides dental benefits only and

that has a certificate of authority under chapter 70 of the

insurance code of 1956, 1956 PA 218, MCL 500.7001 to 500.7090.

(2) Subsection (1)(e) does not exempt a farmers' cooperative

corporation if the total dollar value of the farmers' cooperative

corporation's incidental and emergency purchases described in

subsection (1)(e)(ii) are equal to or greater than 5% of the

corporation's total purchases.

(3) Except as otherwise provided in this section, a farmers'

cooperative corporation that is structured to allocate net earnings

in the form of patronage dividends as defined in section 1388 of

the internal revenue code to its farmer or farmer cooperative

corporation patrons shall exclude from its adjusted tax base the

revenue and expenses attributable to business transacted with its

farmer or farmer cooperative corporation patrons.

(4) As used in subsection (1)(b), "exclusively" means that

term as applied for purposes of section 501(c)(3) of the internal

revenue code.

CHAPTER 2A

Sec. 235. (1) Each insurance company shall pay a tax

determined under this chapter.

(2) The tax imposed by this chapter on each insurance company

shall be a tax equal to 1.25% of gross direct premiums written on

property or risk located or residing in this state. Direct premiums

do not include any of the following:

(a) Premiums on policies not taken.

(b) Returned premiums on canceled policies.

(d) Receipts on reinsurance premiums if the tax has been paid

on the original premiums.

(e) The first $190,000,000.00 of disability insurance premiums

written in this state, other than credit insurance and disability

income insurance premiums, of each insurance company subject to tax

under this chapter. This exemption shall be reduced by $2.00 for

each $1.00 by which the insurance company's gross direct premiums

from insurance carrier services in this state and outside this

state exceed $450,000,000.00.

(3) The tax calculated under this chapter is in lieu of all

other privilege or franchise fees or taxes imposed by this act or

any other law of this state, except taxes on real and personal

property, taxes collected under the general sales tax act, 1933 PA

167, MCL 205.1 to 205.78, and taxes collected under the use tax

act, 1937 PA 94, MCL 205.91 to 205.111, and except as otherwise

provided in the insurance code of 1956, 1956 PA 218, MCL 500.100 to

500.8302.

Sec. 237. (1) An insurance company may claim a credit against

the tax imposed under this chapter in the following amounts:

(a) Amounts paid to the Michigan worker's compensation

placement facility pursuant to chapter 23 of the insurance code of

1956, 1956 PA 218, MCL 500.2301 to 500.2352.

(b) Amounts paid to the Michigan basic property insurance

association pursuant to chapter 29 of the insurance code of 1956,

1956 PA 218, MCL 500.2901 to 500.2954.

placement facility pursuant to chapter 33 of the insurance code of

1956, 1956 PA 218, MCL 500.3301 to 500.3390.

(d) Amounts paid to the property and casualty guaranty

association pursuant to chapter 79 of the insurance code of 1956,

1956 PA 218, MCL 500.7901 to 500.7949.

(e) Amounts paid to the Michigan life and health guaranty

association pursuant to chapter 77 of the insurance code of 1956,

1956 PA 218, MCL 500.7701 to 500.7780.

(2) The assessments of an insurance company from the

immediately preceding tax year shall be used in calculating the

credits allowed under this section for each tax year.

Sec. 239. An insurance company shall be allowed a credit

against the tax imposed under this chapter in an amount equal to

50% of the examination fees paid by the insurance company during

the tax year pursuant to section 224 of the insurance code of 1956,

1956 PA 218, MCL 500.224.

Sec. 241. (1) For amounts paid pursuant to section 352 of the

worker's disability compensation act of 1969, 1969 PA 317, MCL

418.352, an insurance company subject to the worker's disability

compensation act of 1969, 1969 PA 317, MCL 418.101 to 418.941, may

claim a credit against the tax imposed under this chapter for the

tax year in an amount equal to the amount paid during that tax year

by the insurance company pursuant to section 352 of the worker's

disability compensation act of 1969, 1969 PA 317, MCL 418.352, as

certified by the director of the bureau of worker's disability

compensation pursuant to section 391(6) of the worker's disability

compensation act of 1969, 1969 PA 317, MCL 418.391.

(2) An insurance company claiming a credit under this section

may claim a portion of the credit allowed under this section equal

to the payments made during a calendar quarter pursuant to section

352 of the worker's disability compensation act of 1969, 1969 PA

317, MCL 418.352, against the estimated tax payments made under

section 501. Any credit in excess of an estimated payment shall be

refunded to the insurance company on a quarterly basis within 60

calendar days after receipt of a properly completed estimated tax

return. Any subsequent increase or decrease in the amount claimed

for payments made by the insurance company shall be reflected in

the amount of the credit taken for the calendar quarter in which

the amount of the adjustment is finalized.

(3) The credit under this section is in addition to any other

credits the insurance company is eligible for under this act.

(4) Any amount of the credit under this section that is in

excess of the tax liability of the insurance company for the tax

year shall be refunded, without interest, by the department to the

insurance company within 60 calendar days of receipt of a properly

completed annual return required under this act.

Sec. 243. (1) An insurance company is subject to the tax

imposed by this chapter or by section 476a of the insurance code of

1956, 1956 PA 218, MCL 500.476a, if applicable, whichever is

greater.

(2) The tax year of an insurance company is the calendar year.

(3) Notwithstanding section 505, an insurance company shall

file the annual return required under this act before March 2 after

the end of the tax year, and an automatic extension under section

505(4) is not available.

(4) For the purpose of calculating an estimated payment

required by section 501, the greater of the amount of tax imposed

on an insurance company under this chapter or under section 476a of

the insurance code of 1956, 1956 PA 218, MCL 500.476a, shall be

considered the insurance company's tax liability for the

immediately preceding tax year.

(5) The requirements of section 28(1)(f) of 1941 PA 122, MCL

205.28, that prohibit an employee or authorized representative of,

a former employee or authorized representative of, or anyone

connected with the department from divulging any facts or

information obtained in connection with the administration of a

tax, do not apply to disclosure of a tax return required by this

section.

CHAPTER 2B

Sec. 261. As used in this chapter:

(a) "Depository financial institution" means a bank holding

company, a national bank, a state chartered bank, an office of

thrift supervision chartered bank or thrift institution, a savings

and loan holding company, or a credit union.

(b) "Michigan obligations" means a bond, note, or other

obligation issued by a governmental unit described in section 3 of

the shared credit rating act, 1985 PA 227, MCL 141.1053.

United States exempt from taxation under 31 USC 3124(a) or exempt

under the United States constitution or any federal statute,

including the obligations of any instrumentality or agency of the

United States that are exempt from state or local taxation under

the United States constitution or any statute of the United States.

Sec. 263. (1) Every depository financial institution with

business activity in this state and with nexus in this state as

determined under section 205 is subject to a franchise tax. The

franchise tax is imposed upon the tax base of the depository

financial institution as determined under section 265 after

allocation or apportionment to this state, at the rate of 0.44%.

(2) The tax under this chapter is in lieu of the tax levied

and imposed under chapter 2 or 2A of this act.

Sec. 265. (1) For a depository financial institution, tax base

means the depository financial institution's net capital. Net

capital shall be determined by adding the value determined under

subsection (2) for the current tax year and preceding 4 calendar

years and dividing the resulting sum by 5. If a depository

financial institution has not been in existence for a period of 5

calendar years, net capital shall be determined by adding together

the values determined under subsection (2) for the number of

calendar years the depository financial institution has been in

existence and dividing the resulting sum by the number of years the

depository financial institution has been in existence. For

purposes of this section, a partial year shall be treated as a full

year.

(2) The value of net capital for each year for purposes of

subsection (1) shall be determined by making the following

adjustments:

(a) Adding together the book value of each of the following:

(i) Capital stock paid in.

(ii) Surplus.

(iii) Undivided profits and capital reserves.

(iv) Net unrealized holding gains or losses on available for

sale securities.

(v) Cumulative foreign currency translation adjustments.

(b) Deducting from the total determined under subdivision (a)

an amount equal to the same percentage of the total as the book

value of United States obligations and Michigan obligations bears

to the book value of the total assets of the depository financial

institution.

(3) For purposes of subsection (2), net capital shall include

equity related to investment in subsidiaries and, except as

otherwise provided in subsections (4) and (5), the foregoing book

values and deductions for United States obligations and Michigan

obligations for each year shall be determined by the reports of

condition for each quarter filed in accordance with the

requirements of the board of governors of the federal reserve

system, the comptroller of the currency, the federal deposit

insurance corporation, or other applicable regulatory authority.

Book values shall be calculated by averaging the quarterly book

values as determined by the reports of condition.

(4) For any year in which a depository financial institution

does not file 4 quarterly reports of condition, book values and

deductions for United States obligations and Michigan obligations

shall be determined by adding together the respective book values

and deductions for United States obligations and Michigan

obligations as determined by each quarterly report of condition

filed for the year and the respective book values and deductions

for United States obligations and Michigan obligations determined

in accordance with generally accepted accounting principles as of

the end of each of the remaining quarters and dividing the

resulting sums by 4.

(5) For any calendar year in which a depository financial

institution ceases to be in existence for 4 quarters, other than by

combination with another depository financial institution, the book

value for that year shall be determined by adding together the book

values and deductions for United States obligations and Michigan

obligations for each quarter in which the financial institution was

in existence and dividing the sums by 4.

(6) In the case of a depository financial institution which

does not file reports of condition, book values shall be determined

in accordance with generally accepted accounting principles.

(7) For purposes of this section, each of the following

applies:

(a) A change in identity, form, or place of organization of 1

depository financial institution shall be treated as if a single

depository financial institution had been in existence prior to as

well as after the change.

(b) The combination of 2 or more depository financial

institutions into 1 shall be treated as if the constituent

depository financial institutions had been a single depository

financial institution in existence prior to as well as after the

combination, and the book values and deductions for United States

obligations and Michigan obligations from the reports of condition

of the constituent institutions shall be combined. A combination

shall include any acquisition required to be accounted for by the

surviving depository financial institution under the pooling of

interest method in accordance with generally accepted accounting

principles or a statutory merger or consolidation.

institutions and 1 or more savings and loan associations taxable

under laws of this state into a single depository financial

institution shall be treated for the taxable year in which the

combination occurred as if the single depository financial

institution had been in existence prior to as well as after the

combination, and the book values and deductions for United States

obligations and Michigan obligations from the reports of condition

of the depository financial institution and the reports to the

federal regulatory agency which are the equivalent of reports of

condition for a savings and loan association shall be combined. The

conversion of a savings and loan association taxable under the laws

of this state into a depository financial institution shall be

treated for the tax year in which the conversion occurred as if the

savings and loan association had been a depository financial

institution prior to as well as after the conversion, and the book

values and deductions for United States obligations and Michigan

obligations from the reports to the federal regulatory agency which

are the equivalent of reports of condition for a savings and loan

association shall be used. The savings and loan association shall

not be relieved of the responsibilities of filing and paying tax

under the laws of this state for tax years prior to the year of any

combination or conversion. Notwithstanding any other provision of

this chapter, the depository financial institution resulting from a

combination with or conversion of a savings and loan association

shall receive a credit on the franchise tax return equal to the

amount of tax paid under the laws of this state for the assessment

date occurring within the tax year during which the combination or

conversion takes place for franchise tax purposes.

Sec. 267. Except as otherwise provided under this chapter, the

tax base of a depository financial institution whose business

activities are confined solely to this state shall be allocated to

this state. The tax base of a depository financial institution

whose business activities are both within and outside this state

shall apportion its tax base to this state as provided under

chapter 3.

CHAPTER 3

Sec. 301. (1) Except as otherwise provided in this act, each

tax base established under this act shall be apportioned in

accordance with this chapter.

(2) A taxpayer whose business activities are confined solely

to this state shall be allocated to this state. A taxpayer whose

business activities are subject to tax both within and outside of

this state are subject to tax in another state in either of the

following circumstances:

(a) The taxpayer is subject to a business privilege tax, a net

income tax, a franchise tax measured by net income, a franchise tax

for the privilege of doing business, or a corporate stock tax or a

tax of the type imposed under this act in that state.

(b) That state has jurisdiction to subject the taxpayer to 1

or more of the taxes listed in subdivision (a) regardless of

whether that state does or does not subject the taxpayer to that

tax.

(3) Both the business income tax base and the net worth tax

base of a taxpayer subject to tax both within and outside of this

state shall be apportioned to this state by multiplying the tax

base by the sales factor calculated under section 303.

Sec. 303. (1) Except as otherwise provided in subsection (2)

and section 311, the sales factor is a fraction, the numerator of

which is the total sales of the taxpayer in this state during the

tax year and the denominator of which is the total sales of the

taxpayer everywhere during the tax year.

(2) Except as otherwise provided under this subsection, for a

taxpayer that is a unitary business group, sales include sales in

this state of every person included in the unitary business group

without regard to whether the person has nexus in this state. Sales

between persons included in a unitary business group must be

eliminated in calculating the sales factor.

Sec. 305. (1) Sales of the taxpayer in this state are

determined as follows:

(a) Sales of tangible personal property are in this state if

the property is shipped or delivered, or, in the case of

electricity and gas, the contract requires the property to be

shipped or delivered, to any purchaser within this state based on

the ultimate destination at the point that the property comes to

rest regardless of the free on board point or other conditions of

the sales.

(b) Receipts from the sale, lease, rental, or licensing of

real property are in this state if that property is located in this

state.

property are sales in this state to the extent that the property is

utilized in this state. The extent of utilization of tangible

personal property in this state is determined by multiplying the

receipts by a fraction, the numerator of which is the number of

days of physical location of the property in this state during the

lease or rental period in the tax year and the denominator of which

is the number of days of physical location of the property

everywhere during all lease or rental periods in the tax year. If

the physical location of the property during the lease or rental

period is unknown or unascertainable by the taxpayer, the tangible

personal property is utilized in the state in which the property

was located at the time the lease or rental payer obtained

possession.

(d) Receipts from the lease or rental of mobile transportation

property owned by the taxpayer are in this state to the extent that

the property is used in this state. The extent an aircraft will be

deemed to be used in this state and the amount of receipts that is

to be included in the numerator of this state's sales factor is

determined by multiplying all the receipts from the lease or rental

of the aircraft by a fraction, the numerator of the fraction is the

number of landings of the aircraft in this state and the

denominator of the fraction is the total number of landings of the

aircraft. If the extent of the use of any transportation property

within this state cannot be determined, then the receipts are in

this state if the property has its principal base of operations in

this state. A motor vehicle will be deemed to be used wholly in the

state in which it is registered.

(e) Royalties and other income received for the use of or for

the privilege of using intangible property, including patents,

know-how, formulas, designs, processes, patterns, copyrights, trade

names, service names, franchises, licenses, contracts, customer

lists, computer software, or similar items, are attributed to the

state in which the property is used by the purchaser. If the

property is used in more than 1 state, the royalties or other

income shall be apportioned to this state pro rata according to the

portion of use in this state. If the portion of use in this state

cannot be determined, the royalties or other income shall be

excluded from both the numerator and the denominator. Intangible

property is used in this state if the purchaser uses the intangible

property or the rights to the intangible property in the regular

course of its business operations in this state, regardless of the

location of the purchaser's customers.

(2) Sales from the performance of services are in this state

and attributable to this state as follows:

(a) Except as otherwise provided in this section, all receipts

from the performance of services are included in the numerator of

the apportionment factor if the recipient of the services receives

all of the benefit of the services in this state. If the recipient

of the services receives some of the benefit of the services in

this state, the receipts are included in the numerator of the

apportionment factor in proportion to the extent that the recipient

receives benefit of the services in this state.

(b) Sales derived from securities brokerage services

attributable to this state are determined by multiplying the total

dollar amount of receipts from securities brokerage services by a

fraction, the numerator of which is the sales of securities

brokerage services to customers within this state, and the

denominator of which is the sales of securities brokerage services

to all customers. Receipts from securities brokerage services

include commissions on transactions, the spread earned on principal

transactions in which the broker buys or sells from its account,

total margin interest paid on behalf of brokerage accounts owned by

the broker's customers, and fees and receipts of all kinds from the

underwriting of securities. If receipts from brokerage services can

be associated with a particular customer, but it is impractical to

associate the receipts with the address of the customer, then the

address of the customer shall be presumed to be the address of the

branch office that generates the transactions for the customer.

from the sale of management, distribution, administration, or

securities brokerage services to, or on behalf of, a regulated

investment company or its beneficial owners, including receipts

derived directly or indirectly from trustees, sponsors, or

participants of employee benefit plans that have accounts in a

regulated investment company, shall be attributable to this state

to the extent that the shareholders of the regulated investment

company are domiciled within this state. For purposes of this

subdivision, "domicile" means the shareholder's mailing address on

the records of the regulated investment company. If the regulated

investment company or the person providing management services to

the regulated investment company has actual knowledge that the

shareholder's primary residence or principal place of business is

different than the shareholder's mailing address, then the

shareholder's primary residence or principal place of business is

the shareholder's domicile. A separate computation shall be made

with respect to the receipts derived from each regulated investment

company. The total amount of sales attributable to this state shall

be equal to the total receipts received by each regulated

investment company multiplied by a fraction determined as follows:

(i) The numerator of the fraction is the average of the sum of

the beginning-of-year and end-of-year number of shares owned by the

regulated investment company shareholders who have their domicile

in this state.

(ii) The denominator of the fraction is the average of the sum

of the beginning-of-year and end-of-year number of shares owned by

all shareholders.

(iii) For purposes of the fraction, the year shall be the tax

year of the regulated investment company that ends with or within

the tax year of the taxpayer.

(3) Receipts from the origination of a loan or group of loans

or gains from the sale of a loan or group of loans secured by

residential real property is deemed a sale in this state only if 1

or more of the following apply:

(a) The real property is located in this state.

(b) The real property is located both within this state and 1

or more other states and more than 50% of the fair market value of

the real property is located within this state.

state and the borrower is located in this state.

(4) Interest from loans secured by real property is in this

state if the property is located within this state or if the

property is located both within this state and 1 or more other

states, if more than 50% of the fair market value of the real

property is located within this state, or if more than 50% of the

fair market value of the real property is not located within any 1

state, if the borrower is located in this state. The determination

of whether the real property securing a loan is located within this

state shall be made as of the time the original agreement was made

and any and all subsequent substitutions of collateral shall be

disregarded.

(5) Interest from loans not secured by real property is in

this state if the borrower is located in this state.

(6) Gains from the sale of loans or a group of loans not

secured by real property, including income recorded under the

coupon stripping rules of section 1286 of the internal revenue

code, are in this state if the borrower is in this state.

(7) Receipts from credit card receivables, including interest

and fees or penalties in the nature of interest from credit card

receivables and receipts from fees charged to cardholders, such as

annual fees, are in this state if the billing address of the card

holder is in this state.

(8) Receipts from the sale of credit card or other receivables

is in this state if the billing address of the customer is in this

state. Credit card issuer's reimbursements fees are in this state

if the billing address of the cardholder is in this state. Receipts

from merchant discount, computed net of any cardholder chargebacks,

but not reduced by any interchange transaction fees or by any

issuer's reimbursement fees paid to another for charges made by its

cardholders, are in this state if the commercial domicile of the

merchant is in this state.

(9) Loan servicing fees derived from loans of another secured

by real property are in this state if the real property is located

in this state, or the real property is located both within and

outside of this state and 1 or more states if more than 50% of the

fair market value of the real property is located in this state, or

more than 50% of the fair market value of the real property is not

located in any 1 state, and the borrower is located in this state.

Loan servicing fees derived from loans of another not secured by

real property are in this state if the borrower is located in this

state. If the location of the security cannot be determined, then

loan servicing fees for servicing either the secured or the

unsecured loans of another are in this state if the lender to whom

the loan servicing service is provided is located in this state.

(10) Receipts from the sale of securities and other assets

from investment and trading activities, including, but not limited

to, interest, dividends, and gains are in this state in either of

the following circumstances:

(a) The person's customer is in this state.

(b) If the location of the person's customer cannot be

determined, both of the following:

(i) Interest, dividends, and other income from investment

assets and activities and from trading assets and activities,

including, but not limited to, investment securities; trading

account assets; federal funds; securities purchased and sold under

agreements to resell or repurchase; options; futures contracts;

forward contracts; notional principal contracts such as swaps;

equities; and foreign currency transactions are in this state if

the average value of the assets is assigned to a regular place of

business of the taxpayer within this state. Interest from federal

funds sold and purchased and from securities purchased under resale

agreements and securities sold under repurchase agreements are in

this state if the average value of the assets is assigned to a

regular place of business of the taxpayer within this state. The

amount of receipts and other income from investment assets and

activities is in this state if assets are assigned to a regular

place of business of the taxpayer within this state.

(ii) The amount of receipts from trading assets and activities,

including, but not limited to, assets and activities in the matched

book, in the arbitrage book, and foreign currency transactions, but

excluding amounts otherwise sourced in this section, are in this

state if the assets are assigned to a regular place of business of

the taxpayer within this state.

(11) Receipts from transportation services rendered by a

person subject to tax in another state are in this state and shall

be attributable to this state as follows:

(a) Except as otherwise provided in subdivisions (b) through

(e), receipts shall be proportioned based on the ratio that revenue

miles of the person in this state bear to the revenue miles of the

person everywhere.

(b) Receipts from maritime transportation services shall be

attributable to this state as follows:

(i) 50% of those receipts that either originate or terminate in

this state.

(ii) 100% of those receipts that both originate and terminate

in this state.

business activity consists of the transportation both of property

and of individuals shall be proportioned based on the total gross

receipts for passenger miles and ton mile fractions, separately

computed and individually weighted by the ratio of gross receipts

from passenger transportation to total gross receipts from all

transportation, and by the ratio of gross receipts from freight

transportation to total gross receipts from all transportation,

respectively.

(d) Receipts attributable to this state of a person whose

business activity consists of the transportation of oil by pipeline

shall be proportioned based on the ratio that the gross receipts

for the barrel miles transported in this state bear to the gross

receipts for the barrel miles transported by the person everywhere.

(e) Receipts attributable to this state of a person whose

business activities consist of the transportation of gas by

pipeline shall be proportioned based on the ratio that the gross

receipts for the 1,000 cubic feet miles transported in this state

bear to the gross receipts for the 1,000 cubic feet miles

transported by the person everywhere.

(12) For purposes of subsection (11), if a taxpayer can show

that revenue mile information is not available or cannot be

obtained without unreasonable expense to the taxpayer, receipts

attributable to this state shall be that portion of the revenue

derived from transportation services everywhere performed that the

miles of transportation services performed in this state bears to

the miles of transportation services performed everywhere. If the

department determines that the information required for the

calculations under subsection (11) are not available or cannot be

obtained without unreasonable expense to the taxpayer, the

department may use other available information that in the opinion

of the department will result in an equitable allocation of the

taxpayer's receipts to this state.

(13) Except as provided in subsections (14) through (19),

receipts from the sale of telecommunications service or mobile

telecommunications service are in this state if the customer’s

place of primary use of the service is in this state. As used in

this subsection, "place of primary use" means the customer's

residential street address or primary business street address where

the customer’s use of the telecommunications service primarily

occurs. For mobile telecommunications service, the customer's

residential street address or primary business street address is

the place of primary use only if it is within the licensed service

area of the customer’s home service provider.

(14) Receipts from the sale of telecommunications service sold

on an individual call-by-call basis are in this state if either of

the following applies:

(a) The call both originates and terminates in this state.

(b) The call either originates or terminates in this state and

the service address is located in this state.

(15) Receipts from the sale of postpaid telecommunications

service are in this state if the origination point of the

telecommunication signal, as first identified by the service

provider’s telecommunication system or as identified by information

received by the seller from its service provider if the system used

to transport telecommunication signals is not the seller's, is

located in this state.

(16) Receipts from the sale of prepaid telecommunications

service or prepaid mobile telecommunications service are in this

state if the purchaser obtains the prepaid card or similar means of

conveyance at a location in this state. Receipts from recharging a

prepaid telecommunications service or mobile telecommunications

service is in this state if the purchaser’s billing information

indicates a location in this state.

(17) Receipts from the sale of private communication services

are in this state as follows:

(a) 100% of the receipts from the sale of each channel

termination point within this state.

(b) 100% of the receipts from the sale of the total channel

mileage between each termination point within this state.

a channel between 2 customer channel termination points, 1 of which

is located in this state and the other is located outside of this

state, which segments are separately charged.

(d) The receipts from the sale of service for segments with a

channel termination point located in this state and in 2 or more

other states or equivalent jurisdictions, and which segments are

not separately billed, are in this state based on a percentage

determined by dividing the number of customer channel termination

points in this state by the total number of customer channel

termination points.

(18) Receipts from the sale of billing services and ancillary

services for telecommunications service are in this state based on

the location of the purchaser’s customers. If the location of the

purchaser's customers is not known or cannot be determined, the

sale of billing services and ancillary services for

telecommunications service are in this state based on the location

of the purchaser.

(19) Receipts to access a carrier's network or from the sale

of telecommunication services for resale are in this state as

follows:

(a) 100% of the receipts from access fees attributable to

intrastate telecommunications service that both originates and

terminates in this state.

(b) 50% of the receipts from access fees attributable to

interstate telecommunications service if the interstate call either

originates or terminates in this state.

charges, if the customer’s service address is in this state. As

used in this subdivision, "interstate end user access line charges"

includes, but is not limited to, the surcharge approved by the

federal communications commission and levied pursuant to 47 CFR 69.

(d) Gross receipts from sales of telecommunication services to

other telecommunication service providers for resale shall be

sourced to this state using the apportionment concepts used for

non-resale receipts of telecommunications services if the

information is readily available to make that determination. If the

information is not readily available, then the taxpayer may use any

other reasonable and consistent method.

(20) Terms used in subsections (13) through (19) have the same

meaning as those terms defined in the streamlined sales and use tax

agreement administered under the streamlined sales and use tax

administration act, 2004 PA 174, MCL 205.801 to 205.833.

(21) For purposes of this section, a borrower is considered

located in this state if the borrower's billing address is in this

state.

Sec. 307. (1) Notwithstanding sections 303 and 305, a spun off

corporation that qualified to calculate its sales factor for 7

years under section 54 of former 1975 PA 228 may elect to calculate

its sales factor under this section for an additional 4 years

following those 7 years or 3 years if a taxpayer had an election

approved under section 54(1)(e) of former 1975 PA 228. Prior to the

end of the first year following the 7 years for which the taxpayer

qualified under section 54 of former 1975 PA 228 and if the spun

off corporation is not required to file amended returns under

section 54(5) of former 1975 PA 228, the spun off corporation may

request, in writing, approval from the state treasurer for the

election of the 4 additional years under this section. If the

taxpayer had an election approved under section 54(1)(e) of former

1975 PA 228, the taxpayer is not required to seek approval under

this section. The department shall approve the election under this

subsection if the requirements of this section are met. The request

shall include all of the following:

(a) A statement that the spun off corporation qualifies for

the election under this section.

(b) A list of all corporations, limited liability companies,

and any other business entities that the spun off corporation

controlled at the time of the restructuring transaction.

least an additional $200,000,000.00 of capital investment in this

state within the additional 4 years and maintain at least 80% of

the number of full-time equivalent employees in this state based on

the number of full-time equivalent employees in this state at the

beginning of the additional 4-year period for all of the additional

4 years; a commitment by the spun off corporation to invest an

additional $400,000,000.00 in this state within the additional 4

years; or a commitment by the spun off corporation to invest a

total of $1,300,000,000.00 in this state within the 11-year period

beginning with the year in which the restructuring transaction

under which a spun off corporation qualified under this subsection

was completed. The 4-year period under this subdivision begins with

the eighth year following the tax year in which the restructuring

transaction under which a spun off corporation qualified under this

subsection was completed. For purposes of this subdivision, the

number of full-time equivalent employees includes employees in all

of the following circumstances:

(i) On temporary layoff.

(ii) On strike.

(iii) On a type of temporary leave other than the type under

subparagraphs (i) and (ii).

(iv) Transferred by the spun off corporation to a related

entity or to its immediately preceding former parent corporation.

(v) Transferred by the spun off corporation to another

employer because of the sale of the spun off corporation's location

in this state that was the work site of the employees.

(2) Prior to the end of the eleventh year following the

restructuring transaction under which a spun off corporation

qualified under subsection (1), a taxpayer that is a buyer of a

plant located in this state that was included in the initial

restructuring transaction under subsection (1) may elect to

calculate its sales factor under subsection (3) and disregard sales

by the taxpayer attributable to that plant to a former parent of a

spun off corporation and the sales attributable to the plant shall

be treated as sales by a spun off corporation. This election shall

extend for a period of 4 years following the date that the plant

was purchased reduced by the number of years for which the taxpayer

calculated its sales factor pursuant to section 54(2) of former

1975 PA 228. On or before the due date for filing the buyer's first

annual return under this act following the purchase of the plant,

the buyer shall request, in writing, approval from the department

for the election provided under this section and shall attach a

statement that the buyer qualifies for the election under this

section.

(3) A spun off corporation qualified under subsection (1) or

(2) that makes an election and is approved under subsection (1) or

(2) calculates its sales factor under section 54 of former 1975 PA

228 subject to both of the following:

(a) A purchaser in this state under section 52 of former 1975

PA 228 does not include a person that purchases from a seller that

was included in the purchaser's combined or consolidated annual

return under this act but, as a result of the restructuring

transaction, ceased to be included in the purchaser's combined or

consolidated annual return under this act. This subdivision applies

only to sales that originate from a plant located in this state.

(b) Total sales under section 51 of former 1975 PA 228 do not

include sales to a purchaser that was a member of a Michigan

affiliated business group that had included the seller in the

filing of a combined annual return under this act but, as a result

of the restructuring transaction, ceased to include the seller.

This subdivision applies only to sales that originate from a plant

located in this state to a location in this state.

(4) At the end of the fourth tax year following an election

under this section, if the spun off corporation that elected to

calculate its sales factor under this section for the additional 4

years allowed under subsection (1) has failed to maintain the

required number of employees or failed to pay or accrue the capital

investment required under subsection (1)(c), the spun off

corporation shall file amended annual returns under this act for

the first through fourth tax years following the election under

this section, regardless of the statute of limitations under

section 27a of 1941 PA 122, MCL 205.27a, and pay any additional tax

plus interest based on the sales factor as calculated under section

303. Interest shall be calculated from the due date of the annual

return under this act or former 1975 PA 228 on which an exemption

under this section was first claimed.

(5) The amount of the spun off corporation's investment

commitments required under this section shall not be reduced by the

amount of any qualifying investments in Michigan plants that are

sold.

(6) A taxpayer whose assets were wholly owned either directly

or indirectly by a taxpayer from whom a spun off corporation

qualifies to apportion its tax base under this section and that

ceased to be wholly owned on November 30, 2006 may annually elect

on its originally filed tax return to apportion its tax base to

this state using the same receipts factor reported on the combined

tax return filed by its former parent company for the same taxable

year.

(7) As used in this section:

(a) "Restructuring transaction" means a tax free distribution

under section 355 of the internal revenue code and includes tax

free transactions under section 355 of the internal revenue code

that are commonly referred to as spin offs, split ups, split offs,

or type D reorganizations.

(b) "Spun off corporation" means an entity treated as a

controlled corporation under section 355 of the internal revenue

code. Controlled corporation includes a corporate subsidiary

created for the purpose of a restructuring transaction, a limited

liability company, or an operational unit or division with business

activities that were previously carried out as a part of the

distributing corporation.

Sec. 309. (1) If the apportionment provisions of this act do

not fairly represent the extent of the taxpayer's business activity

in this state, the taxpayer may petition for or the treasurer may

require the following, with respect to all or a portion of the

taxpayer's business activity, if reasonable:

(a) Separate accounting.

(b) The inclusion of 1 or more additional or alternative

factors that will fairly represent the taxpayer's business activity

in this state.

allocation and apportionment of the taxpayer's tax base.

(2) An alternate method may be used only if it is approved by

the department.

(3) The apportionment provisions of this act shall be

rebuttably presumed to fairly represent the business activity

attributed to the taxpayer in this state, taken as a whole and

without a separate examination of the specific elements of either

tax base unless it can be demonstrated that the business activity

attributed to the taxpayer in this state is out of all appropriate

proportion to the actual business activity transacted in this state

and leads to a grossly distorted result or would operate

unconstitutionally to tax the extraterritorial activity of the

taxpayer.

(4) The filing of a return or an amended return is not

considered a petition for the purposes of subsection (1).

Sec. 311. All other receipts not otherwise sourced under this

chapter shall be sourced based on where the benefit to the customer

is received or, if where the benefit to the customer is received

cannot be determined, to the customer's location.

CHAPTER 4

Sec. 401. (1) Notwithstanding any other provision in this act,

the credit provided in this section shall be taken before any other

credit under this act. A taxpayer whose business activities in this

state include regulated activities may claim a credit against the

tax imposed under section 203 equal to the product of the

taxpayer's net worth tax base allocated and apportioned to this

state multiplied by .17% and then multiplied by a fraction the

numerator of which is the taxpayer's total sales within this state

as determined under chapter 3 related to regulated activities and

the denominator of which is the taxpayer's total sales within this

state as determined under chapter 3 for all business activities.

(2) As used in this section, "regulated activities" means

those business activities for which the taxpayer is licensed or

regulated under any of the following:

(a) Mortgage brokers, lenders, and servicers licensing act,

1987 PA 173, MCL 445.1651 to 445.1684.

(b) The secondary mortgage loan act, 1981 PA 125, MCL 493.51

to 493.81.

to 487.2072.

(d) 1984 PA 379, MCL 493.101 to 493.114.

(e) Motor vehicle sales finance act, 1950 (Ex Sess) PA 27, MCL

492.101 to 492.141.

(f) Regulatory loan act, 1939 PA 21, MCL 493.1 to 493.24.

(g) Home improvement finance act, 1965 PA 332, MCL 445.1101 to

445.1431.

(h) Retail installment sales act, 1966 PA 224, MCL 445.851 to

445.873.

(i) Deferred presentment service transactions act, 2005 PA

244, MCL 487.2121 to 487.2173.

(j) Uniform securities act, 1964 PA 265, MCL 451.501 to

451.818.

(k) Money transmission services act, 2006 PA 250, MCL 487.1001

to 487.1047.

(l) Debt management act, 1975 PA 148, MCL 451.411 to 451.437.

(m) Article 25 of the occupational code, 1980 PA 299, MCL

339.2501 to 339.2518.

(n) Chapter 12 of the insurance code of 1956, 1956 PA 218, MCL

500.1200 to 500.1247.

Sec. 403. (1) Notwithstanding any other provision in this act,

the credits provided in this section shall be taken after the

credit under section 401 and before any other credit under this

act. The total combined credit allowed under this section shall not

exceed 65% of the total tax liability imposed under this act.

(2) Subject to the limitation in subsection (1), a taxpayer

may claim a credit against the tax imposed by this act equal to

0.56% of the taxpayer's compensation in this state.

(3) Subject to the limitation in subsection (1), a taxpayer

may claim a credit against the tax imposed by this act equal to

3.3% multiplied by the result of subtracting the sum of the amounts

calculated under subdivisions (d), (e), and (f) from the sum of the

amounts calculated under subdivisions (a), (b), and (c):

(a) Calculate the cost, including fabrication and

installation, paid or accrued in the taxable year of tangible

assets of a type that are, or under the internal revenue code will

become, eligible for depreciation, amortization, or accelerated

capital cost recovery for federal income tax purposes, provided

that the assets are physically located in this state for use in a

business activity in this state and are not mobile tangible assets.

(b) Calculate the cost, including fabrication and

installation, paid or accrued in the taxable year of mobile

tangible assets of a type that are, or under the internal revenue

code will become, eligible for depreciation, amortization, or

accelerated capital cost recovery for federal income tax purposes.

This amount shall be multiplied by the apportionment factor for the

tax year as prescribed in chapter 3.

purchased or acquired for use outside of this state in a tax year

beginning after December 31, 2007 and subsequently transferred into

this state and purchased or acquired for use in a business

activity, calculate the federal basis used for determining gain or

loss as of the date the tangible assets were physically located in

this state for use in a business activity plus the cost of

fabrication and installation of the tangible assets in this state.

(d) If the cost of tangible assets described in subdivision

(a) was paid or accrued in a tax year beginning after December 31,

2007, calculate the gross proceeds or benefit derived from the sale

or other disposition of the tangible assets minus the gain,

multiplied by the apportionment factor for the taxable year as

prescribed in chapter 3, and plus the loss, multiplied by the

apportionment factor for the taxable year as prescribed in chapter

3 from the sale or other disposition reflected in federal taxable

income and minus the gain from the sale or other disposition added

to the business income tax base in section 201.

(e) If the cost of tangible assets described in subdivision

(b) was paid or accrued in a tax year beginning after December 31,

2007, calculate the gross proceeds or benefit derived from the sale

or other disposition of the tangible assets minus the gain and plus

the loss from the sale or other disposition reflected in federal

taxable income and minus the gain from the sale or other

disposition added to the business income tax base in section 201.

This amount shall be multiplied by the apportionment factor for the

tax year as prescribed in chapter 3.

(f) For assets purchased or acquired in a tax year beginning

after December 31, 2007 that were eligible for a credit under

subdivision (a) or (c) and that were transferred out of this state,

calculate the federal basis used for determining gain or loss as of

the date of the transfer.

(4) For a tax year in which the amount of the credit

calculated under subsection (3) is negative, the absolute value of

that amount is added to the taxpayer's tax liability for the tax

year.

(5) A taxpayer that is an insurance company is not eligible

for the credit allowed under this section.

(6) A taxpayer that claims a credit under this section is not

prohibited from claiming a credit under section 405. However, the

taxpayer shall not claim a credit under this section and section

405 based on the same costs and expenses.

Sec. 405. A taxpayer may claim a credit against the tax

imposed by this act equal to 4% of the taxpayer's research and

development expenses in this state in the tax year. The credit

under this section combined with the total credit allowed under

section 403 shall not exceed 75% of the total tax liability imposed

under this act. As used in this section, "research and development

expenses" means that term as defined in section 41(b) of the

internal revenue code.

Sec. 407. (1) A qualified taxpayer that makes an eligible

contribution in an eligible business may claim a credit against the

tax imposed by the act equal to 50% of the taxpayer's eligible

contribution, not to exceed $500,000.00.

(2) Prior to making an eligible contribution, a qualified

taxpayer shall submit an application to the authority for approval

of the credit. The application shall include at least all of the

following:

(a) An economic impact analysis, including all of the

following:

(i) The impact on both the qualified taxpayer and eligible

business.

(ii) The innovation impact on the technology sector.

(iii) The number of jobs created.

(b) A project and collaboration structure that includes:

(i) The structure of investment between the qualified taxpayer

and eligible business.

(ii) Technology development roles and responsibilities.

(iii) A commercialization plan, including intellectual property

structure.

the qualified taxpayer.

(d) Other collaborators or interested and supportive

businesses.

(i) A financial summary.

(ii) Total eligible contribution by the qualified taxpayer.

(iii) In-kind services provided by the qualified taxpayer.

(iv) Other investors or service providers in the project.

(v) Total overall investment into the project.

(3) The authority shall develop criteria to competitively

review applications, including, but not limited to, criteria

related to all of the following:

(a) Economic impact in Michigan.

(b) Total cash investment by the qualified taxpayer.

(d) Other collaborators and services provided.

(e) Impact of technology development across specific and other

sectors.

(f) The commercialization plan and potential for

commercialization.

(4) A qualified 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.

(5) The certificate required by subsection (4) shall state all

of the following:

(a) The taxpayer is an eligible business.

(b) The amount of the credit under this section for the

eligible business for the designated tax year, which shall be the

year in which contribution is made.

the Michigan department of treasury number assigned to the

taxpayer.

(6) The authority shall not grant more than 25 credits under

this section for any 1 year, based on an application and a

competitive review criteria.

(7) A qualified taxpayer that receives a credit under this

section and the eligible business to which a contribution is made

shall enter into an agreement with the authority that requires the

qualified taxpayer and the eligible business to comply with the

relevant provisions of the application as determined by the

authority for a period of 5 years. If the authority determines that

there has not been compliance with the requirements of the terms of

the agreement, the qualified taxpayer shall be liable for an amount

equal to 125% of the total of all credits received under this

section for all tax years.

(8) As used in this section:

(a) "Authority" means the Michigan economic growth authority

created in the Michigan economic growth authority act, 1995 PA 24,

MCL 207.801 to 207.810.

(b) "Eligible contribution" means the transfer of pecuniary

interest in the form of cash, for the purposes of research and

development and technology innovation. An eligible contribution

does not include contract research.

and development that together with any affiliates employs fewer

than 50 full-time employees or has gross receipts of less than

$10,000,000.00 and has no prior financial interest in the qualified

taxpayer and in which the qualified taxpayer has no prior financial

interest.

(d) "Qualified taxpayer" means a taxpayer that meets all of

the following criteria:

(i) Proposes to fund, support, and collaborate in the research

and development and technology innovation with an eligible business

located in this state.

(ii) Has not received a credit under this section in the past

calendar year.

(e) "Research and development" means 1 of the following:

(i) Translational research conducted with the objective of

attaining a specific benefit or to solve a practical problem.

(ii) Activity that seeks to utilize, synthesize, or apply

existing knowledge, information, or resources to the resolution of

a specified problem, question, or issue, with high potential for

commercial application to create jobs in this state.

(iii) Original investigation for the advancement of scientific

or technological knowledge that will enhance the research capacity

of this state in a way that increases the ability to attract to or

develop companies, jobs, researchers, or students in this state.

Sec. 409. (1) For tax years that begin on or after January 1,

2008 and end before January 1, 2018, an eligible taxpayer may claim

a credit against the tax imposed by this act equal to the amount of

the capital expenditures during the tax year for which the credit

under this section is claimed, not to exceed $1.00.

(2) If the credit allowed under this section for the tax year

exceeds the taxpayer's tax liability for the tax year, that portion

which exceeds the tax liability for the tax year shall not be

refunded and may not be carried forward to offset tax liability in

subsequent years.

(3) As used in this section:

(a) "Eligible taxpayer" means any of the following:

(i) A person who owns and operates a motorsports entertainment

complex.

(ii) A person who is the lessee and operator of a motorsports

entertainment complex or the lessee of the land on which a

motorsports entertainment complex is located and operates that

mortorsports entertainment complex.

(iii) A person who operates and maintains a motorsports

entertainment complex under an operation and management agreement.

(b) "Motorsports entertainment complex" means a closed-course

motorsports facility, and its ancillary grounds and facilities,

that satisfies all of the following:

(i) Has at least 70,000 fixed seats for race patrons.

(ii) Has at least 6 scheduled days of motorsports events each

calendar year.

(iii) Serves food and beverages at the motorsports entertainment

complex during motorsports events each calendar year through

concession outlets, which are staffed by individuals who represent

or are members of 1 or more nonprofit civic or charitable

organizations that directly benefit from the concession outlets'

sales.

(iv) Engages in tourism promotion.

(v) Has permanent exhibitions of motorsports history, events,

or vehicles within the motorsports entertainment complex.

ancillary activities that have been sanctioned by a sanctioning

body.

(d) "Sanctioning body" means the American motorcycle

association (AMA); auto racing club of America (ARCA); championship

auto racing teams (CART); grand American road racing association

(GRAND AM); Indy racing league (IRL); national association for

stock car auto racing (NASCAR); national hot rod association

(NHRA); professional sportscar racing (PSR); sports car club of

America (SCCA); United States auto club (USAC); Michigan state

promoters association; or any successor organization or any other

nationally or internationally recognized governing body of

motorsports that establishes an annual schedule of motorsports

events and grants rights to conduct the events, that has

established and administers rules and regulations governing all

participants involved in the events and all persons conducting the

events, and that requires certain liability assurances, including

insurance.

Sec. 411. A taxpayer whose gross receipts allocated or

apportioned to this state are greater than $350,000.00 but less

than $700,000.00, may claim a credit against the tax imposed under

this act equal to the tax liability after the credit under section

417 and before all other credits multiplied by a fraction the

numerator of which is the difference between the person's allocated

or apportioned gross receipts and $700,000.00 and the denominator

of which is $350,000.00.

Sec. 413. (1) A taxpayer may claim a credit against the tax

imposed by this act equal to 50% of the amount paid for taxes

levied on eligible personal property in the tax year and a credit

against the tax imposed by this act equal to 30% of the amount paid

for taxes levied on eligible telephone personal property in the tax

year.

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

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

excess shall be refunded.

(3) As used in this section:

(a) "Eligible personal property" means personal property that

is classified as industrial personal property under section 34c of

the general property tax act, 1893 PA 206, MCL 211.34c.

(b) "Eligible telephone personal property" means personal

property of a telephone company subject to the tax levied under

1905 PA 282, MCL 207.1 to 207.21.

Sec. 415. (1) A taxpayer that meets the criteria under

subsection (4) and that is a qualified start-up business that does

not have business income for 2 consecutive tax years may claim a

credit against the tax imposed under this act for the second of

those 2 consecutive tax years and each immediately following

consecutive tax year in which the taxpayer does not have business

income equal to the taxpayer's tax liability for the tax year in

which the taxpayer has no business income. If the taxpayer has

business income in any tax year after the credit under this section

is claimed, the taxpayer shall claim the credit under this section

for any following tax year only if the taxpayer subsequently has no

business income for 2 consecutive tax years. The taxpayer may claim

the credit for the second of those 2 consecutive tax years and each

immediately following consecutive tax year in which the taxpayer

does not have business income.

(2) A credit under this section shall not be claimed for more

than a total of 5 tax years.

(3) A taxpayer that qualified to claim the credit under

section 31a of former 1975 PA 228 may claim the credit under this

section for a total of 5 years, reduced by the number of years the

taxpayer was eligible to claim the credit under section 31a of

former 1975 PA 228.

(4) If a taxpayer that took the credit under this section has

no business activity in this state and has any business activity

outside of this state for any of the first 3 tax years after the

last tax year for which it took the credit under this section, the

taxpayer shall add to its tax liability the following amounts:

(a) If the taxpayer has no business activity in this state for

the first tax year after the last tax year for which a credit under

this section is claimed, 100% of the total of all credits claimed

under this section.

(b) If the taxpayer has no business activity in this state for

the second tax year after the last tax year for which a credit

under this section is claimed, 67% of the total of all credits

claimed under this section.

year after the last tax year for which a credit under this section

is claimed, 33% of the total of all credits claimed under this

section.

(5) For the tax year for which a credit under this section is

claimed, compensation, directors' fees, or distributive shares paid

by the taxpayer to any 1 of the following shall not exceed

$135,000.00:

(a) A shareholder or officer of a corporation other than an S

corporation.

(b) A partner of a partnership or limited liability

partnership.

(d) A member of a limited liability corporation.

(e) An individual who is an owner.

(6) As used in this section:

(a) "Business income" means business income as defined in

section 105 excluding funds received from small business innovation

research grants and small business technology transfer programs

established under the small business innovation development act of

1982, Public Law 97-219, reauthorized under the small business

research and development enhancement act, Public Law 102-564, and

subsequently reauthorized under the small business reauthorization

act of 2000, Public Law 106-554.

(b) "Michigan economic development corporation" means the

public body corporate created under section 28 of article VII of

the state constitution of 1963 and the urban cooperation act of

1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual

interlocal agreement effective April 5, 1999, as amended, between

local participating economic development corporations formed under

the economic development corporations act, 1974 PA 338, MCL

125.1601 to 125.1636, and the Michigan strategic fund.

all of the following criteria as certified annually by the Michigan

economic development corporation:

(i) Has fewer than 25 full-time equivalent employees.

(ii) Has sales of less than $1,000,000.00 in the tax year for

which the credit under this section is claimed.

(iii) Research and development expenses make up at least 15% of

its expenses in the tax year for which the credit under this

section is claimed.

(iv) Is not publicly traded.

(v) Met 1 of the following criteria during 1 of the initial 2

consecutive tax years in which the qualified start-up business had

no business income:

(A) During the immediately preceding 7 years was in 1 of the

first 2 years of contribution liability under section 19 of the

Michigan employment security act, 1936 (Ex Sess) PA 1, MCL 421.19.

(B) During the immediately preceding 7 years would have been

in 1 of the first 2 years of contribution liability under section

19 of the Michigan employment security act, 1936 (Ex Sess) PA 1,

MCL 421.19, if the qualified start-up business had employees and

was liable under the Michigan employment security act, 1936 (Ex

Sess) PA 1, MCL 421.1 to 421.75.

in 1 of the first 2 years of contribution liability under section

19 of the Michigan employment security act, 1936 (Ex Sess) PA 1,

MCL 421.19, if the qualified start-up business had not assumed

successor liability under section 15(g) of the Michigan employment

security act, 1936 (Ex Sess) PA 1, MCL 421.15.

(d) "Research and development" means qualified research as

that term is defined in section 41(d) of the internal revenue code.

Sec. 417. (1) The credit provided in this section shall be

taken after the credits under sections 401, 403, and 405 and before

any other credit under this act and is available to any taxpayer

with gross receipts that do not exceed $10,000,000.00 and with

adjusted business income minus the loss adjustment that does not

exceed $475,000.00, subject to the following as adjusted annually

for inflation using the Detroit consumer price index:

(a) An individual, a partnership, a limited liability company,

or a subchapter S corporation is disqualified if the individual,

any 1 partner of the partnership, any 1 member of the limited

liability company, or any 1 shareholder of the subchapter S

corporation receives more than $115,000.00 as a distributive share

of the adjusted business income minus the loss adjustment of the

individual, the partnership, the limited liability company, or the

subchapter S corporation.

(b) A corporation other than a subchapter S corporation is

disqualified if either of the following occur for the respective

tax year:

(i) Compensation and directors' fees of a shareholder or

officer exceed $115,000.00.

(ii) The sum of the following amounts exceeds $115,000.00:

(A) Compensation and directors' fees of a shareholder.

(B) The product of the percentage of outstanding ownership or

of outstanding stock owned by that shareholder multiplied by the

difference between the sum of business income and, to the extent

deducted in determining federal taxable income, a carry back or a

carry over of a net operating loss or capital loss, minus the loss

adjustment.

subsection (3), the credit determined under this subsection shall

be reduced by the following percentages in the following

circumstances:

(i) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is more than $95,000.00 but less than $100,000.00, the credit is

reduced by 20%.

(ii) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is $100,000.00 or more but less than $105,000.00, the credit is

reduced by 40%.

(iii) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is $105,000.00 or more but less than $110,000.00, the credit is

reduced by 60%.

(iv) If an individual, any 1 partner of the partnership, any 1

member of the limited liability company, or any 1 shareholder of

the subchapter S corporation receives as a distributive share of

adjusted business income minus the loss adjustment of the

individual, partnership, limited liability company, or subchapter S

corporation; if compensation and directors' fees of a shareholder

or officer of a corporation other than a subchapter S corporation

are; or if the sum of the amounts in subdivision (b)(ii)(A) and (B)

is $110,000.00 or more but not in excess of $115,000.00, the credit

is reduced by 80%.

(2) For the purposes of determining disqualification under

subsection (1), an active shareholder's share of business income

shall not be attributed to another active shareholder.

(3) To determine the reduction percentage under subsection

(1)(c), the following apply:

(a) The reduction percentage for a partnership, limited

liability company, or subchapter S corporation is based on the

distributive share of adjusted business income minus loss

adjustment of the partner, member, or shareholder with the greatest

distributive share of adjusted business income minus loss

adjustment.

(b) The reduction percentage for a corporation other than a

subchapter S corporation is the greater of the following:

(i) The reduction percentage based on the compensation and

directors' fees of the shareholder or officer with the greatest

amount of compensation and directors' fees.

(ii) The reduction percentage based on the sum of the amounts

in subsection (1)(b)(ii)(A) and (B) for the shareholder or officer

with the greatest sum of the amounts in subsection (1)(b)(ii)(A) and

(B).

(4) A taxpayer that qualifies under subsection (1) is allowed

a credit against the tax imposed under this act. The credit under

this subsection is the amount by which the tax imposed under this

act exceeds 1.8% of adjusted business income.

(5) If gross receipts exceed $9,000,000.00, the credit shall

be reduced by a fraction, the numerator of which is the amount of

gross receipts over $9,000,000.00 and the denominator of which is

$1,000,000.00. The credit shall not exceed 100% of the tax

liability imposed under this act.

(6) For a taxpayer that reports for a tax year less than 12

months, the amounts specified in this section for gross receipts,

adjusted business income, and share of business income shall be

multiplied by a fraction, the numerator of which is the number of

months in the tax year and the denominator of which is 12.

(7) The department shall permit a taxpayer that elects to

claim the credit allowed under this section based on the amount by

which the tax imposed under this act exceeds the percentage of

adjusted business income for the tax year as determined under

subsection (4), and that is not required to reduce the credit

pursuant to subsection (1) or (5), to file and pay the tax imposed

by this act without computing the tax imposed under section 20.

(8) As used in this section:

(a) "Active shareholder" means a shareholder who receives at

least $10,000.00 in compensation, directors' fees, or dividends

from the business, and who owns at least 5% of the outstanding

stock or other ownership interest.

(b) "Adjusted business income" means business income as

defined in section 3 with all of the following adjustments:

(i) Add compensation and directors' fees of active shareholders

of a corporation.

(ii) Add, to the extent deducted in determining federal taxable

income, a carry back or a carry over of a net operating loss.

(iii) Add, to the extent deducted in determining federal taxable

income, a capital loss.

(iv) Add compensation and directors' fees of officers of a

corporation.

comprehensive index of consumer prices available for the Detroit

area from the United States department of labor, bureau of labor

statistics.

(d) "Loss adjustment" means the amount by which adjusted

business income was less than zero in any of the 5 tax years

immediately preceding the tax year for which eligibility for the

credit under this section is being determined. In determining the

loss adjustment for a tax year, a taxpayer is not required to use

more of the taxpayer's total negative adjusted business income than

the amount needed to qualify the taxpayer for the credit under this

section. A taxpayer shall not be considered to have used any

portion of the taxpayer's negative adjusted business income amount

unless the portion used is necessary to qualify for the credit

under this section. A taxpayer shall not reuse a negative adjusted

business income amount used as a loss adjustment in a previous tax

year or use a negative adjusted business income amount from a year

in which the taxpayer did not receive the credit under this

section.

(e) "Subchapter S corporation" means a corporation that elects

to be subject to taxation under subchapter S of chapter 1 of

subtitle A of the internal revenue code, 26 USC 1361 to 1379.

Sec. 419. (1) For tax years that begin after December 31,

2008, a taxpayer that has been issued a tax voucher certificate

under section 23 of the Michigan early stage venture investment act

of 2003, 2003 PA 296, MCL 125.2253, or any taxpayer to which all or

a portion of a tax voucher is transferred pursuant to the Michigan

early stage venture investment act of 2003, 2003 PA 296, MCL

125.2231 to 125.2263, may use the tax voucher to pay a liability of

the taxpayer due under this act.

(2) On and after November 21, 2005, the total amount of all

tax voucher certificates that shall be approved under this section,

section 37e of former 1975 PA 228, and the Michigan early stage

venture investment act of 2003, 2003 PA 296, MCL 125.2231 to

125.2263, shall not exceed an amount sufficient to allow the

Michigan early stage venture investment corporation to raise

$450,000,000.00 for the purposes authorized under the Michigan

early stage venture investment act of 2003, 2003 PA 296, MCL

125.2231 to 125.2263. The total amount of all tax voucher

certificates under this section and section 37e of former 1975 PA

228 shall not exceed $600,000,000.00.

(3) The department shall not approve a tax voucher certificate

under section 23(2) of the Michigan early stage venture investment

act of 2003, 2003 PA 296, MCL 125.2253, after December 31, 2015.

(4) For tax voucher certificates approved under subsection

(2), the amount of tax voucher certificates approved by the

department for use in any tax year shall not exceed 25% of the

total amount of all tax voucher certificates approved by the

department.

(5) Investors shall apply to the Michigan early stage venture

investment corporation for approval of tax voucher certificates at

the time and in the manner required under the Michigan early stage

venture investment act of 2003, 2003 PA 296, MCL 125.2231 to

125.2263.

(6) The Michigan early stage venture investment corporation

shall determine which investors are eligible for tax vouchers and

the amount of the tax vouchers allowed to each investor as provided

in the Michigan early stage venture investment act of 2003, 2003 PA

296, MCL 125.2231 to 125.2263.

(7) The tax voucher certificate, and any completed transfer

form that was issued pursuant to the Michigan early stage venture

investment act of 2003, 2003 PA 296, MCL 125.2231 to 125.2263,

shall be attached to the taxpayer's annual return under this act.

The department may prescribe and implement alternative methods of

reporting and recording ownership, transfer, and utilization of tax

voucher certificates that are not inconsistent with this act.

(8) A tax voucher shall be used to pay a liability of the

taxpayer due under this act only in a tax year that begins after

December 31, 2008. The amount of the tax voucher that may be used

to pay a liability of the taxpayer due under this act in any tax

year shall not exceed the lesser of the following:

(a) The amount of the tax voucher stated on the tax voucher

certificate held by the taxpayer.

(b) The amount authorized to be used in the tax year under the

terms of the tax voucher certificate.

year for which the tax voucher is to be applied.

(9) The department shall administer transfers of tax voucher

certificates or the transfer of the right to be issued and receive

a tax voucher certificate as provided in the Michigan early stage

venture investment act of 2003, 2003 PA 296, MCL 125.2231 to

125.2263, and shall take any action necessary to enforce and

effectuate the permissible issuance and use of tax voucher

certificates in a manner authorized under this section and the

Michigan early stage venture investment act of 2003, 2003 PA 296,

MCL 125.2231 to 125.2263.

(10) If the amount of a tax voucher certificate held by a

taxpayer or transferee exceeds the amount the taxpayer or

transferee may use under subsection (8)(b) or (c) in a tax year,

that excess may be used by the taxpayer or transferee to pay,

subject to the limitations of subsection (8), any future liability

of the taxpayer or transferee under this act.

(11) If a taxpayer requests, the department shall issue

separate replacement tax voucher certificates, or replacement

approval letters, evidencing the right of the holder to be issued

and receive a tax voucher certificate in an aggregate amount equal

to the amount of a tax voucher certificate or an approval letter

presented by a taxpayer. Replacement tax voucher certificates may

be used, and replacement approval letters may be issued, to

evidence the right to be issued and receive a tax voucher

certificate that will be used for 1 or more of the following

purposes:

(a) To pay any liability of the taxpayer under this act to the

extent permitted in any tax year by subsection (8).

(b) To pay any liability of the taxpayer under and to the

extent allowed under section 270 of the income tax act of 1967,

1967 PA 281, MCL 206.270.

replacement tax voucher certificate to pay any liability under this

act to the extent allowed under subsection (8).

(d) To be transferred to a taxpayer that may use the tax

voucher certificate to pay any liability under and to the extent

allowed under section 270 of the income tax act of 1967, 1967 PA

281, MCL 206.270.

(12) As used in this section:

(a) "Investor" means that term as defined in the Michigan

early stage venture investment act of 2003, 2003 PA 296, MCL

125.2231 to 125.2263.

(b) "Certificate" means the certificate issued under section

23 of the Michigan early stage venture investment act of 2003, 2003

PA 296, MCL 125.2253.

certificate has been transferred under section 23 of the Michigan

early stage venture investment act of 2003, 2003 PA 296, MCL

125.2253, and this section.

Sec. 421. (1) A taxpayer that is not subject to the income tax

act of 1967, 1967 PA 281, MCL 206.1 to 206.532, may claim a credit

against the tax imposed by this act, subject to the applicable

limitations under this section, equal to 50% of the aggregate

amount of charitable contributions made by the taxpayer during the

tax year to all of the following:

(a) A public broadcast station as defined by 47 USC 397 that

is not affiliated with an institution of higher education.

(b) A public library.

a nonprofit corporation, fund, foundation, trust, or association

organized and operated exclusively for the benefit of an

institution of higher learning.

(d) The Michigan colleges foundation.

(e) A municipality or a nonprofit corporation affiliated with

an art, historical, or zoological institute for the purpose of

benefiting the art, historical, or zoological institute.

(f) An institution devoted to the procurement, care, study,

and display of objects of lasting interest or value.

(2) The tax credit allowed under this section for a donation

under subsection (1)(c) is allowed only if the donee corporation,

fund, foundation, trust, or association is controlled or approved

and reviewed by the governing board of the institution of higher

learning that benefits from the charitable contributions. The

nonprofit corporation, fund, foundation, trust, or association

shall provide copies of its annual independently audited financial

statements to the auditor general of this state and chairpersons of

the appropriation committees of the senate and house or

representatives.

(3) The credit allowed under this section for any tax year

shall not exceed 5% of the tax liability of the taxpayer for that

tax year as determined without regard to this section or $5,000.00,

whichever is less.

(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) As used in this section:

(a) "Institution of higher learning" means an educational

institution located within this state meeting all of the following

requirements:

(i) Maintains a regular faculty and curriculum and has a

regularly enrolled body of students in attendance at the place

where its educational activities are carried on.

(ii) Regularly offers education above the twelfth grade.

(iii) Awards associate, bachelor's, master's, or doctoral

degrees or any combination of those degrees or higher education

credits acceptable for those degrees granted by other institutions

of higher learning.

(iv) Is recognized by the state board of education as an

institution of higher learning and appears as an institution of

higher learning in the annual publication of the department of

education entitled "the directory of institutions of higher

education".

(b) "Public library" means a public library as defined in

section 2 of 1977 PA 89, MCL 397.552.

Sec. 423. (1) A taxpayer that is an employer or carrier that

is subject to the worker's disability compensation act of 1969,

1969 PA 317, MCL 418.101 to 418.941, may claim a credit against the

tax imposed by this act an amount equal to the amount paid during

that tax year by the taxpayer pursuant to section 352 of the

worker's disability compensation act of 1969, 1969 PA 317, MCL

418.352, as certified by the director of the bureau of worker's

disability compensation pursuant to section 391(6) of the worker's

disability compensation act of 1969, 1969 PA 317, MCL 418.391.

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

claim a portion of the credit allowed by this section equal to the

payments made during a calendar quarter pursuant to section 352 of

the worker's disability compensation act of 1969, 1969 PA 317, MCL

418.352, against the estimated tax payments made under section 501.

Any subsequent increase or decrease in the amount claimed for

payments made by the insurer or self-insurer shall be reflected in

the amount of the credit taken for the calendar quarter in which

the amount of the adjustment is finalized.

(3) The credit under this section is in addition to any other

credits the taxpayer is eligible for under this act.

(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 be

refunded.

Sec. 425. (1) Subject to the applicable limitations in this

section, a taxpayer that does not claim a credit under section 261

of the income tax act of 1967, 1967 PA 281, MCL 206.261, may claim

a credit against the tax imposed by this act equal to 50% of the

amount the taxpayer contributed during the tax year to an endowment

fund of a community foundation.

(2) The credit allowed by this section shall not exceed 5% of

the taxpayer's tax liability for the tax year before claiming any

credits allowed by this act or $5,000.00, whichever is less.

(3) 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.

(4) A taxpayer may claim a credit under this section for

contributions to a community foundation made before the expiration

of the 18-month period after a community foundation was

incorporated or established during which the community foundation

must build an endowment value of $100,000.00 as provided in

subsection (6)(g). If the community foundation does not reach the

required $100,000.00 endowment value during that 18-month period,

contributions to the community foundation made after the date on

which the 18-month period expires shall not be used to calculate a

credit under this section. At any time after the expiration of the

18-month period under subsection (6)(g) that the community

foundation has an endowment value of $100,000.00, the community

foundation may apply to the department for certification under this

section.

(5) On or before July 1 of each year, the department shall

report to the house of representatives committee on tax policy and

the senate finance committee the total amount of tax credits

claimed under this section and under section 261 of the income tax

act of 1967, 1967 PA 281, MCL 206.261, for the immediately

preceding tax year.

(6) As used in this section, "community foundation" means an

organization that applies for certification under subsection (4) on

or before May 15 of the tax year for which the taxpayer is claiming

the credit and that the department certifies for that tax year as

meeting all of the following requirements:

(a) Qualifies for exemption from federal income taxation under

section 501(c)(3) of the internal revenue code.

(b) Supports a broad range of charitable activities within the

specific geographic area of this state that it serves, such as a

municipality or county.

funds by seeking gifts and bequests from a wide range of potential

donors in the community or area served.

(d) Is publicly supported as defined by the regulations of the

United States department of treasury, 26 CFR 1.170A-9(e)(10). To

maintain certification, the community foundation shall submit

documentation to the department annually that demonstrates

compliance with this subdivision.

(e) Is not a supporting organization as an organization is

described in section 509(a)(3) of the internal revenue code and in

26 CFR 1.509(a)-4 and 1.509(a)-5.

(f) Meets the requirements for treatment as a single entity

contained in 26 CFR 1.170A-9(e)(11).

(g) Except as provided in subsection (4), is incorporated or

established as a trust at least 6 months before the beginning of

the tax year for which the credit under this section is claimed and

that has an endowment value of at least $100,000.00 before the

expiration of 18 months after the community foundation is

incorporated or established.

(h) Has an independent governing body representing the general

public's interest and that is not appointed by a single outside

entity.

(i) Provides evidence to the department that the community

foundation has, before the expiration of 6 months after the

community foundation is incorporated or established, and maintains

continually during the tax year for which the credit under this

section is claimed, at least 1 part-time or full-time employee.

(j) For community foundations that have an endowment value of

$1,000,000.00 or more only, the community foundation is subject to

an annual independent financial audit and provides copies of that

audit to the department not more than 3 months after the completion

of the audit. For community foundations that have an endowment

value of less than $1,000,000.00, the community foundation is

subject to an annual review and an audit every third year.

(k) In addition to all other criteria listed in this

subsection for a community foundation that is incorporated or

established after January 9, 2001, operates in a county of this

state that was not served by a community foundation when the

community foundation was incorporated or established or operates as

a geographic component of an existing certified community

foundation.

Sec. 427. (1) A taxpayer that does not claim a credit under

section 261 of the income tax act of 1967, 1967 PA 281, MCL

206.261, for a contribution to a shelter for homeless persons, food

kitchen, food bank, or other entity, the primary purpose of which

is to provide overnight accommodation, food, or meals to persons

who are indigent, may claim a credit against the tax imposed by

this act equal to 50% of the cash amount the taxpayer contributed

during the tax year to a shelter for homeless persons, food

kitchen, food bank, or other entity, the primary purpose of which

is to provide overnight accommodation, food, or meals to persons

who are indigent, if a contribution to that entity is tax

deductible for the donor under the internal revenue code.

(2) The credit allowed by this section shall not exceed 5% of

the taxpayer's tax liability for the tax year before claiming any

credits allowed by this act or $5,000.00, whichever is less.

(3) 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.

(4) An entity described in subsection (1) may request that the

department determine whether a contribution to that entity

qualifies for the credit under this section. The department shall

make a determination and respond to a request no later than 30 days

after the department receives the request.

(5) On or before July 1 of each year, the department shall

report to the house of representatives committee on tax policy and

the senate committee on finance the total amount of tax credits

claimed under this section, section 425, and section 261 of the

income tax act of 1967, 1967 PA 281, MCL 206.261, for the

immediately preceding tax year.

Sec. 429. (1) A taxpayer may claim a credit against the tax

imposed by this act for 1 or more of the following as applicable:

(a) The credit allowed under subsection (2).

(b) The credit allowed under subsection (6).

(2) A taxpayer that is certified under the Michigan next

energy authority act, 2002 PA 593, MCL 207.821 to 207.827, as an

eligible taxpayer may claim a nonrefundable credit for the tax year

equal to the amount determined under subdivision (a) or (b),

whichever is less:

(a) The amount by which the taxpayer's tax liability

attributable to qualified business activity for the tax year

exceeds the taxpayer's baseline tax liability attributable to

qualified business activity.

(b) Ten percent of the amount by which the taxpayer's adjusted

qualified business activity performed in this state outside of a

renaissance zone for the tax year exceeds the taxpayer's adjusted

qualified business activity performed in this state outside of a

renaissance zone for the 2001 tax year under section 39e of former

1975 PA 228.

(3) For any tax year in which the eligible taxpayer's tax

liability attributable to qualified business activity for the tax

year does not exceed the taxpayer's baseline tax liability

attributable to qualified business activity, the eligible taxpayer

shall not claim the credit allowed under subsection (2).

(4) A taxpayer that claims a credit under subsection (2) shall

attach a copy of each of the following as issued pursuant to the

Michigan next energy authority act, 2002 PA 593, MCL 207.821 to

207.827, to the annual return required under this act for each tax

year in which the taxpayer claims the credit allowed under

subsection (2):

(a) The proof of certification that the taxpayer is an

eligible taxpayer for the tax year.

(b) The proof of certification of the taxpayer's tax liability

attributable to qualified business activity for the tax year.

liability attributable to qualified business activity.

(5) A taxpayer that is a qualified alternative energy entity

may claim a credit for the taxpayer's qualified payroll amount. A

taxpayer shall claim the credit under this subsection after all

allowable nonrefundable credits under this act.

(6) If the credit allowed under subsection (5) exceeds the tax

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

credit that exceeds the tax liability shall be refunded.

(7) As used in this section:

(a) "Adjusted qualified business activity performed in this

state outside of a renaissance zone" means either of the following:

(i) Except as provided in subparagraph (ii), the taxpayer's

payroll for qualified business activity performed in this state

outside of a renaissance zone.

(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:

(A) Business income.

(B) The apportionment factor as determined under chapter 3.

(b) "Alternative energy business activity factor" means a

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

taxpayer's property used for qualified business activity and

located in this state outside of a renaissance zone for the year

for which the factor is being calculated to the value of all of the

taxpayer's property located in this state for that year plus the

ratio of the taxpayer's payroll for qualified business activity

performed in this state outside of a renaissance zone for that year

to all of the taxpayer's payroll in this state for that year and

the denominator of which is 2.

"alternative energy system", "alternative energy vehicle", and

"alternative energy technology" mean those terms as defined in the

Michigan next energy authority act, 2002 PA 593, MCL 207.821 to

207.827.

(d) "Alternative energy zone" means a renaissance zone

designated as an alternative energy zone by the board of the

Michigan strategic fund under section 8a of the Michigan

renaissance zone act, 1996 PA 376, MCL 125.2688a.

(e) "Baseline tax liability attributable to qualified business

activity" means the taxpayer's tax liability for the 2001 tax year

under former 1975 PA 228 multiplied by the taxpayer's alternative

energy business activity factor for the 2001 tax year under former

1975 PA 228. A taxpayer with a 2001 tax year of less than 12 months

under former 1975 PA 228 shall annualize the amount calculated

under this subdivision as necessary to determine baseline tax

liability attributable to qualified business activity that reflects

a 12-month period.

(f) "Eligible taxpayer" means a taxpayer that has proof of

certification of qualified business activity under the Michigan

next energy authority act, 2002 PA 593, MCL 207.821 to 207.827.

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

any personal or dependency exemptions.

(h) "Qualified alternative energy entity" means a taxpayer

located in an alternative energy zone.

(i) "Qualified business activity" means research, development,

or manufacturing of an alternative energy marine propulsion system,

an alternative energy system, an alternative energy vehicle,

alternative energy technology, or renewable fuel.

(j) "Qualified employee" means an individual who is employed

by a qualified alternative energy entity, whose job

responsibilities are related to the research, development, or

manufacturing activities of the qualified alternative energy

entity, and whose regular place of employment is within an

alternative energy zone.

(k) "Qualified payroll amount" means an amount equal to

payroll of the qualified alternative energy entity attributable to

all qualified employees in the tax year of the qualified

alternative energy entity for which the credit under subsection (6)

is being claimed, multiplied by the tax rate for that tax year.

(l) "Renaissance zone" means a renaissance zone designated

under the Michigan renaissance zone act, 1996 PA 376, MCL 125.2681

to 125.2696.

(m) "Renewable fuel" means 1 or more of the following:

(i) Biodiesel or biodiesel blends containing at least 20%

biodiesel. As used in this subparagraph, "biodiesel" means a diesel

fuel substitute consisting of methyl or ethyl esters produced from

the transesterification of animal or vegetable fats with methanol

or ethanol.

(ii) Biomass. As used in this subparagraph, "biomass" means

residues from the wood and paper products industries, residues from

food production and processing, trees and grasses grown

specifically to be used as energy crops, and gaseous fuels produced

from solid biomass, animal wastes, municipal waste, or landfills.

(n) "Tax liability attributable to qualified business

activity" means the taxpayer's tax liability multiplied by the

taxpayer's alternative energy business activity factor for the tax

year.

(o) "Tax rate" means the rate imposed under section 51e of the

income tax act of 1967, 1967 PA 281, MCL 206.51e, annualized as

necessary, for the tax year in which the qualified alternative

energy entity claims a credit under subsection (6).

Sec. 431. (1) For a period of time not to exceed 20 years as

determined by the Michigan economic growth authority, a taxpayer

that is an authorized business or an eligible taxpayer may claim a

credit against the tax imposed by this act equal to the amount

certified each year by the Michigan economic growth authority as

follows:

(a) For an authorized business for the tax year, an amount not

to exceed the payroll of the authorized business attributable to

employees who perform qualified new jobs as determined under the

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

207.810, multiplied by the tax rate.

(b) For an eligible business as determined under section

8(5)(a) of the Michigan economic growth authority act, 1995 PA 24,

MCL 207.808, an amount not to exceed 50% of the payroll of the

eligible taxpayer attributable to employees who perform retained

jobs as determined under the Michigan economic growth authority

act, 1995 PA 24, MCL 207.801 to 207.810, multiplied by the tax rate

for the tax year.

8(5)(b) of the Michigan economic growth authority act, 1995 PA 24,

MCL 207.808, an amount not to exceed the payroll of the eligible

taxpayer attributable to employees who perform retained jobs as

determined under the Michigan economic growth authority act, 1995

PA 24, MCL 207.801 to 207.810, multiplied by the tax rate for the

tax year.

(2) 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.

(3) The certificate required by subsection (2) shall state all

of the following:

(a) The taxpayer is an authorized business or an eligible

taxpayer.

(b) The amount of the credit under this section for the

authorized business or eligible taxpayer for the designated tax

year.

the Michigan department of treasury number assigned to the

taxpayer.

(4) The Michigan economic growth authority may certify a

credit under this section based on an agreement entered into prior

to January 1, 2008 pursuant to section 37c of former 1975 PA 228.

The number of years for which the credit may be claimed under this

section shall equal the maximum number of years designated in the

resolution reduced by the number of years for which a credit has

been claimed under section 37c of former 1975 PA 228.

(5) If 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 of the taxpayer shall be

refunded.

(6) A taxpayer that claims a credit under subsection (1) or

section 37c or 37d of former 1975 PA 228, that has an agreement

with the Michigan economic growth authority based on qualified new

jobs as defined in section 3(n)(ii) of the Michigan economic growth

authority act, 1995 PA 24, MCL 207.803, and that removes from this

state 51% or more of those qualified new jobs within 3 years after

the first year in which the taxpayer claims a credit described in

this subsection shall pay to the department no later than 12 months

after those qualified new jobs are removed from the state an amount

equal to the total of all credits described in this subsection that

were claimed by the taxpayer.

(7) If the Michigan economic growth authority or a designee of

the Michigan economic growth authority requests that a taxpayer

that claims the credit under this section get a statement prepared

by a certified public accountant verifying that the actual number

of new jobs created is the same number of new jobs used to

calculate the credit under this section, the taxpayer shall get the

statement and attach that statement to its annual return under this

act on which the credit under this section is claimed.

(8) A credit shall not be claimed by a taxpayer under this

section if the taxpayer's initial certification as required in

subsection (3) is issued after December 31, 2013.

(9) As used in this section:

(a) "Authorized business", "facility", "full-time job",

"qualified high-technology business", and "written agreement" mean

those terms as defined in the Michigan economic growth authority

act, 1995 PA 24, MCL 207.801 to 207.810.

(b) "Eligible taxpayer" means an eligible business that meets

the criteria under section 8(5) of the Michigan economic growth

authority act, 1995 PA 24, MCL 207.808.

economic growth authority created in the Michigan economic growth

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

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

deducting any personal or dependency exemptions.

(e) "Qualified new jobs" means 1 or more of the following:

(i) The average number of full-time jobs at a facility of an

authorized business for a tax year in excess of the average number

of full-time jobs the authorized business maintained in this state

prior to the expansion or location as that is determined under the

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

207.810.

(ii) The average number of full-time jobs at a facility created

by an eligible business within 120 days before becoming an

authorized business that is in excess of the average number of

full-time jobs that the business maintained in this state 120 days

before becoming an authorized business, as determined under the

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

207.810.

(f) "Tax rate" means the rate imposed under section 51e of the

income tax act of 1967, 1967 PA 281, MCL 206.51e, for the tax year

in which the tax year of the taxpayer for which the credit is being

computed begins.

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.

a renaissance zone before January 1, 2008, 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) 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.

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

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

of 1996, MCL 432.201 to 432.226.

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.

Sec. 435. (1) A qualified taxpayer with a rehabilitation plan

certified after December 31, 2007 or a qualified taxpayer that has

a rehabilitation plan certified before January 1, 2008 under

section 39c of former 1975 PA 228 for the rehabilitation of a

historic resource for which a certification of completed

rehabilitation has been issued after the end of the taxpayer's last

tax year may credit against the tax imposed by this act the amount

determined pursuant to subsection (2) for the qualified

expenditures for the rehabilitation of a historic resource pursuant

to the rehabilitation plan in the year in which the certification

of completed rehabilitation of the historic resource is issued

provided that the certification of completed rehabilitation was

issued not more than 5 years after the rehabilitation plan was

certified by the Michigan historical center.

(2) The credit allowed under this section shall be 25% of the

qualified expenditures that are eligible for the credit under

section 47(a)(2) of the internal revenue code if the taxpayer is

eligible for the credit under section 47(a)(2) of the internal

revenue code or, if the taxpayer is not eligible for the credit

under section 47(a)(2) of the internal revenue code, 25% of the

qualified expenditures that would qualify under section 47(a)(2) of

the internal revenue code except that the expenditures are made to

a historic resource that is not eligible for the credit under

section 47(a)(2) of the internal revenue code, subject to both of

the following:

(a) A taxpayer with qualified expenditures that are eligible

for the credit under section 47(a)(2) of the internal revenue code

may not claim a credit under this section for those qualified

expenditures unless the taxpayer has claimed and received a credit

for those qualified expenditures under section 47(a)(2) of the

internal revenue code.

(b) A credit under this section shall be reduced by the amount

of a credit received by the taxpayer for the same qualified

expenditures under section 47(a)(2) of the internal revenue code.

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

taxpayer shall apply to and receive from the Michigan historical

center certification that the historic significance, the

rehabilitation plan, and the completed rehabilitation of the

historic resource meet the criteria under subsection (6) and either

of the following:

(a) All of the following criteria:

(i) The historic resource contributes to the significance of

the historic district in which it is located.

(ii) Both the rehabilitation plan and completed rehabilitation

of the historic resource meet the federal secretary of the

interior's standards for rehabilitation and guidelines for

rehabilitating historic buildings, 36 CFR part 67.

(iii) All rehabilitation work has been done to or within the

walls, boundaries, or structures of the historic resource or to

historic resources located within the property boundaries of the

property.

(b) The taxpayer has received certification from the national

park service that the historic resource's significance, the

rehabilitation plan, and the completed rehabilitation qualify for

the credit allowed under section 47(a)(2) of the internal revenue

code.

(4) If a qualified taxpayer is eligible for the credit allowed

under section 47(a)(2) of the internal revenue code, the qualified

taxpayer shall file for certification with the center to qualify

for the credit allowed under section 47(a)(2) of the internal

revenue code. If the qualified taxpayer has previously filed for

certification with the center to qualify for the credit allowed

under section 47(a)(2) of the internal revenue code, additional

filing for the credit allowed under this section is not required.

(5) The center may inspect a historic resource at any time

during the rehabilitation process and may revoke certification of

completed rehabilitation if the rehabilitation was not undertaken

as represented in the rehabilitation plan or if unapproved

alterations to the completed rehabilitation are made during the 5

years after the tax year in which the credit was claimed. The

center shall promptly notify the department of a revocation.

(6) Qualified expenditures for the rehabilitation of a

historic resource may be used to calculate the credit under this

section if the historic resource meets 1 of the criteria listed in

subdivision (a) and 1 of the criteria listed in subdivision (b):

(a) The resource is 1 of the following during the tax year in

which a credit under this section is claimed for those qualified

expenditures:

(i) Individually listed on the national register of historic

places or state register of historic sites.

(ii) A contributing resource located within a historic district

listed on the national register of historic places or the state

(iii) A contributing resource located within a historic district

designated by a local unit pursuant to an ordinance adopted under

the local historic districts act, 1970 PA 169, MCL 399.201 to

399.215.

(b) The resource meets 1 of the following criteria during the

tax year in which a credit under this section is claimed for those

qualified expenditures:

(i) The historic resource is located in a designated historic

district in a local unit of government with an existing ordinance

under the local historic districts act, 1970 PA 169, MCL 399.201 to

399.215.

(ii) The historic resource is located in an incorporated local

unit of government that does not have an ordinance under the local

historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and

has a population of less than 5,000.

(iii) The historic resource is located in an unincorporated

local unit of government.

(iv) The historic resource is located in an incorporated local

unit of government that does not have an ordinance under the local

historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and is

located within the boundaries of an association that has been

chartered under 1889 PA 39, MCL 455.51 to 455.72.

(7) If a qualified taxpayer is a partnership, limited

liability company, or subchapter S corporation, the qualified

taxpayer may assign all or any portion of a credit allowed under

this section to its partners, members, or shareholders, based on

the partner's, member's, or shareholder's proportionate share of

ownership or based on an alternative method approved by the

department. A credit assignment under this subsection is

irrevocable and shall be made in the tax year in which a

certificate of completed rehabilitation is issued. A qualified

taxpayer may claim a portion of a credit and assign the remaining

credit amount. A partner, member, or shareholder that is an

assignee shall not subsequently assign a credit or any portion of a

credit assigned to the partner, member, or shareholder under this

subsection. A credit amount assigned under this subsection may be

claimed against the partner's, member's, or shareholder's tax

liability under this act or under the income tax act of 1967, 1967

PA 281, MCL 206.1 to 206.532. A credit assignment under this

subsection shall be made on a form prescribed by the department.

The qualified taxpayer and assignees shall send a copy of the

completed assignment form to the department in the tax year in

which the assignment is made and attach a copy of the completed

assignment form to the annual return required to be filed under

this act for that tax year.

(8) If the credit allowed under this section for the tax year

and any unused carryforward of the credit allowed by this section

exceed the taxpayer's tax liability for the tax year, that portion

that exceeds the tax liability for the tax year shall not be

refunded but may be carried forward to offset tax liability in

subsequent tax years for 10 years or until used up, whichever

occurs first. An unused carryforward of a credit under section 39c

of former 1975 PA 228 that was unused at the end of the last tax

year for which former 1975 PA 228 was in effect may be claimed

against the tax imposed under this act for the years the

carryforward would have been available under section 39c of former

1975 PA 228.

(9) If the taxpayer sells a historic resource for which a

credit was claimed under this section or under section 39c of

former 1975 PA 228 less than 5 years after the year in which the

credit was claimed, the following percentage of the credit amount

previously claimed relative to that historic resource shall be

added back to the tax liability of the taxpayer in the year of the

sale:

(a) If the sale is less than 1 year after the year in which

the credit was claimed, 100%.

(b) If the sale is at least 1 year but less than 2 years after

the year in which the credit was claimed, 80%.

after the year in which the credit was claimed, 60%.

(d) If the sale is at least 3 years but less than 4 years

after the year in which the credit was claimed, 40%.

(e) If the sale is at least 4 years but less than 5 years

after the year in which the credit was claimed, 20%.

(f) If the sale is 5 years or more after the year in which the

credit was claimed, an addback to the taxpayer's tax liability

shall not be made.

(10) If a certification of completed rehabilitation is revoked

under subsection (5) less than 5 years after the year in which a

credit was claimed under this section or under section 39c of

former 1975 PA 228, the following percentage of the credit amount

previously claimed relative to that historic resource shall be

added back to the tax liability of the taxpayer in the year of the

revocation:

(a) If the revocation is less than 1 year after the year in

which the credit was claimed, 100%.

(b) If the revocation is at least 1 year but less than 2 years

after the year in which the credit was claimed, 80%.

years after the year in which the credit was claimed, 60%.

(d) If the revocation is at least 3 years but less than 4

years after the year in which the credit was claimed, 40%.

(e) If the revocation is at least 4 years but less than 5

years after the year in which the credit was claimed, 20%.

(f) If the revocation is 5 years or more after the year in

which the credit was claimed, an addback to the taxpayer's tax

liability shall not be made.

(11) The department of history, arts, and libraries through

the Michigan historical center may impose a fee to cover the

administrative cost of implementing the program under this section.

(12) The qualified taxpayer shall attach all of the following

to the qualified taxpayer's annual return required under this act

or under the income tax act of 1967, 1967 PA 281, MCL 206.1 to

206.532, if applicable, on which the credit is claimed:

(a) Certification of completed rehabilitation.

(b) Certification of historic significance related to the

historic resource and the qualified expenditures used to claim a

credit under this section.

assigned any portion of a credit allowed under this section to a

partner, member, or shareholder or if the taxpayer is an assignee

of any portion of a credit allowed under this section.

(13) The department of history, arts, and libraries shall

promulgate rules to implement this section pursuant to the

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

24.328.

(14) The total of the credits claimed under this section and

section 266 of the income tax act of 1967, 1967 PA 281, MCL

206.266, for a rehabilitation project shall not exceed 25% of the

total qualified expenditures eligible for the credit under this

section for that rehabilitation project.

(15) The department of history, arts, and libraries through

the Michigan historical center shall report all of the following to

the legislature annually for the immediately preceding state fiscal

year:

(a) The fee schedule used by the center and the total amount

of fees collected.

(b) A description of each rehabilitation project certified.

project.

(16) As used in this section:

(a) "Contributing resource" means a historic resource that

contributes to the significance of the historic district in which

it is located.

(b) "Historic district" means an area, or group of areas not

necessarily having contiguous boundaries, that contains 1 resource

or a group of resources that are related by history, architecture,

archaeology, engineering, or culture.

historic building, structure, site, object, feature, or open space

located within a historic district designated by the national

or a local unit acting under the local historic districts act, 1970

PA 169, MCL 399.201 to 399.215, or that is individually listed on

the state register of historic sites or national register of

historic places, and includes all of the following:

(i) An owner-occupied personal residence or a historic resource

located within the property boundaries of that personal residence.

(ii) An income-producing commercial, industrial, or residential

resource or a historic resource located within the property

boundaries of that resource.

(iii) A resource owned by a governmental body, nonprofit

organization, or tax-exempt entity that is used primarily by a

taxpayer lessee in a trade or business unrelated to the

governmental body, nonprofit organization, or tax-exempt entity and

that is subject to tax under this act.

(iv) A resource that is occupied or utilized by a governmental

body, nonprofit organization, or tax-exempt entity pursuant to a

long-term lease or lease with option to buy agreement.

(v) Any other resource that could benefit from rehabilitation.

(d) "Last tax year" means the taxpayer's tax year under former

1975 PA 228 that begins after December 31, 2006 and before January

1, 2008.

(e) "Local unit" means a county, city, village, or township.

(f) "Long-term lease" means a lease term of at least 27.5

years for a residential resource or at least 31.5 years for a

nonresidential resource.

(g) "Michigan historical center" or "center" means the state

historic preservation office of the Michigan historical center of

the department of history, arts, and libraries or its successor

agency.

(h) "Open space" means undeveloped land, a naturally

landscaped area, or a formal or man-made landscaped area that

provides a connective link or a buffer between other resources.

(i) "Person" means an individual, partnership, corporation,

association, governmental entity, or other legal entity.

(j) "Qualified expenditures" means capital expenditures that

qualify for a rehabilitation credit under section 47(a)(2) of the

internal revenue code if the taxpayer is eligible for the credit

under section 47(a)(2) of the internal revenue code or, if the

taxpayer is not eligible for the credit under section 47(a)(2) of

the internal revenue code, the qualified expenditures that would

qualify under section 47(a)(2) of the internal revenue code except

that the expenditures are made to a historic resource that is not

eligible for the credit under section 47(a)(2) of the internal

revenue code that were paid not more than 5 years after the

certification of the rehabilitation plan that included those

expenditures was approved by the center, and that were paid after

December 31, 1998 for the rehabilitation of a historic resource.

Qualified expenditures do not include capital expenditures for

nonhistoric additions to a historic resource except an addition

that is required by state or federal regulations that relate to

historic preservation, safety, or accessibility.

(k) "Qualified taxpayer" means a person that is an assignee

under subsection (7) or either owns the resource to be

rehabilitated or has a long-term lease agreement with the owner of

the historic resource and that has qualified expenditures for the

rehabilitation of the historic resource equal to or greater than

10% of the state equalized valuation of the property. If the

historic resource to be rehabilitated is a portion of a historic or

nonhistoric resource, the state equalized valuation of only that

portion of the property shall be used for purposes of this

subdivision. If the assessor for the local tax collecting unit in

which the historic resource is located determines the state

equalized valuation of that portion, that assessor's determination

shall be used for purposes of this subdivision. If the assessor

does not determine that state equalized valuation of that portion,

qualified expenditures, for purposes of this subdivision, shall be

equal to or greater than 5% of the appraised value as determined by

a certified appraiser. If the historic resource to be rehabilitated

does not have a state equalized valuation, qualified expenditures

for purposes of this subdivision shall be equal to or greater than

5% of the appraised value of the resource as determined by a

certified appraiser.

(l) "Rehabilitation plan" means a plan for the rehabilitation

of a historic resource that meets the federal secretary of the

interior's standards for rehabilitation and guidelines for

rehabilitation of historic buildings under 36 CFR part 67.

Sec. 437. (1) Subject to the criteria under this section, a

qualified taxpayer that has unused credits or has a preapproval

letter issued after December 31, 2007 and before January 1, 2013,

or a taxpayer that received a preapproval letter prior to January

1, 2008 under section 38g of former 1975 PA 228 and has not

received a certificate of completion prior to the taxpayer's last

tax year, provided that the project is completed not more than 5

years after the preapproval letter for the project is issued, or an

assignee under subsection (20), (21), or (22) may claim a credit

that has been approved under section 38g of former 1975 PA 228 or

under subsection (2), (3), or (4) against the tax imposed by this

act equal to either of the following:

(a) If the total of all credits for a project is $1,000,000.00

or less, 10% of the cost of the qualified taxpayer's eligible

investment paid or accrued by the qualified taxpayer on an eligible

property provided that the project does not exceed the amount

stated in the preapproval letter. If eligible investment exceeds

the amount of eligible investment in the preapproval letter for

that project, the total of all credits for the project shall not

exceed the total of all credits on the certificate of completion.

(b) If the total of all credits for a project is more than

$1,000,000.00 but $30,000,000.00 or less and, except as provided in

subsection (6)(b), the project is located in a qualified local

governmental unit, a percentage as determined by the Michigan

economic growth authority not to exceed 10% of the cost of the

qualified taxpayer's eligible investment as determined under

subsection (9) paid or accrued by the qualified taxpayer on an

eligible property. If eligible investment exceeds the amount of

eligible investment in the preapproval letter for that project, the

total of all credits for the project shall not exceed the total of

all credits on the certificate of completion.

(2) If the cost of a project will be $2,000,000.00 or less, a

qualified taxpayer shall apply to the Michigan economic growth

authority for approval of the project under this subsection. An

application under this subsection shall state whether the project

is a multiphase project. The chairperson of the Michigan economic

growth authority or his or her designee is authorized to approve an

application or project under this subsection. Only the chairperson

of the Michigan economic growth authority is authorized to deny an

application or project under this subsection. A project shall be

approved or denied not more than 45 days after receipt of the

application. If the chairperson of the Michigan economic growth

authority or his or her designee does not approve or deny the

application within 45 days after the application is received by the

Michigan economic growth authority, the application is considered

approved as written. The total of all credits for all projects

approved under this subsection shall not exceed $10,000,000.00 in

any calendar year. If the chairperson of the Michigan economic

growth authority or his or her designee approves a project under

this subsection, the chairperson of the Michigan economic growth

authority or his or her designee shall issue a preapproval letter

that states that the taxpayer is a qualified taxpayer; the maximum

total eligible investment for the project on which credits may be

claimed and the maximum total of all credits for the project when

the project is completed and a certificate of completion is issued;

and the project number assigned by the Michigan economic growth

authority. If a project is denied under this subsection, a taxpayer

is not prohibited from subsequently applying under this subsection

for the same project or for another project. If the authority

approves a total of all credits for all projects under this

subsection of less than $10,000,000.00 in a calendar year, the

authority may carry forward for 1 year only the difference between

$10,000,000.00 and the total of all credits for all projects under

this subsection approved in the immediately preceding calendar

year. The Michigan economic growth authority shall develop and

implement the use of the application form to be used for projects

under this subsection. Before the Michigan economic growth

authority substantially changes the form, the Michigan economic

growth authority shall adopt the changes by resolution and give

notice of the proposed resolution to the secretary of the senate,

to the clerk of the house of representatives, and to each person

who requested from the Michigan economic growth authority in

writing or electronically to be notified regarding proposed

resolutions. The notice and proposed resolution and all attachments

shall be published on the Michigan economic growth authority's

internet website. The Michigan economic growth authority shall hold

a public hearing not sooner than 14 days and not later than 30 days

after the date notice of a proposed resolution is given and offer

an opportunity for persons to present data, views, questions, and

arguments. The Michigan economic growth authority board members or

1 or more persons designated by the Michigan economic growth

authority who have knowledge of the subject matter of the proposed

resolution shall be present at the public hearing and shall

participate in the discussion of the proposed resolution. The

Michigan economic growth authority may act on the proposed

resolution no sooner than 14 days after the public hearing. The

Michigan economic growth authority shall produce a final decision

document that describes the basis for its decision. The final

resolution and all attachments and the decision document shall be

provided to the secretary of the senate and to the clerk of the

house of representatives and shall be published on the Michigan

economic growth authority's internet website. The notice shall

include all of the following:

(a) A copy of the proposed resolution and all attachments.

(b) A statement that any person may express any data, views,

or arguments regarding the proposed resolution.

date by which comments must be mailed or electronically

transmitted, which date shall not be restricted to only before the

date of the public hearing.

(d) The date, time, and place of the public hearing.

(3) If the cost of a project will be for more than

$2,000,000.00 but $10,000,000.00 or less, a qualified taxpayer

shall apply to the Michigan economic growth authority for approval

of the project under this subsection. An application under this

subsection shall state whether the project is a multiphase project.

The chairperson of the Michigan economic growth authority or his or

her designee is authorized to approve an application or project

under this subsection. Only the chairperson of the Michigan

economic growth authority is authorized to deny an application or

project under this subsection. A project shall be approved or

denied not more than 45 days after receipt of the application. If

the chairperson of the Michigan economic growth authority or his or

her designee does not approve or deny an application within 45 days

after the application is received by the Michigan economic growth

authority, the application is considered approved as written. The

total of all credits for all projects approved under this

subsection shall not exceed $30,000,000.00 in any calendar year. If

the authority approves a total of all credits for all projects

under this subsection of less than $30,000,000.00 in a calendar

year, the authority may carry forward for 1 year only the

difference between $30,000,000.00 and the total of all credits for

all projects approved under this subsection in the immediately

preceding calendar year. The criteria in subsection (7) shall be

used when approving projects under this subsection. When approving

projects under this subsection, priority shall be given to projects

on a facility. The total of all credits for an approved project

under this subsection shall not exceed $1,000,000.00. A taxpayer

may apply under this subsection instead of subsection (4) for

approval of a project that will be for more than $10,000,000.00,

but the total of all credits for that project shall not exceed

$1,000,000.00. If the chairperson of the Michigan economic growth

authority or his or her designee approves a project under this

subsection, the chairperson of the Michigan economic growth