SB-1115, As Passed House, March 20, 2008

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 1115

     A bill to amend 2007 PA 36, entitled

"Michigan business tax act,"

(MCL 208.1101 to 208.1601) by adding section 431a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 431a. (1) A qualified taxpayer may claim a credit against

the tax imposed by this act in an amount up to 100% of the

qualified supplier's or customer's payroll attributable to

employees who perform qualified new jobs as determined by the

Michigan economic growth authority, multiplied by the tax rate for

the tax year for a period of up to 5 years as determined by the

Michigan economic growth authority. If the credit allowed under

this subsection exceeds the liability of the taxpayer for the tax

year, the taxpayer may elect to have that portion that exceeds the

tax liability of the taxpayer refunded or to have the excess

carried forward to offset tax liability in subsequent years for 10

years or until it is used up, whichever occurs first. The Michigan

economic growth authority shall not designate more than 5 taxpayers

as an anchor company in each calendar year and shall not approve

more than 5 new credits in each calendar year under this

subsection. A taxpayer has 5 years from the date on which the

taxpayer is designated as an anchor company to seek certification

from the Michigan economic growth authority as a qualified taxpayer

for each qualified supplier or customer for which a credit is

sought under this section. However, a credit shall not be provided

for a tax year prior to the tax year during which the certification

is made. If a qualified taxpayer is awarded a credit under this

subsection, any subsequent credits awarded to that qualified

taxpayer shall not be included in determining the yearly limit of 5

new credits under this subsection.

     (2) The Michigan economic growth authority may also provide

that qualified sales to a qualified supplier or customer are not

sales in this state for purposes of calculating the sales factor

under this act for the tax year for which a credit is provided

under this section. Qualified sales to a qualified supplier or

customer are the total sales in this state to a qualified supplier

or customer multiplied by a fraction, the numerator of which is the

compensation on which the credit in this section is calculated and

the denominator of which is the total compensation of the qualified

supplier or customer in this state.

     (3) 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 the

credit under this section is claimed. The certificate required by

this subsection shall state all of the following:

     (a) The taxpayer is a qualified taxpayer and the date on which

the taxpayer was designated as an anchor company.

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

qualified taxpayer for the designated tax year.

     (c) The amount of the qualified sales calculated in accordance

with the fraction described under subsection (2).

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

the Michigan department of treasury number assigned to the

taxpayer.

     (4) A taxpayer that claims a credit under this section and

subsequently fails to meet the requirements of this section or any

other conditions included in an agreement entered into with the

Michigan economic growth authority in order to obtain a certificate

for which the credit was under this section may, as to be

determined by the Michigan economic growth authority, have its

credit reduced or terminated or have a percentage of the credit

amount previously claimed under this section added back to the tax

liability of the taxpayer in the year that the taxpayer fails to

comply with this section or the agreement.

     (5) As used in this section:

     (a) "Anchor company" means a qualified high-technology

business that is an integral part of a high-technology activity and

that has the ability or potential ability to influence business

decisions and site location of qualified suppliers and customers.

     (b) "Business", "qualified high-technology activity", and

"qualified high-technology business" mean those terms as defined in

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

to 207.810.

     (c) "Full-time job" means a job performed by an individual for

35 hours or more each week and whose income and social security

taxes are withheld by 1 or more of the following:

     (i) A qualified supplier or customer.

     (ii) An employee leasing company on behalf of a qualified

supplier or customer.

     (iii) A professional employer organization on behalf of a

qualified supplier or customer.

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

economic growth authority created in the Michigan economic growth

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

     (e) "Qualified new job" means a full-time job created by a

qualified supplier or customer at a facility or facilities that is

in excess of the number of full-time jobs a qualified supplier or

customer maintained in this state or at a facility prior to the

expansion or location, as determined by the authority.

     (f) "Qualified supplier or customer" means a business that

opens a new location in this state, a business that locates in this

state, or an existing business located in this state that expands

its business within the last year as a result of an anchor company

and satisfies, as certified by the Michigan economic growth

authority, each of the following:

     (i) Has financial transactions with the anchor company.

     (ii) Sells a critical or unique component or technology

necessary for the anchor company to market a finished product or

buys a critical or unique component from the anchor company.

     (iii) Has created more than 10 qualified new jobs.

     (iv) Has made an investment of at least $1,000,000.00 as

certified by the Michigan economic growth authority.

     (g) "Qualified taxpayer" means a taxpayer that was designated

by the Michigan economic growth authority as an anchor company

within the last 5 years and that has influenced a new qualified

supplier or customer to open, locate, or expand in this state.