May 28, 2008, Introduced by Reps. Hammel, Meadows, Palsrok, Brandenburg, Miller, Gonzales, Clack, Calley, Sheltrown, Valentine, Kathleen Law, Simpson, LeBlanc, Byrnes and Hammon and referred to the Committee on Education.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 351, 355, and 365 (MCL 206.351, 206.355, and
206.365), section 351 as amended by 2003 PA 22, section 355 as
amended by 2003 PA 48, and section 365 as amended by 2003 PA 47,
and by adding section 366.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 351. (1) Every employer in this state required under the
provisions of the internal revenue code to withhold a tax on the
compensation of an individual, except as otherwise provided, shall
deduct and withhold a tax in an amount computed by applying, except
as provided by subsection (9), the rate prescribed in section 51 to
the remainder of the compensation after deducting from compensation
the same proportion of the total amount of personal and dependency
exemptions of the individual allowed under this act that the period
of time covered by the compensation is of 1 year. The commissioner
may prescribe withholding tables that may be used by employers to
compute the amount of tax required to be withheld.
(2) Every flow-through entity in this state shall withhold a
tax in an amount computed by applying the rate prescribed in
section 51 to the share of taxable income available for
distribution of each nonresident member after deducting from that
distributive income the same proportion of the total amount of
personal and dependency exemptions of the individual allowed under
this act that the period of time covered by the distributive income
is of 1 year. If a flow-through entity is a nonresident member of a
separate flow-through entity in this state, the flow-through entity
in this state of which it is a member shall withhold the tax as
required by this subsection on behalf of the flow-through entity
that is a nonresident member and all nonresident members of that
flow-through entity that is a nonresident member.
(3) Every casino licensee shall withhold a tax in an amount
computed by applying the rate prescribed in section 51 to the
winnings of a nonresident reportable by the casino licensee under
the internal revenue code.
(4) Every race meeting licensee or track licensee shall
withhold a tax in an amount computed by applying the rate
prescribed in section 51 to a payoff price on a winning ticket of a
nonresident reportable by the race meeting licensee or track
licensee under the internal revenue code that is the result of
pari-mutuel wagering at a licensed race meeting.
(5) Every casino licensee or race meeting licensee or track
licensee shall report winnings of a resident reportable by the
casino licensee or race meeting licensee or track licensee under
the internal revenue code to the department in the same manner and
format as required under the internal revenue code.
(6)
The Except as otherwise
provided under this subsection,
all of the taxes withheld under this section shall accrue to the
state on the last day of the month in which the taxes are withheld
but shall be returned and paid to the department by the employer,
flow-through entity, casino licensee, or race meeting licensee or
track licensee within 15 days after the end of any month or as
provided in section 355, except prior to July 1, 1993, taxes
deposited pursuant to section 19(2) of 1941 PA 122, MCL 205.19, are
accrued on the last day of the filing period. For an employer or
flow-through entity that has entered into an agreement with a
community college pursuant to chapter 13 of the community college
act of 1966, 1966 PA 331, MCL 389.161 to 389.166, a portion of the
taxes withheld under this section that are attributable to each
employee in a new job created pursuant to the agreement shall
accrue to the community college on the last day of the month in
which the taxes are withheld but shall be returned and paid to the
community college by the employer or flow-through entity within 15
days after the end of any month or as provided in section 355 for
as long as the agreement remains in effect. For purposes of this
act and 1941 PA 122, MCL 205.1 to 205.31, payments made by an
employer or flow-through entity to a community college under this
subsection shall be considered income taxes paid to this state.
(7) An employer, flow-through entity, casino licensee, or race
meeting licensee or track licensee required by this section to
deduct and withhold taxes on compensation, a share of income
available for distribution on which withholding is required under
subsection (2), winning on which withholding is required under
subsection (3), or a payoff price on which withholding is required
under subsection (4) holds the amount of tax withheld as a trustee
for
the state , is
liable for the payment of the tax to the state ,
or, if applicable, to the community college and is not liable to
any individual for the amount of the payment.
(8) An employer in this state is not required to deduct and
withhold a tax on the compensation paid to a nonresident individual
employee, who, under section 256, may claim a tax credit equal to
or in excess of the tax estimated to be due for the tax year or is
exempted from liability for the tax imposed by this act. In each
tax year, the nonresident individual shall furnish to the employer,
on a form approved by the department, a verified statement of
nonresidence.
(9) An employer, flow-through entity, casino licensee, or race
meeting licensee or track licensee required to withhold a tax under
this act, by the fifteenth day of the following month, shall
provide the department with a copy of any exemption certificate on
which the employee, nonresident member, or person subject to
withholding under subsection (3) or (4) claims more than 9 personal
or dependency exemptions, claims a status that exempts the
employee, nonresident member, or person subject to withholding
under subsection (3) or (4) from withholding under this section, or
elects to pay the tax imposed by this act calculated under section
51a.
(10) An employer shall deduct and withhold the tax imposed by
this act calculated under section 51a for a resident who files an
exemption certificate under subsection (9) to elect to pay the tax
calculated under section 51a.
(11) The exemption certificate required by this section shall
include the following statement, "Electing to file using the no-
form option may not be for everyone who is eligible. If a taxpayer
chooses the no-form option, he or she may not be eligible for some
of the credits allowed under this act including the property tax
credit allowed under sections 520 and 522, the tuition tax credit
allowed under section 274, and the city income tax credit allowed
under section 257.".
(12) As used in this section:
(a) "Casino" means that term as defined in section 110.
(b) "Casino licensee" means a person licensed to operate a
casino
under the Michigan gaming control and revenue act, the
Initiated
Law of 1996 IL 1,
MCL 432.201 to 432.226.
(c) "Race meeting licensee" and "track licensee" mean a person
to whom a race meeting license or track license is issued pursuant
to section 8 of the horse racing law of 1995, 1995 PA 279, MCL
431.308.
Sec. 355. (1) All provisions relating to the administration,
collection, and enforcement of this act apply to the employer,
flow-through entity, casino licensee, or race meeting licensee or
track licensee required to withhold taxes and to the taxes required
to be withheld. If the department has reasonable grounds to believe
that an employer, flow-through entity, casino licensee, or race
meeting licensee or track licensee will not pay taxes withheld to
the state or, if applicable, to the community college, as
prescribed by this act, or to provide a more efficient
administration, the department may require the employer, flow-
through entity, casino licensee, or race meeting licensee or track
licensee to make the return and pay to the department or, if
applicable, to the community college, the tax deducted and withheld
at other than monthly periods, or from time to time, or require the
employer, flow-through entity, casino licensee, or race meeting
licensee or track licensee to deposit the tax in a bank approved by
the department in a separate account, in trust for the department
or, if applicable, the community college, and payable to the
department or community college, and to keep the amount of the
taxes in the account until payment over to the department or
community college.
(2) Every publicly traded partnership as that term is defined
under section 7704 of the internal revenue code that has equity
securities registered with the securities and exchange commission
under section 12 of title I of the securities and exchange act of
1934,
chapter 404, 48 Stat. 881, 15 U.S.C. 15 USC 78l, shall file on
or before each August 31 all unitholder information from the
publicly traded partnership's schedule K-1 for the immediately
preceding calendar year by paper or electronic format on a form
prescribed by the department.
(3) As used in this section:
(a) "Casino" means that term as defined in section 110.
(b) "Casino licensee" means a person licensed to operate a
casino
under the Michigan gaming control and revenue act, the
Initiated
Law of 1996 IL 1,
MCL 432.201 to 432.226.
(c) "Race meeting licensee" and "track licensee" mean a person
to whom a race meeting license or track license is issued pursuant
to section 8 of the horse racing law of 1995, 1995 PA 279, MCL
431.308.
Sec. 365. (1) Every employer, flow-through entity, casino
licensee, and race meeting licensee and track licensee required by
this act to deduct and withhold taxes for a tax year on
compensation, share of income available for distribution, winnings,
or payoff on a winning ticket shall furnish to each employee,
nonresident member, or person with winnings or a payoff on a
winning ticket subject to withholding under this act on or before
January 31 of the succeeding year a statement in duplicate of the
total compensation, share of income available for distribution,
winnings, or payoff on a winning ticket paid during the tax year
and the amount deducted or withheld. However, if employment is
terminated before the close of a calendar year by an employer who
goes out of business or permanently ceases to be an employer in
this state, or a flow-through entity, casino licensee, race meeting
licensee, or track licensee goes out of business or permanently
ceases to be a flow-through entity, casino licensee, race meeting
licensee, or track licensee before the close of a calendar year,
then the statement required by this subsection shall be issued
within 30 days after the last compensation, share of income
available for distribution, winnings, or payoff of a winning ticket
is paid. A duplicate of a statement made pursuant to this section
and an annual reconciliation return, MI-W3, shall be filed with the
department by February 28 of the succeeding year except that an
employer, flow-through entity, casino licensee, and race meeting
licensee and track licensee who goes out of business or permanently
ceases to be an employer, flow-through entity, casino licensee, and
race meeting licensee and track licensee shall file the statement
and the annual reconciliation return within 30 days after going out
of business or permanently ceasing to be an employer, flow-through
entity, casino licensee, and race meeting licensee and track
licensee.
(2) Every employer, flow-through entity, casino licensee, and
race meeting licensee and track licensee required by this act to
deduct or withhold taxes from compensation, share of income
available for distribution, winnings, or payoff on a winning ticket
shall make a return or report in form and content and at times as
prescribed by the department. An employer or flow-through entity
that has entered into an agreement with a community college
pursuant to chapter 13 of the community college act of 1966, 1966
PA 331, MCL 389.161 to 389.166, and is required to deduct or
withhold taxes from compensation and make payments to a community
college pursuant to the agreement for a portion of those taxes
withheld shall, for as long as the agreement remains in effect,
delineate in the return or report required under this subsection
between the amount deducted or withheld and paid to the state and
that amount paid to a community college.
(3) Every employee, nonresident member, or person with
winnings or a payoff on a winning ticket subject to withholding
under this act shall furnish to his or her employer, flow-through
entity, casino licensee, and race meeting licensee and track
licensee information required for the employer, flow-through
entity, casino licensee, and race meeting licensee and track
licensee to make an accurate withholding. An employee, nonresident
member, or person with winnings or a payoff on a winning ticket
subject to withholding under this act shall file with his or her
employer, flow-through entity, casino licensee, and race meeting
licensee and track licensee revised information within 10 days
after a decrease in the number of exemptions or a change in status
from a nonresident to a resident. An employee shall file revised
information with his or her employer within 10 days after the
employee completes the residency requirements under section
31(11)(d), and when a change of status occurs from resident of a
renaissance zone to nonresident of a renaissance zone. Within 10
days after an employer receives revised information from an
employee who completes the residency requirements under section
31(11)(d), the employer shall forward a copy of that revised
information to the department. The employee, nonresident member, or
person with winnings or a payoff on a winning ticket subject to
withholding under this act may file revised information when the
number of exemptions increases or when a change in status occurs
from that of a resident of this state to a nonresident of this
state. Revised information shall not be given retroactive effect
for withholding purposes. An employer, flow-through entity, casino
licensee, and race meeting licensee and track licensee shall rely
on this information for withholding purposes unless directed by the
department to withhold on some other basis. If an employee,
nonresident member, or person with winnings or a payoff on a
winning ticket subject to withholding under this act fails or
refuses to furnish information, the employer, flow-through entity,
casino licensee, and race meeting licensee and track licensee shall
withhold the full rate of tax from the employee's total
compensation, the nonresident member's share of income available
for distribution, or the winnings of a person with winnings or a
payoff on a winning ticket subject to withholding under this act.
As used in this subsection, "renaissance zone" means a renaissance
zone designated pursuant to the Michigan renaissance zone act, 1996
PA 376, MCL 125.2681 to 125.2696.
(4) As used in this section:
(a) "Casino" means that term as defined in section 110.
(b) "Casino licensee" means a person licensed to operate a
casino
under the Michigan gaming control and revenue act, the
Initiated
Law of 1996 IL 1,
MCL 432.201 to 432.226.
(c) "Race meeting licensee" and "track licensee" mean a person
to whom a race meeting license or track license is issued pursuant
to section 8 of the horse racing law of 1995, 1995 PA 279, MCL
431.308.
Sec. 366. By July 1 of each year, based on the information
received from each community college district pursuant to section
163 of the community college act of 1966, 1966 PA 331, MCL 389.163,
the department shall submit to the governor, the clerk of the house
of representatives, the secretary of the senate, the chairperson of
each standing committee that has jurisdiction over economic
development issues, the chairperson of each legislative budget
subcommittee that has jurisdiction over economic development
issues, and the president of the Michigan strategic fund an annual
report concerning the operation and effectiveness of the new jobs
training programs and the corresponding withholding requirements
under this chapter. The report shall include all of the following:
(a) The number of community colleges participating in the new
jobs training program and the names of those colleges.
(b) The number of employers that have entered into agreements
with community colleges pursuant to the new jobs training program
and the names of those employers organized by major industry group
under the standard industrial classification code as compiled by
the United States department of labor.
(c) The total amount of money from a new jobs credit from
withholding each employer described in subdivision (b) has remitted
to the community college district.
(d) The total amount of new jobs training revenue bonds each
community college district has authorized, issued, or sold.
(e) The total amount of each community college district's debt
related to agreements at the end of the calendar year.
(f) The number of degrees or certificates awarded to program
participants in the calendar year.
(g) The number of individuals who entered a program at each
community college district in the calendar year; who completed the
program in the calendar year; and who were enrolled in a program at
the end of the calendar year.
(h) The number of individuals who completed a program an
employer described in subdivision (b) hired to fill new jobs.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 6184(request no.
06445'08 *) of the 94th Legislature is enacted into law.