SENATE BILL No. 151

February 1, 2007, Introduced by Senator GILBERT and referred to the Committee on Finance.

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 certain 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; and to make appropriations.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

CHAPTER 1

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

"Michigan business license and business income tax act".

Sec. 2. (1) For the purposes of this act, the words and

phrases defined in sections 3 through 9 shall have the meanings

respectively ascribed to them in those sections.

(2) 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. 3. (1) "Affiliated group" means 2 or more United States

corporations, 1 of which owns or controls, directly or indirectly,

80% or more of the capital stock with voting rights of the other

United States corporation or United States corporations. As used in

this subsection, "United States corporation" means a domestic

corporation as that term is defined in section 7701(a)(3) and (4)

of the internal revenue code.

(2) "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, within this state, 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 shall not include the services rendered by an employee

to his or her employer, services as a director of a corporation, or

a casual transaction. 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.

(3) Except as otherwise provided in this subsection or section

10, "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 a tax-exempt person, business income means only

that part of federal taxable income derived from unrelated business

activity.

Sec. 4. (1) "Casual transaction" means a transaction made or

engaged in other than in the ordinary course of repeated and

successive transactions of a like character, except that a

transaction made or engaged in by a person that is incidental to

that person's regular business activity is a business activity

within the meaning of this act.

(2) "Commercial domicile" means the principal place from which

the business activity of the taxpayer is directed or managed.

(3) "Consolidated member" means each person within a

consolidated taxpayer group.

(4) "Consolidated taxpayer group" means a group of 2 or more

persons treated as a single taxpayer for purposes of this act as

the result of an election made under section 96.

(5) "Corporation" means a person that is a corporation under

the internal revenue code.

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

Sec. 5. (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.

(4) "Financial organization" means a bank, industrial bank,

trust company, building and loan or savings and loan association,

bank holding company as defined in 12 USC 1841, credit union,

safety and collateral deposit company, regulated investment company

as defined in the internal revenue code, or any other association,

joint stock company, or corporation at least 90% of whose assets

consist of intangible personal property and at least 90% of whose

gross receipts consist of dividends or interest or other charges

resulting from the use of money or credit.

Sec. 6. (1) "Gross receipts" means the total revenue of a

person determined as follows:

(a) For a person treated for federal income tax purposes as a

corporation, an amount computed under subparagraphs (i) and (ii):

(i) Add all of the following:

(A) The amount of gross receipts entered on line 1c, internal

revenue service form 1120.

(B) The amount of dividends, interest, gross rents, gross

royalties, and net gain from form 4797 entered on lines 4 through 7

and line 9, internal revenue service form 1120.

schedule D of form 1120 or 1120-A for assets not used in the

ordinary course of the conduct of a trade or business.

(D) The net amounts, but not less than zero, entered as short-

and long-term gain on schedule D of form 1120 or 1120-A for assets

used in the ordinary course of the conduct of a trade or business.

(E) The amounts, but not less than zero, of other income

entered on line 10 of internal revenue service form 1120 resulting

from the conduct of a trade or business.

(ii) Subtract each of the following:

(A) Bad debt expensed for federal income tax purposes that

corresponds to items of gross receipts included in subparagraph (i)

for the current reporting period or a past reporting period.

(B) Allowable deductions from internal revenue service form

1120, schedule C, to the extent that the relating dividend income

is included in the tax base.

authorized by this section.

(b) For a person treated for federal income tax purposes as a

partnership, an amount computed under subparagraphs (i) and (ii):

(i) Add all of the following:

(A) The amount of gross receipts entered on line 1c, internal

revenue service form 1065.

(B) The amount, but not less than zero, of ordinary income and

net gain from form 4797 entered on lines 4 and 6 of internal

revenue service form 1065.

entered on line 7 of internal revenue service form 1065 resulting

from the conduct of a trade or business.

(D) Gross farm income as defined for line 5, internal revenue

service form 1065.

(E) Gross rents used to calculate amounts reported on lines 2

and 3, internal revenue service form 1065, schedule K-1.

(F) The amounts entered as short- and long-term sales price on

schedule D of form 1065 from assets not used in the ordinary course

of the conduct of a trade or business.

(G) The net amounts, but not less than zero, entered as short-

and long-term gain on schedule D of form 1065 from assets used in

the ordinary course of the conduct of a trade or business.

(H) The amount of guaranteed payments, interest income,

dividends, and royalties entered on lines 4 through 7, internal

revenue service form 1065, schedule K-1.

(ii) Subtract each of the following:

(A) Bad debt expensed for federal income tax purposes that

corresponds to items of gross receipts included in subparagraph (i)

for the current reporting period or a past reporting period.

(B) To the extent included in subparagraph (i), other amounts

authorized by this section.

income tax purposes as a corporation or partnership, an amount

determined in a manner substantially equivalent to the amounts

calculated for subdivision (a) or (b).

(d) A person shall exclude amounts received in an agency

capacity.

(e) A person shall exclude from its total gross receipts, to

the extent included under subdivision (a), (b), or (c), only the

following funds that are mandated by contract to be distributed to

other persons:

(i) Sales commissions to nonemployees, including split-fee real

estate commissions.

(ii) The tax basis as determined under the internal revenue

code of securities underwritten.

(iii) Subcontracting payments handled by the taxable entity to

provide services, labor, or materials in connection with the actual

or proposed design, construction, remodeling, or repair of

improvements on real property or the location of the boundaries of

real property.

(f) A taxable entity shall exclude from its total gross

receipts, to the extent included under subdivision (a), (b), or

(c), the tax basis as determined under the internal revenue code of

securities and loans sold.

(g) A taxable entity shall exclude from its gross receipts, to

the extent included under subdivision (a), (b), or (c), sales, use,

excise, and fuel taxes and assessments, fees, levies, fines,

penalties, or other payments established by law that are the legal

obligation of another, paid to any local, state, or federal

governmental authority.

(h) A taxable entity shall exclude from its total gross

receipts, to the extent included under subdivision (a), (b), or

(c), amounts received from a vendor related to goods or services

sold by the vendor to the taxable entity, including, but not

limited to, volume purchase discounts, promotional allowances, and

advertising allowances.

(i) Gross receipts do not include amounts not received by a

person but that are only deemed received under the internal revenue

code.

(j) Except as provided by subdivision (e), a payment made

under an ordinary contract for the provision of services in the

regular course of business shall not be excluded.

(k) As used in this subsection, a reference to an internal

revenue service form includes a variant of the form. For example, a

reference to form 1120 includes forms 1120-A, 1120-S, and other

variants of form 1120. A reference to an internal revenue service

form also includes any subsequent form with a different number or

designation that substantially provides the same information as the

original form. A reference to an amount entered on a line number on

an internal revenue service form includes the corresponding amount

entered on a variant of the form, or a subsequent form, with a

different line number.

(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) "Nonbusiness income" means all income from casual

transactions and all income other than business income. For a tax-

exempt person, nonbusiness income means all income derived from

unrelated business activity other than business income.

Sec. 7. (1) "Person" means an individual, firm, bank,

financial institution, limited partnership, limited liability

partnership, co-partnership, 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.

(2) "Rent" includes a lease payment or other payment for the

use of any property to which the taxpayer does not have legal or

equitable title.

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

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

1 mile.

Sec. 8. (1) "Subchapter S corporation" means a corporation for

which there is in effect an election under section 1362 of the

internal revenue code, or for which there is a federal election to

opt out of the provisions of the subchapter S revision act of 1982,

Public Law 97-354, and have applied instead the prior federal

subchapter S rules as in effect on July 1, 1982.

(2) "Sale" or "sales" means 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.

(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 subdivision

and subdivision (a).

intangible property that constitutes business activity.

(d) Sale or sales do not include dividends, interest, and

royalties except to the extent earned in the ordinary course of a

trade or business.

(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. 9. (1) "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.

(2) "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.

(3) "Tax year" or "taxable 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 person 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.

(4) "Taxpayer" means a person liable for a tax, interest, or

penalty under this act.

(5) "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.

(6) "Unitary business group" means a group of persons related

through common ownership whose business activities are integrated

with, are dependent upon, and contribute to each other. A unitary

business group does not include a member whose business activity

outside the United States is 80% or more of that member's total

business activity. For purposes of this subsection, business

activity within the United States is measured by the sales factor

ordinarily applicable under sections 10 and 70 through 81. The

computation required by the preceding sentence shall, in each case,

involve the division of the member's sales in the United States or

insurance premiums on property or risk in the United States, as the

case may be, by the respective worldwide figures for such items.

Common ownership of a unitary business group shall be determined as

follows:

(a) Common ownership in the case of a corporation or

subchapter S corporation is the direct or indirect control or

ownership of more than 50% of the outstanding stock by vote and

value and the direct or indirect control or ownership of more than

50% of the outstanding value of stock of the persons carrying on

unitary business activity.

(b) Common ownership in the case of partnerships is the direct

or indirect ownership or control of more than 50% of the

partnership interests of the partnerships carrying on unitary

business activity.

(7) For purposes of subsection (6):

(a) An individual is considered the owner of the stock or the

owner of partnership interests owned, directly or indirectly, by or

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

revenue code.

(b) Unitary activity can ordinarily be illustrated if the

activities of the members are any of the following:

(i) In the same general line, such as manufacturing,

wholesaling, retailing of tangible personal property, insurance,

transportation, or finance.

(ii) Steps in a vertically structured enterprise or process,

such as the steps involved in the production of natural resources,

which might include exploration, mining, refining, and marketing.

(iii) Functionally integrated through the exercise of strong

centralized management, including, but not limited to, authority

over such matters as purchasing, financing, tax compliance, product

line, personnel, marketing, and capital investment.

include members that are subject to apportionment by different

apportionment factors.

(d) "United States" means only the 50 states and the District

of Columbia, but does not include any territory or possession of

the United States or any area over which the United States has

asserted jurisdiction or claimed exclusive rights with respect to

the exploration for or exploitation of natural resources.

(8) "Unitary business member" means a person that is a member

of a unitary business group.

Sec. 10. (1) A foreign person shall calculate business income

and gross receipts under this section and, except as otherwise

provided in this section, the business license tax base and

business income tax base of a foreign person is subject to all

adjustments and other provisions of this act.

(2) Except as otherwise provided in this section and except

for a taxpayer that pays the tax imposed under section 60 of this

act, the business license tax base of a foreign person includes the

sum of gross receipts and the adjustments under section 23 that are

related to United States business activity, whether or not the

foreign person is subject to taxation under the internal revenue

code.

(3) Except as otherwise provided in this section and except

for a taxpayer that pays the tax imposed under section 60, the

business income tax base of a foreign person includes the sum of

business income and the adjustments under section 32 that are

related to United States business activity, whether or not the

foreign person is subject to taxation under the internal revenue

code.

(4) To calculate business income, gross receipts, and the

adjustments under sections 23 and 32 that are related to United

States business activity, a foreign person that does not have a

permanent establishment in the United States during the tax year or

that is not subject to taxation under the internal revenue code for

the tax year may use amounts that reasonably approximate the

federal taxable income and the permitted deductions the person

would have had had the person been subject to the internal revenue

code, provided the foreign person does not in the ordinary course

of its business maintain tax or financial accounting records in

accordance with the tax accounting requirements of the internal

revenue code. The tax base of a foreign person described in this

subsection shall not include gross income from sales shipped or

delivered to any purchaser within the United States and for which

title transfers outside the United States.

(5) To calculate business income, gross receipts, and the

adjustments under sections 23 and 32 that are related to United

States business activity, a Canadian person that is subject to

Canadian federal income tax under the income tax act (RSC 1985, c.

1 (5th Supp)) may use amounts properly calculated under the income

tax act (RSC 1985, c. 1 (5th Supp)) to reasonably approximate

business income, gross receipts, and the adjustments under sections

23 and 32 that are related to United States business activity.

Amounts calculated under this subsection are presumed to reasonably

approximate business income, gross receipts, and the adjustments

under sections 23 and 32 that are related to United States business

activity. The business income tax base of a Canadian person shall

not include gross receipts from sales shipped or delivered to any

purchaser within the United States and for which title transfers

outside the United States. As used in this subsection, "Canadian

person" means a foreign person that does not have a permanent

establishment in the United States during the tax year or that is

not subject to taxation under the internal revenue code for the tax

year and is either of the following:

(a) An entity formed under the laws of Canada or a province of

Canada.

(b) An individual who is physically present in Canada in the

aggregate exceeding 182 days in the tax year.

(6) As used in this section:

(a) "Business income" means, for a foreign person, gross

income attributable to the taxpayer's United States business

activity and gross income derived from sources within the United

States minus the deductions allowed under the internal revenue code

that are related to that gross income. Gross income includes the

proceeds from sales shipped or delivered to any purchaser within

the United States and for which title transfers within the United

States; proceeds from services performed within the United States;

and a pro rata proportion of the proceeds from services performed

both within and outside the United States, based on cost of

performance.

(b) "Gross receipts" means, for a foreign person, gross

receipts as defined in section 6 from United States business

activity or from sources within the United States. Gross receipts

include all sales for which title transfers within the United

States; proceeds from all services performed within the United

States; and a pro rata portion of proceeds from services performed

both within and outside of the United States based on costs of

performance.

(i) If an income tax treaty applies to the foreign person, that

term as defined in that income tax treaty in effect between the

United States and another nation.

(ii) If an income tax treaty does not apply to the foreign

person, that term as defined in the United States model income tax

convention.

(d) "Property" means, for a foreign person, all of the

taxpayer's real and tangible personal property owned or rented in

the United States during the tax year.

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

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

(7) As used in this section and sections 23, 32, and 73,

"foreign person" means either of the following:

(a) An individual who is not a United States resident, whether

or not the individual is subject to taxation under the internal

revenue code.

(b) A person formed under the laws of a foreign country or a

political subdivision of a foreign country, whether or not the

person is subject to taxation under the internal revenue code.

CHAPTER 2

Sec. 20. (1) Except as otherwise provided in this act, there

is levied and imposed a business license tax on every person with

business activity and nexus within this state. The business license

tax is imposed upon the business license tax base as determined

under section 23 after allocation or apportionment to this state

minus $350,000.00 at the rates provided below:

(a) Except as provided in subdivision (b), the rate of the

business license tax is .48%.

(b) The rate of the business license tax is .24% for those

persons primarily engaged in retail trades or wholesale trades.

(2) A person with gross receipts apportioned to this state in

an amount equal to or less than $350,000.00 is subject to the

business license tax as follows:

(a) A person with no employees has no tax liability and no

filing responsibility.

(b) A person with employees shall pay a business license tax

in the amount of $150.00.

(3) In no event shall a person subject to the business license

tax pay a business license tax in excess of $2,000,000.00. For

purposes of this subsection, a unitary business group and a

consolidated taxpayer group is a single person.

(4) The tax levied and imposed under this section is upon the

privilege of doing business in this state.

Sec. 21. As used in this section and section 20:

(a) "Other trades" means the trades described in division A

through E and H through J of the 1987 standard industrial

classification manual published by the federal office of management

and budget.

(b) "Primarily engaged in retail trades or wholesale trades"

means:

(i) Any person that engages solely in the wholesale trades and

retail trades.

(ii) Any unitary business member or consolidated member that

engages solely in the wholesale trades and retail trades,

determined separately for each member after elimination of all

transactions between the members of the unitary business group or

the consolidated taxpayer group.

(iii) Any person that engages in wholesale trades and retail

trades and also engages in other trades, and has gross receipts

from the wholesale trades and retail trades greater than the gross

receipts from other trades.

(iv) Any unitary business member or consolidated member that

engages in wholesale trades and retail trades and also engages in

other trades, tested separately, that has gross receipts from the

wholesale trades and retail trades greater than the gross receipts

from other trades. Gross receipts for purposes of this test are

measured separately for each member before apportionment and after

elimination of all transactions between the members of the unitary

business group or the consolidated taxpayer group.

(v) A person is primarily engaged in retail trades or

wholesale trades only if each of the following is satisfied:

(A) The total revenue from the person's activities in retail

trades or wholesale trades is greater that the total revenue from

the person's activities in other trades.

(B) Less than 50% of the total revenue from the person's

activities in retail trades or wholesale trades comes from the sale

of products that it produces or products that are produced by a

person that is part of a unitary business group or consolidated

taxpayer group to which the person is a member.

G of the 1987 standard industrial classification manual published

by the federal office of management and budget.

(d) "Wholesale trades" means the activities described in

division F of the 1987 standard industrial classification manual

published by the federal office of management and budget.

Sec. 22. (1) An out-of-state person has nexus in this state if

that person engages in any of the following activities:

(a) Has 1 or more employees who are residents of this state

conducting business activity in this state.

(b) Owns, rents, leases, maintains, or has the right to use

and uses tangible personal or real property that is permanently or

temporarily physically located in this state.

office or other establishment in this state.

(d) Has agents, representatives, independent contractors,

brokers, or others acting on its behalf that own, rent, lease, use,

or maintain an office or other establishment in this state, and the

office or other establishment is used in the representation of the

out-of-state person in this state and is significantly associated

with the out-of-state person's ability to establish and maintain a

market in this state.

(e) Has goods delivered to this state in vehicles it owns,

rents, leases, uses, or maintains or has goods delivered by a

related party acting as a representative of the out-of-state

person.

(f) Regularly and systematically conducts business activity in

this state through its employees, agents, representatives,

independent contractors, brokers, or others acting on its behalf,

whether or not these individuals or organizations reside in this

state.

(2) For purposes of subsection (1)(f), regular and systematic

business activity including, but not limited to those activities

listed under this subsection, exists if at least 10 days of

business activity occur in this state during that person's taxable

year. If less than 10 days of business activity occur during that

person's taxable year, regular and systematic business activity may

exist depending on the facts and circumstances of the taxpayer's

in-state business activity. Any of the following activities

conducted by the taxpayer in this state for 2 or more days within a

taxable year will be rebuttably presumed to constitute regular and

systematic business activity:

(a) Soliciting sales.

(b) Making repairs or providing maintenance or service to

property sold or to be sold.

of tangible personal property through assignment or otherwise.

(d) Installing or supervising installation at or after

shipment or delivery.

(e) Conducting training for employees, agents,

representatives, independent contractors, brokers, or others acting

on its behalf, or for customers or potential customers.

(f) Providing customers any kind of technical assistance or

service, including, but not limited to, engineering assistance,

design service, quality control, product inspections, or similar

services.

(g) Investigating, handling, or otherwise assisting in

resolving customer complaints.

(h) Providing consulting services.

(i) Soliciting, negotiating, or entering into franchising,

licensing, or similar agreements.

(3) Lawyers, accountants, investment bankers, and other

similar professionals in this state who perform services for an

out-of-state person in their professional capacity shall not be

considered to be conducting in-state business activity on behalf of

the out-of-state person.

(4) If none of the out-of-state person's business activities

in this state fall under the business activities described in

subsection (2) and its only contacts with this state are limited to

conducting any of the activities listed below, for less than 10

days, then those contacts will not be presumed to create nexus. If

an activity is listed in subdivisions (a) through (f) below but

also is described under subsection (2), then subsection (2) shall

control. If an out-of-state person's only in-state business

activity is listed in subdivision (g), that activity shall not be

considered as solicitation for the purposes of subsection (2).

Conducting any of the activities listed below for more than 10 days

does not necessarily create nexus. Whether nexus has been created

will depend on the facts and circumstances of the following in-

state business activities:

(a) Meeting with in-state suppliers of goods or services.

(b) In-state meeting with government representatives in their

official capacity.

to, board meetings, retreats, seminars, and conferences sponsored

by others.

(d) Holding recruiting or hiring events.

(e) Advertising in this state through various media.

(f) Renting customer lists to or from an in-state entity.

(g) Attending or participating at a trade show at which no

orders for goods are taken and no sales are made.

(5) Nexus shall be determined on a person-by-person basis. A

taxpayer that is a member of a unitary business group or a

consolidated taxpayer group not meeting the requirements of

subsections (1) through (4) shall not be deemed to have nexus with

this state based solely upon the in-state nexus of another member

of the taxpayer's unitary business group or consolidated taxpayer

group.

Sec. 23. (1) "Business license tax base" means a person's,

other than a tax-exempt person's, gross receipts, before allocation

or apportionment to this state, subject to the adjustments in this

section.

(2) To the extent included in gross receipts, deduct interest

and dividends received from obligations of the federal government.

(3) To the extent included in gross receipts, deduct dividends

and royalties received from foreign persons, including, but not

limited to, amounts determined under section 78 or sections 951 to

964 of the internal revenue code.

(4) To the extent included in gross receipts, subtract the

gross receipts that are attributable to another entity whose

business activities are taxable under this chapter or would be

subject to the tax under this chapter if the business activities

were in this state.

(5) The business license tax base of each unitary business

member is the sum of the gross receipts of each member of the

unitary business group less gross receipts received from other

members of the unitary business group.

(6) The business license tax base of each consolidated member

of the consolidated taxpayer group is the gross receipts of that

consolidated member less gross receipts received from other members

of the consolidated taxpayer group.

Sec. 24. (1) The business license tax base of a financial

organization means gross receipts, minus interest expense,

allocated or apportioned to this state.

(2) The business license tax base of a tax-exempt person means

the person's gross receipts derived from unrelated business

activity subject to the adjustments in section 23 to the extent

that the gross receipts are directly connected with unrelated

business activity, allocated or apportioned to this state.

CHAPTER 3

Sec. 30. (1) Except as otherwise provided in this act, there

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

business activity and nexus 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 3.05%.

(2) A person with gross receipts apportioned to this state

equal to or less than $350,000.00 shall have no business income tax

liability and no filing requirement.

Sec. 32. (1) The business income tax base means a person's

business income subject to the following adjustments, before

allocation or apportionment, and the adjustments in subsections (2)

through (4) 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 foreign persons, including,

but not limited to, amounts determined under section 78 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 chapter or would be subject to the tax under

this chapter if the business activities were in this state.

(2) Add any nonbusiness income or loss allocated to this

state.

(3) Deduct from the allocated or apportioned business income

tax base any remaining business loss carryforward calculated under

section 23b(h) of former 1975 PA 228 to the extent not deducted in

tax years beginning before January 1, 2008. A carryforward may be

deducted in any tax year that is not more than 10 taxable years

after the loss year. If the taxpayer is a unitary business member,

the business loss carryforward under this subsection may only be

deducted against the business income tax base of that unitary

business member calculated as if it were not a member of the

unitary business group. If the taxpayer is a consolidated member,

the business loss carryforward under this subsection may only be

deducted against the business income tax base of that consolidated

member calculated as if it were not a member of the consolidated

taxpayer group unless the consolidated member filed as a member of

a consolidated taxpayer group under section 77 of former 1975 PA

228 for the year the loss was incurred.

(4) 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.

(5) The business income tax base of a unitary business member

is the sum of the business income tax base of each member of the

unitary business member group less any items of income and related

deductions arising from transactions between members of the unitary

business group.

(6) The business income tax base of each consolidated member

of a consolidated taxpayer group is the business income tax base of

each member less any items of income and related deductions arising

from transactions between members of the consolidated taxpayer

group.

CHAPTER 4

Sec. 50. (1) The following are exempt from the taxes 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 nonprofit cooperative housing corporation. As used in

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.

23 and 32 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. Production of

agricultural goods 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.

(d) 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 a tax-exempt

person 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.

(e) That portion of the tax base as determined under sections

23 and 32 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.

(f) That portion of the tax base as determined under sections

23 and 32 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.

(g) That portion of the tax base as determined under sections

23 and 32 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)(d) 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)(d)(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 shall exclude from the adjusted tax base

the revenue and expenses attributable to business transacted with

farmer or farmer cooperative corporation patrons to whom net

earnings are allocated in the form of patronage dividends as

defined in section 1388 of the internal revenue code. In computing

the adjusted tax base of a farmers' cooperative corporation, each

of the additions and deductions under chapters 2 and 3 shall be

multiplied by a fraction, the numerator of which is the gross

profit of the nonpatronage sourced business of the farmers'

cooperative corporation and the denominator of which is the gross

profits of the farmers' cooperative corporation. As used in this

subsection only, "farmers' cooperative corporation" means a

farmers' cooperative corporation organized within the limitations

of section 98 of 1931 PA 327, MCL 450.98.

Sec. 51. (1) For tax years beginning after December 31, 2007,

a taxpayer may claim a credit against the total amount of taxes

imposed by this act equal to 50% of the property taxes paid in the

same tax year by the person on tangible personal property.

(2) A person that is not otherwise required to file a return

under this act may claim the credit under this section.

(3) To qualify for the credit under this section for taxes

paid on an item of tangible personal property, a person that is

otherwise eligible to claim the credit allowed under this section

shall file a copy of the assessment or bill issued to and paid by

the taxpayer for items of tangible personal property that are

classified as tangible personal property for the location at which

the tangible personal property that is the basis of the credit

allowed under this section is located. An assessment or bill issued

by the department under 1905 PA 282, MCL 207.1 to 207.21, is not

required to be filed under this subsection.

(4) If the credit allowed under this section exceeds the tax

liability of the person for the tax year or if the person does not

have a tax liability under this act for the tax year, the excess or

the amount of the credit shall be refunded or paid to the person.

The state treasurer may establish a reserve account in the

department to fund and provide for payment of the amount of refunds

or payments for credits under this section that are attributable to

the fiscal years ending in the tax years for which credits are

claimed.

(5) The credit allowed under this section shall be calculated

after application of all other credits allowed under this act.

(6) As used in this section:

(a) "Personal property" means property classified as

assessable personal property under section 34c(3) of the general

property tax act, 1893 PA 206, MCL 211.34c, and property that is

taxable under 1905 PA 282, MCL 207.1 to 207.21.

(b) "Property taxes" means any of the following:

(i) Taxes collected under the general property tax act, 1893 PA

206, MCL 211.1 to 211.157.

(ii) Taxes collected under 1905 PA 282, MCL 207.1 to 207.21.

(iii) Taxes levied under 1974 PA 198, MCL 207.551 to 207.572.

(iv) Taxes levied under the obsolete property rehabilitation

act, 2000 PA 146, MCL 125.2781 to 125.2797.

(v) Taxes levied under the technology park development act,

1984 PA 385, MCL 207.702 to 207.718.

(vi) Any payments made by the taxpayer pursuant to a contract

with the Michigan strategic fund in connection with the creation of

a renaissance zone under the Michigan renaissance zone act, 1996 PA

376, MCL 125.2681 to 125.2696, to the extent that those payments

are made by the taxpayer to reimburse all taxing units for property

taxes that would otherwise be exempt under section 7ff of the

general property tax act, 1893 PA 206, MCL 211.7ff.

(vii) Taxes levied under the commercial rehabilitation act,

2005 PA 210, MCL 207.841 to 207.856.

(viii) Any payments made by a taxpayer pursuant to a contract

with an eligible local assessing district to the extent that those

payments are made to reimburse taxing units for property taxes that

would otherwise be payable under the general property tax act, 1893

PA 206, MCL 211.1 to 211.157. As used in this subparagraph,

"eligible local assessing district" means that term as defined in

section 9f of the general property tax act, 1893 PA 206, MCL

211.9f.

Sec. 52. (1) For a project for which a certificate of

completion or component completion certificate has been issued to a

qualified taxpayer before January 1, 2008 under section 38g of

former 1975 PA 228, all of the following apply:

(a) If a credit or any carryforward of a credit under that

certificate of completion or component completion certificate

exceeds a qualified taxpayer's or assignee's tax liability for the

most recent tax year beginning before January 1, 2008, the excess

shall not be refunded, but the qualified taxpayer or assignee may

carry forward the excess portion to offset the total tax liability

under this act for up to 10 years minus the number of years the

credit was claimed under section 38g of former 1975 PA 228, or

until used up, whichever occurs first.

(b) If the certificate of completion designates a schedule for

claiming annual credit amounts and specifies that certain amounts

may only be claimed after December 31, 2007, those amounts required

to be claimed after December 31, 2007 may be claimed as a credit

against the taxpayer's or assignee's tax liability under this act,

according to the schedule provided in the certificate of

completion. If an amount required to be claimed after December 31,

2007 exceeds the taxpayer's or assignee's total tax liability for

the year in which it may first be claimed, the excess shall not be

refunded, but the taxpayer or assignee may carry forward the excess

portion for up to 10 years, or until used up, whichever occurs

first.

(2) A qualified taxpayer listed on a preapproval letter issued

before January 1, 2008 under section 38g or 35c of former 1975 PA

228 for any project, other than a multiphase project, for which a

certificate of completion has not been issued before January 1,

2008 may claim a credit against the total tax liability imposed

under this act, subject to the following requirements:

(a) The project must be completed within 5 years after the

date of the preapproval letter.

(b) When the project is completed, the taxpayer shall file a

request for a certificate of completion with the Michigan economic

growth authority, which shall include documentation that the

project is completed, an accounting of the cost of the project, the

eligible investment of each taxpayer if there is more than 1

taxpayer eligible for a credit for the project, and, if the

taxpayer is not the owner or lessee of the eligible property on

which the eligible investment was made at the time the project is

completed, that the taxpayer was the owner or lessee of that

eligible property when all eligible investment of the taxpayer was

made.

or his or her designee shall verify that the project is completed.

When the completion of the project is verified, a certificate of

completion shall be issued to each qualified taxpayer that has made

eligible investment on the eligible property. The certificate of

completion shall state all of the following:

(i) The total amount of all credits for the project, which

shall not exceed the maximum total of all credits listed in the

preapproval letter.

(ii) That the taxpayer is a qualified taxpayer.

(iii) The total cost of the project and the eligible investment

of each qualified taxpayer.

(iv) Each qualified taxpayer's credit amount.

(v) The qualified taxpayer's federal employer identification

number or the Michigan treasury number assigned to the taxpayer.

(vi) The project number.

(vii) If the total of all credits is more than $10,000,000.00

but $30,000,000.00 or less, the schedule by which the annual credit

amount shall be claimed by each taxpayer, which shall be equivalent

to 10% of the taxpayer's credit each year for 10 years.

(d) A credit claimed under this subsection shall be first

claimed in the tax year in which the certificate of completion is

issued. If the amount of the credit exceeds the taxpayer's or

assignee's total tax liability for the year in which it may first

be claimed, the excess shall not be refunded, but the taxpayer or

assignee may carry forward the excess portion for up to 10 years,

or until used up, whichever occurs first.

(3) A qualified taxpayer who has a preapproval letter issued

before January 1, 2008 under section 38g or 35c of former 1975 PA

228 for a multiphase project that has not been fully completed

before January 1, 2008 may claim a credit against the tax liability

imposed under this act, subject to the following requirements:

(a) When a component of the multiphase project is completed,

the taxpayer shall file a request for a component completion

certificate with the Michigan economic growth authority, which

shall include documentation that the component is complete, an

accounting of the cost of the component, and the eligible

investment for the component of each taxpayer eligible for a credit

for the project of which the component is a part.

(b) The chairperson of the Michigan economic growth authority

or his or her designee shall verify that the component is complete.

When the completion of the component is verified, a component

completion certificate shall be issued to each qualified taxpayer

that has made eligible investment on the eligible property. The

certificate of completion shall state all of the following:

(i) That the taxpayer is a qualified taxpayer.

(ii) The credit amount for the component.

(iii) The total cost of the component and the eligible

investment of each qualified taxpayer.

(iv) Each qualified taxpayer's credit amount.

(v) The credit amount of all component completion certificates

for the project previously issued under sections 38g and 35c of

former 1975 PA 228, which, together with the amount in subparagraph

(ii), shall not exceed the amount stated in the preapproval letter

for the project.

(vi) The qualified taxpayer's federal employer identification

number or the Michigan treasury number assigned to the taxpayer.

(vii) The project number.

(viii) If the total of all credits for the component is more

than $10,000,000.00 but $30,000,000.00 or less, the schedule by

which the annual credit amount shall be claimed by each taxpayer,

which shall be equivalent to 10% of the taxpayer's credit each year

for 10 years.

completed by 10 years after the date on which the preapproval

letter for the project was issued, the qualified taxpayer that

received the preapproval letter for the project shall pay to the

state treasurer, as a penalty, an amount equal to the sum of all

credits claimed and assigned for all components of the multiphase

project and no credits based on that multiphase project shall be

claimed after that date by the qualified taxpayer or any assignee

of the qualified taxpayer. The penalty under this subsection is

subject to interest on the amount of the credit claimed or assigned

determined individually for each component at the rate in section

23 of 1941 PA 122, MCL 205.23, beginning on the date that the

credit for that component was claimed or assigned.

(d) A credit claimed under this subsection shall be first

claimed in the tax year in which the component completion

certificate is issued. If the amount of the credit exceeds the

taxpayer's or assignee's tax liability for the year in which it may

first be claimed, the taxpayer or assignee may carry forward the

excess portion for up to 10 years, or until used up, whichever

occurs first.

(4) A credit allowed under this section may be assigned as

follows:

(a) A qualified taxpayer may assign all or a portion of a

credit. An assignee may subsequently assign a credit or any portion

of a credit to 1 or more assignees.

(b) If a certificate of completion or component completion

certificate requires a credit to be claimed pursuant to a schedule,

the taxpayer shall assign the annual credit amount for each tax

year separately. More than 1 annual credit amount may be assigned

to any 1 assignee, and the qualified taxpayer may assign all or a

portion of each annual credit amount to any assignee.

is irrevocable and shall be made by filing notice of the assignment

with the Michigan economic growth authority in the tax year in

which the assignment or reassignment is made. The notice shall

include the names of the parties assigning and accepting assignment

of the credit, the project number, and the amount of the credit

being assigned.

(5) Each qualified taxpayer or assignee that claims a credit

under this section shall attach a copy of the certificate of

completion or component completion certificate and, if the credit

was assigned, a copy of the assignment form, to the annual return

filed under this act on which the credit is claimed.

(6) The Michigan economic growth authority may amend project

descriptions and preapproval letters as necessary to enable

taxpayers to claim credits under this section, but may not increase

the maximum amount of all credits on a preapproval letter.

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

section 54(1)(c) based on the same costs.

(8) As used in this section:

(a) "Assignee" means a person to whom a credit allowed under

this section or section 38g of former 1975 PA 228 has been assigned

as authorized by this section or section 38g or 35e of former 1975

PA 228.

(b) "Eligible investment" means demolition, construction,

restoration, alteration, renovation, or improvement of buildings or

site improvements on eligible property and the addition of

machinery, equipment, and fixtures to eligible property after the

date that eligible activities on that eligible property have

started pursuant to a brownfield plan under the brownfield

redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2672,

and after the date that the preapproval letter is issued, except

that the date that the preapproval letter is issued is not a

limitation for 1 project the construction of which began after

January 1, 2000 and before January 1, 2001 without the Michigan

economic growth authority determining that the project would not

occur in this state without the tax credit offered under this

section, if the costs of the eligible investment are not otherwise

reimbursed to the taxpayer or paid for on behalf of the taxpayer

from any source other than the taxpayer. The addition of leased

machinery, equipment, or fixtures to eligible property by a lessee

of the machinery, equipment, or fixtures is eligible investment if

the lease of the machinery, equipment, or fixtures has a minimum

term of 10 years or is for the expected useful life of the

machinery, equipment, or fixtures, and if the owner of the

machinery, equipment, or fixtures is not the qualified taxpayer

with regard to that machinery, equipment, or fixtures. The cost of

eligible investment for leased machinery, equipment, or fixtures is

the cost of that property had the property been purchased minus the

lessor's estimate, made at the time the lease is entered into, of

the market value the property will have at the end of the lease.

brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651

to 125.2672, except that the term also includes:

(i) Property identified under a brownfield plan that was used

or is currently used for commercial, industrial, or residential

purposes and that is 1 of the following:

(A) Property for which eligible activities are identified

under the brownfield plan, which is in a qualified local

governmental unit, and which is a facility, functionally obsolete,

or blighted.

(B) Property that is not in a qualified local governmental

unit but is within a downtown development district established

under 1975 PA 197, MCL 125.1651 to 125.1681, and is functionally

obsolete or blighted, and a component of the project on that

eligible property is 1 or more of the following:

(I) Infrastructure improvements that directly benefit the

eligible property.

(II) Demolition of structures that is not response activity

under section 20101 of the natural resources and environmental

protection act, 1994 PA 451, MCL 324.20101.

(III) Lead or asbestos abatement.

(IV) Site preparation that is not response activity under

section 20101 of the natural resources and environmental protection

act, 1994 PA 451, MCL 324.20101.

under the brownfield plan, which is not in a qualified local

governmental unit, and which is a facility.

(ii) Parcels that are adjacent or contiguous to the eligible

property if the development of the adjacent or contiguous parcels

is estimated to increase the captured taxable value of the property

or tax reverted property owned or under the control of a land bank

fast track authority pursuant to the land bank fast track act, 2003

PA 258, MCL 124.751 to 124.774.

(iii) To the extent included in the brownfield plan, personal

property located on the eligible property.

(iv) Eligible property does not include qualified agricultural

property exempt under section 7ee of the general property tax act,

1893 PA 206, MCL 211.7ee, from the tax levied by a local school

district for school operating purposes to the extent provided under

section 1211 of the revised school code, 1976 PA 451, MCL 380.1211.

(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) "Multiphase project" means a project that has more than 1

component but not more than 20 components, each of which can be

completed separately.

(f) "Project" means the eligible investment identified in a

preapproval letter issued before January 1, 2008 under section 38g

or 35c of former 1975 PA 228.

(g) "Qualified local governmental unit" means that term as

defined in the obsolete property rehabilitation act, 2000 PA 146,

MCL 125.2781 to 125.2797.

(h) "Qualified taxpayer" means a taxpayer that meets both of

the following criteria at the time the eligible investment of the

taxpayer is made:

(i) Owns or leases eligible property.

(ii) Certifies that, except as otherwise provided in this

subparagraph, the department of environmental quality has not sued

or issued a unilateral order to the taxpayer pursuant to part 201

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.20101 to 324.20142, to compel response activity on or

to the eligible property, or expended any state funds for response

activity on or to the eligible property and demanded reimbursement

for those expenditures from the qualified taxpayer. However, if the

taxpayer has completed all response activity required by part 201

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.20101 to 324.20142, is in compliance with any deed

restriction or administrative or judicial order related to the

required response activity, and has reimbursed the state for all

costs incurred by the state related to the required response

activity, the taxpayer meets the criteria under this subparagraph.

Sec. 53. (1) Except as provided in subsection (2), a taxpayer

that is a business that has been located and conducting business

activity within a renaissance zone since before January 1, 2008 may

claim a credit against the total amount of taxes imposed by this

act for the tax year, equal to the following:

(a) Except as provided in subdivision (b), for a business that

first locates and begins conducting business activity within a

renaissance zone after November 30, 2002, the lesser of the

following:

(i) The tax liability attributable to business activity

conducted within a renaissance zone in the tax year.

(ii) Ten percent of adjusted services performed in a designated

renaissance zone.

(b) For a business that is located and conducting business

activity within a renaissance zone before December 1, 2002 or a

business that before December 1, 2002 has entered into a purchase

agreement or lease agreement for real or personal property to be

used for business activity within a renaissance zone, the greater

of the following:

(i) The amount calculated under subdivision (a)(i) or (ii),

whichever is less.

(ii) The lesser of the following:

(A) The amount calculated under subdivision (a)(i).

(B) The credit allowed under this section for the tax year

beginning in 2002 plus 2% of the increase in the amount calculated

under subsection (11)(a)(i) for the tax year over the amount

calculated under subsection (11)(a)(i) for the tax year beginning

in 2002.

(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) The tax liability used to determine the credit under this

section is the taxpayer's tax liability before the calculation of

all other credits under this act.

(5) The credit allowed under this section shall not exceed the

tax liability of the taxpayer for the tax year.

(6) 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.

(7) To be eligible for the credit allowed under this section,

an otherwise qualified taxpayer shall file an annual return under

this act.

(8) 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. As used in

this subsection, "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.

(9) During the last 3 years that the taxpayer is eligible for

a credit under this section, the credit shall be reduced by the

following percentages:

(a) For the tax year that is 2 years before the final year of

designation as a renaissance zone, the percentage shall be 25%.

(b) For the tax year immediately preceding the final year of

designation as a renaissance zone, the percentage shall be 50%.

zone, the percentage shall be 75%.

(10) A taxpayer is not eligible for a credit under this

section for the tax year if any of the following apply:

(a) The taxpayer is delinquent on December 31 of the prior tax

year for tax due for the prior tax year under any of the taxes

listed in section 10(1)(a) of the Michigan renaissance zone act,

1996 PA 376, MCL 125.2690, subject to the exception described in

section 10(4) of the Michigan renaissance zone act, 1996 PA 376,

MCL 125.2690.

(b) The taxpayer is substantially delinquent as defined in a

written policy by the qualified local governmental unit in which

the renaissance zone is located on December 31 of the prior tax

year under any of the taxes listed in section 10(1)(b) of the

Michigan renaissance zone act, 1996 PA 376, MCL 125.2690.

renaissance zone and the department determines that the aggregate

state and local tax revenue forgone as a result of all exemptions,

deductions, or credits granted under the Michigan renaissance zone

act, 1996 PA 376, MCL 125.2681 to 125.2696, plus the credits

granted under this section, to the taxpayer reaches $10,000,000.00.

(d) The taxpayer is a casino located and conducting business

activity within a renaissance zone. As used in this subsection,

"casino" means a casino or a parking lot, hotel, motel, or retail

store owned or operated by a casino, an affiliate, or an affiliated

company, regulated by this state pursuant to the Michigan gaming

control and revenue act, the Initiated Law of 1996, MCL 432.201 to

432.226.

(11) 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 any deduction for

depreciation, amortization, or accelerated write-off related to the

cost of tangible assets, in arriving at federal taxable income.

(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 apportionment factor.

(b) "Delinquent" means assessed, unpaid, and not subject to

administrative or judicial review or appeal.

to, or exempt from, the collection of taxes under the general

property tax act, 1896 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. 54. (1) Except as otherwise provided in this section, a

taxpayer that is an authorized business and that has entered into a

written agreement with the Michigan economic growth authority

before January 1, 2008 for a tax credit or credits under the

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

207.810, may credit against the total amount of tax imposed by this

act the following amounts as certified each year by the Michigan

economic growth authority:

(a) An amount certified each year by the Michigan economic

growth authority, which shall not exceed the payroll of the

authorized business attributable to employees who perform qualified

new jobs multiplied by the tax rate.

(b) An amount certified each year by the Michigan economic

growth authority equal to the tax liability attributable to

authorized business activity.

growth authority that is 1 of the following:

(i) For an eligible business under section 8(5)(a) of the

Michigan economic growth authority act, 1995 PA 24, MCL 207.808, an

amount that is not more than 50% of 1 or both of the following as

determined by the Michigan economic growth authority:

(A) An amount determined under the Michigan economic growth

authority act, 1995 PA 24, MCL 207.801 to 207.810, that does not

exceed the payroll of the eligible taxpayer attributable to

employees who perform retained jobs multiplied by the tax rate for

the tax year.

(B) The tax liability attributable to the eligible taxpayer's

business activity multiplied by a fraction the numerator of which

is the ratio of the value of new capital investment to all of the

taxpayer's property located in this state plus the ratio of the

taxpayer's payroll attributable to retained jobs to all of the

taxpayer's payroll in this state and the denominator of which is 2.

(ii) For an eligible business under section 8(5)(b) of the

Michigan economic growth authority act, 1995 PA 24, MCL 207.808, an

amount that is not more than 1 or both of the following as

determined by the Michigan economic growth authority:

(A) An amount determined under the Michigan economic growth

authority act, MCL 207.801 to 207.810, that does not exceed the

payroll of the eligible taxpayer attributable to employees who

perform retained jobs multiplied by the tax rate for the tax year.

(B) The tax liability attributable to the eligible taxpayer's

business activity multiplied by a fraction the numerator of which

is the ratio of the value of capital investment to all of the

taxpayer's property located in this state plus the ratio of the

taxpayer's payroll attributable to retained jobs to all of the

taxpayer's payroll in this state and the denominator of which is 2.

(2) A taxpayer shall not claim a credit under subsection (1)

unless the Michigan economic growth authority has issued a

certificate to the taxpayer. The taxpayer shall attach the

certificate to the 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) That the taxpayer is an authorized business.

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

the authorized business for the designated tax year, and the

subsection under which each credit is being authorized.

the Michigan treasury number assigned to the taxpayer.

(4) A taxpayer shall not claim a credit under subsection (1)

unless the initial certificate as required in subsection (2) is

issued before January 1, 2010.

(5) The Michigan economic growth authority shall not issue

certificates under subsection (2) to a taxpayer in excess of either

of the following:

(a) The total amount of tax credits determined for the

taxpayer under section 8(2) of the Michigan economic growth

authority act, 1995 PA 24, MCL 207.808, minus the amount of tax

credits that have previously been certified for the taxpayer under

this section, or sections 37c, 37d, or 38g(20) of former 1975 PA

228.

(b) The duration of tax credits determined for the taxpayer

under section 8(2) of the Michigan economic growth authority act,

1995 PA 24, MCL 207.808, minus the number of years that tax credits

have previously been certified for the taxpayer under this section,

or sections 37c, 37d, or 38g(20) of former 1975 PA 228.

(6) For a credit or credits under subsection (1)(a), all of

the following apply:

(a) An affiliated group, a controlled group of corporations as

defined in section 1563 of the internal revenue code and further

described in 26 CFR 1.414(b)-1 and 1.414(c)-1 to 1.414(c)-5, or an

entity under common control as defined by the internal revenue code

shall claim only 1 credit for each tax year for each expansion or

location evidenced by a written agreement whether or not a unitary

business group or consolidated taxpayer group return is filed.

(b) If the credit allowed exceeds the tax liability of the

taxpayer for the tax year, the excess shall be refunded to the

taxpayer.

(7) For a credit or credits under subsection (1)(b), all of

the following apply:

(a) The tax liability attributable to authorized business

activity is the tax liability imposed by this act multiplied by

either of the following fractions as appropriate:

(i) For an authorized business locating a facility in this

state, a fraction the numerator of which is the ratio of the value

of the facility to all of the taxpayer's property located in this

state plus the ratio of the taxpayer's payroll attributable to

qualified new jobs to all of the taxpayer's payroll in this state

and the denominator of which is 2.

(ii) For an authorized business expanding at an existing site,

a fraction the numerator of which is the ratio of the value of the

new property added to the site as part of that expansion to all of

the taxpayer's property located in this state plus the ratio of the

taxpayer's payroll attributable to qualified new jobs to all of the

taxpayer's payroll in this state and the denominator of which is 2.

(b) If the credit for the tax year and any unused carryforward

of the credit 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.

(8) For a credit or credits under subsection (1)(c), all of

the following apply:

(a) An affiliated group, a controlled group of corporations as

defined in section 1563 of the internal revenue code and further

described in 26 CFR 1.414(b)-1 and 1.414(c)-1 to 1.414(c)-5, or an

entity under common control as defined by the internal revenue code

shall claim only 1 credit for each tax year based on each written

agreement whether or not a combined or consolidated return is

filed.

(b) If the credit allowed under subsection (1)(c)(i)(B) or

(ii)(B) for the tax year and any unused carryforward of the credit

allowed by subsection (1)(c)(i)(B) or (ii)(B) 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.

(ii)(A) exceeds the tax liability of the eligible taxpayer for the

tax year, the excess shall be refunded to the eligible taxpayer.

(d) A taxpayer shall not claim a credit under section 52 and

subsection (1)(c) based on the same costs.

(9) If any unused carryforward of a credit or credits under

section 37c(12), 37d(5), or 38g(24) of former 1975 PA 228 exceeds

the taxpayer's tax liability for the most recent tax year beginning

before January 1, 2008, the excess shall not be refunded, but the

taxpayer may carry forward the excess portion to offset tax

liability under this act for up to 10 years minus the number of

years the credit was claimed under section 37c(12), 37d(5), or

38g(24) of former 1975 PA 228, or until used up, whichever occurs

first.

(10) If the Michigan economic growth authority or a designee

of the Michigan economic growth authority requests that a taxpayer

who claims any 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

that statement and attach that statement to its annual return under

this act on which the credit under this section is claimed.

(11) A taxpayer that claims a credit under subsection (1)(a)

or (b), or section 37c(1) 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 not

later than 12 months after those qualified new jobs are removed

from this state an amount equal to the total of all credits

described in this subsection that were claimed by the taxpayer.

(12) A credit shall not be taken under this section unless the

original or amended written agreement provides that the provision

of that credit is contingent upon the taxpayer's fulfillment of its

obligations under the agreement. Neither the taxpayer's obligations

under the agreement nor the total amount or duration of tax credits

shall be amended.

(13) As used in this section:

(a) "Authority" or "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.

(b) "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.

of an authorized business certified under the Michigan economic

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

(d) "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.

(e) "Payroll" means the total salaries and wages before

deducting any personal or dependency exemptions.

(f) "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 taxpayer 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.

(g) "Tax rate" means the rate imposed under sections 51, 51d,

and 51e of the income tax act of 1967, 1967 PA 281, MCL 206.51,

206.51d, and 206.51e, for the tax year in which the tax year of the

taxpayer for which the credit is being computed begins.

CHAPTER 5

Sec. 60. (1) Each insurance company and each formerly

authorized insurance company with respect to premiums received

while an insurance company in this state shall pay to the

department a tax calculated as the product of .010735 times the

insurance company's tax base as determined pursuant to section 61.

(2) The following are exempt from the tax imposed by this

section:

(a) Beginning January 1, 2008 and after being apportioned

under section 61(4), the first $130,000,000.00 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 act. This exemption

shall be reduced by $2.00 for each $1.00 by which the insurance

company's gross premiums from insurance carrier services in this

state and outside this state exceed $180,000,000.00.

(b) 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.

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.

Sec. 61. (1) Except as otherwise provided in this section, the

tax base of an insurance company is the insurance company's

adjusted receipts as apportioned under subsection (3).

(2) The tax calculated on an insurance company under this act

is in lieu of all other privilege or franchise fees, income taxes,

or other taxes imposed by any other law of this state, except taxes

levied on real and personal property and except as otherwise

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

500.8302.

(3) The tax base of an insurance company doing business both

within and outside of this state or partly within and outside of

this state shall be that portion of the tax base of the taxpayer

that the gross direct premiums received for insurance upon property

or risk in this state, deducting premiums upon policies not taken

and returned premiums on canceled policies from Michigan, bears to

the gross direct premiums received for insurance upon property or

risk, deducting premiums upon policies not taken and returned

premiums on canceled policies, everywhere.

(4) As used in this section:

(a) "Adjusted receipts" means, except as provided in

subdivision (b), the sum of all of the following:

(i) Rental and royalty receipts from a person that is not

either of the following:

(A) An affiliated insurance company.

(B) An insurance agent of the taxpayer licensed under chapter

12 of the insurance code of 1956, 1956 PA 218, MCL 500.1200 to

500.1247.

(ii) Gross direct premiums received for insurance on property

or risk, deducting premiums on policies not taken and returned

premiums on canceled policies.

(iii) Receipts from administrative services only contracts with

a person who is not an affiliated insurance company or an

affiliated nonprofit corporation.

(iv) Receipts from business activity other than the business of

insurance. As used in this subparagraph, "business of insurance"

means any activity related to the sale of insurance, payment of

claims, or claims handling, on policies written by the taxpayer.

(v) Charges not including interest charges attributable to

premiums paid on a deferred or installment basis.

(vi) Receipts from servicing carrier fees received from the

Michigan auto insurance placement facility pursuant to chapter 33

of the insurance code of 1956, 1956 PA 218, MCL 500.3301 to

500.3390.

(b) Adjusted receipts do not include any of the following:

(i) Receipts from interest, dividends, or proceeds from the

sale of assets.

(ii) Receipts, other than receipts described in subsection

(3)(a)(i) or (ii), from an affiliated insurance company, an

affiliated nonprofit corporation, an employee of the taxpayer, or

an insurance agent of the taxpayer licensed under chapter 12 of the

insurance code of 1956, 1956 PA 218, MCL 500.1200 to 500.1247.

(iii) Receipts on the sale of annuities.

(iv) Receipts on all reinsurance transactions.

that is a member of an affiliated group with the taxpayer or, if

the insurance company does not issue stock, 50% or more of the

members of that insurance company's board of directors are members

of the taxpayer's board of directors.

(d) "Affiliated nonprofit corporation" means a nonprofit

corporation, of which 80% or more of the members of the board of

directors are members of the taxpayer's board of directors.

Sec. 62. (1) An insurance company may claim a credit against

the tax imposed under this act in the following amounts, but not to

exceed the limitations provided in this section:

(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) For each tax year, the total credit provided in subsection

(1) for all insurance companies shall not exceed the product of the

remainder obtained by deducting the sum of the statutory amount

certified by the director of management and budget in 2007 pursuant

to section 22c(3) of former 1975 PA 228, plus the credits allowed

under section 63 from the total tax liability of domestic insurance

companies for the preceding year under this act or former 1975 PA

228 but before applying any credits multiplied by a fraction the

numerator of which is the total assessments paid by all insurance

companies to the associations and facilities described in

subsection (1) and the denominator of which is the total

assessments paid by domestic insurance companies to the

associations and facilities described in subsection (1). The

statutory amount certified by the director of management and budget

in 2007 pursuant to section 22c(3) of former 1975 PA 228 subtrahend

shall be adjusted annually in proportion to the change in total

general fund/general purpose revenues for the immediately preceding

year, as certified by the director of management and budget.

(3) For each tax year, the credit for each insurance company

shall not exceed an amount equal to the product of the total credit

limitation calculated under subsection (2) multiplied by a fraction

the numerator of which is the insurance company's total assessments

paid to the associations and facilities described in subsection (1)

and the denominator of which is the total assessments paid by all

insurance companies to the associations and facilities described in

subsection (1).

(4) The tax liability and 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.

(5) Not later than June 30 of each year after 2007, the state

treasurer shall certify the amounts needed to calculate the credits

allowed under this section for the insurance company tax year

ending in that calendar year.

Sec. 63. An insurance company shall be allowed a credit

against the tax imposed under this act 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. 64. (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 act 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 90. 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. 65. (1) An insurance company is subject to the tax under

this act or section 476a of the insurance code of 1956, 1956 PA

218, MCL 500.476a, if applicable, whichever is greater.

(2) An insurance company's tax year is the calendar year.

(3) An insurance company shall file the annual return required

under this act before the March 2 immediately succeeding the end of

the tax year.

(4) For the purpose of calculating an estimated payment

required under section 90, the greater of the amount of tax imposed

on an insurance company under this act 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 under this

section.

CHAPTER 6

Sec. 70. (1) Except as otherwise provided in this chapter, the

entire business license tax base or business income tax base of a

taxpayer whose business activities are confined solely to this

state shall be allocated to this state.

(2) To the extent that the following are included as

nonbusiness income under chapter 3, that nonbusiness income shall

be allocated as follows:

(a) Net rents and royalties from real property located in this

state are allocable to this state.

(b) Net rents and royalties from tangible personal property

are allocable to this state as follows:

(i) If and to the extent that the property is utilized in this

state.

(ii) In their entirety if the taxpayer's commercial domicile is

in this state and the taxpayer is not organized under the laws of

or taxable in another state in which the property is utilized.

(iii) The extent of utilization of tangible personal property in

this state is determined by multiplying the rents and royalties by

a fraction, the numerator of the fraction is the number of days of

physical location of the property in this state during the rental

or royalty period in the taxable year and the denominator of the

fraction is the number of days of physical location of the property

everywhere during all rental or royalty periods in the taxable

year. If the physical location of the property during the rental or

royalty period is unknown or unascertainable by the taxpayer,

tangible personal property is utilized in the state in which the

property was located at the time the rental or royalty payer

obtained possession.

located in this state is allocable to this state.

(d) A capital gain or loss from sales of tangible personal

property is allocable to this state if the property had a situs in

this state at the time of the sale or if the taxpayer's commercial

domicile is in this state and the taxpayer is not taxable in the

state in which the property had a situs.

(e) A capital gain or loss from the sale of intangible

personal property is allocable to this state if the taxpayer's

commercial domicile is in this state.

(f) Interest and dividends are allocable to this state if the

taxpayer's commercial domicile is in this state.

(g) Patent and copyright royalties are allocable to this state

if the patent or copyright is utilized by the payer in this state

or if the patent or copyright is utilized by the payer in a state

in which the taxpayer is not taxable and the taxpayer's commercial

domicile is in this state. A patent is utilized in a state to the

extent that it is employed in production, fabrication,

manufacturing, or other processing in that state or to the extent

that a patented product is produced in that state. If the basis of

receipts from patent royalties does not permit allocation to 1 or

more states or if the accounting procedures do not reflect 1 or

more states of utilization, the patent shall be considered utilized

in the state in which the taxpayer's commercial domicile is

located.

(h) A copyright is utilized in a state to the extent that

printing or other publication originates in that state. If the

basis of receipts from copyright royalties does not permit

allocation to 1 or more states or if the accounting procedures do

not reflect 1 or more states of utilization, the copyright shall be

considered utilized in the state in which the taxpayer's commercial

domicile is located.

(i) Any other item of nonbusiness income is allocated to this

state if the taxpayer's commercial domicile is in this state.

Sec. 71. The business license tax base or business income tax

base of a taxpayer whose business activities are taxable both

within and outside of this state is taxable 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.

Sec. 72. All of the business license tax base or business

income tax base, other than the tax base of a financial

organization or the tax base derived principally from

transportation services or specifically allocated, shall be

apportioned to this state by multiplying the tax base by the sales

factor calculated under section 73.

Sec. 73. (1) Except as otherwise provided in this section and

in section 80, 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) The sales factor for a unitary business member is a

fraction, the numerator of which is the total sales of the unitary

business member in this state during the tax year and the

denominator of which is the total sales of the unitary business

group everywhere during the tax year. In the case of a unitary

business group composed exclusively of taxpayers using the special

apportionment factors under section 77, 78, or 79 of this act, the

unitary business member's tax base shall be apportioned by a

fraction, the numerator of which is the special factor of the

unitary business member in this state during the tax year and the

denominator of which is the special factor of the unitary business

group everywhere during the tax year. Sales between members of the

unitary business group must be eliminated in calculating the sales

factor or the special factor.

(3) The sales factor for a consolidated member is calculated

under subsection (1) excluding sales between consolidated members.

The factors of each consolidated member are added together to total

1 sales factor for the consolidated taxpayer group. The allocation

of sales to determine the numerator of the sales factor is made as

though each corporation is filing a separate return.

(4) The sales factor for a foreign person as defined under

section 10 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 in the

United States during the tax year.

Sec. 74. Total sales of the taxpayer in this state are

determined as follows:

(a) A sale of tangible personal property is in this state if

the property is shipped or delivered to any purchaser within this

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

the sale.

(b) Receipts from the rent, lease, or sublease of real

property owned by the taxpayer are in this state if the property is

located within 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.

Sec. 75. (1) Except as otherwise provided under section 76,

sales from the performance of services are in this state if the

receipts are derived from customers within this state or if the

receipts are otherwise attributable to this state's marketplace.

(2) The following shall be used to determine the amount of

sales from the performance of services that are attributable to

this state:

(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.

(d) Sales in this state shall include royalty or other

receipts 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, or similar items

if such sales are from activities that constitute the taxpayer's

regular trade or business. Except as otherwise provided in this

section, such sales must be attributed to the state in which the

property is used by the purchaser. If the property is used in more

than 1 state, then the royalties or other income shall be

apportioned to this state pro rata according to the portion of use

in this state. Intangible property is used in this state if the

purchaser uses the intangible property or the rights of the

intangible property in this state.

(e) The taxpayer shall expend a reasonable amount of effort to

obtain the information necessary to determine the amount of sales

that are attributable to this state. If that information is not

available, the taxpayer may use another reasonable method to

determine the amount of sales attributable to this state.

(3) As used in this section:

(a) "Billing address" means the location indicated in the

books and records of the taxpayer as the address of record where

any notice, statement, or bill relating to a customer's account is

mailed.

(b) "Customers within this state" means either of the

following:

(i) A customer that is engaged in a trade or business and

maintains a regular place of business within this state.

(ii) A customer that is not engaged in a trade or business

whose billing address is in this state.

warehouse, or other business location at which the customer

conducts business in a regular and systematic manner and that is

continuously maintained, occupied, and used by employees, agents,

or representatives of the customer.

Sec. 76. (1) 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.

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

this state if the borrower is located in this state.

(3) Receipts from the sale of loans or a group of loans,

including income recorded under the coupon stripping rules of

section 1286 of the internal revenue code, are in this state as

follows:

(a) The amount of receipts from the sale of loans secured by

real property is in this state if the property is in this state or

the 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, or if more than 50% of the

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

state, then if the borrower is located in this state.

(b) The amount of receipts from the sale of loans not secured

by real property is in this state if the borrower is in this state.

(4) 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.

(5) Receipts from the sale of credit card receivables is in

this state if the billing address of the cardholder 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.

(6) 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.

(7) 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.

(8) 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.

Sec. 77. (1) The tax base of a taxpayer whose business

activities consist of transportation services rendered either

entirely within or partly within and partly outside of this state

shall be determined as provided under this section and section 78.

(2) The tax base attributable to this state of a taxpayer

described in subsection (1), other than a taxpayer whose activity

consists of the transportation of oil or gas by pipeline, is that

portion of the tax base of the taxpayer derived from transportation

services wherever performed that the revenue miles of the taxpayer

in this state bear to the revenue miles of the taxpayer everywhere.

For a taxpayer providing maritime transportation, a revenue mile is

in this state if such transportation occurs within 3 nautical miles

of the Michigan shoreline.

(3) The tax base attributable to this state of a taxpayer

whose business activity consists of the transportation both of

property and of individuals shall be that portion of the entire tax

base of the taxpayer that is equal to the sum of its passenger

miles and ton mile fractions, separately computed and individually

weighted by the ratio of receipts from passenger transportation to

total receipts from all transportation, and by the ratio of

receipts from freight transportation to total receipts from all

transportation, respectively.

(4) If a taxpayer can show that revenue mile information is

not available or cannot be obtained without unreasonable expense to

the taxpayer, the tax base attributable to this state shall be that

portion of the tax base of the taxpayer 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.

(5) If the department determines that the information required

for the calculations under this section 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.

Sec. 78. (1) The tax base attributable to this state of a

taxpayer whose business activity consists of the transportation of

oil by pipeline, is the tax base of the taxpayer in the ratio that

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

transported by the taxpayer everywhere.

(2) The tax base attributable to this state of a taxpayer

whose business activities consists of the transportation of gas by

pipeline is the tax base of the taxpayer in the ratio that the

1,000 cubic feet miles transported in this state bear to the 1,000

cubic feet miles transported by the taxpayer everywhere.

Sec. 79. The tax base of a financial organization shall be

apportioned to this state by multiplying the tax base by a faction

the numerator of which is the total gross receipts in this state

during the tax years and the denominator of which is the total

gross receipts of the taxpayer everywhere during the tax years.

Sec. 80. (1) Notwithstanding sections 73 through 76, 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

1978 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 72 subject to both of

the following:

(a) A purchaser in this state under section 72 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 73 do not include sales to a

purchaser that was a member of a Michigan affiliated group that had

included the seller in the filing of a combined or consolidated

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

73. 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) 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. 81. (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 the 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.

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

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

CHAPTER 7

Sec. 90. (1) A taxpayer that reasonably expects business

license or business income tax liability for the tax year to exceed

$1,000.00 shall file an estimated return and pay an estimated tax

for each quarter of the taxpayer's tax year. A unitary business

group or a consolidated taxpayer group may file a single estimated

return and pay estimated tax on behalf of the group.

(2) For taxpayers on a calendar year basis, the quarterly

returns and estimated payments shall be made by April 15, July 15,

October 15, and January 15. Taxpayers not on a calendar year basis

shall file quarterly returns and make estimated payments on the

appropriate due date which in the taxpayer's fiscal year

corresponds to the calendar year.

(3) Except as otherwise provided in this section, the

estimated payment made with each quarterly return of each tax year

shall be for the estimated tax base for the quarter or 25% of the

required annual payment. The required annual payment means the

lesser of 100% of the tax shown on the return for that taxable

year, or 100% of the tax shown on the taxpayer's return for the

preceding taxable year. The second, third, and fourth estimated

payments in each tax year shall include adjustments, if necessary,

to correct underpayments or overpayments from previous quarterly

payments in the tax year.

(4) For a taxpayer that calculates and pays estimated taxes to

the internal revenue service under section 6655(e) of the internal

revenue code, the taxpayer may use the same methodology as used to

calculate the annualized income installment or the adjusted

seasonal installment, whichever is used as the basis for the

federal estimated tax payment, to calculate the required estimated

payment to be made with each quarterly return under this section.

(5) The interest provided by this act shall not be assessed if

any of the following occur:

(a) If the sum of the estimated payments equals at least 85%

of the tax liability for that taxable year.

(b) If the preceding year's tax liability under this act was

$40,000.00 or less and if the taxpayer submitted 4 equal

installments the sum of which equals the immediately preceding tax

year's tax liability.

(6) Each estimated return shall be made on a form prescribed

by the department and shall include an estimate of the annual tax

liability and other information required by the department. The

form prescribed under this subsection may be combined with any

other tax reporting form prescribed by the department.

(7) With respect to a taxpayer filing an estimated tax return

for the taxpayer's first tax year of less than 12 months, the

amounts paid with each return shall be proportional to the number

of payments made in the first tax year.

(8) Payments made under this section shall be a credit against

the payment required with the annual tax return required in section

92.

(9) If the department considers it necessary to ensure payment

of the tax or to provide a more efficient administration of the

tax, the department may require filing of the returns and payment

of the tax for other than quarterly or annual periods.

(10) A taxpayer that elects under the internal revenue code to

file an annual federal income tax return by March 1 in the year

following the taxpayer's tax year and does not make a quarterly

estimate or payment, or does not make a quarterly estimate or

payment and files a tentative annual return with a tentative

payment by January 15 in the year following the taxpayer's tax year

and a final return by April 15 in the year following the taxpayer's

tax year, has the same option in filing the estimated and annual

returns required by this act.

Sec. 91. (1) A taxpayer subject to this act may elect to

compute the tax imposed by this act for the first tax year if that

tax year is less than 12 months in accordance with 1 of the

following methods:

(2) The tax may be computed as if this act were effective on

the first day of the taxpayer's annual accounting period and the

amount computed shall be multiplied by a fraction, the numerator of

which is the number of months in the taxpayer's first tax year and

the denominator of which is 12.

(3) The tax may be computed by determining the tax base in the

first tax year in accordance with an accounting method satisfactory

to the department that reflects the actual tax base attributable to

the period.

Sec. 92. (1) A single annual or final return shall be filed

for both business license tax and business income tax with the

department in the form and content prescribed by the department by

the last day of the fourth month after the end of the taxpayer's

tax year. Any final tax liability shall be remitted with this

return.

(2) If a taxpayer is granted an extension of time within which

to file the federal income tax return for any tax year, the filing

of a copy of the request for extension together with a tentative

return and payment of estimated tax due, if any, with the

department by the due date provided in subsection (1) shall

automatically extend the due date for the filing of an annual or

final return under this act until the last day of the eighth month

following the original due date of the return. Interest at the rate

under section 23(2) of 1941 PA 122, MCL 205.23, shall be added to

the amount of any tax due unpaid for the period of the extension.

(3) If a taxpayer does not have an extension of time within

which to file the federal income tax return for any tax year, the

department, upon application of the taxpayer shall extend the date

for filing the annual return. Interest at the rate under section

23(2) of 1941 PA 122, MCL 205.23, shall be added to the amount of

the tax unpaid for the period of the extension. The department

shall require with the application payment of the estimated tax

liability unpaid for the tax period covered by the extension.

Sec. 93. (1) A taxpayer required to file a return under this

act may be required to furnish a true and correct copy of any

return or portion of any return filed under the provisions of the

internal revenue code.

(2) A taxpayer shall file an amended return with the

department showing any alteration in or modification of a federal

income tax return that affects its tax base under this act. The

amended return shall be filed within 2 years after the final

determination by the internal revenue service.

Sec. 94. (1) At the request of the department, a person

required by the internal revenue code to file or submit an

information return of income paid to others shall, to the extent

the information is applicable to residents of this state, at the

same time file or submit the information in the form and content

prescribed to the department.

(2) At the request of the department, a voluntary association,

joint venture, partnership, estate, or trust shall file a copy of

any tax return or portion of any tax return that was filed under

the provisions of the internal revenue code. The department may

prescribe alternate forms of returns.

Sec. 95. (1) Persons that are members of the same unitary

business group shall be treated as 1 taxpayer for purposes of any

original return, amended return that includes the same taxpayers of

the unitary business group which joined in filing the original

return, extension, claim for refund, assessment, collection and

payment, and determination of the group's tax liability under this

act.

(2) A unitary business group shall file a single combined tax

return reporting the tax liability of all members of the group.

(3) The department may assess the entire amount of the tax and

all additional taxes, penalty, and interest computed on the basis

of the combined tax return against any 1 or more members of the

unitary group.

Sec. 96. (1) A group of 2 or more persons may elect to be a

consolidated taxpayer group for the purposes of this chapter if the

group satisfies all of the following requirements:

(a) The group elects to include all persons having at least

50% of the vote, if applicable, and value of their ownership

interests owned or controlled, directly or constructively through

related interests, by common owners during all or any portion of

the tax period, together with the common owners. At the election of

the group, entities that are not incorporated or formed under the

laws of a state or of the United States and that meet the elected

ownership test shall either be included in the group or all shall

be excluded from the group. The group shall notify the department

of the foregoing elections before the due date of the return in

which the election is to become effective. If 50% of the vote, if

applicable, and value of a person's ownership interests is owned or

controlled by each of 2 consolidated taxpayer groups formed under

the 50% ownership or control test, that person is a member of each

group for the purposes of this section, and each group shall

include in the group's taxable receipts 50% of that person's

taxable receipts. Otherwise, all of that person's taxable receipts

shall be included in the tax base of the consolidated taxpayer

group of which the person is a member. In no event shall the

ownership or control of 50% of the vote, if applicable, and value

of a person's ownership interests by 2 otherwise unrelated groups

form the basis for consolidating the groups into a single

consolidated taxpayer group or permit any exclusion under

subsection (3) of taxable receipts between members of the 2 groups.

Subdivision (c) applies with respect to the elections described in

this subdivision.

(b) The group makes the election to be treated as a

consolidated taxpayer group in the manner prescribed under

subsection (4).

section 60.

(d) Subject to review and audit by the department, the group

agrees that all of the following apply:

(i) The group shall file reports as a single taxpayer for at

least the next 5 years following the election so long as at least 2

or more of the members of the group meet the requirements of

subdivision (a).

(ii) Before the expiration of the fifth taxable year, the group

shall notify the department if it elects to cancel its designation

as a consolidated taxpayer group. If the group does not notify the

department, the election shall remain in effect for another 5

years.

(iii) If at any time during any of those 5 years following the

election, a former member of the group no longer meets the

requirements under subdivision (a), that member shall report and

pay the tax imposed under this act separately, as a member of a

unitary business group, or if the former member satisfies those

requirements, with respect to another consolidated taxpayer group,

as a member of that consolidated taxpayer group.

(iv) The group agrees to the application of subsection (2).

(2) A consolidated taxpayer group shall exclude taxable

receipts between its members. Nothing in this section shall have

the effect of excluding receipts received from persons that are not

members of the group.

(3) To make the election to be a consolidated taxpayer group,

a group of persons shall notify the department of the election in

the manner prescribed by the department. The election shall be made

before the later of the beginning of the first calendar quarter to

which the election applies or June 15, 2008. The election shall be

made on a form prescribed by the department for that purpose and

shall be signed by 1 or more individuals with authority, separately

or together, to make a binding election on behalf of all persons in

the group. Any person acquired or formed after the filing of the

election shall be included in the group if the person meets the

requirements of subsection (1)(a), and the group shall notify the

department of any additions to the group with the next tax return

it files with the department.

(4) Each member of a consolidated taxpayer group is jointly

and severally liable for the tax imposed by this act and any

penalties or interest thereon. The department may require 1 person

in the group to be the taxpayer for purposes of registration and

remittance of the tax, but all members of the group are subject to

assessment under this act.

CHAPTER 8

Sec. 100. (1) The tax imposed by this act shall be

administered by the department pursuant to 1941 PA 122, MCL 205.1

to 205.31, and this act. If a conflict exists between 1941 PA 122,

MCL 205.1 to 205.31, and this act, the provisions of this act

apply.

(2) The department may promulgate rules to implement this act

pursuant to the administrative procedures act of 1969, 1969 PA 306,

MCL 24.201 to 24.328.

(3) The department shall prescribe forms for use by taxpayers

and may promulgate rules in conformity with this act for the

maintenance by taxpayers of records, books, and accounts, and for

the computation of the tax, the manner and time of changing or

electing accounting methods and of exercising the various options

contained in this act, the making of returns, and the

ascertainment, assessment, and collection of the tax imposed under

this act.

(4) The tax imposed by this act is in addition to all other

taxes for which the taxpayer may be liable.

(5) The department shall prepare and publish statistics from

the records kept to administer the tax imposed by this act that

detail the distribution of tax receipts by type of business, legal

form of organization, sources of tax base, timing of tax receipts,

and types of deductions. The statistics shall not result in the

disclosure of information regarding any specific taxpayer.

Sec. 101. The proceeds of the tax collected under this act

shall be deposited in the general fund.

Sec. 102. There is appropriated to the department for the

2006-2007 state fiscal year the sum of $2,000,000.00 to implement

the requirements of this act. Any portion of this amount under this

section that is not expended in the 2006-2007 state fiscal year

shall not lapse to the general fund but shall be carried forward in

a work project account that is in compliance with section 451a of

the management and budget act, 1984 PA 431, MCL 18.1451a, for the

following state fiscal year.

Enacting section 1. This act takes effect January 1, 2008.