May 3, 2007, Introduced by Senators JANSEN and HARDIMAN 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 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; and to provide for the interrelation of this act with other
acts.
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 activities tax act".
Sec. 2. A term used in this act and not defined differently
shall have the same meaning as when used in the laws of the United
States relating to federal income taxes in effect for the tax year
unless the context clearly requires a different meaning. 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 that term as defined
under section 1504 of the internal revenue code.
(2) "Agricultural activity" means commercial farming
including, but not limited to, cultivation of the soil; growing and
harvesting of an agricultural, horticultural, or floricultural
commodity; dairying; raising of livestock, bees, fish, fur-bearing
animals, or poultry; or turf or tree farming, but not including 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.
(3) "Business activity" means any activity that is a trade or
business of the taxpayer for federal income tax purposes, but does
not include any activity that is a trade or business carried on as
an employee.
Sec. 4. (1) "Department" means the department of treasury.
(2) "Employee" means an employee as defined in section 3401(c)
of the internal revenue code. A person who receives remuneration
that is required to be reported in a statement pursuant to section
6051 of the internal revenue code is presumed to be an employee
with respect to services provided by that person for that
remuneration.
(3) "Employer" means an employer as defined in section 3401(d)
of the internal revenue code. A person who pays remuneration that
is required be reported in a statement pursuant to section 6051 of
the internal revenue code is presumed to be an employer with
respect to services received by that person for that remuneration.
(4) "Exempt organization" means a person who is exempt from
taxation under section 501 of the internal revenue code.
Sec. 5. (1) "Financial organization" means a bank, trust
company, building and loan or savings and loan association, bank
holding company as defined in 12 USC 1841, credit union, or any
other person at least 90% of whose assets consist of intangible
personal property and at least 90% of whose business receipts
consist of dividends or interest or other charges resulting from
the use of money or the extension of credit.
(2) "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.
(3) "Insurance company" means an authorized insurer as defined
in section 106 of the insurance code of 1956, 1956 PA 218, MCL
500.106.
(4) "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.
(5) "Michigan business receipts" means the following:
(a) Receipts from sale of tangible personal property 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
sales and if personal property is shipped from an office, store,
warehouse, factory, or other place of storage in this state and the
taxpayer is not taxable in the state of the purchaser. For the
purposes of this subdivision only, "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, or a
political subdivision thereof.
(b) Receipts from the sale, lease, rental, or licensing of
real property located in this state and the lease, rental, or
licensing of tangible personal property located in this state.
(c) Receipts from the sale of services if the services are
provided to a person who is located in this state or the benefit of
the services is received by a person who is located in this state.
(d) Receipts derived by a mortgage company from the
origination or sale of a loan secured by residential real property.
For purposes of this subdivision, "mortgage company" means a person
who has greater than 70% of its revenues, in the ordinary course of
business, from the origination, sale, or servicing of residential
mortgage loans. Receipts shall only be included under this
subdivision if 1 or more of the following apply:
(i) The real property is located in this state.
(ii) The real property is located both within this state and 1
or more other states and more than 50% of the fair market value of
the real property is located within this state.
(iii) More than 50% of the real property is not located in any 1
state and the borrower is located in this state. For purposes of
this subparagraph, a borrower is considered located in this state
if the borrower's billing address is in this state.
(e) For a taxpayer whose business activities consist of
transportation services rendered partly inside and partly outside
this state, that portion of the total business receipts of the
taxpayer that is equal to the sum of its passenger miles and
freight mile fractions, separately computed and individually
weighted by the ratio of total business receipts from passenger
transportation to total business receipts from all transportation,
and by the ratio of total business receipts from freight
transportation to total business receipts from all transportation,
respectively. If the department determines that the information
required for the calculations under this subdivision is 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
determination of the taxpayer's Michigan business receipts.
(f) For a taxpayer whose business activity consists of the
transportation of oil by pipeline, the ratio that the barrel miles
transported in this state bear to the barrel miles transported by
the taxpayer everywhere.
(g) For a taxpayer whose business activities consist of the
transportation of gas by pipeline, 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.
(h) For a taxpayer that is a financial organization, either of
the following:
(i) The total business receipts of a taxpayer whose business
activities are confined solely to this state.
(ii) For a taxpayer whose business activities are conducted
both within and outside of this state, that portion of its total
business receipts as its gross business in this state is to its
gross business everywhere during the period covered by its return.
Gross business is the sum of all of the following:
(A) Fees, commissions, or other compensation for financial
services.
(B) Gross profits from trading in stocks, bonds, or other
securities.
(C) Interest charged to customers for carrying debit balances
of margin accounts, without deduction of any costs incurred in
carrying the accounts.
(D) Interest and dividends received.
(E) Any other gross income resulting from the operation as a
financial organization.
Sec. 6. (1) "Net business receipts" means business receipts
less refunds, returns, and allowances to the extent that those
refunds, returns, and allowances were included in the calculation
of business receipts and less bad debts to the extent that those
debts were included in the calculation of business receipts and
were allowed as a deduction for federal income tax purposes.
(2) "Person" means that term as defined in section 7701 of the
internal revenue code.
(3) "Related group" means an affiliated group, a controlled
group of corporations as defined in section 1563 of the internal
revenue code, or a group of businesses under common control as
described in section 414(c) of the internal revenue code.
(4) "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. 7. (1) "Tangible personal property" means tangible
personal property purchased or leased for sale or lease to other
persons in the ordinary course of business activity and component
parts and raw materials purchased for use in the manufacturing of
goods for sale or lease to other persons in the ordinary course of
business activities.
(2) "Tax" means the tax imposed by this act, including
interest and penalties under this act, unless the term is given a
more limited meaning in the context of this act or a provision of
this act.
(3) "Tax year" means the taxable year of the taxpayer for
federal income tax purposes.
(4) "Taxpayer" means a person liable for a tax, interest, or
penalty under this act.
(5) "Total business receipts" means the total amount received
in the ordinary course of the taxpayer's business activities,
including the fair market value of any property and services
received and any debt transferred or forgiven as consideration.
Business receipts do not include any of the following:
(a) Amounts received as an agent on behalf of another person
in excess of the taxpayer's commission, fee, or other compensation.
(b) Amounts realized from the sale or exchange of capital
assets, including property described in section 1221(a)(2) of the
internal revenue code.
(c) Amounts that a taxpayer is required by law or contract to
pay over to subcontractors.
(d) Amounts received by the taxpayer from another person in
the other person's capacity as an equity owner of the taxpayer and
amounts received by the taxpayer from another person in the
taxpayer's capacity as an equity owner of the other person.
(e) Amounts deemed to be income for federal income tax
purposes but never actually or constructively received.
(f) Amounts received from an insurance policy, settlement of a
claim, or judgment in a civil action to the extent excluded from
gross income for federal income tax purposes.
(g) Principal amounts received in the taxpayer's capacity as
borrower or lender.
(h) Interest, dividends, and other amounts that, with respect
to the taxpayer, are classified as portfolio income for federal
income tax purposes.
(i) Amounts received on the collection or sale of an account
receivable for the sale of goods or services if the sale that
generated the account receivable was included in the calculation of
the taxpayer's business receipts.
(j) Amounts received as deposits that are excluded from gross
income for federal income tax purposes.
(k) Sales, use, withholding, excise, and other taxes collected
or withheld from another person, regardless of the legal incidence
of the tax but does not include taxes that are included in the
price of goods or services or taxes that are recovered by surcharge
or otherwise as part of the cost of service in a regulatory rate
base.
(6) "United States corporation" means a domestic corporation
as that term is defined in section 7701(a)(3) and (4) of the
internal revenue code.
(7) "Unrelated business activity" means any business activity
that is an unrelated trade or business as that term is defined in
section 513 of the internal revenue code.
Sec. 9. (1) Except as otherwise provided in this act, "tax
base" means the taxpayer's total business receipts, less the cost
of tangible personal property multiplied by a fraction the
numerator of which is the taxpayer's Michigan business receipts and
the denominator of which is the taxpayer's total business receipts,
or $350,000.00, whichever is greater. For a taxpayer whose business
activity involves the leasing of tangible personal property to
other persons, if the taxpayer owns the leased property then the
cost of tangible personal property that may be subtracted from that
taxpayer's net business receipts is the amount allowable as a
deduction for depreciation under the internal revenue code
multiplied by a fraction the numerator of which is the taxpayer's
Michigan business receipts and the denominator of which is the
taxpayer's total business receipts. If the taxpayer does not own
the leased property then the cost of tangible personal property
that may be subtracted from that taxpayer's net business receipts
is the amount allowable as a deduction for rent under the internal
revenue code multiplied by a fraction the numerator of which is the
taxpayer's Michigan business receipts and the denominator of which
is the taxpayer's total business receipts.
(2) For a financial organization, tax base means the
taxpayer's Michigan business receipts, less the amount allowable as
a deduction for interest under the internal revenue code multiplied
by a fraction the numerator of which is the taxpayer's Michigan
business receipts and the denominator of which is the taxpayer's
total business receipts.
(3) Except for a taxpayer that pays the tax imposed under
chapter 3, the tax base of a foreign person means the taxpayer's
Michigan business receipts that are related to United States
business activity less the costs of tangible personal property that
are related to United States business activity multiplied by a
fraction the numerator of which is the taxpayer's Michigan business
receipts and the denominator of which is the taxpayer's total
business receipts. The tax base of a foreign person is subject to
all adjustments and other provisions of this act.
(4) The tax base of an exempt organization means the
taxpayer's Michigan business receipts that are related to unrelated
business activity multiplied by a fraction the numerator of which
is the taxpayer's Michigan business receipts and the denominator of
which is the taxpayer's total business receipts.
CHAPTER 2
Sec. 20. (1) Except as otherwise provided in this act, there
is levied and imposed a specific tax at a rate of .75% on the tax
base of every person with business activity and nexus within this
state.
(2) The tax levied and imposed under this section is upon the
privilege of doing business and not upon income or property.
(3) A taxpayer with business receipts apportioned to this
state in an amount equal to or less than $350,000.00 is subject to
the tax under this act as follows:
(a) A taxpayer with no employees has no tax liability and no
filing requirement.
(b) A taxpayer with 1 or more employees shall pay a tax in the
amount of $150.00.
(4) The first $10,000,000.00 of the tax base of a taxpayer
whose primary business activity is agricultural activity is exempt
from the tax imposed by this act. For a taxpayer whose primary
business activity is agricultural activity that has a tax base
greater than $10,000,000.00 but less than $20,000,000.00 may claim
a credit against the tax imposed under this act equal to the tax
liability multiplied by a fraction the numerator of which is the
difference between the taxpayer's tax base and $20,000,000.00 and
the denominator of which is $10,000,000.00.
Sec. 21. (1) The following are exempt from the tax imposed by
this act:
(a) The United States, this state, other states, and the
agencies and political subdivisions 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.
(c) Except as provided in subsection (2), a farmers'
cooperative corporation organized within the limitations of section
98 of 1931 PA 327, MCL 450.98, that was at any time exempt under
section 501(c)(12), 501(c)(16), or 501(c)(4) of the internal
revenue code because the corporation was exempt from federal income
taxes under section 521 of the internal revenue code and that would
continue to be exempt under section 521 of the internal revenue
code except for either of the following activities:
(i) The corporation's repurchase from nonproducer customers of
portions or components of commodities the corporation markets to
those nonproducer customers and the corporation's subsequent
manufacturing or marketing of the repurchased portions or
components of the commodities.
(ii) The corporation's incidental or emergency purchases of
commodities from nonproducers to facilitate the manufacturing or
marketing of commodities purchased from producers.
(d) That portion of the tax base attributable to the direct
and indirect marketing activities of a farmers' cooperative
corporation organized within the limitations of section 98 of 1931
PA 327, MCL 450.98, if those marketing activities are provided on
behalf of the members of that corporation and are related to the
members' direct sales of their products to third parties or, for
livestock, are related to the members' direct or indirect sales of
that product to third parties. Marketing activities for a product
that is not livestock are not exempt under this subdivision if the
farmers' cooperative corporation takes physical possession of the
product. As used in this subdivision, "marketing activities" means
activities that include, but are not limited to, all of the
following:
(i) Activities under the agricultural commodities marketing
act, 1965 PA 232, MCL 290.651 to 290.674, and the agricultural
marketing and bargaining act, 1972 PA 344, MCL 290.701 to 290.726.
(ii) Dissemination of market information.
(iii) Establishment of price and other terms of trade.
(iv) Promotion.
(v) Research relating to members' products.
(e) 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.
(2) Subsection (1)(c) 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)(c)(ii) are equal to or greater than 5% of the
corporation's total purchases.
(3) Except as otherwise provided in this section, a farmers'
cooperative corporation that is structured to allocate net earnings
in the form of patronage dividends as defined in section 1388 of
the internal revenue code to its farmer or farmer cooperative
corporation patrons shall exclude from its adjusted tax base the
revenue and expenses attributable to business transacted with its
farmer or farmer cooperative corporation patrons.
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.
(c) Has employees who own, rent, lease, use, or maintain an
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.
(c) Collecting current or delinquent accounts related to sales
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.
(c) Attending occasional meetings, including, but not limited
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) Any unused carryforward for any credit under
former 1975 PA 228 may be carried forward and applied as an offset
to the taxpayer's tax liability under this act in subsequent tax
years for 10 tax years or until the carryforward is used up,
whichever occurs first.
(2) Any business loss carryovers remaining under former 1975
PA 228 may be carried forward and deducted from the taxpayer's tax
base under this act in subsequent tax years for 10 tax years or
until the carryover is used up, whichever occurs first.
CHAPTER 3
Sec. 30. (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.
(2) The following are exempt from the tax imposed by this
section:
(a) Beginning January 1, 2008 and after being apportioned
under this chapter, 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.
(c) For tax years that begin after December 31, 2006, that
portion of the tax base attributable to a multiple employer welfare
arrangement that provides dental benefits only and that has a
certificate of authority under chapter 70 of the insurance code of
1956, 1956 PA 218, MCL 500.7001 to 500.7090.
Sec. 31. (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
(4)(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.
(c) "Affiliated insurance company" means an insurance company
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. 32. (1) An insurance company may claim a credit against
the tax imposed under this chapter 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.
(c) Amounts paid to the Michigan automobile insurance
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 33 from the total tax liability of domestic insurance
companies under this act 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. 33. An insurance company shall be allowed a credit
against the tax imposed under this chapter in an amount equal to
50% of the examination fees paid by the insurance company during
the tax year pursuant to section 224 of the insurance code of 1956,
1956 PA 218, MCL 500.224.
Sec. 34. (1) For amounts paid pursuant to section 352 of the
worker's disability compensation act of 1969, 1969 PA 317, MCL
418.352, an insurance company subject to the worker's disability
compensation act of 1969, 1969 PA 317, MCL 418.101 to 418.941, may
claim a credit against the tax imposed under this chapter for the
tax year in an amount equal to the amount paid during that tax year
by the insurance company pursuant to section 352 of the worker's
disability compensation act of 1969, 1969 PA 317, MCL 418.352, as
certified by the director of the bureau of worker's disability
compensation pursuant to section 391(6) of the worker's disability
compensation act of 1969, 1969 PA 317, MCL 418.391.
(2) An insurance company claiming a credit under this section
may claim a portion of the credit allowed under this section equal
to the payments made during a calendar quarter pursuant to section
352 of the worker's disability compensation act of 1969, 1969 PA
317, MCL 418.352, against the estimated tax payments made under
section 40. 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. 35. (1) An insurance company is subject to the tax under
this chapter 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 40, 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 4
Sec. 40. (1) A taxpayer that reasonably expects liability for
the tax year to exceed $2,000.00 shall pay an estimated tax not
more than 20 days after the last day of the immediately preceding
month.
(2) The interest provided by this act shall not be assessed on
an underpayment of an estimated tax for a tax year if any of the
following occur:
(a) If the sum of the estimated payments for the tax year
equals at least 85% of the total tax liability for the tax year and
the amount of each estimated payment reasonably approximates the
tax liability incurred during the month for which the estimated
payment was made.
(b) If the tax liability for the preceding year was $20,000.00
or less and if the taxpayer submitted 12 equal installments the sum
of which equals the tax liability for the preceding year.
(3) Each estimated payment shall be made in a manner
prescribed by the department.
(4) Payments made under this section shall be a credit against
the payment required with the annual tax return required in section
52.
Sec. 41. A taxpayer 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:
(a) 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.
(b) 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. 42. (1) Except as otherwise provided in this section, an
annual or final return shall be filed 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. A person
required to file an annual or final return under this subsection
may file a short form return in a form prescribed by the department
if the subtractions allowed in section 9 are not applicable. Any
final liability shall be remitted with this return.
(2) If a person has Michigan business receipts for a tax year
of less than 12 months, the amount in subsection (1) shall be
multiplied by a fraction, the numerator of which is the number of
months in the tax year and the denominator of which is 12.
(3) A person may elect not to file a return as required under
this section if the subtractions allowed in section 9 are not
applicable and if all business receipts are Michigan business
receipts.
(4) The department, upon application of the taxpayer and for
good cause shown, may 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 treasurer shall require with the
application payment of the estimated tax liability unpaid for the
tax period covered by the extension.
(5) If a taxpayer is granted an extension of time within which
to file the federal income tax return for any tax year, the due
date for the filing of an annual or final return under this act
shall be automatically extended 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 the tax unpaid for the period of the
extension.
(6) Members of a related group shall aggregate their business
receipts to determine whether the group or 1 or more of the members
of the related group are required to pay a tax or file a return as
provided under subsection (1). A member of a related group is not
required to file a return or pay the tax under this act if that
member has Michigan business receipts of less than $100,000.00.
Sec. 43. (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 within 120 days after any amendment or adjustment of the
taxpayer's federal income tax return that affects the taxpayer's
tax base under this act.
Sec. 44. (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 to the department in the
form and content prescribed by the department.
(2) At the request of the department, a taxpayer 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. 45. (1) The tax imposed by this act shall be administered
by the department of treasury 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 shall promulgate rules to implement this
act pursuant to the administrative procedures act of 1969, 1969 PA
306, MCL 24.201 to 24.328.
(3) A person liable for the tax imposed under this act shall
maintain a complete and detailed record of all business receipts.
Records may be maintained in paper form or in an electronic or
digital form accessible by the department. Records maintained under
this subsection shall include all of the following:
(a) The complete name and address of each customer.
(b) The complete address of each location at which tangible
personal property was delivered or where the benefit of services
was received.
(4) 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.
(5) The tax imposed by this act is in addition to all other
taxes for which the taxpayer may be liable.
(6) 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. 46. (1) In 2008 through 2012, .456% of the revenue
collected under this act shall be distributed to each local tax
collecting unit in this state and each local tax collecting unit in
this state shall distribute revenue received under this subdivision
to each local taxing unit at the same time and in the same manner
as taxes collected under the general property tax act, 1893 PA 206,
MCL 211.1 to 211.157. The balance of the revenue shall be deposited
into the general fund.
(2) Beginning in 2013, the revenue collected under this act
shall be deposited into the general fund.
Enacting section 1. This act takes effect January 1, 2008.