September 18, 2008, Introduced by Senators CASSIS, GEORGE, JANSEN and GILBERT and referred to the Committee on Finance.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending sections 431, 431a, 431b, and 431c (MCL 208.1431,
208.1431a, 208.1431b, and 208.1431c), section 431 as amended by
2008 PA 111, section 431a as added by 2008 PA 92, section 431b as
added by 2008 PA 109, and section 431c as added by 2008 PA 88.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 431. (1) Except as otherwise provided under this
subsection, for a period of time not to exceed 20 years as
determined by the Michigan economic growth authority, a taxpayer
that is an authorized business may claim a credit against the tax
imposed by this act equal to the amount certified each year by the
Michigan economic growth authority as follows:
(a) Except as otherwise provided under this subdivision, for
an authorized business for the tax year, an amount not to exceed
the payroll of the authorized business attributable to employees
who perform qualified new jobs as determined under the Michigan
economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810,
multiplied
by the tax rate; beginning after the effective date of
the
amendatory act that added subdivision (d) April 28, 2008, for
an authorized business for the tax year, an amount not to exceed
the sum of the payroll and health care benefits of the authorized
business attributable to employees who perform qualified new jobs
as determined under the Michigan economic growth authority act,
1995 PA 24, MCL 207.801 to 207.810, multiplied by the tax rate.
(b) For an eligible business as determined under section
8(5)(a) of the Michigan economic growth authority act, 1995 PA 24,
MCL 207.808, an amount not to exceed 50% of the payroll of the
authorized business attributable to employees who perform retained
jobs as determined under the Michigan economic growth authority
act, 1995 PA 24, MCL 207.801 to 207.810, multiplied by the tax rate
for the tax year.
(c) For an eligible business as determined under section
8(5)(b) of the Michigan economic growth authority act, 1995 PA 24,
MCL 207.808, an amount not to exceed the payroll of the authorized
business attributable to employees who perform retained jobs as
determined under the Michigan economic growth authority act, 1995
PA 24, MCL 207.801 to 207.810, multiplied by the tax rate for the
tax year.
(d) For an authorized business that is a qualified high-
technology business, for a period of time not to exceed 7 years as
determined by the Michigan economic growth authority, an amount not
to exceed 200% of the sum of the payroll and health care benefits
of the qualified high-technology business attributable to employees
who perform qualified new jobs as determined under the Michigan
economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810,
for the first 3 tax years of the credit, multiplied by the tax rate
and, for each of the remaining tax years of the credit, an amount
not to exceed 100% of the sum of the payroll and health care
benefits of the qualified high-technology business attributable to
employees who perform qualified new jobs as determined under the
Michigan economic growth authority act, 1995 PA 24, MCL 207.801 to
207.810, multiplied by the tax rate.
(e) For an authorized business as determined under section
8(9) of the Michigan economic growth authority act, 1995 PA 24, MCL
207.808, an amount up to, but not to exceed 100% of, the sum of the
payroll and health care benefits of the authorized business
attributable to employees who perform retained jobs multiplied by a
fraction, the numerator of which is the amount of new capital
investment made at the facility and the denominator of which is the
product of the number of retained jobs multiplied by $100,000.00,
and then multiplied by the tax rate for the tax year.
(f) For an authorized business as determined under section
8(11) of the Michigan economic growth authority act, 1995 PA 24,
MCL 207.808, an amount not to exceed 100% of the sum of the payroll
and health care benefits of the authorized business attributable to
employees who perform new full-time jobs and retained jobs as
determined under the Michigan economic growth authority act, 1995
PA 24, MCL 207.801 to 207.810, multiplied by the tax rate for the
tax year.
(2) A taxpayer shall not claim a credit under this section
unless the Michigan economic growth authority has issued a
certificate to the taxpayer. The taxpayer shall attach the
certificate to the annual return filed under this act on which a
credit under this section is claimed.
(3) The certificate required by subsection (2) shall state all
of the following:
(a) The taxpayer is an authorized business.
(b) The amount of the credit under this section for the
authorized business for the designated tax year.
(c) The taxpayer's federal employer identification number or
the Michigan department of treasury number assigned to the
taxpayer.
(4) The Michigan economic growth authority may certify a
credit under this section based on an agreement entered into prior
to January 1, 2008 pursuant to section 37c of former 1975 PA 228.
The number of years for which the credit may be claimed under this
section shall equal the maximum number of years designated in the
resolution reduced by the number of years for which a credit has
been claimed or could have been claimed under section 37c of former
1975 PA 228.
(5)
If the For a credit
certified under this section based on
an agreement entered into prior to January 1, 2009, if that credit
allowed under this section exceeds the tax liability of the
taxpayer for the tax year, that portion of the credit that exceeds
the tax liability of the taxpayer shall be refunded. For a credit
certified under this section based on an agreement entered on or
after January 1, 2009, if that credit allowed under this section
exceeds the tax liability of the taxpayer for the tax year, that
portion that exceeds the tax liability of the taxpayer shall not be
refunded, but may be carried forward to offset tax liability in
subsequent tax years for 10 tax years or until used up, whichever
occurs first.
(6) Except as otherwise provided under this subsection, a
taxpayer that claims a credit under subsection (1) or section 37c
or 37d of former 1975 PA 228, that has an agreement with the
Michigan economic growth authority based on qualified new jobs as
defined in section 3(p)(ii) of the Michigan economic growth
authority act, 1995 PA 24, MCL 207.803, and that removes from this
state 51% or more of those qualified new jobs within 3 years after
the first year in which the taxpayer claims a credit described in
this subsection shall pay to the department no later than 12 months
after those qualified new jobs are removed from the state an amount
equal to the total of all credits described in this subsection that
were
claimed by the taxpayer. Beginning after the effective date of
the
amendatory act that added subsection (1)(d) April 28, 2008, a
taxpayer that claims a credit under subsection (1) and subsequently
fails to meet the requirements of this section or any other
conditions included in an agreement entered into with the Michigan
economic growth authority in order to obtain a certificate for the
credit claimed under this section or removes any of the qualified
new jobs from this state during the term of the written agreement
and for a period of years after the term of the written agreement,
as determined by the Michigan economic growth authority, may have
its credit reduced or terminated or have a percentage of the credit
amount previously claimed under this section added back to the tax
liability of the taxpayer in the tax year that the taxpayer fails
to comply with this section or the agreement.
(7) If the Michigan economic growth authority or a designee of
the Michigan economic growth authority requests that a taxpayer
that claims the credit under this section get a statement prepared
by a certified public accountant verifying that the actual number
of new jobs created is the same number of new jobs used to
calculate the credit under this section, the taxpayer shall get the
statement and attach that statement to its annual return under this
act on which the credit under this section is claimed.
(8) A credit shall not be claimed by a taxpayer under this
section if the taxpayer's initial certification as required in
subsection (3) is issued after December 31, 2013.
(9) For purposes of this section, taxpayer includes a person
subject to the tax imposed under chapters 2A and 2B.
(10) As used in this section:
(a) "Authorized business", "facility", "full-time job",
"qualified high-technology business", "retained jobs", and "written
agreement" mean those terms as defined in the Michigan economic
growth authority act, 1995 PA 24, MCL 207.801 to 207.810.
(b) "Health care benefits" means all costs paid for a self-
funded health care benefit plan or for an expense-incurred
hospital, medical, or surgical policy or certificate, nonprofit
health care corporation certificate, or health maintenance
organization contract. Health care benefit does not include
accident-only, credit, dental, or disability income insurance;
long-term care insurance; coverage issued as a supplement to
liability insurance; coverage only for a specified disease or
illness; worker's compensation or similar insurance; or automobile
medical payment insurance.
(c) "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.
(d) "Payroll" means the total salaries and wages before
deducting any personal or dependency exemptions.
(e) "Qualified new jobs" means 1 or more of the following:
(i) The average number of full-time jobs at a facility of an
authorized business for a tax year in excess of the average number
of full-time jobs the authorized business maintained in this state
prior to the expansion or location as that is determined under the
Michigan economic growth authority act, 1995 PA 24, MCL 207.801 to
207.810.
(ii) The average number of full-time jobs at a facility created
by an eligible business up to 90 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 up to 90 days before
becoming an authorized business, as determined under the Michigan
economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810.
(f) "Tax rate" means the rate imposed under section 51 of the
income tax act of 1967, 1967 PA 281, MCL 206.51, for the tax year
in which the tax year of the taxpayer for which the credit is being
computed begins.
Sec. 431a. (1) A qualified taxpayer may claim a credit against
the tax imposed by this act in an amount up to 100% of the
qualified supplier's or customer's payroll attributable to
employees who perform qualified new jobs as determined by the
Michigan economic growth authority, multiplied by the tax rate for
the tax year for a period of up to 5 years as determined by the
Michigan economic growth authority. If the credit allowed under
this subsection exceeds the liability of the taxpayer for the tax
year,
the taxpayer may elect to have that portion that exceeds the
tax
liability of the taxpayer refunded or to have the excess that
portion of the credit that exceeds the tax liability of the
taxpayer shall not be refunded, but may be carried forward to
offset tax liability in subsequent years for 10 years or until it
is used up, whichever occurs first. The Michigan economic growth
authority shall not designate more than 5 taxpayers as an anchor
company in each calendar year and shall not approve more than 5 new
credits in each calendar year under this subsection. A taxpayer has
5 years from the date on which the taxpayer is designated as an
anchor company to seek certification from the Michigan economic
growth authority as a qualified taxpayer for each qualified
supplier or customer for which a credit is sought under this
section. However, a credit shall not be provided for a tax year
prior to the tax year during which the certification is made. If a
qualified taxpayer is awarded a credit under this subsection, any
subsequent credits awarded to that qualified taxpayer shall not be
included in determining the yearly limit of 5 new credits under
this subsection.
(2) The Michigan economic growth authority may also provide
that qualified sales to a qualified supplier or customer are not
sales in this state for purposes of calculating the sales factor
under this act for the tax year for which a credit is provided
under this section. Qualified sales to a qualified supplier or
customer are the total sales in this state to a qualified supplier
or customer multiplied by a fraction, the numerator of which is the
compensation on which the credit in this section is calculated and
the denominator of which is the total compensation of the qualified
supplier or customer in this state.
(3) A taxpayer shall not claim a credit under this section
unless the Michigan economic growth authority has issued a
certificate to the taxpayer. The taxpayer shall attach the
certificate to the annual return filed under this act on which the
credit under this section is claimed. The certificate required by
this subsection shall state all of the following:
(a) The taxpayer is a qualified taxpayer and the date on which
the taxpayer was designated as an anchor company.
(b) The amount of the credit under this section for the
qualified taxpayer for the designated tax year.
(c) The amount of the qualified sales calculated in accordance
with the fraction described under subsection (2).
(d) The taxpayer's federal employer identification number or
the Michigan department of treasury number assigned to the
taxpayer.
(4) A taxpayer that claims a credit under this section and
subsequently fails to meet the requirements of this section or any
other conditions included in an agreement entered into with the
Michigan economic growth authority in order to obtain a certificate
for which the credit was under this section may, as to be
determined by the Michigan economic growth authority, have its
credit reduced or terminated or have a percentage of the credit
amount previously claimed under this section added back to the tax
liability of the taxpayer in the year that the taxpayer fails to
comply with this section or the agreement.
(5) As used in this section:
(a) "Anchor company" means a qualified high-technology
business that is an integral part of a high-technology activity and
that has the ability or potential ability to influence business
decisions and site location of qualified suppliers and customers.
(b) "Business", "qualified high-technology activity", and
"qualified high-technology business" mean those terms as defined in
the Michigan economic growth authority act, 1995 PA 24, MCL 207.801
to 207.810.
(c) "Full-time job" means a job performed by an individual for
35 hours or more each week and whose income and social security
taxes are withheld by 1 or more of the following:
(i) A qualified supplier or customer.
(ii) An employee leasing company on behalf of a qualified
supplier or customer.
(iii) A professional employer organization on behalf of a
qualified supplier or customer.
(d) "Michigan economic growth authority" means the Michigan
economic growth authority created in the Michigan economic growth
authority act, 1995 PA 24, MCL 207.801 to 207.810.
(e) "Qualified new job" means a full-time job created by a
qualified supplier or customer at a facility or facilities that is
in excess of the number of full-time jobs a qualified supplier or
customer maintained in this state or at a facility prior to the
expansion or location, as determined by the authority.
(f) "Qualified supplier or customer" means a business that
opens a new location in this state, a business that locates in this
state, or an existing business located in this state that expands
its business within the last year as a result of an anchor company
and satisfies, as certified by the Michigan economic growth
authority, each of the following:
(i) Has financial transactions with the anchor company.
(ii) Sells a critical or unique component or technology
necessary for the anchor company to market a finished product or
buys a critical or unique component from the anchor company.
(iii) Has created more than 10 qualified new jobs.
(iv) Has made an investment of at least $1,000,000.00 as
certified by the Michigan economic growth authority.
(g) "Qualified taxpayer" means a taxpayer that was designated
by the Michigan economic growth authority as an anchor company
within the last 5 years and that has influenced a new qualified
supplier or customer to open, locate, or expand in this state.
Sec. 431b. (1) Upon application, a person or group of persons
acting collectively may enter into an agreement with the Michigan
economic growth authority for a credit under this section. In
determining whether to enter into an agreement with a person or
group of persons, the authority shall consider the following
factors:
(a) The number of qualified new jobs or products, or both, to
be created or maintained as a result of winning a federal
procurement contract offered by the United States department of
defense, department of energy, or department of homeland security.
(b) The potential impact of the expansion, retention, or
location on the economy of Michigan if the person or group of
persons acting collectively is awarded the federal contract
described under subdivision (a).
(c) The number of out-of-state persons bidding against the
person or group of persons acting collectively for the federal
contract described under subdivision (a).
(d) The total capital investment or new capital investment the
person or group of persons acting collectively will make to win and
maintain the federal contract described under subdivision (a).
(2) The agreement required under subsection (1) shall include,
but is not limited to, all of the following:
(a) A description of the federal contract for which the person
or group of persons acting collectively intends to bid.
(b) A description of the person's or group's expansion,
retention, or location that is necessary if awarded the federal
contract that is the subject of the agreement.
(c) Conditions upon which the person or group of persons
acting collectively is designated a qualified taxpayer under this
section.
(d) A statement by the person or group of persons acting
collectively that a violation of the written agreement may result
in the revocation of the designation as a qualified taxpayer and
the loss or reduction of future credits under this section.
(e) A statement by the person or group of persons acting
collectively that a misrepresentation in the application may result
in the revocation of the designation as a qualified taxpayer and
the refund of credits received under this section.
(f) A method for measuring qualified new jobs before and after
the award of a federal contract and the expansion, retention, or
location of the person or group of persons acting collectively in
this state as a result of winning the federal contract.
(3) A qualified taxpayer may claim a credit against the tax
imposed by this act in an amount up to 100% of the qualified
taxpayer's payroll attributable to employees who perform qualified
new jobs created as a result of the person or group of persons
acting collectively being awarded a federal procurement contract by
the United States department of defense, department of energy, or
department of homeland security as determined by the Michigan
economic growth authority, multiplied by the tax rate for the tax
year for a period of up to 7 years or the term of the contract,
whichever is less, as determined by the Michigan economic growth
authority. If the qualified taxpayer is a group of persons acting
collectively, the Michigan economic growth authority shall
determine the amount of the credit which each person included in
the group is allowed to claim by multiplying the amount of the
credit allowed collectively by the qualified taxpayer by a
fraction, the numerator of which is the person's payroll
attributable to employees who perform qualified new jobs and the
denominator of which is 100% of the qualified taxpayer's payroll
attributable to employees who perform qualified new jobs, and then
certifying the amount of the credit that each person is allowed to
claim respectively. If the credit allowed under this subsection
exceeds
the liability of the taxpayer for the tax year, the
taxpayer
may elect to have that portion that exceeds the tax
liability
of the taxpayer refunded or to have the excess that
portion of the credit that exceeds the tax liability of the
taxpayer shall not be refunded, but may be carried forward to
offset tax liability in subsequent years for 10 years or until it
is used up, whichever occurs first. The Michigan economic growth
authority shall not execute more than 10 new written agreements
each year. If a qualified taxpayer is awarded a credit under this
section, any subsequent credits awarded to that qualified taxpayer
shall not be included in determining the yearly limit of 10 new
agreements under this subsection.
(4) A taxpayer shall not claim a credit under this section
unless the Michigan economic growth authority has issued the
taxpayer a certificate of designation as a qualified taxpayer.
However, a credit shall not be provided for a tax year prior to the
tax year during which the certification is made. The taxpayer shall
attach the certificate to the annual return filed under this act on
which the credit under this section is claimed. The certificate
required by this subsection shall state all of the following:
(a) The taxpayer is a qualified taxpayer.
(b) The amount of the credit under this section for the
qualified taxpayer for the designated tax year or, if the qualified
taxpayer is a group of persons, the percentage of the amount of the
credit that the taxpayer is allowed to claim for the designated tax
year.
(c) The taxpayer's federal employer identification number or
the Michigan department of treasury number assigned to the
taxpayer.
(5) As used in this section:
(a) "Full-time job" means a job performed by an individual for
35 hours or more each week and whose income and social security
taxes are withheld by 1 or more of the following:
(i) A taxpayer.
(ii) An employee leasing company on behalf of a taxpayer.
(iii) A professional employer organization on behalf of a
taxpayer.
(b) "Michigan economic growth authority" or "authority" means
the Michigan economic growth authority created in the Michigan
economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810.
(c) "Qualified new job" means a full-time job created by a
qualified taxpayer at a facility or facilities that is in excess of
the number of full-time jobs the qualified taxpayer maintained in
this state or at a facility prior to being awarded the federal
procurement contract and the expansion or location, as determined
by the authority.
(d) "Qualified taxpayer" means a person that individually
satisfies each of the following or a group of 1 or more persons
that enter into a cooperative or informal agreement to act
collectively and satisfy each of the following:
(i) Has entered into an agreement with the authority as
described under this section.
(ii) Has submitted a competitive bid for a federal procurement
contract offered by the United States department of defense,
department of energy, or department of homeland security.
(iii) Has been awarded the federal contract for which the person
or group of persons acting collectively submitted a bid under
subparagraph (ii).
(iv) Has created a minimum of 25 qualified new jobs.
Sec. 431c. (1) Except as otherwise provided under this
section, a qualified taxpayer may claim a credit against the tax
imposed by this act equal to the sum of up to 5.0% of the taxable
value of each qualified supplier's or customer's taxable property
that is located within the 10-mile radius of the qualified taxpayer
and that is subject to collection of general ad valorem taxes under
the general property tax act, 1893 PA 206, MCL 211.1 to 211.155,
for a period of up to 5 years, as determined by the Michigan
economic growth authority. If a qualified supplier's or customer's
taxable property is subject to the specific tax levied under 1974
PA 198, MCL 207.551 to 207.572, the qualified taxpayer may only
include up to 2.5% of the taxable value of that property in the
calculation of the amount of the credit allowed under this section.
The Michigan economic growth authority shall not designate more
than 5 taxpayers as an anchor company in each calendar year and
shall not approve more than 5 new credits in each calendar year
under this subsection. A taxpayer has 5 years from the date on
which the taxpayer is designated as an anchor company to seek
certification as a qualified taxpayer for each qualified supplier
or customer for which a credit is sought under this section.
(2) A taxpayer shall not claim a credit under this section
unless the Michigan economic growth authority has issued a
certificate to the qualified taxpayer. However, a credit shall not
be provided for a tax year prior to the tax year during which the
certification is issued. The qualified taxpayer shall attach the
certificate to the annual return filed under this act on which the
credit under this section is claimed. The certificate required by
this subsection shall state all of the following:
(a) The taxpayer is a qualified taxpayer and the date on which
the taxpayer was designated as an anchor company.
(b) The amount of the credit under this section for the
taxpayer for the designated tax year.
(c) The taxpayer's federal employer identification number or
the Michigan department of treasury number assigned to the
taxpayer.
(3) A qualified taxpayer that claims a credit under this
section and subsequently fails to meet the requirements of this
section or any other conditions established by the Michigan
economic growth authority in order to obtain a certificate for
which the credit was claimed under this section may, as to be
determined by the Michigan economic growth authority, have its
credit reduced or terminated or have a percentage of the credit
amount previously claimed under this section added back to the tax
liability of the qualified taxpayer in the year that the qualified
taxpayer fails to comply with this section or the agreement.
(4) If the credit allowed under this subsection exceeds the
liability
of the qualified taxpayer for the tax year, the qualified
taxpayer
may elect to have that portion that exceeds the tax
liability
of the qualified taxpayer refunded or to have the excess
that portion of the credit that exceeds the tax liability of the
qualified taxpayer shall not be refunded, but may be carried
forward to offset tax liability in subsequent years for 5 years or
until it is used up, whichever occurs first.
(5) As used in this section:
(a) "Anchor company" means a qualified high-technology
business that is an integral part of a high-technology activity and
that has the ability or potential ability to influence business
decisions and site location of qualified suppliers and customers.
(b) "Business", "qualified high-technology activity", and
"qualified high-technology business" mean those terms as defined in
the Michigan economic growth authority act, 1995 PA 24, MCL 207.801
to 207.810.
(c) "Full-time job" means a job performed by an individual for
35 hours or more each week and whose income and social security
taxes are withheld by 1 or more of the following:
(i) A qualified supplier or customer.
(ii) An employee leasing company on behalf of a qualified
supplier or customer.
(iii) A professional employer organization on behalf of a
qualified supplier or customer.
(d) "Michigan economic growth authority" means the Michigan
economic growth authority created in the Michigan economic growth
authority act, 1995 PA 24, MCL 207.801 to 207.810.
(e) "Qualified new job" means a full-time job created by a
qualified supplier or customer at a facility or facilities that is
in excess of the number of full-time jobs a qualified supplier or
customer maintained in this state or facility prior to the
expansion or location, as determined by the authority.
(f) "Qualified supplier or customer" means a business that
opens a new location in this state, a business that locates in this
state, or an existing business located in this state that expands
its business within the last year as a result of an anchor company
and satisfies, as certified by the Michigan economic growth
authority, each of the following:
(i) Has financial transactions with the anchor company.
(ii) Sells a critical or unique component or technology
necessary for the anchor company to market a finished product or
buys a critical or unique component from the anchor company.
(iii) Has created more than 10 qualified new jobs.
(iv) Has made an investment of at least $1,000,000.00 as
certified by the Michigan economic growth authority.
(g) "Qualified taxpayer" means a taxpayer that was designated
by the Michigan economic growth authority as an anchor company
within the last 5 years and that has influenced 1 or more qualified
suppliers or customers to open, locate, or expand their business
and conduct business activity within a 10-mile radius of the anchor
company.
Enacting section 1. This amendatory act takes effect January
1, 2009.