February 16, 2010, Introduced by Reps. Smith and Gregory and referred to the Committee on Tax Policy.
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending sections 3 and 20 (MCL 205.93 and 205.110), section 3
as amended by 2007 PA 103 and section 20 as added by 2004 PA 172,
and by adding section 3g.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3. (1) There is levied upon and there shall be collected
from every person in this state a specific tax for the privilege of
using, storing, or consuming tangible personal property in this
state
and for providing certain
services in this state at a the
following rate:
(a) Prior to the effective date of the amendatory act that
added section 3g, a rate equal to 6% of the price of the property
or
services specified in section 3a or 3b subject to tax under this
act.
(b) Beginning on the effective date of the amendatory act that
added section 3g, a rate equal to 5.5% of the price of the property
or services subject to tax under this act.
(2) The tax levied under this act applies to a person who
acquires tangible personal property or services that are subject to
the tax levied under this act for any tax-exempt use who
subsequently converts the tangible personal property or service to
a taxable use, including an interim taxable use. If tangible
personal property or services are converted to a taxable use, the
tax levied under this act shall be imposed without regard to any
subsequent tax-exempt use. Penalties and interest shall be added to
the tax if applicable as provided in this act. For the purpose of
the proper administration of this act and to prevent the evasion of
the tax, all of the following shall be presumed:
(a) That tangible personal property purchased is subject to
the tax if brought into this state within 90 days of the purchase
date and is considered as acquired for storage, use, or other
consumption in this state.
(b) That tangible personal property used solely for personal,
nonbusiness purposes that is purchased outside of this state and
that is not an aircraft is exempt from the tax levied under this
act if 1 or more of the following conditions are satisfied:
(i) The property is purchased by a person who is not a resident
of this state at the time of purchase and is brought into this
state more than 90 days after the date of purchase.
(ii) The property is purchased by a person who is a resident of
this state at the time of purchase and is brought into this state
more than 360 days after the date of purchase.
(3) (2)
The tax imposed by this section for
the privilege of
using, storing, or consuming a vehicle, ORV, manufactured housing,
aircraft, snowmobile, or watercraft shall be collected before the
transfer of the vehicle, ORV, manufactured housing, aircraft,
snowmobile, or watercraft, except a transfer to a licensed dealer
or retailer for purposes of resale that arises by reason of a
transaction made by a person who does not transfer vehicles, ORVs,
manufactured housing, aircraft, snowmobiles, or watercraft in the
ordinary course of his or her business done in this state. The tax
on a vehicle, ORV, snowmobile, and watercraft shall be collected by
the secretary of state before the transfer of the vehicle, ORV,
snowmobile, or watercraft registration. The tax on manufactured
housing shall be collected by the department of consumer and
industry services, mobile home commission, or its agent before the
transfer of the certificate of title. The tax on an aircraft shall
be collected by the department of treasury. The price tax base of a
new or previously owned car or truck held for resale by a dealer
and that is not exempt under section 4(1)(c) is the purchase price
of the car or truck multiplied by 2.5% plus $30.00 per month
beginning with the month that the dealer uses the car or truck in a
nonexempt manner.
(4) (3)
The following transfers or
purchases are not subject
to use tax:
(a) A transaction or a portion of a transaction if the
transferee or purchaser is the spouse, mother, father, brother,
sister, child, stepparent, stepchild, stepbrother, stepsister,
grandparent, grandchild, legal ward, or a legally appointed
guardian with a certified letter of guardianship, of the
transferor.
(b) A transaction or a portion of a transaction if the
transfer is a gift to a beneficiary in the administration of an
estate.
(c) If a vehicle, ORV, manufactured housing, aircraft,
snowmobile, or watercraft that has once been subjected to the
Michigan sales or use tax is transferred in connection with the
organization, reorganization, dissolution, or partial liquidation
of an incorporated or unincorporated business and the beneficial
ownership is not changed.
(d) If an insurance company licensed to conduct business in
this state acquires ownership of a late model distressed vehicle as
defined in section 12a of the Michigan vehicle code, 1949 PA 300,
MCL 257.12a, through payment of damages in response to a claim or
when the person who owned the vehicle before the insurance company
reacquires ownership from the company as part of the settlement of
a claim.
(5) (4)
The department may utilize the
services, information,
or records of any other department or agency of state government in
the performance of its duties under this act, and other departments
or agencies of state government are required to furnish those
services, information, or records upon the request of the
department.
(6) (5)
Any decrease in the rate of the tax
levied under
subsection (1) on services subject to tax under this act shall
apply only to billings rendered on or after the effective date of
the decrease.
Sec. 3g. (1) Beginning on the effective date of the amendatory
act that added this section, except as otherwise provided in
subsection (2), the use or consumption of all services in this
state shall be taxed under this act in the same manner as tangible
personal property is taxed under this act.
(2) The following services are not subject to tax under this
act:
(a) Services provided by any of the following:
(i) A religious organization.
(ii) A community foundation.
(iii) An organization that awards grants.
(iv) A charitable organization.
(v) A social advocacy organization.
(vi) A human rights organization.
(vii) An environmental, conservation, or wildlife organization.
(viii) A civic organization.
(ix) A social organization.
(x) A business association.
(xi) A professional organization.
(xii) A labor union.
(xiii) A political organization.
(b) Educational services.
(c) Health care services.
(d) Social assistance services.
(e) Real estate services.
(f) Intangible leasing services.
(g) Services that are primarily business to business
transactions, including, but not limited to, accounting,
bookkeeping, surveying, drafting, architectural services, and
office administration.
(3) Except as otherwise provided in this act, services subject
to tax under this act as provided in this section shall be sourced
under section 20.
Sec. 20. (1) For sourcing a sale subject to tax under this
act, the following apply:
(a) If a product or service is received by the purchaser at a
business location of the seller, the sale is sourced to that
business location.
(b) If a product or service is not received by the purchaser
at a business location of the seller, the sale is sourced to the
location where the product or service is received by the purchaser
or the purchaser's designee, including the location indicated by
instructions for delivery to the purchaser, known to the seller.
(c) If subdivision (a) or (b) does not apply, the sale is
sourced to the location indicated by an address for the purchaser
available from the seller's business records maintained in the
ordinary course of the seller's business, provided use of the
address does not constitute bad faith.
(d) If subdivisions (a) through (c) do not apply, the sale is
sourced to the location indicated by an address for the purchaser
obtained at the completion of the sale, including the address of
the purchaser's payment instrument if no other address is
available, provided use of the address does not constitute bad
faith.
(e) If subdivisions (a) through (d) do not apply or the seller
has insufficient information to apply subdivisions (a) through (d),
the sale will be sourced to the location indicated by the address
from which the tangible personal property was shipped, from which
the service originated, or from which the computer software
delivered electronically was first available for transmission by
the seller.
(2) For sourcing the lease or rental of tangible personal
property, other than property included in subsection (3) or (4),
subject to tax under this act, the following apply:
(a) For a lease or rental requiring recurring periodic
payments, the first payment is sourced in the same manner provided
for a sale in subsection (1). Subsequent payments shall be sourced
to the primary property location for each period covered by the
payment as indicated by the address of the property provided by the
lessee and available to the lessor from the lessor's records
maintained in the ordinary course of business, when use of this
address does not constitute bad faith. The property location is not
considered altered by intermittent use at different locations such
as business property that accompanies employees on business trips
or service calls.
(b) For a lease or rental not requiring recurring periodic
payments, the payment is sourced in the same manner provided for a
sale in subsection (1).
(3) For sourcing the lease or rental of motor vehicles,
trailers, semitrailers, or aircraft that are not transportation
equipment, the following apply:
(a) For a lease or rental requiring recurring periodic
payments, each payment is sourced to the primary property location
as indicated by the address of the property provided by the lessee
and available to the lessor from the lessor's records maintained in
the ordinary course of business, when use of this address does not
constitute bad faith. The property location is not considered
altered by intermittent use at a different location.
(b) For a lease or rental not requiring recurring periodic
payments, the payment is sourced in the same manner provided for a
sale in subsection (1).
(4) The lease or rental of transportation equipment shall be
sourced in the same manner provided for a sale in subsection (1).
(5) Subsections (2) and (3) do not affect the imposition or
computation of the tax under the general sales tax act, 1933 PA
167, MCL 205.51 to 205.78, on leases or rentals based on a lump-sum
or accelerated basis or on the acquisition of property for lease.
(6) As used in this section:
(a) "Receive" and "receipt" mean 1 or more of the following
but exclude possession by a shipping company on behalf of the
purchaser:
(i) Taking possession of tangible personal property.
(ii) Making first use of services.
(b) "Transportation equipment" means 1 or more of the
following:
(i) Locomotives and railcars utilized for the carriage of
persons or property in interstate commerce.
(ii) Trucks and truck-tractors with a gross vehicle weight
rating of 10,001 pounds or greater, trailers, semitrailers, or
passenger buses, which are registered through the international
registration plan and operated under authority of a carrier
authorized and certificated by the United States department of
transportation or another federal authority to engage in the
carriage of persons or property in interstate commerce.
(iii) Aircraft operated by air carriers authorized and
certificated by the United States department of transportation or
other federal or foreign authority to transport air cargo or
passengers in interstate or foreign commerce.
(iv) Containers designed for use on or component parts attached
or secured to the equipment included in subparagraphs (i) to (iii).
(7) A person may deviate from the sourcing requirements under
this
section as provided in section 12 or 13.