SB-0673, As Passed Senate, November 30, 2011

SUBSTITUTE FOR

SENATE BILL NO. 673

     A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

by amending section 663 (MCL 206.663), as added by 2011 PA 38.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 663. (1) Except as otherwise provided in subsection (2)

and section 669, 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. The numerator of a

taxpayer shall include its proportionate share of the total sales

in this state of a flow-through entity that is unitary with the

taxpayer. The denominator of a taxpayer shall include its

proportionate share of the total sales everywhere of a flow-through

entity that is unitary with the taxpayer. A flow-through entity is

unitary with a taxpayer when that taxpayer owns or controls,

directly or indirectly, more than 50% of the ownership interests

with voting rights or ownership interests that confer comparable

rights to voting rights of the flow-through entity, and that has

business activities or operations which result in a flow of value

between the taxpayer and the flow-through entity, or between the

flow-through entity and another flow-through entity unitary with

the taxpayer, or has business activities or operations that are

integrated with, are dependent upon, or contribute to each other.

     (2) Except as otherwise provided under this subsection, for a

taxpayer that is a unitary business group, sales include sales in

this state of every person included in the unitary business group

without regard to whether the person has nexus in this state. Sales

between persons included in a unitary business group must be

eliminated in calculating the sales factor. Sales between a

taxpayer and flow-through entities unitary with that taxpayer, or

between flow-through entities unitary with a taxpayer, must be

eliminated in calculating the sales factor.

     (3) It is the intent of the legislature that each the tax base

of a taxpayer is apportioned to this state by multiplying each the

tax base by the sales factor multiplied by 100% and that

apportionment shall not be based on property, payroll, or any other

factor notwithstanding section 1 of 1969 PA 343, MCL 205.581.

     Enacting section 1. This amendatory act takes effect January

1, 2012.