SB-0367, As Passed Senate, June 19, 2013
May 21, 2013, Introduced by Senator BRANDENBURG and referred to the Committee on Finance.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 603, 611, and 691 (MCL 206.603, 206.611, and
206.691), section 603 as amended by 2011 PA 173, section 611 as
amended by 2011 PA 170, and section 691 as amended by 2012 PA 70.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 603. (1) "Affiliated group" means that term as defined in
section 1504 of the internal revenue code except that it shall
include all persons, other than a foreign operating entity,
incorporated in the United States or formed under the laws of the
United States, any state, the District of Columbia, or any
territory or possession of the United States that are commonly
owned, directly or indirectly, by any member of such affiliated
group and other members of which more than 50% of the ownership
interests with voting rights or ownership interests that confer
comparable rights to voting rights of the member is directly or
indirectly owned by a common owner or owners.
(2)
(1) "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, 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 does not
include the services rendered by an employee to his or her employer
or services as a director of a corporation. Although an activity of
a taxpayer may be incidental to another or to others of his or her
business activities, each activity shall be considered to be
business engaged in within the meaning of this part.
(3) (2)
"Business income" means
federal taxable income. For a
tax-exempt taxpayer, business income means only that part of
federal taxable income derived from unrelated business activity.
Sec. 611. (1) "Tangible personal property" means that term as
defined in section 2 of the use tax act, 1937 PA 94, MCL 205.92.
(2) "Tax" means the tax imposed under this part, including
interest and penalties under this part, unless the term is given a
more limited meaning in the context of this part or a provision of
this part.
(3) "Tax-exempt person" means an organization that is exempt
from federal income tax under section 501(a) of the internal
revenue code, 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.
(4) "Tax 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 part. 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 part, a taxpayer's tax year is for the same period as is
covered by its federal income tax return. A taxpayer that has a 52-
or 53-week tax year beginning not more than 7 days before the end
of any month is considered to have a tax year beginning on the
first day of the subsequent month. A person included in a unitary
business group that joins or departs the unitary business group
other than at the end of that person's federal tax year shall have
a tax year beginning with its federal income tax period and ending
on the date of joining or departing the unitary business group, and
another tax year beginning on the date immediately after joining or
departing the unitary business group and ending with its federal
income tax period. If the term tax year in this part is used in
reference to 1 or more previous or preceding tax years and those
referenced tax years are before January 1, 2012, then those
referenced tax years are deemed those same tax years during which
former 1975 PA 228 or the Michigan business tax act, 2007 PA 36,
MCL 208.1101 to 208.1601, applied.
(5) "Taxpayer" means a corporation, insurance company,
financial institution, or unitary business group, whichever is
applicable under each chapter, that is liable for a tax, interest,
or penalty under this part. For purposes of chapters 11 and 14,
taxpayer does not include an insurance company or a financial
institution. For purposes of chapter 12, unless specifically
included in the section, taxpayer does not include a corporation or
a financial institution. For purposes of chapter 13, taxpayer does
not include a corporation or an insurance company.
(6) "Unitary business group" means a group of United States
persons that are corporations, insurance companies, or financial
institutions, other than a foreign operating entity, 1 of which
owns or controls, directly or indirectly, more than 50% of the
ownership interest with voting rights or ownership interests that
confer comparable rights to voting rights of the other members, and
that has business activities or operations which result in a flow
of value between or among members included in the unitary business
group or has business activities or operations that are integrated
with, are dependent upon, or contribute to each other. Unitary
business group includes an affiliated group that makes the election
to be treated, and to file, as a unitary business group under
section 691(2).
(7) "United States person" means that term as defined in
section 7701(a)(30) of the internal revenue code.
(8) "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.
Sec. 691. (1) Except as otherwise provided under section
680(3), a unitary business group shall file a combined return that
includes each United States person that is included in the unitary
business group. Each United States person included in a unitary
business group or included in a combined return shall be treated as
a single person, and all transactions between those persons
included in the unitary business group shall be eliminated from the
corporate income tax base and the apportionment formulas under this
part. If a United States person included in a unitary business
group or included in a combined return is subject to the tax under
chapter 12 or 13, any corporate income attributable to that person
shall be eliminated from the corporate income tax base and any
sales attributable to that person shall be eliminated from the
apportionment formula under this part.
(2) A taxpayer that is part of an affiliated group may elect
without the consent of the department to have all of the persons
that are members of that affiliated group to be treated as a
unitary business group. A taxpayer that elects to file as a unitary
business group pursuant to this subsection shall compute its tax
under this part in accordance with all other provisions of this
part that apply to a unitary business group. The taxpayer shall
make the election under this subsection on a form or in a format as
prescribed by the department that is to be filed in a timely manner
with the taxpayer's annual return. Any member included in the
affiliated group shall be considered to have waived any objection
to its inclusion in the affiliated group and treatment as a unitary
business group. An election made pursuant to this subsection is
binding for and applicable to the tax year for which it is made and
for the next 9 tax years. Upon the expiration of the election after
it has been in effect for 10 tax years, an election may be renewed
for another 10 tax years, without the consent of the department;
provided however, that in the case of a nonrenewal a new election
under this subsection is not permitted in any of the immediately
following 3 tax years. The renewal shall be made on a form or in a
format as prescribed by the department that is to be filed in a
timely manner with the taxpayer's annual return after the
completion of a 10-year period for which an election under this
subsection was in place.