February 25, 2014, Introduced by Senators PROOS, ROBERTSON, WARREN, MOOLENAAR and BRANDENBURG and referred to the Committee on Finance.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending sections 9f and 9m (MCL 211.9f and 211.9m), section 9f
as amended by 2012 PA 399 and section 9m as amended by 2013 PA 154.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 9f. (1) The governing body of an eligible local assessing
district or, subject to subsection (4), the board of a next
Michigan development corporation in which an eligible local
assessing district is a constituent member may adopt a resolution
to exempt from the collection of taxes under this act all new
personal property owned or leased by an eligible business located
in 1 or more eligible districts or distressed parcels designated in
the resolution or an eligible next Michigan business as provided in
this section. The clerk of the eligible local assessing district or
the recording officer of a next Michigan development corporation
shall notify in writing the assessor of the local tax collecting
unit in which the eligible district or distressed parcel is located
and the legislative body of each taxing unit that levies ad valorem
property taxes in the eligible local assessing district in which
the eligible district or distressed parcel is located. Before
acting on the resolution, the governing body of the eligible local
assessing district or a next Michigan development corporation shall
afford the assessor and a representative of the affected taxing
units an opportunity for a hearing.
(2) The exemption under this section is effective on the
December 31 immediately succeeding the adoption of the resolution
by the governing body of the eligible local assessing district or a
next Michigan development corporation and, except as otherwise
provided in subsection (8), shall continue in effect for a period
specified in the resolution. However, an exemption shall not be
granted under this section after December 31, 2012 for an eligible
business located in an eligible district identified in subsection
(9)(f)(ix) (10)(f)(ix) or
in an eligible local assessing district
identified
in subsection (9)(h)(ii). (10)(h)(ii).
A copy of the
resolution shall be filed with the state tax commission, the state
treasurer, and the president of the Michigan strategic fund. A
resolution is not effective unless approved as provided in
subsection (3).
(3) Not more than 60 days after receipt of a copy of the
resolution adopted by the governing body of an eligible local
assessing district under subsection (1), the state tax commission
shall determine if the new personal property subject to the
exemption is owned or leased by an eligible business and if the
eligible business is located in 1 or more eligible districts. If
the state tax commission determines that the new personal property
subject to the exemption is owned or leased by an eligible business
and that the eligible business is located in 1 or more eligible
districts, the state treasurer, with the written concurrence of the
president of the Michigan strategic fund, shall approve the
resolution adopted under subsection (1) if the state treasurer and
the president of the Michigan strategic fund determine that
exempting new personal property of the eligible business is
necessary to reduce unemployment, promote economic growth, and
increase capital investment in this state. In addition, for an
eligible business located in an eligible local assessing district
described
in subsection (9)(h)(ii), (10)(h)(ii),
the resolution
adopted under subsection (1) shall be approved if the state
treasurer and the president of the Michigan strategic fund
determine that granting the exemption is a net benefit to this
state, that expansion, retention, or location of an eligible
business will not occur in this state without this exemption, and
that there is no significant negative effect on employment in other
parts of this state as a result of the exemption.
(4) A next Michigan development corporation may only adopt a
resolution under subsection (1) exempting new personal property
from the collection of taxes under this act for new personal
property located in a next Michigan development district. A next
Michigan development corporation shall not adopt a resolution under
subsection (1) exempting new personal property from the collection
of taxes under this act without a written agreement entered into
with the eligible next Michigan business subject to the exemption,
which written agreement contains a remedy provision that includes,
but is not limited to, all of the following:
(a) A requirement that the exemption under this section is
revoked if the eligible next Michigan business is determined to be
in violation of the provisions of the written agreement.
(b) A requirement that the eligible next Michigan business may
be required to repay all or part of the personal property taxes
exempted under this section if the eligible next Michigan business
is determined to be in violation of the provisions of the written
agreement.
(5) Subject to subsections (6) and (8), if an existing
eligible business sells or leases new personal property exempt
under this section to an acquiring eligible business, the exemption
granted to the existing eligible business shall continue in effect
for the period specified in the resolution adopted under subsection
(1) for the new personal property purchased or leased from the
existing eligible business by the acquiring eligible business and
for any new personal property purchased or leased by the acquiring
eligible business.
(6) After December 31, 2007, an exemption for an existing
eligible business shall continue in effect for an acquiring
eligible business under subsection (5) only if the continuation of
the exemption is approved in a resolution adopted by the governing
body of an eligible local assessing district or the board of a next
Michigan development corporation in which the eligible local
assessing district is a constituent member.
(7) Notwithstanding the amendatory act that added section
2(1)(c), all of the following shall apply to an exemption under
this section that was approved by the state tax commission on or
before April 30, 1999, regardless of the effective date of the
exemption:
(a) The exemption shall be continued for the term authorized
by the resolution adopted by the governing body of the eligible
local assessing district and approved by the state tax commission
with respect to buildings and improvements constructed on leased
real property during the term of the exemption if the value of the
real property is not assessed to the owner of the buildings and
improvements.
(b) The exemption shall not be impaired or restricted with
respect to buildings and improvements constructed on leased real
property during the term of the exemption if the value of the real
property is not assessed to the owner of the buildings and
improvements.
(8) Notwithstanding any other provision of this section to the
contrary and subject to subsection (9), if new personal property
exempt under this section on December 31, 2012 is eligible
manufacturing personal property, that eligible manufacturing
personal property shall remain exempt under this section until the
later of the following:
(a) The date that eligible manufacturing personal property
would otherwise be exempt from the collection of taxes under this
act under section 9m, 9n, or 9o.
(b) The date that eligible manufacturing personal property is
no longer exempt under the resolution adopted under subsection (1).
(9) If neither House Bill No. 6026 of the 96th Legislature,
2012 PA 408, nor Senate Bill No.822
of the 97th Legislature is not approved
by a majority
of the qualified electors of this state voting on the question at
an election to be held on the August regular election date in 2014,
subsection (8) shall not apply after the date of that election.
(10) As used in this section:
(a) "Acquiring eligible business" means an eligible business
that purchases or leases assets of an existing eligible business,
including the purchase or lease of new personal property exempt
under this section, and that will conduct business operations
similar to those of the existing eligible business at the location
of the existing eligible business within the eligible district.
(b) "Authorized business" means that term as defined in
section 3 of the Michigan economic growth authority act, 1995 PA
24, MCL 207.803.
(c) "Eligible manufacturing personal property" means that term
as defined in section 9m.
(d) "Distressed parcel" means a parcel of real property
located in a city or village that meets all of the following
conditions:
(i) Is located in a qualified downtown revitalization district.
As used in this subparagraph, "qualified downtown revitalization
district" means an area located within 1 or more of the following:
(A) The boundaries of a downtown district as defined in
section 1 of 1975 PA 197, MCL 125.1651.
(B) The boundaries of a principal shopping district or a
business improvement district as defined in section 1 of 1961 PA
120, MCL 125.981.
(C) The boundaries of the local governmental unit in an area
that is zoned and primarily used for business as determined by the
local governmental unit.
(ii) Meets 1 of the following conditions:
(A) Has a blighted or functionally obsolete building located
on the parcel. As used in this sub-subparagraph, "blighted" and
"functionally obsolete" mean those terms as defined in section 2 of
the brownfield redevelopment financing act, 1996 PA 381, MCL
125.2652.
(B) Is a vacant parcel that had been previously occupied.
(iii) Is zoned to allow for mixed use.
(e) "Eligible business" means, effective August 7, 1998, a
business engaged primarily in manufacturing, mining, research and
development, wholesale trade, office operations, or the operation
of a facility for which the business that owns or operates the
facility is an eligible taxpayer. For purposes of a next Michigan
development corporation, eligible business means only an eligible
next Michigan business. Eligible business does not include a
casino, retail establishment, professional sports stadium, or that
portion of an eligible business used exclusively for retail sales.
Professional sports stadium does not include a sports stadium in
existence on June 6, 2000 that is not used by a professional sports
team on the date of the resolution adopted pursuant to subsection
(1). As used in this subdivision, "casino" means a casino regulated
by this state pursuant to the Michigan gaming control and revenue
act, 1996 IL 1, MCL 432.201 to 432.226, and all property associated
or affiliated with the operation of a casino, including, but not
limited to, a parking lot, hotel, motel, or retail store.
(f) "Eligible district" means 1 or more of the following:
(i) An industrial development district as that term is defined
in 1974 PA 198, MCL 207.551 to 207.572.
(ii) A renaissance zone as that term is defined in the Michigan
renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696.
(iii) An enterprise zone as that term is defined in the
enterprise zone act, 1985 PA 224, MCL 125.2101 to 125.2123.
(iv) A brownfield redevelopment zone as that term is designated
under the brownfield redevelopment financing act, 1996 PA 381, MCL
125.2651 to 125.2672.
(v) An empowerment zone designated under subchapter U of
chapter 1 of the internal revenue code of 1986, 26 USC 1391 to
1397F.
(vi) An authority district or a development area as those terms
are defined in the tax increment finance authority act, 1980 PA
450, MCL 125.1801 to 125.1830.
(vii) An authority district as that term is defined in the
local development financing act, 1986 PA 281, MCL 125.2151 to
125.2174.
(viii) A downtown district or a development area as those terms
are defined in 1975 PA 197, MCL 125.1651 to 125.1681.
(ix) An area that contains an eligible taxpayer.
(x) A next Michigan development district.
(g) "Eligible distressed area" means 1 of the following:
(i) That term as defined in section 11 of the state housing
development authority act of 1966, 1966 PA 346, MCL 125.1411.
(ii) An area that contains an eligible taxpayer.
(h) "Eligible local assessing district" means a city, village,
or township that contains an eligible distressed area or that is a
party to an intergovernmental agreement creating a next Michigan
development corporation, or a city, village, or township that meets
1 or more of the following conditions and is located in a county
all or a portion of which borders another state or Canada:
(i) Is currently served by not fewer than 4 of the following
existing services:
(A) Water.
(B) Sewer.
(C) Police.
(D) Fire.
(E) Trash.
(F) Recycling.
(ii) Is party to an agreement under 1984 PA 425, MCL 124.21 to
124.30, with a city, village, or township that provides not fewer
than 4 of the following existing services:
(A) Water.
(B) Sewer.
(C) Police.
(D) Fire.
(E) Trash.
(F) Recycling.
(i) "Eligible next Michigan business" means that term as
defined in section 3 of the Michigan economic growth authority act,
1995 PA 24, MCL 207.803.
(j) "Eligible taxpayer" means a taxpayer that meets both of
the following conditions:
(i) Is an authorized business.
(ii) Is eligible for tax credits described in section 9 of the
Michigan economic growth authority act, 1995 PA 24, MCL 207.809.
(k) "Existing eligible business" means an eligible business
identified in a resolution adopted under subsection (1) for which
an exemption has been granted under this section.
(l) "New personal property" means personal property that was
not previously subject to tax under this act or was not previously
placed in service in this state and that is placed in an eligible
district after a resolution under subsection (1) is approved. As
used in this subdivision, for exemptions approved by the state
treasurer under subsection (3) after April 30, 1999, new personal
property does not include buildings described in section 14(6) and
personal property described in section 8(h), (i), and (j).
(m) "Next Michigan development corporation" and "next Michigan
development district" mean those terms as defined under the next
Michigan development act, 2010 PA 275, MCL 125.2951 to 125.2959.
Sec. 9m. (1) Beginning December 31, 2015 and each year
thereafter, qualified new personal property for which an exemption
has been properly claimed under subsection (2) is exempt from the
collection of taxes under this act.
(2) A person shall claim the exemption under this section by
filing an affidavit with the local tax collecting unit in which the
qualified new personal property is located as provided in
subsection (3). The affidavit shall be in a form prescribed by the
state tax commission. An affidavit claiming an exemption under this
section applies to all existing and subsequently acquired qualified
new personal property.
(3) If a person claiming an exemption under this section has
not filed an affidavit under this section in any prior year with
the local tax collecting unit in which the qualified new personal
property is located, that person shall file the affidavit described
under subsection (2) with that local tax collecting unit not later
than February 10 of the first year for which the person is claiming
the exemption for qualified new personal property in the local tax
collecting unit.
(4) Except for a person claiming an exemption under this
section for personal property that was subject to section 9f or
1974 PA 198, MCL 207.551 to 207.572, in 2015, if an affidavit
claiming the exemption under this section is filed as provided in
subsection (3) by February 10, 2016, and the person claiming the
exemption under this section complied with section 19(9) in 2015,
or if the filing requirement under section 19(9) was not applicable
because the qualified new personal property was acquired in 2015,
the person claiming the exemption under this section is not
required to file a statement under section 19 for that qualified
new personal property in 2016. Except for a person claiming an
exemption under this section for personal property that was subject
to section 9f or 1974 PA 198, MCL 207.551 to 207.572, in 2015, if
an affidavit claiming the exemption under this section is filed as
provided in subsection (3), beginning in 2017, the person claiming
the exemption under this section is not required to file a
statement under section 19 for qualified new personal property
exempt under this section. For a person claiming an exemption under
this section for personal property that was subject to section 9f
or 1974 PA 198, MCL 207.551 to 207.572, in 2015, if an affidavit
claiming the exemption under this section is filed as provided in
subsection (3) and the person claiming the exemption under this
section complied with section 19(9) in 2015, the person claiming
the exemption under this section is not required to file a
statement under section 19 for that qualified new personal property
in the first year for which that person is claiming an exemption
under this section or in any subsequent year. For a person claiming
an exemption under this section for personal property that was
subject to section 9f or 1974 PA 198, MCL 207.551 to 207.572, in
2015, if an affidavit claiming the exemption under this section is
filed as provided in subsection (3), but the person claiming the
exemption under this section did not comply with section 19(9) in
2015, the person claiming the exemption under this section shall
file a statement under section 19 for that person's qualified new
personal property in the first year for which that person is
claiming an exemption under this section for qualified new personal
property, but that person is not required to file a statement under
section 19 for that qualified new personal property in any
subsequent year. If the person claiming the exemption under this
section has not filed an affidavit as required under subsection
(2), the personal property for which the person is claiming an
exemption is subject to the collection of taxes under this act and
that person shall file a statement under section 19.
(5) If the assessor of the local tax collecting unit believes
that personal property for which an affidavit claiming an exemption
is filed under subsection (2) is not qualified new personal
property, the assessor may deny that claim for exemption by
notifying the person that filed the affidavit in writing of the
reason for the denial and advising the person that the denial may
be appealed to the board of review under section 30 or 53b. The
assessor may deny a claim for exemption under this subsection for
the current year only. If the assessor denies a claim for
exemption, the assessor shall remove the exemption of that personal
property and amend the tax roll to reflect the denial and the local
treasurer shall within 30 days of the date of the denial issue a
corrected tax bill for any additional taxes.
(6) A person claiming an exemption for qualified new personal
property exempt under this section shall maintain books and records
and shall provide access to those books and records as provided in
section 22.
(7) If a person fraudulently claims an exemption for personal
property under this section, that person is subject to the
penalties provided for in section 21(2).
(8) As used in this section:
(a) "Affiliated person" means a sole proprietorship,
partnership, limited liability company, corporation, association,
flow-through entity, member of a unitary business group, or other
entity related to a person claiming an exemption under this
section.
(b) "Direct integrated support" means any of the following:
(i) Research and development related to goods produced in
industrial processing and conducted in furtherance of that
industrial processing.
(ii) Testing and quality control functions related to goods
produced in industrial processing and conducted in furtherance of
that industrial processing.
(iii) Engineering related to goods produced in industrial
processing and conducted in furtherance of that industrial
processing.
(iv) Receiving or storing equipment, materials, supplies,
parts, or components for industrial processing, or scrap materials
or waste resulting from industrial processing, at the industrial
processing site or at another site owned or leased by the owner or
lessee of the industrial processing site.
(v) Storing of finished goods inventory if the inventory was
produced by a business engaged primarily in industrial processing
and if the inventory is stored either at the site where it was
produced or at another site owned or leased by the business that
produced the inventory.
(vi) Sorting, distributing, or sequencing functions that
optimize transportation and just-in-time inventory management and
material handling for inputs to industrial processing.
(c) "Eligible manufacturing personal property" means all
personal property located on occupied real property if that
personal property is predominantly used in industrial processing or
direct integrated support. Personal property located on occupied
real property is predominantly used in industrial processing or
direct integrated support if the result of the following
calculation is more than 50%:
(i) Multiply the original cost of all personal property located
on that occupied real property by its percentage of use in
industrial processing or in direct integrated support. Personal
property is used in industrial processing if it is not used to
generate, transmit, or distribute electricity for sale, if it is
not utility personal property as described in section 34c(3)(e),
and if its purchase or use by the person claiming the exemption
would be eligible for exemption under section 4t of the general
sales tax act, 1933 PA 167, MCL 205.54t, or section 4o of the use
tax act, 1937 PA 94, MCL 205.94o. For an item of personal property
that is used in industrial processing, its percentage of use in
industrial processing shall equal the percentage of the exemption
the property would be eligible for under section 4t of the general
sales tax act, 1933 PA 167, MCL 205.54t, or section 4o of the use
tax act, 1937 PA 94, MCL 205.94o. Utility personal property as
described in section 34c(3)(e) is not used in direct integrated
support.
(ii) Divide the result of the calculation under subparagraph (i)
by the total original cost of all personal property located on that
occupied real property.
(d) "Industrial processing" means that term as defined in
section 4t of the general sales tax act, 1933 PA 167, MCL 205.54t,
or section 4o of the use tax act, 1937 PA 94, MCL 205.94o.
Industrial processing does not include the generation,
transmission, or distribution of electricity for sale.
(e) "New personal property" means property that was initially
placed in service in this state or outside of this state after
December 31, 2012.
(f) "Occupied real property" means all of the following:
(i) A parcel of real property that is entirely owned, leased,
or otherwise occupied by a person claiming an exemption under this
section.
(ii) Contiguous parcels of real property that are entirely
owned, leased, or otherwise occupied by a person claiming an
exemption under this section and that host a single, integrated
business operation engaged primarily in industrial processing,
direct integrated support, or both. A business operation is not
engaged primarily in industrial processing, direct integrated
support, or both if it engages in significant business activities
that are not directly related to industrial processing or direct
integrated support.
(iii) The portion of a parcel of real property that is owned,
leased, or otherwise occupied by a person claiming the exemption or
by an affiliated person.
(g) "Original cost" means the fair market value of eligible
manufacturing personal property at the time of acquisition by the
current owner. There is a rebuttable presumption that the
acquisition price paid by the current owner for eligible
manufacturing personal property reflects the fair market value of
that eligible manufacturing personal property. The department may
provide guidelines for circumstances in which the actual
acquisition cost of eligible manufacturing personal property is not
determinative of the fair market value of that eligible
manufacturing personal property and for the basis of determining
fair market value of eligible manufacturing personal property in
those circumstances.
(h) (g)
"Qualified new personal
property" means property that
meets all of the following conditions:
(i) Is eligible manufacturing personal property.
(ii) Is new personal property.