HB-5545, As Passed House, April 28, 2016HB-5545, As Passed Senate, April 28, 2016

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5545

     A bill to amend 2014 PA 93, entitled

"Alternative state essential services assessment act,"

by amending sections 3, 7, and 9 (MCL 211.1073, 211.1077, and

211.1079), sections 3 and 7 as amended by 2015 PA 121.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 3. As used in this act:

(a) Except as otherwise provided in subparagraph (ii),

"acquisition cost" means that term as defined in subparagraph (i),

as follows:

     (i) (a) "Acquisition cost" means the fair market value of

personal property at the time of acquisition by the first owner,

including the cost of freight, sales tax, and installation, and

other capitalized costs, except capitalized interest. There is a

rebuttable presumption that the acquisition price paid by the first

owner for personal property, and any costs of freight, sales tax,

and installation, and other capitalized costs, except capitalized

interest, reflect the acquisition cost. For personal property

exempt under section 9m or 9n of the general property tax act, 1893

PA 206, MCL 211.9m and 211.9n, that would otherwise be prior to the

current tax year was exempt under section 7k of the general

property tax act, 1893 PA 206, MCL 211.7k, under an industrial

facilities exemption certificate issued under 1974 PA 198, MCL

207.551 to 207.572, and effective before January 1, 2013, which

either has been extended for property not yet exempt under section

9m or 9n of the general property tax act, 1893 PA 206, MCL 211.9m

and 211.9n, or had an expiration date after the date the tax levied

under this act is due, and for personal property subject to an

extended industrial facilities exemption certificate under section

11a of 1974 PA 198, MCL 207.561a, that is exempt under an

industrial facilities exemption certificate issued under 1974 PA

198, MCL 207.551 to 207.572, and effective before January 1, 2013,

acquisition cost means 1/2 of the fair market value of that

personal property at the time of acquisition by the first owner,

including the cost of freight, sales tax, and installation, and

other capitalized costs, except capitalized interest. The

acquisition cost for personal property exempt under the Michigan

renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696, is

$0.00 except for the 3 years immediately preceding the expiration

of the exemption of that personal property under the Michigan

renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696, during

which period of time the acquisition cost for that personal

property means the fair market value of that personal property at

the time of acquisition by the first owner, including the cost of

freight, sales tax, and installation, and other capitalized costs,

except capitalized interest, multiplied by the percentage reduction

in the exemption as provided in section 9(3) of the Michigan

renaissance zone act, 1996 PA 376, MCL 125.2689. The state tax

commission department may provide guidelines for circumstances in

which the actual acquisition price is not determinative of

acquisition cost and the basis of determining acquisition cost in

those circumstances. When the acquisition cost, year of acquisition

by the first owner, or both are unknown, the state tax commission

department may provide guidelines for estimating the acquisition

cost and year of acquisition by the first owner. The state tax

commission department may issue guidelines that allow for the

reduction of acquisition cost for property that is idle, is

obsolete or has material obsolescence, or is surplus.

     (ii) Beginning with the 2017 assessment year, for property

that is construction in progress only, "acquisition cost" means 1/2

of the fair market value at the time acquired by the first owner,

including the cost of freight, sales tax, and installation. For

property that is construction in progress, "acquired by" means the

year the property is first reported on the combined form as

prescribed in section 7(8) in the report of the fair market value

and year of acquisition by the first owner of qualified new

personal property or qualified previously existing personal

property.

     (b) "Assessment" means the alternative state essential

services assessment levied under section 5.

     (c) "Assessment year" means the year in which the alternative

state essential services assessment levied under section 5 is due.

     (d) "Eligible claimant" means a person that owns, leases, or

is in the possession of eligible personal property.

     (e) "Eligible personal property" means personal property

exempt from the tax levied under the state essential services

assessment act, 2014 PA 92, MCL 211.1051 to 211.1061, and

determined to be subject to the alternative state essential

services assessment as provided in section 9 of the state essential

services assessment act, 2014 PA 92, MCL 211.1059.

     (f) "Department" means the department of treasury.

     Sec. 7. (1) The department of treasury shall collect and

administer the alternative state essential services assessment as

provided in this section.

     (2) Not later than May 1 in each assessment year, the

department of treasury shall make available in electronic form to

each eligible claimant a statement for calculation of the

assessment as provided in section 5. That statement shall be

developed from the information submitted by the eligible claimant

on the combined document as required by sections 9m and 9n of the

general property tax act, 1893 PA 206, MCL 211.9m and 211.9n.

     (3) Not later than August 15 in each assessment year, each

eligible claimant shall submit electronically to the department of

treasury revise as necessary and certify the completed statement ,

in a form and manner prescribed by the department of treasury, and

make full payment of the assessment levied under section 5 for that

assessment year as calculated in section 5(2). The department of

treasury may waive or delay the electronic filing certification

requirement at its discretion. The department of treasury may

accept a timely filed statement that calculates the tax under this

act that is transmitted and certified using reporting software

approved by the department, of treasury, subject to audit under

subsection (6). A statement submitted certified by an eligible

claimant shall include all of the eligible claimant's eligible

personal property located in this state subject to the assessment

levied under section 5. The completed statement required under this

subsection shall not be subject to disclosure under the freedom of

information act, 1976 PA 442, MCL 15.231 to 15.246.

     (4) If an eligible claimant does not submit certify the

statement and full payment of the assessment levied under section 5

by August 15, the department of treasury shall issue a notice to

the eligible claimant not later than September 15. The notice shall

include a statement explaining the consequences of nonpayment as

set forth in subsection (5) and instructing the eligible claimant

of its potential responsibility under subsection (5)(e). An

eligible claimant shall submit payment in full by October 15 of the

assessment year along with a penalty of 1% per week on the unpaid

balance for each week payment is not made in full up to a maximum

of 5% of the total amount due and unpaid. For the eligible

claimant's first assessment year, the penalty shall be waived if

the eligible claimant submits certifies the statement and makes

full payment of the assessment levied under section 5 by September

15. An eligible claimant may amend a filed certified statement for

the current year up to September 15. Payments made due to an

amended statement are subject to the penalties as described in this

subsection. The department of treasury shall issue refunds for

overpayments due to an amended statement. All refunds due to

overpayment shall be remitted without interest except as provided

by section 37 of the tax tribunal act, 1973 PA 186, MCL 205.737.

     (5) For any assessment year in which an eligible claimant does

not submit payment in full and any penalty due under subsection (4)

or (6) by October 15, or if the state tax commission department

discovers that the property is not eligible under section 9m or 9n

of the general property tax act, 1893 PA 206, MCL 211.9m and

211.9n, all of the following shall apply:

     (a) The state tax commission department shall issue an order

to rescind no later than the first Monday in December for the

assessment year any exemption described in section 9m or 9n of the

general property tax act, 1893 PA 206, MCL 211.9m and 211.9n,

granted for any parcel for which payment in full and any penalty

due have not been received or for which the state tax commission

department discovers that the property is not eligible under

section 9m or 9n of the general property tax act, 1893 PA 206, MCL

211.9m and 211.9n.

     (b) The Upon the request of the department, the state tax

commission shall issue an order to rescind no later than the first

Monday in December for the assessment year any exemption under

section 9f of the general property tax act, 1893 PA 206, MCL

211.9f, which exemption was approved under section 9f of the

general property tax act, 1893 PA 206, MCL 211.9f, after 2013 for

any parcel for which payment in full and any penalty due have not

been received or for which the state tax commission discovers that

the property is not eligible under section 9m or 9n of the general

property tax act, 1893 PA 206, MCL 211.9m and 211.9n.personal

property.

     (c) The Upon the request of the department, the state tax

commission shall issue an order to rescind no later than the first

Monday in December for the assessment year any exemption for

eligible personal property subject to an extended industrial

facilities exemption certificate under section 11a of 1974 PA 198,

MCL 207.561a, for any parcel for which payment in full and any

penalty due have not been received or for which the state tax

commission department discovers that the property is not eligible

under section 9m or 9n of the general property tax act, 1893 PA

206, MCL 211.9m and 211.9n.personal property.

     (d) The Upon the request of the department, the state tax

commission shall issue an order to rescind no later than the first

Monday in December for the assessment year any extended exemption

for eligible personal property under section 9f(8)(a) of the

general property tax act, 1893 PA 206, MCL 211.9f, for any parcel

for which payment in full and any penalty due have not been

received or for which the state tax commission department discovers

that the property is not eligible under section 9m or 9n of the

general property tax act, 1893 PA 206, MCL 211.9m and

211.9n.personal property.

     (e) The eligible claimant shall file with the assessor of the

township or city within 30 days of the date of the state tax

commission order to rescind rescission issued under subdivisions

(a) to (d) a statement under section 19 of the general property tax

act, 1893 PA 206, MCL 211.19, for all property for which the

exemption has been rescinded under this section.

     (f) Within 60 days of an order of rescission by the state tax

commission a rescission under subdivisions (a) to (d), the

treasurer of the local tax collecting unit shall issue amended tax

bills for any taxes, including penalty and interest, that were not

billed under the general property tax act, 1893 PA 206, MCL 211.1

to 211.155, or under 1974 PA 198, MCL 207.551 to 207.572, and that

are owed as a result of the order of rescission.

     (6) An eligible claimant shall provide access to the books and

records, for audit purposes, relating to the location and

description; the date of purchase, lease, or acquisition; and the

purchase price, lease amount, or value of all personal property

owned by, leased by, or in the possession of that person or a

related entity if requested by the assessor of the township or

city, county equalization department, or department of treasury for

the year in which the statement is filed and the immediately

preceding 3 years. The department of treasury shall develop and

implement an audit program which includes, but is not limited to,

the audit of statements submitted under subsection (3) and amended

statements submitted under subsection (4) for the current calendar

year and the 3 calendar years immediately preceding the

commencement of an audit. An assessment as a result of an audit

shall be paid in full within 35 days of issuance and shall include

penalties and interest as described in section 154(3) of the

general property tax act, 1893 PA 206, MCL 211.154. Refunds as a

result of an audit under this subsection shall be without interest.

The exemption for personal property for which an assessment has

been issued as a result of an audit under this subsection shall be

subject to the rescission provisions of subsection (5) for the

years of the assessment if full payment is not timely made as

required by this subsection.

     (7) An eligible claimant may appeal an assessment levied under

section 5 or a penalty or rescission under this section to the

state tax commission Michigan tax tribunal by filing a petition not

later than December 31 in that tax year. An eligible claimant may

appeal an assessment issued, including penalties, interest, or

rescission, as a result of an audit conducted under subsection (6)

by filing a petition with the state tax commission Michigan tax

tribunal within 30 35 days of the date of that assessment's

issuance. The department of treasury may appeal to the state tax

commission Michigan tax tribunal by filing a petition for the

current calendar year and 3 immediately preceding calendar years.

The state tax commission shall decide any appeal based on the

written petition and the written recommendation of state tax

commission staff and any other relevant information. The department

of treasury or any eligible claimant may appeal the determination

of the state tax commission to the Michigan tax tribunal within 35

days of the date of the determination.

     (8) For any year before 2023, the The department of treasury

may require eligible claimants to annually file by February 20 of

the each year a combined document that includes the affidavit form

to claim the exemption under sections 9f(9), 9m, and 9n of the

general property tax act, 1893 PA 206, MCL 211.9f, 211.9m, and

211.9n, the affidavit and under section 11a of 1974 PA 198, MCL

207.561a, a report of the fair market value and year of acquisition

by the first owner of eligible personal property, and for any year

before 2023, a statement under section 19 of the general property

tax act, 1893 PA 206, MCL 211.19. , and a report of the acquisition

cost and year of acquisition by the first owner of eligible

personal property. All of the following apply to the filing of a

combined document under this subsection:

     (a) The combined document shall be in a form prescribed by the

state tax commission. department.

     (b) As provided in sections 9m and 9n of the general property

tax act, 1893 PA 206, MCL 211.9m and 211.9n, leasing companies are

not eligible to receive the exemption for qualified new personal

property and qualified previously existing personal property and

may not use the combined document prescribed in this section. With

respect to personal property that is the subject of a lease

agreement, regardless of whether the agreement constitutes a lease

for financial or tax purposes, all of the following apply:

     (i) If the personal property is eligible manufacturing

personal property, the lessee and lessor may elect that the lessee

report the leased personal property on the combined document.

     (ii) An election made by the lessor and the lessee under this

subdivision shall be made in a form and manner approved by the

department.

     (iii) Absent an election, the personal property shall be

reported by the lessor on the personal property statement unless

the exemption for eligible manufacturing personal property is

claimed by the lessee on the combined document.

     (c) For eligible personal property exempt under the Michigan

renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696, an

eligible claimant shall report the fair market value of that

personal property at the time of acquisition by the first owner,

including the cost of freight, sales tax, installation, and other

capitalized costs, except capitalized interest.

     (d) The combined document shall be filed with the assessor of

the township or city in which the eligible personal property is

located.

     (e) The assessor shall transmit the information contained in

the combined document filed under this subsection, and other parcel

information required by the department, of treasury, to the

department of treasury in the form and in the manner prescribed by

the department of treasury no later than April 1.

     Sec. 9. (1) Proceeds of the assessment collected under section

7 shall be credited to the general fund.

     (2) Beginning in fiscal year 2014-2015 and each fiscal year

thereafter, the legislature shall appropriate funds in an amount

equal to the necessary expenses incurred by the department of

treasury in implementing this act.