March 24, 2016, Introduced by Rep. Nesbitt and referred to the Committee on Tax Policy.
A bill to amend 2014 PA 92, entitled
"State essential services assessment act,"
by amending sections 3, 7, 9, and 11 (MCL 211.1053, 211.1057,
211.1059, and 211.1061), sections 3 and 7 as amended by 2015 PA
120.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3. As used in this act:
(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 property described in
subdivision
(e)(i) 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 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, and for
property described in subdivision (e)(iii) 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. Beginning in 2017,
the acquisition cost of personal property that is construction in
progress means 1/2 of the total cost incurred for construction in
progress, as calculated on an accrual basis, based on the extent of
physical presence of the construction in progress in the assessment
jurisdiction. Construction in progress is property of a personal
property nature that has never been in service and was in the
process
of being installed on tax day. 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 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.
(b) "Assessment" means the state essential services assessment
levied under section 5.
(c) "Assessment year" means the year in which the state
essential services assessment levied under section 5 is due.
(d) "Department" means the department of treasury.
(e) (d)
"Eligible claimant" means
a person that claims an
exemption for eligible personal property.
(f) (e)
"Eligible personal
property" means all of the
following:
(i) Personal property exempt under section 9m or 9n of the
general property tax act, 1893 PA 206, MCL 211.9m and 211.9n.
(ii) Personal property that is eligible manufacturing personal
property as defined in section 9m and that is exempt 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, unless both of the
following conditions are satisfied:
(A) The application for the exemption was filed with the
eligible local assessing district or Next Michigan development
corporation before August 5, 2014.
(B) The resolution approving the exemption states that the
project is expected to have total new personal property of over
$25,000,000.00 within 5 years of the adoption of the resolution by
the eligible local assessing district or Next Michigan development
corporation.
(iii) Personal property subject to an extended industrial
facilities exemption certificate under section 11a of 1974 PA 198,
MCL 207.561a.
(iv) Personal property subject to an extended exemption under
section 9f(8)(a) of the general property tax act, 1893 PA 206, MCL
211.9f.
(g) (f)
"Fund board" means the
board of directors of the
Michigan strategic fund created under the Michigan strategic fund
act, 1984 PA 270, MCL 125.2001 to 125.2094.
(h) (g)
"Michigan economic development
corporation" means the
Michigan economic development corporation, the public body
corporate created under section 28 of article VII of the state
constitution of 1963 and the urban cooperation act of 1967, 1967
(Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual interlocal
agreement effective April 5, 1999, and subsequently amended,
between local participating economic development corporations
formed under the economic development corporations act, 1974 PA
338, MCL 125.1601 to 125.1636, and the Michigan strategic fund.
(i) (h)
"Michigan strategic fund"
means the Michigan strategic
fund created under the Michigan strategic fund act, 1984 PA 270,
MCL 125.2001 to 125.2094.
(j) (i)
"Next Michigan development
corporation" means that
term as defined under the Next Michigan development act, 2010 PA
275, MCL 125.2951 to 125.2959.
Sec.
7. (1) The department of treasury shall collect and
administer the 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 the completed statement, in a form and manner prescribed
by the department of treasury, and 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 requirement at its discretion. The department of
treasury may accept a timely filed statement using reporting
software approved by the department of treasury, subject to audit
under subsection (6). A statement submitted 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 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 the statement and full payment of the
assessment levied under section 5 by September 15. An eligible
claimant may amend a filed 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 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 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 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 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 a
rescission by the state
tax
commission 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 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. The combined document shall be in a form prescribed by
the state tax commission. The combined document shall be filed with
the assessor of the township or city in which the eligible personal
property is located. 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) The fund board may adopt a resolution to exempt
from the assessment under this act eligible personal property
designated in the resolution as provided in this section and
described in subsection (3)(c) that is owned by, leased to, or in
the possession of an eligible claimant. In the resolution, the fund
board may determine that the eligible personal property designated
in the resolution shall be subject to the alternative state
essential services assessment under the alternative state essential
services assessment act. The resolution shall not be approved if
the state treasurer, or his or her designee to the fund board,
votes against the resolution.
(2) An exemption under this section is effective in the
assessment year immediately succeeding the year in which the fund
board adopts the resolution under subsection (1) and shall continue
in effect for a period specified in the resolution. A copy of the
resolution
shall be filed with the state tax commission.department.
(3) The fund board shall provide for a detailed application,
approval, and compliance process published and available on the
fund's website. The detailed application, approval, and compliance
process shall, at a minimum, contain the following:
(a) An eligible claimant, or a next Michigan development
corporation on behalf of an eligible claimant, may apply for an
exemption to the assessment in a form and manner determined by the
fund board.
(b) After receipt of an application, the fund may enter into
an agreement with an eligible claimant if the eligible claimant
agrees to make certain investments of eligible personal property in
this state.
(c) An eligible claimant shall present a business plan or
demonstrate that a minimum of $25,000,000.00 will be invested in
additional eligible personal property in this state during the
duration of the written agreement.
(d) The written agreement shall provide in a clear and concise
manner all of the conditions imposed, including specific time
frames, on the eligible claimant, to receive the exemption to the
assessment under this section.
(e) The written agreement shall provide that the exemption
under this section is revoked if the eligible claimant fails to
comply with the provisions of the written agreement.
(f) The written agreement shall provide for a repayment
provision on the exemption to the assessment if the eligible
claimant fails to comply with the provisions of the written
agreement.
(g) The written agreement shall provide for an audit provision
that requires the fund to verify that the specific time frames for
the investment have been met.
(4) The fund board shall consider the following criteria to
the extent reasonably applicable to the type of investment proposed
when approving an exemption to the assessment:
(a) Out-of-state competition.
(b) Net-positive return to this state.
(c) Level of investment made by the eligible claimant.
(d) Business diversification.
(e) Reuse of existing facilities.
(f) Near-term job creation or significant job retention as a
result of the investment made in eligible personal property.
(g) Strong links to Michigan suppliers.
(h) Whether the project is in a local unit of government that
contains an eligible distressed area as that term is defined in
section 11 of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1411.
(5) The fund board, or the Michigan economic development
corporation, may charge actual and reasonable fees for costs
associated with administering the activities authorized under this
section.
Sec. 11. (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.