HOUSE BILL No. 5525

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.