EXEMPT SELF-INSURED WORKER'S COMPENSATION GROUPS FROM CORPORATE INCOME TAX

House Bill 4502 as introduced

Sponsor:  Rep. James A. Lower

Committee:  Tax Policy

Complete to 5-2-17                                                    (Enacted as Public Act 216 of 2017)

SUMMARY:

House Bill 4502 would amend the Income Tax Act (MCL 206.625) to exempt from the Corporate Income Tax "a person that is a self-insurer group operating under an agreement entered pursuant to Section 611(2) of the Worker's Disability Compensation Act of 1969, 1969 PA 317, MCL 418.611."

BACKGROUND:

Section 611(2) of the Worker's Disability Compensation Act allows multiple employers in the same industry with combined assets of $1 million or more, and multiple public employers of the same type of unit, to form self-insured groups for worker's compensation coverage.  The groups must apply to the Worker's Compensation Agency, within the Department of Licensing and Regulatory Affairs to form a group.

FISCAL IMPACT:

As written, the bill is reaffirming the existing practice of exempting self-insured workers' compensation groups from the corporate income tax, and as such should have no fiscal impact.  See the Department of Treasury's Letter Ruling on the topic at:

https://www.michigan.gov/documents/treasury/LR_2016-1_542234_7.pdf

                                                                                        Legislative Analyst:   Patrick Morris

                                                                                                Fiscal Analyst:   Jim Stansell

■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.