HB-5913, As Passed Senate, December 19, 2018

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5913

     A bill to amend 1933 PA 167, entitled

"General sales tax act,"

by amending section 4q (MCL 205.54q), as amended by 2012 PA 573.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 4q. (1) A sale of tangible personal property not for

resale to the following, subject to subsection (5), is exempt from

the tax under this act:

     (a) A health, welfare, educational, cultural arts, charitable,

or benevolent organization not operated for profit that has been

issued an exemption ruling letter to purchase items exempt from tax

before July 17, 1998 signed by the administrator of the sales, use,

and withholding taxes division of the department.

     (b) An organization not operated for profit and exempt from

federal income tax under section 501(c)(3) or 501(c)(4) of the

internal revenue code, 26 USC 501.

     (c) An organization not operated for profit and exempt from

federal income tax under section 501(c)(19) of the internal revenue

code, 26 USC 501.

     (2) The exemptions provided for in subsection (1) do not apply

to any of the following:

     (a) Sales of tangible personal property and sales of vehicles

licensed for use on public highways that are not used primarily to

carry out the purposes of the organization or to raise funds or

obtain resources necessary to carry out the purposes of the

organization as stated in the bylaws or articles of incorporation

of the exempt entity.

     (b) Sales of tangible personal property or vehicles used for

purposes of raising funds or obtaining resources where if the sales

price exceeds $5,000.00.the following:

     (i) For an organization exempt under subsection (1)(a) or (b),

$5,000.00.

     (ii) For an organization exempt under subsection (1)(c),

$25,000.00.

     (3) At the time of the transfer of the tangible personal

property exempt under subsection (1), the transferee shall do 1 of

the following:

     (a) Present the exemption ruling letter signed by the

administrator of the sales, use, and withholding taxes division of

the department certifying that the property is to be used or

consumed in connection with the operation of the organization.

     (b) Present a signed statement, on a form approved by the

department, stating that the property is to be used or consumed in

connection with the operation of the organization, to carry out the

purpose or purposes of the organization, or to raise funds or

obtain resources necessary for the operation of the organization,

that the organization qualifies as an exempt organization under

this section, and that the sales price of any single item of

tangible personal property or vehicle purchased for purposes of

raising funds or obtaining resources does not exceed $5,000.00. the

applicable cap amount established in subsection (2)(b). The

transferee shall also provide to the transferor a copy of the

federal exemption letter. However, a copy of the federal exemption

letter is not required if the organization is exempt from filing an

application for exempt status with the internal revenue service.

     (4) The letter provided under subsection (3)(a) and the

statement with the accompanying letter provided under subsection

(3)(b) shall be accepted by all courts as prima facie evidence of

the exemption and the statement shall provide that if the claim for

tax exemption is disallowed, the transferee will reimburse the

transferor for the amount of tax involved.

     (5) The tangible personal property under subsection (1) is

exempt only to the extent that the property is used to carry out

the purposes of the organization or to raise funds or obtain

resources necessary to carry out the purposes of the organization

as stated in the organization's bylaws or articles of

incorporation. The exemption for purposes of carrying out the

purposes of the organization as stated in its bylaws or articles of

incorporation is limited to the percentage of exempt use to total

use determined by a reasonable formula or method approved by the

department. The exemption for any single item of tangible personal

property or vehicle used to raise funds or obtain resources is

limited to a sales price that does not exceed $5,000.00 for an

organization exempt under subsection (1)(a) or (b) and $25,000.00

for an organization exempt under subsection (1)(c).

     Enacting section 1. This amendatory act takes effect 90 days

after the date it is enacted into law.