SENATE BILL NO. 499

A bill to amend 1937 PA 94, entitled

"Use tax act,"

by amending section 21 (MCL 205.111), as amended by 2023 PA 175, and by adding section 14c.

the people of the state of michigan enact:

Sec. 14c. (1) A purchaser that purchases eligible back-to-school property between 12:01 a.m. on August 8th and 11:59 p.m. on August 24th of an eligible year may submit a claim for a refund to the department for the use tax related to that purchase if all of the following conditions are met:

(a) The claim for refund is made not later than 30 days after the date of purchase.

(b) The purchaser submits to the department an accurate record of the purchase, including, but not limited to, a paper, electronic, or digital receipt, invoice, or purchase order related to the purchase, that includes all of the following information:

(i) The name and location of the seller.

(ii) The date on which the eligible back-to-school property was purchased.

(iii) The purchase price of each item purchased.

(iv) The amount of use tax collected by the seller from the purchaser.

(c) One of the following applies:

(i) The receipt, invoice, or purchase order described in subdivision (b) includes the name of the purchaser.

(ii) The purchaser provides an affidavit of purchase in the form and manner prescribed by the department.

(d) The purchaser submits to the department a proper refund claim on a form prescribed by the department.

(e) The purchaser submits to the department any additional information that the department requires related to the purchaser's claim for a refund under this section.

(2) All of the following provisions apply in determining whether property is eligible back-to-school property:

(a) If the seller offers a discount on an item, the discount reduces the purchase price of the item, and the discounted purchase price determines whether the purchase price of the item is within the purchase price threshold under subsection (5)(c). If a discount applies to the total amount paid by a purchaser rather than to the purchase price of a particular item and the purchaser has purchased both eligible back-to-school property and taxable property, the discount must be allocated based on the total purchase prices of the taxable property compared to the total purchase prices of all property sold in that same transaction.

(b) A coupon that reduces the purchase price is treated as a discount under subdivision (a) if the seller is not reimbursed for the coupon amount by a third party.

(c) Articles normally sold as a single unit must continue to be sold as a single unit during the authorized time period described in subsection (1). Such articles must not be priced separately and sold as individual items to enable a purchaser to obtain a refund under this section.

(d) Eligible back-to-school property is considered purchased within the authorized time period described in subsection (1) if either of the following applies:

(i) The eligible back-to-school property is both delivered to and paid for by the purchaser during the authorized time period.

(ii) The purchaser orders and pays for the eligible back-to-school property and the seller accepts the order during the authorized time period for immediate shipment, even if delivery is made after the authorized time period. The seller accepts an order when the seller has taken action to fill the order for immediate shipment. Actions to fill an order include placement of an "in-date" stamp on a mail order or assignment of an "order number" to a telephone order. An order is for immediate shipment if the purchaser does not request delayed shipment. An order is for immediate shipment notwithstanding that the shipment may be delayed because of a backlog of orders or because stock is currently unavailable to, or on back order by, the seller.

(e) If the purchaser is located in one time zone and a seller is located in another time zone, the time zone of the seller's location determines whether a purchase occurred during the authorized time period described in subsection (1).

(3) Notwithstanding this section, a seller is liable for and shall remit use tax on purchases of eligible back-to-school property unless such purchases are exempt under another section of this act.

(4) If a purchaser returns an item of eligible back-to-school property purchased during the authorized time period described in subsection (1), the seller shall not give credit for or refund use tax unless the purchaser provides a form signed by the purchaser, as prescribed by the department, that states that the purchaser has not claimed, and will not claim, a refund under this section with respect to that item. When the seller files its tax return for a month under section 6, the seller shall provide the department with copies of all forms received under this subsection during that month.

(5) As used in this section:

(a) "Clothing" means all human wearing apparel suitable for general use.

(b) "Clothing accessories or equipment" means incidental items worn on the person or in conjunction with clothing, including, but not limited to, the following:

(i) Briefcases.

(ii) Cosmetics.

(iii) Hair notions, including, but not limited to, barrettes, hair bows, and hair nets.

(iv) Handbags.

(v) Handkerchiefs.

(vi) Jewelry.

(vii) Sun glasses, nonprescription.

(viii) Umbrellas.

(ix) Wallets.

(x) Watches.

(xi) Wigs and hair pieces.

(c) "Eligible back-to-school property" means, except as otherwise provided in subdivision (d), both of the following:

(i) Clothing, if the purchase price of each individual item is not greater than $100.00.

(ii) School supplies, if the purchase price of each individual item is not greater than $20.00.

(d) Eligible back-to-school property does not include any of the following:

(i) Clothing accessories or equipment.

(ii) Sport or recreational equipment.

(iii) Protective equipment.

(iv) Any item sold for use in a trade or business. This subparagraph does not apply to an item sold to a teacher for use in the teacher's classroom, and a teacher who purchases eligible back-to-school property for use in the teacher's classroom is eligible for a refund under subsection (1).

(v) Furniture.

(e) "Eligible year" means a calendar year that begins on or after January 1, 2025 and before January 1, 2031.

(f) "Protective equipment" means items for human wear and designed as protection of the wearer against injury or disease or as protections against damage or injury of other persons or property but not suitable for general use. Protective equipment includes, but is not limited to, the following:

(i) Breathing masks.

(ii) Clean room apparel and equipment.

(iii) Ear and hearing protectors.

(iv) Face shields.

(v) Hard hats.

(vi) Helmets.

(vii) Paint or dust respirators.

(viii) Protective gloves.

(ix) Safety glasses and goggles.

(x) Safety belts.

(xi) Tool belts.

(xii) Welder's gloves and masks.

(g) "School supplies" means items commonly used by a student in a course of study and includes only the following items:

(i) Binders.

(ii) Book bags.

(iii) Calculators.

(iv) Cellophane tape.

(v) Blackboard chalk.

(vi) Compasses.

(vii) Composition books.

(viii) Crayons.

(ix) Erasers.

(x) Folders, including expandable, pocket, plastic, and manila.

(xi) Glue, paste, and paste sticks.

(xii) Highlighters.

(xiii) Index cards.

(xiv) Index card boxes.

(xv) Legal pads.

(xvi) Lunch boxes.

(xvii) Markers.

(xviii) Notebooks.

(xix) Paper, including loose-leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper.

(xx) Pencil boxes and other school supply boxes.

(xxi) Pencil sharpeners.

(xxii) Pencils.

(xxiii) Pens.

(xxiv) Protractors.

(xxv) Rulers.

(xxvi) Scissors.

(xxvii) Writing tablets.

(h) "Sport or recreational equipment" means items designed for human use and worn in conjunction with an athletic or recreational activity that are not suitable for general use. Sport or recreational equipment includes, but is not limited to, the following:

(i) Ballet and tap shoes.

(ii) Cleated or spiked athletic shoes.

(iii) Gloves, including, but not limited to, baseball, bowling, boxing, hockey, and golf.

(iv) Goggles.

(v) Hand and elbow guards.

(vi) Life preservers and vests.

(vii) Mouth guards.

(viii) Roller and ice skates.

(ix) Shin guards.

(x) Shoulder pads.

(xi) Ski boots.

(xii) Waders.

(xiii) Wetsuits and fins.

(i) "Teacher" means that term as defined in section 1249 of the revised school code, 1976 PA 451, MCL 380.1249.

Sec. 21. (1) Except as otherwise provided in this section, all money received and collected under this act must be deposited by the department of treasury in the state treasury to the credit of the general fund, to be disbursed only by appropriations by the legislature.

(2) The collections from the use tax imposed at the additional rate of 2% approved by the electors on March 15, 1994 must be deposited in the state school aid fund.

(3) In addition to the money deposited in the state school aid fund under subsection (2), from the money received and collected under this act for the state share, an amount equal to the sum of the following, as determined by the department, must be deposited in the state school aid fund:

(a) All revenue lost under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, as a result of the exemption of personal property under sections 9m, 9n, and 9o of the general property tax act, 1893 PA 206, MCL 211.9m, 211.9n, and 211.9o.

(b) All revenue lost from basic school operating mills as a result of the exemption of personal property under sections 9m, 9n, and 9o of the general property tax act, 1893 PA 206, MCL 211.9m, 211.9n, and 211.9o.

(c) All revenue lost to the state school aid fund as a result of the exemption under section 4(1)(gg).

(d) All revenue lost to the state school aid fund as a result of the exemption under section 4cc. A person that claims an exemption under section 4cc shall report the purchase price of the data center equipment as defined in section 4cc and any other information necessary to determine the amount of revenue lost to the state school aid fund as a result of the exemption under section 4cc annually on a form at the time and in a manner prescribed by the department. The report required under this subdivision must not include any remittance for tax and does not constitute a return or otherwise alleviate the person's obligations under section 6.

(e) All revenue lost to the state school aid fund as a result of the exclusion under section 2(1)(f)(xv).

(4) Money received and collected under this act for the local community stabilization share is not state funds, must not be credited to the state treasury, and must be transmitted to the authority for deposit in the treasury of the authority, to be disbursed by the authority only as authorized under the local community stabilization authority act, 2014 PA 86, MCL 123.1341 to 123.1362. The local community stabilization share is a local tax, not a state tax, and money received and collected for the local community stabilization share is money of the authority and not money of this state.

(5) Beginning October 1, 2016 and the first day of each calendar quarter thereafter, from the money received and collected under this act for the state share, an amount equal to the collections for the calendar quarter that is 2 calendar quarters immediately preceding the current calendar quarter of the tax imposed under this act at the additional rate of 2% approved by the electors on March 15, 1994 from the use, storage, or consumption of aviation fuel must be distributed as follows:

(a) An amount equal to 35% of the collections of the tax imposed at a rate of 2% on the use, storage, or consumption of aviation fuel must be deposited in the state aeronautics fund and must be expended, on appropriation, only for those purposes authorized in the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.1 to 259.208.

(b) An amount equal to 65% of the collections of the tax imposed at a rate of 2% on the use, storage, or consumption of aviation fuel must be deposited in the qualified airport fund and must be expended, on appropriation, only for those purposes authorized under section 35 of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.35.

(6) The department shall, on an annual basis, reconcile the amounts distributed under subsection (5) during each fiscal year with the amounts actually collected for a particular fiscal year and shall make any necessary adjustments, positive or negative, to the amounts to be distributed for the next successive calendar quarter that begins January 1. The state treasurer or the state treasurer's designee shall annually provide to the operator of each qualified airport a report of the reconciliation performed under this subsection. The reconciliation report is subject to the confidentiality restrictions and penalties provided in section 28(1)(f) of 1941 PA 122, MCL 205.28.

(7) Beginning with the fiscal year ending September 30, 2024 and each fiscal year thereafter, from the money received and collected under this act for the state share, $75,000,000.00 must be deposited into the local government reimbursement fund created in section 3a of the Michigan trust fund act, 2000 PA 489, MCL 12.253a.

(8) Until September 30, 2030, from the money received and collected under this act for the state share, an amount equal to the collections of the tax imposed at a rate of 6% under this act from the use, storage, or consumption of eligible back-to-school property, as that term is defined in section 14c, during the authorized time period described in section 14c(1) must be deposited in the back-to-school rebate fund created in section 25a of the general sales tax act, 1933 PA 167, MCL 205.75a.

(9) (8) As used in this section:

(a) "Aviation fuel" means fuel as that term is defined in section 4 of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.4.

(b) "Qualified airport" means that term as defined in section 109 of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.109.

(c) "Qualified airport fund" means the qualified airport fund created in section 34(2) of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.34.

(d) "State aeronautics fund" means the state aeronautics fund created in section 34(1) of the aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.34.

(e) "State school aid fund" means the state school aid fund established in section 11 of article IX of the state constitution of 1963.

Enacting section 1. This amendatory act does not take effect unless Senate Bill No. ____ (request no. S04183'25) or House Bill No. ____ (request no. H04183'25) of the 103rd Legislature is enacted into law.