HB-4951, As Passed Senate, September 28, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 4951

 

September 13, 2011, Introduced by Rep. Lyons and referred to the Committee on Tax Policy.

 

     A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 651 (MCL 206.651), as added by 2011 PA 38.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 651. As used in this chapter:

 

     (a) "Billing address" means the location indicated in the

 

books and records of the financial institution on the first day of

 

the tax year or on a later date in the tax year when the customer

 

relationship began as the address where any notice, statement, or

 

bill relating to a customer's account is mailed.

 

     (b) "Borrower is located in this state" or "credit card holder

 

is located in this state" means a borrower, other than a credit

 

card holder, that is engaged in a trade or business which maintains

 

its commercial domicile in this state, or a borrower that is not

 

engaged in a trade or business or a credit card holder whose


 

billing address is in this state.

 

     (c) "Commercial domicile" means the headquarters of the trade

 

or business, that is the place from which the trade or business is

 

principally managed and directed, or if a financial institution is

 

organized under the laws of a foreign country, of the Commonwealth

 

of Puerto Rico, or any territory or possession of the United

 

States, such financial institution's commercial domicile shall be

 

deemed for the purposes of this chapter to be the state of the

 

United States or the District of Columbia from which such financial

 

institution's trade or business in the United States is principally

 

managed and directed. It shall be presumed, subject to rebuttal,

 

that the location from which the financial institution's trade or

 

business is principally managed and directed is the state of the

 

United States or the District of Columbia to which the greatest

 

number of employees are regularly connected or out of which they

 

are working, irrespective of where the services of such employees

 

are performed, as of the last day of the tax year.

 

     (d) "Credit card" means a credit, travel, or entertainment

 

card.

 

     (e) "Credit card issuer's reimbursement fee" means the fee a

 

financial institution receives from a merchant's bank because 1 of

 

the persons to whom the financial institution has issued a credit

 

card has charged merchandise or services to the credit card.

 

     (f) "Financial institution" means any of the following:

 

     (i) A bank holding company, a national bank, a state chartered

 

bank, an office of thrift supervision chartered bank or thrift

 

institution, a savings and loan holding company other than a


House Bill No. 4951 as amended September 20, 2011

 

diversified savings and loan holding company as defined in 12 USC

 

1467a(a)(F), a [STATE CHARTERED BANK, A STATE CHARTERED SAVINGS BANK, A]

federally chartered savings association, or a

 

federally chartered farm credit system institution.

 

     (ii) Any entity, other than an entity subject to the tax

 

imposed under chapter 12, who is directly or indirectly owned by an

 

entity described in subparagraph (i) and is a member of the unitary

 

business group.

 

     (iii) A unitary business group of entities described in

 

subparagraph (i) or (ii), or both.

 

     (g) "Gross business" means the sum of the following less

 

transactions between those entities included in a unitary business

 

group:

 

     (i) Fees, commissions, or other compensation for financial

 

services.

 

     (ii) Net gains, not less than zero, from the sale of loans and

 

other intangibles.

 

     (iii) Net gains, not less than zero, from trading in stocks,

 

bonds, or other securities.

 

     (iv) Interest charged to customers for carrying debit balances

 

of margin accounts.

 

     (v) Interest and dividends received.

 

     (vi) Any other gross proceeds resulting from the operation as a

 

financial institution.

 

     (h) "Loan" means any extension of credit resulting from direct

 

negotiations between the financial institution and its customer, or

 

the purchase, in whole or in part, of such extension of credit from

 

another. Loans include participations, syndications, and leases


 

treated as loans for federal income tax purposes. Loans shall not

 

include properties treated as loans under section 595 of the

 

internal revenue code, futures or forward contracts, options,

 

notional principal contracts such as swaps, credit card

 

receivables, including purchased credit card relationships, non-

 

interest-bearing balances due from depository institutions, cash

 

items in the process of collection, federal funds sold, securities

 

purchased under agreements to resell, assets held in a trading

 

account, securities, interests in a real estate mortgage investment

 

conduit, or other mortgage-backed or asset-backed security, and

 

other similar items.

 

     (i) "Loan secured by real property" means that 50% or more of

 

the aggregate value of the collateral used to secure a loan or

 

other obligation, when valued at fair market value as of the time

 

the original loan or obligation was incurred, was real property.

 

     (j) "Merchant discount" means the fee or negotiated discount

 

charged to a merchant by the financial institution for the

 

privilege of participating in a program whereby a credit card is

 

accepted in payment for merchandise or services sold to the credit

 

card holder.

 

     (k) "Michigan obligations" means a bond, note, or other

 

obligation issued by a governmental unit described in section 3 of

 

the shared credit rating act, 1985 PA 227, MCL 141.1053.

 

     (l) "Participation" means an extension of credit in which an

 

undivided ownership interest is held on a pro rata basis in a

 

single loan or pool of loans and related collateral. In a loan

 

participation, the credit originator initially makes the loan and


 

then subsequently resells all or a portion of it to other lenders.

 

The participation may or may not be known to the borrower.

 

     (m) "Principal base of operations", with respect to

 

transportation property, means the place of more or less permanent

 

nature from which said property is regularly directed or

 

controlled. With respect to an employee, the principal base of

 

operations means the place of more or less permanent nature from

 

which the employee regularly does any of the following:

 

     (i) Starts his or her work and to which he or she customarily

 

returns in order to receive instructions from his or her employer.

 

     (ii) Communicates with his or her customers or other persons.

 

     (iii) Performs any other functions necessary to the exercise of

 

his or her trade or profession at some other point or points.

 

     (n) "Real property owned" and "tangible personal property

 

owned" mean real and tangible personal property respectively on

 

which the financial institution may claim depreciation for federal

 

income tax purposes or to which the financial institution holds

 

legal title and on which no other person may claim depreciation for

 

federal income tax purposes or could claim depreciation if subject

 

to federal income tax. Real and tangible personal properties do not

 

include coin, currency, or property acquired in lieu of or pursuant

 

to a foreclosure.

 

     (o) "Regular place of business" means an office at which the

 

financial institution carries on its business in a regular and

 

systematic manner and which is continuously maintained, occupied,

 

and used by employees of the financial institution. The financial

 

institution shall have the burden of proving that an investment


 

asset or activity or trading asset or activity was properly

 

assigned to a regular place of business outside of this state by

 

demonstrating that the day-to-day decisions regarding the asset or

 

activity occurred at a regular place of business outside this

 

state. Where the day-to-day decisions regarding an investment asset

 

or activity or trading asset or activity occur at more than 1

 

regular place of business and 1 such regular place of business is

 

in this state and 1 such regular place of business is outside this

 

state, such asset or activity shall be considered to be located at

 

the regular place of business of the financial institution where

 

the investment or trading policies or guidelines with respect to

 

the asset or activity are established. Unless the financial

 

institution demonstrates to the contrary, such policies and

 

guidelines shall be presumed to be established at the commercial

 

domicile of the financial institution.

 

     (p) "Rolling stock" means railroad freight or passenger cars,

 

locomotives, or other rail cars.

 

     (q) "Syndication" means an extension of credit in which 2 or

 

more persons finance the credit and each person is at risk only up

 

to a specified percentage of the total extension of the credit or

 

up to a specified dollar amount.

 

     (r) "Transportation property" means vehicles and vessels

 

capable of moving under their own power, such as aircraft, trains,

 

water vessels, and motor vehicles, as well as any equipment or

 

containers attached to such property, such as rolling stock,

 

barges, or trailers.

 

     (s) "United States obligations" means all obligations of the


 

United States exempt from taxation under 31 USC 3124(a) or exempt

 

under the United States constitution or any federal statute,

 

including the obligations of any instrumentality or agency of the

 

United States that are exempt from state or local taxation under

 

the United States constitution or any statute of the United States.

 

     Enacting section 1. This amendatory act takes effect January

 

1, 2012.