HB-4951, As Passed Senate, September 28, 2011
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
(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
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
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
(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
(i) Fees, commissions, or other compensation for financial
(ii) Net gains, not less than zero, from the sale of loans and
(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
(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
(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