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.




     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


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



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




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




     (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.