FIRST CONFERENCE REPORT

The Committee of Conference on the matters of difference between the two Houses concerning

House Bill No. 4539, entitled

A bill to amend 1933 PA 167, entitled "General sales tax act," by amending sections 2, 4, 6a, and 25 (MCL 205.52, 205.54, 205.56a, and 205.75), sections 2 and 4 as amended by 2004 PA 173, section 6a as amended by 2013 PA 1, and section 25 as amended by 2012 PA 226, and by adding section 2b.

Recommends:

First: That the Senate recede from the Substitute of the Senate as passed by the Senate.

Second: That the House and Senate agree to the Substitute of the House as passed by the House, amended to read as follows:

(attached)

Third: That the House and Senate agree to the title of the bill to read as follows:

A bill to amend 1933 PA 167, entitled "An act to provide for the raising of additional public revenue by prescribing certain specific taxes, fees, and charges to be paid to the state for the privilege of engaging in certain business activities; to provide, incident to the enforcement thereof, for the issuance of licenses to engage in such occupations; to provide for the ascertainment, assessment and collection thereof; to appropriate the proceeds thereof; and to prescribe penalties for violations of the provisions of this act," by amending sections 2, 4, 6a, and 25 (MCL 205.52, 205.54, 205.56a, and 205.75), sections 2 and 4 as amended

by 2004 PA 173, section 6a as amended by 2013 PA 1, and section 25 as amended by 2012 PA 226, and by adding section 4dd.

_______________________ ________________________

Jim Stamas Arlan B. Meekhof

_______________________ ________________________

Rob VerHeulen Mike Kowall

_______________________ ________________________

Marilyn Lane Jim Ananich

Conferees for the House Conferees for the Senate

SUBSTITUTE FOR

HOUSE BILL NO. 4539

A bill to amend 1933 PA 167, entitled

"General sales tax act,"

by amending sections 2, 4, 6a, and 25 (MCL 205.52, 205.54, 205.56a,

and 205.75), sections 2 and 4 as amended by 2004 PA 173, section 6a

as amended by 2013 PA 1, and section 25 as amended by 2012 PA 226,

and by adding section 4dd.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 2. (1) Except as provided in section 2a, there is levied

upon and there shall be collected from all persons engaged in the

business of making sales at retail, by which ownership of tangible

personal property is transferred for consideration, an annual tax

for the privilege of engaging in that business equal to 6% 7% of

the gross proceeds of the business, plus the penalty and interest

if applicable as provided by law, less deductions allowed by this

act.

(2) The tax under subsection (1) also applies to the

following:

(a) The transmission and distribution of electricity, whether

the electricity is purchased from the delivering utility or from

another provider, if the sale is made to the consumer or user of

the electricity for consumption or use rather than for resale.

(b) The sale of a prepaid telephone calling card or a prepaid

authorization number for telephone use, rather than for resale,

including the reauthorization of a prepaid telephone calling card

or a prepaid authorization number.

transfer of property, if title is retained as security for the

purchase but is intended to be transferred later.

(3) Any person engaged in the business of making sales at

retail who is at the same time engaged in some other kind of

business, occupation, or profession not taxable under this act

shall keep books to show separately the transactions used in

determining the tax levied by this act. If the person fails to keep

separate books, there shall be levied upon him or her the tax

provided for in subsection (1) equal to 6% 7% of the entire gross

proceeds of both or all of his or her businesses. The taxes levied

by this section are a personal obligation of the taxpayer.

(4) A meal provided free of charge or at a reduced rate to an

employee during work hours by a food service establishment licensed

by the Michigan department of agriculture for the convenience of

the employer is not considered transferred for consideration.

Sec. 4. (1) In computing the amount of tax levied under this

act for any month, a taxpayer not subject to section 6(2) may

deduct the amount provided by subdivision (a) or (b), whichever is

greater:

(a) If the tax that accrued to this state from the sales at

retail during the preceding month is remitted to the department on

or before the twelfth day of the month in which remittance is due,

0.75% of the tax due at a rate of 4% not more than 5% for the

preceding monthly period, but not to exceed $20,000.00 of the tax

due for that month. If the tax that accrued to this state from the

sales at retail during the preceding month is remitted to the

department after the twelfth day and on or before the twentieth day

of the month in which remittance is due, 0.50% of the tax due at a

rate of 4% not more than 5% for the preceding monthly period, but

not to exceed $15,000.00 of the tax due for that month.

(b) The tax at a rate of 4% not more than 5% due on $150.00 of

taxable gross proceeds for the preceding monthly period, or a

prorated portion of $150.00 of the taxable gross proceeds for the

preceding month if the taxpayer engaged in business for less than a

month.

(2) Beginning January 1, 1999, in computing the amount of tax

levied under this act for any month, a taxpayer who is subject to

section 6(2) may deduct from the amount of the tax paid 0.50% of

the tax due at a rate of ~~4%.~~not more than 5%.

(3) A deduction is not allowed under this section for payments

of taxes made to the department after the day the taxpayer is

required to pay, pursuant to section 6, the tax imposed by this

act.

(4) If, pursuant to section 6(4), the department prescribes

the filing of returns and the payment of the tax for periods in

excess of 1 month, a taxpayer is entitled to a deduction from the

tax collections remitted to the department for the extended payment

period that is equivalent to the deduction allowed under subsection

(1) or (2) for monthly periods.

(5) The department may prescribe the filing of estimated

returns and annual periodic reconciliations as necessary to carry

out the purposes of this section.

(6) A seller registered under the streamlined sales and use

tax agreement may claim a deduction under this section if provided

for in the streamlined sales and use tax administration act.

Sec. 4dd. Beginning October 1, 2015, the tax levied under this

act does not apply to the sale of gasoline or diesel fuel used to

operate a motor vehicle on the public roads or highways of this

state.

Sec. 6a. (1) Through March 31, 2013, at the time of purchase

or shipment from a refiner, pipeline terminal operator, or marine

terminal operator, a purchaser or receiver of gasoline shall prepay

a portion of the tax imposed by this act at the rate provided in

this section to the refiner, pipeline terminal operator, or marine

terminal operator for the purchase or receipt of gasoline. If the

purchase or receipt of gasoline is made outside this state for

shipment into and subsequent sale within this state, the purchaser

or receiver, other than a refiner, pipeline terminal operator, or

marine terminal operator, shall make the prepayment required by

this section directly to the department. Prepayments for gasoline

shall be made at a cents-per-gallon rate determined by the

department and shall be based on 6% of the statewide average retail

price of a gallon of self-serve unleaded regular gasoline as

determined and certified by the department rounded up to the

nearest 1/10 of 1 cent. A person that makes prepayments directly to

the department shall make those prepayments according to the

schedule in subsection (6).

(2) Beginning April 1, 2013 through October 1, 2015, at the

time of purchase or shipment from a refiner, pipeline terminal

operator, or marine terminal operator, a purchaser or receiver of

fuel shall prepay a portion of the tax imposed by this act at the

rates provided in this section to the refiner, pipeline terminal

operator, or marine terminal operator for the purchase or receipt

of fuel. If the purchase or receipt of fuel is made outside this

state for shipment into and subsequent sale within this state, the

purchaser or receiver, other than a refiner, pipeline terminal

operator, or marine terminal operator, shall make the prepayment

required by this section directly to the department. Prepayments

for gasoline shall be made at a cents-per-gallon rate determined by

the department and shall be based on 6% of the statewide average

retail price of a gallon of self-serve unleaded regular gasoline as

determined and certified by the department rounded up to the

nearest 1/10 of 1 cent. Prepayments for diesel fuel shall be made

at a cents-per-gallon rate determined by the department and shall

be based on 6% of the statewide average retail price of a gallon of

undyed No. 2 ultra-low sulfur diesel fuel as determined and

certified by the department rounded up to the nearest 1/10 of 1

cent. A person that makes prepayments directly to the department

shall make those prepayments according to the schedule in

subsection (6).

(3) Through March 31, 2013, the rate of prepayment applied

pursuant to subsection (1) shall be determined every 3 months by

the department unless the department certifies that the change in

the statewide average retail price of a gallon of self-serve

unleaded regular gasoline has been less than 10% since the

establishment of the rate of prepayment then in effect.

(4) Beginning April 1, 2013, the rates of prepayment applied

pursuant to subsection (2) shall be determined every month by the

department. Notwithstanding subsection (3), the department shall

publish notice of the rates of prepayment applicable to gasoline

and diesel fuel pursuant to subsection (2) not later than the tenth

day of the month immediately preceding the month in which the rate

is effective.

(5) A person subject to tax under this act that makes

prepayment to another person as required by this section for

gasoline may claim an estimated prepayment credit on its regular

monthly return filed pursuant to section 6. The credit shall be for

prepayments made during the month for which the return is required

and shall be based upon the difference between prepayments made in

the immediately preceding month and collections of prepaid tax

received from sales or transfers during the month for which the

return required under section 6 is made. A sale or transfer for

which collection of prepaid tax is due the taxpayer is subject to a

bad debt deduction under section 4i, whether or not the sale or

transfer is a sale at retail. The credit shall not be reduced

because of actual shrinkage. A taxpayer that does not, in the

ordinary course of business, sell gasoline in each month of the

year may, with the approval of the department, base the initial

prepayment deduction in each tax year on prepayments made in a

month other than the immediately preceding month. The difference in

actual prepayments shall be reconciled on the annual return in

accordance with procedures prescribed by the department.

(6) Notwithstanding the other provisions for the payment and

remitting of tax due under this act, a refiner, pipeline terminal

operator, or marine terminal operator shall account for and remit

to the department the prepayments received pursuant to this section

in accordance with the following schedule:

(a) On or before the twenty-fifth of each month, prepayments

received after the end of the preceding month and before the

sixteenth of the month in which the prepayments are made.

(b) On or before the tenth of each month, payments received

after the fifteenth and before the end of the preceding month.

(7) A refiner, pipeline terminal operator, or marine terminal

operator that fails to remit prepayments made by a purchaser or

receiver of fuel is subject to the penalties provided by 1941 PA

122, MCL 205.1 to 205.31.

(8) The refiner, pipeline terminal operator, or marine

terminal operator shall not receive a deduction under section 4 for

receiving and remitting prepayments from a purchaser or receiver

pursuant to this section.

(9) The purchaser or receiver of fuel that makes prepayments

is not subject to further liability for the amount of the

prepayment if the refiner, pipeline terminal operator, or marine

terminal operator fails to remit the prepayment.

(10) A person subject to tax under this act that makes

prepayment to another person as required by this section for diesel

fuel may claim an estimated prepayment credit on its regular

monthly return filed pursuant to section 6. The credit shall be for

prepayments made during the month for which the return is required

and shall be based upon the difference between the prepayments made

in the immediately preceding month and collections of prepaid tax

received from sales or transfers during the month for which the

return required under section 6 is made. A sale or transfer for

which collection of prepaid tax is due the taxpayer is subject to a

bad debt deduction under section 4i, whether or not the sale or

transfer is a sale at retail. The credit shall not be reduced

because of actual shrinkage. A taxpayer that does not, in the

ordinary course of business, sell diesel fuel in each month of the

year may, with the approval of the department, base the initial

prepayment deduction in each tax year on prepayments made in a

month other than the immediately preceding month. Estimated

prepayment credits claimed with the return due in April 2013 shall

be based on the taxpayer's retail sales of diesel fuel in March

2013. The difference in actual prepayments shall be reconciled on

the annual return in accordance with procedures prescribed by the

department. Repayment of the credit claimed on the return due in

April 2013 shall be made by the earlier of the date that the

taxpayer stops selling diesel fuel or October 15, 2013.

(11) As used in this section:

(a) "Blendstock" includes all of the following:

(i) Any petroleum product component of fuel, such as naphtha,

reformate, or toluene.

(ii) Any oxygenate that can be blended for use in a motor fuel.

(b) "Boat terminal transfer" means a dock, a tank, or

equipment contiguous to a dock or a tank, including equipment used

in the unloading of fuel from a ship and in transferring the fuel

to a tank pending wholesale bulk reshipment.

capable of use as a fuel or a component of a fuel in a motor

vehicle that is propelled by a diesel-powered engine or in a

diesel-powered train. Diesel fuel includes number 1 and number 2

fuel oils and mineral spirits. Diesel fuel also includes any

blendstock or additive that is sold for blending with diesel fuel

and any liquid prepared, advertised, offered for sale, sold for use

as, or used in the generation of power for the propulsion of a

diesel-powered engine, airplane, or marine vessel. An additive or

blendstock is presumed to be sold for blending unless a

certification is obtained for federal purposes that the substance

is for a use other than blending for diesel fuel. Diesel fuel does

not include dyed diesel fuel, kerosene, or an excluded liquid.

(d) "Dyed diesel fuel" means diesel fuel that is dyed in

accordance with internal revenue service rules or pursuant to any

other internal revenue service requirements, including any

invisible marker requirements.

(e) "Excluded liquid" means that term as defined in 26 CFR

48.4081-1.

(f) "Fuel" means gasoline and diesel fuel that is subject to

tax under this act, collectively, except when gasoline or diesel

fuel is referred to separately.

(g) "Gasoline" means and includes gasoline, alcohol, gasohol,

casing head or natural gasoline, benzol, benzine, naphtha,

methanol, any blendstock additive, or other product that is sold

for blending with gasoline or for use on the road, other than

products typically sold in containers of less than 5 gallons.

Gasoline also includes a liquid prepared, advertised, offered for

sale, sold for use as, or used in the generation of power for the

propulsion of a motor vehicle, airplane, or marine vessel,

including a product obtained by blending together any 1 or more

products of petroleum, with or without another product, and

regardless of the original character of the petroleum products

blended, if the product obtained by the blending is capable of use

in the generation of power for the propulsion of a motor vehicle,

airplane, or marine vessel. The blending of all of the above-named

products, regardless of their name or characteristics, shall

conclusively be presumed to have been done to produce fuel, unless

the product obtained by the blending is entirely incapable of use

as fuel. An additive or blendstock is presumed to be sold for

blending unless a certification is obtained for federal purposes

that the substance is for a use other than blending for gasoline.

Gasoline does not include diesel fuel, dyed diesel fuel, kerosene,

or an excluded liquid.

(h) "Kerosene" means all grades of kerosene, including, but

not limited to, the 2 grades of kerosene, No. 1-K and No. 2-K,

commonly known as K-1 kerosene and K-2 kerosene, respectively,

described in American society for testing and materials

specification D-3699, in effect on January 1, 1999, and kerosene-

type jet fuel described in American society for testing and

materials specification D-1655 and military specifications MIL-T-

5624r and MIL-T-83133d (grades jp-5 and jp-8), and any successor

internal revenue service rules or regulations, as the specification

for kerosene and kerosene-type jet fuel. Kerosene does not include

an excluded liquid.

(i) "Marine terminal operator" means a person that stores fuel

at a boat terminal transfer.

(j) "Pipeline terminal operator" means a person that stores

fuel in tanks and equipment used in receiving and storing fuel from

interstate and intrastate pipelines pending wholesale bulk

reshipment.

(k) "Purchase" or "shipment" does not include an exchange of

fuel or an exchange transaction between refiners, pipeline terminal

operators, or marine terminal operators.

(l) "Refiner" means a person that manufactures or produces fuel

by any process involving substantially more than the blending of

fuel.

Sec. 25. (1) All money received and collected under this act

shall be deposited by the department in the state treasury to the

credit of the general fund, except as otherwise provided in this

section.

(2) Fifteen percent of the collections of the tax imposed at a

rate of 4% not more than 5% shall be distributed to cities,

villages, and townships pursuant to the Glenn Steil state revenue

sharing act of 1971, 1971 PA 140, MCL 141.901 to 141.921.

(3) Sixty percent of the collections of the tax imposed at a

rate of 4% not more than 5% shall be deposited in the state school

aid fund established in section 11 of article IX of the state

constitution of 1963 and distributed as provided by law. In

addition, all of the collections of the tax imposed at the

additional rate of 2% approved by the electors March 15, 1994 shall

be deposited in the state school aid fund.

(4) Not less than 27.9% of 25% of the collections of the

general sales tax imposed at a rate of 4% not more than 5% directly

or indirectly on fuels sold to propel motor vehicles upon highways,

on the sale of motor vehicles, and on the sale of the parts and

accessories of motor vehicles by new and used car businesses, used

car businesses, accessory dealer businesses, and gasoline station

businesses as classified by the department of treasury shall be

deposited each year into the comprehensive transportation fund

created in section 10b of 1951 PA 51, MCL 247.660b.

(5) For the fiscal year ending September 30, 2013 only, an

amount equal to 18% of the collections of the tax imposed at a rate

of 4% not more than 5% under this act from the sale of motor fuel,

as that term is defined in section 4 of the motor fuel tax act,

2000 PA 403, MCL 207.1004, shall be distributed as follows:

(a) An amount sufficient to match available federal highway

funds shall be deposited into the state trunk line fund created in

section 11 of 1951 PA 51, MCL 247.661, for the purpose of matching

federal aid highway funds as those federal funds are made available

to this state, but not less than 39.1% subject to subdivision (c).

(b) After the distribution under subdivision (a), any

remaining balance, subject to subdivision (c), shall be distributed

as follows:

(i) 66% to the county road commissions of this state, which

distribution shall be administered under section 12 of 1951 PA 51,

MCL 247.662.

(ii) 34% to the cities and villages of this state, which

distribution shall be administered under section 13 of 1951 PA 51,

MCL 247.663.

$100,000,000.00.

~~(6) For the fiscal year ending September 30, 2013 only and~~

~~except as otherwise limited in this subsection after the~~

~~allocations and distributions are made pursuant to subsections (2)~~

~~and (3), an amount equal to the collections of the tax imposed at a~~

~~rate of 4% under this act from the sale at retail of aviation fuel~~

~~and aviation products shall be deposited in the state aeronautics~~

~~fund and shall 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. Not more than~~

~~$10,000,000.00 shall be deposited in the state aeronautics fund~~

~~under this subsection. As used in this subsection, "state~~

~~aeronautics fund" means the state aeronautics fund created in~~

~~section 34 of the aeronautics code of the state of Michigan, 1945~~

~~PA 327, MCL 259.34.~~

(6) ~~(7)~~ An amount equal to the collections of the tax imposed

at a rate of 4% not more than 5% under this act from the sale at

retail of computer software as defined in section 1a shall be

deposited in the Michigan health initiative fund created in section

5911 of the public health code, 1978 PA 368, MCL 333.5911, and

shall be considered in addition to, and is not intended as a

replacement for any other money appropriated to the department of

community health. The funds deposited in the Michigan health

initiative fund on an annual basis shall not be less than

$9,000,000.00 or more than $12,000,000.00.

(7) ~~(8)~~ The balance in the state general fund shall be

disbursed only on an appropriation or appropriations by the

legislature.

Enacting section 1. This amendatory act does not take effect

unless ____ House Joint Resolution ____

UU of the 97th Legislature becomes a part of

the state constitution of 1963 as provided in section 1 of article

XII of the state constitution of 1963.

Enacting section 2. This amendatory act does not take effect

unless all of the following bills of the 97th Legislature are

enacted into law:

(a) Senate Bill No. 80.

(b) Senate Bill No. 423.

(d) House Bill No. 5477.