HOUSE BILL No. 4163 February 8, 2001, Introduced by Reps. Spade, Bovin, Sheltrown, Rich Brown, Wojno, Lipsey, Woodward, Dennis, Kolb, Anderson, Basham, Garcia, Pappageorge, Gieleghem, Schermesser, Rocca, Neumann, Vear and Lemmons and referred to the Committee on Tax Policy. A bill to amend 1933 PA 167, entitled "General sales tax act," by amending section 1 (MCL 205.51), as amended by 2000 PA 390. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. (1) As used in this act: 2 (a) "Person" means an individual, firm, partnership, joint 3 venture, association, social club, fraternal organization, munic- 4 ipal or private corporation whether organized for profit or not, 5 company, estate, trust, receiver, trustee, syndicate, the United 6 States, this state, county, or any other group or combination 7 acting as a unit, and includes the plural as well as the singular 8 number, unless the intention to give a more limited meaning is 9 disclosed by the context. 10 (b) "Sale at retail" means a transaction by which the 11 ownership of tangible personal property is transferred for 00801'01 CSC 2 1 consideration, if the transfer is made in the ordinary course of 2 the transferor's business and is made to the transferee for con- 3 sumption or use, or for any purpose other than for resale, or for 4 lease, if the rental receipts are taxable under the use tax act, 5 1937 PA 94, MCL 205.91 to 205.111, in the form of tangible per- 6 sonal property to a person licensed under this act, or for demon- 7 stration purposes or lending or leasing to a public or parochial 8 school offering a course in automobile driving. However, a vehi- 9 cle purchased by the school shall be certified for driver educa- 10 tion and shall not be reassigned for personal use of the school's 11 administrative personnel. For a dealer selling a new car or 12 truck, the exemption for demonstration purposes shall be deter- 13 mined by the number of new cars and trucks sold during the cur- 14 rent calendar year or the immediately preceding year without 15 regard to specific make or style in accordance with the following 16 schedule of 0 to 25, 2 units; 26 to 100, 7 units; 101 to 500, 20 17 units; 501 or more, 25 units; but not to exceed 25 cars and 18 trucks in a calendar year for demonstration purposes. 19 (c) "Sale at retail" includes a conditional sale, install- 20 ment lease sale, or other transfer of property if title is 21 retained as security for the purchase price but is intended to be 22 transferred later. 23 (d) "Sale at retail" includes the sale of electricity, natu- 24 ral or artificial gas, or steam, if the sale is made to the con- 25 sumer or user for consumption or use rather than for resale. 26 Beginning September 20, 1999, sale at retail also includes the 27 sale of the transmission and distribution of electricity, whether 00801'01 3 1 the electricity is purchased from the delivering utility or from 2 another provider, if the sale is made to the consumer or user of 3 the electricity for consumption or use rather than for resale. 4 Sale at retail also includes the sale of a prepaid telephone 5 calling card or a prepaid authorization number for telephone use, 6 rather than for resale, and also includes the reauthorization of 7 a prepaid telephone calling card or a prepaid authorization 8 number. Sale at retail does not include the sale of water 9 through water mains or the sale of water delivered in bulk tanks 10 in quantities of not less than 500 gallons. 11 (e) "Sale at retail" includes computer software offered for 12 general sale to the public or software modified or adapted to the 13 user's needs or equipment by the seller, only if the software is 14 available for sale from a seller of software on an as is basis or 15 as an end product without modification or adaptation. Sale at 16 retail does not include specific charges for technical support or 17 for adapting or modifying prewritten, standard, or canned com- 18 puter software programs to a purchaser's needs or equipment if 19 those charges are separately stated and identified. Sale at 20 retail does not include computer software originally designed for 21 the exclusive use and special needs of the purchaser. As used in 22 this subdivision, "computer software" means a set of statements 23 or instructions that when incorporated in a machine usable medium 24 is capable of causing a machine or device having information pro- 25 cessing capabilities to indicate, perform, or achieve a particu- 26 lar function, task, or result. 00801'01 4 1 (f) "Sale at retail" includes the sale of tangible personal 2 property by an industrial laundry under a sale, rental, or 3 service agreement with a term of at least 5 days. 4 (g) "Sale at retail" does not include an isolated transac- 5 tion by a person not licensed or required to be licensed under 6 this act, in which tangible personal property is offered for 7 sale, sold, transferred, and delivered by the owner. 8 (h) "Sale at retail" does not include a commercial advertis- 9 ing element if the commercial advertising element is used to 10 create or develop a print, radio, television, or other advertise- 11 ment, the commercial advertising element is discarded or returned 12 to the provider after the advertising message is completed, and 13 the commercial advertising element is custom developed by the 14 provider for the purchaser. As used in this subdivision, 15 "commercial advertising element" means a negative or positive 16 photographic image, an audiotape or videotape master, a layout, a 17 manuscript, writing of copy, a design, artwork, an illustration, 18 retouching, and mechanical or keyline instructions. Sale at 19 retail includes black and white or full color process separation 20 elements, an audiotape reproduction, or a videotape 21 reproduction. 22 (i) "Gross proceeds" means the amount received in money, 23 credits, subsidies, property, or other money's worth in consider- 24 ation of a sale at retail within this state, without a deduction 25 for the cost of the property sold, the cost of material used, the 26 cost of labor or service purchased, an amount paid for interest 27 or a discount, a tax paid on cigarettes or tobacco products at 00801'01 5 1 the time of purchase, a tax paid on beer or liquor at the time of 2 purchase or other expenses. Also, a deduction is not allowed for 3 losses. Gross proceeds do not include an amount received or 4 billed by the taxpayer for remittance to the employee as a gratu- 5 ity or tip, if the gratuity or tip is separately identified and 6 itemized on the guest check or billed to the customer. In a tax- 7 able sale at retail of a motor vehicle, if another motor vehicle 8 is used as part payment of the purchase price, the value of the 9 motor vehicle used as part payment of the purchase price shall be 10 that value agreed to by the parties to the sale as evidenced by 11 the signed statement executed pursuant to section 251 of the 12 Michigan vehicle code, 1949 PA 300, MCL 257.251. IF A MOTOR 13 VEHICLE IS USED AS PART PAYMENT IN A TAXABLE SALE AT RETAIL OF 14 ANOTHER MOTOR VEHICLE, THE GROSS PROCEEDS IS THE DIFFERENCE 15 BETWEEN THE AGREED-UPON VALUE OF THE MOTOR VEHICLE USED AS PART 16 PAYMENT OF THE PURCHASE PRICE AND THE FULL RETAIL PRICE OF THE 17 MOTOR VEHICLE BEING PURCHASED. A credit or refund for returned 18 goods or a refund less an allowance for use made for a motor 19 vehicle returned under 1986 PA 87, MCL 257.1401 to 257.1410, as 20 certified by the manufacturer on a form provided by the depart- 21 ment of treasury, may be deducted. 22 (j) "Business" includes an activity engaged in by a person 23 or caused to be engaged in by that person with the object of 24 gain, benefit, or advantage, either direct or indirect. 25 (k) "Tax year" or "taxable year" means the fiscal year of 26 the state or the taxpayer's fiscal year if permission is obtained 00801'01 6 1 by the taxpayer from the department to use the taxpayer's fiscal 2 year as the tax period instead. 3 (l) "Department" means the revenue division of the depart- 4 ment of treasury. 5 (m) "Taxpayer" means a person subject to a tax under this 6 act. 7 (n) "Tax" includes a tax, interest, or penalty levied under 8 this act. 9 (o) "Textiles" means goods that are made of or incorporate 10 woven or nonwoven fabric, including, but not limited to, cloth- 11 ing, shoes, hats, gloves, handkerchiefs, curtains, towels, 12 sheets, pillows, pillow cases, tablecloths, napkins, aprons, 13 linens, floor mops, floor mats, and thread. Textiles also 14 include materials used to repair or construct textiles, or other 15 goods used in the rental, sale, or cleaning of textiles. 16 (2) If the department determines that it is necessary for 17 the efficient administration of this act to regard an unlicensed 18 person, including a salesperson, representative, peddler, or can- 19 vasser as the agent of the dealer, distributor, supervisor, or 20 employer under whom the unlicensed person operates or from whom 21 the unlicensed person obtains the tangible personal property sold 22 by the unlicensed person, irrespective of whether the unlicensed 23 person is making sales on the unlicensed person's own behalf or 24 on behalf of the dealer, distributor, supervisor, or employer, 25 the department may so regard the unlicensed person and may regard 26 the dealer, distributor, supervisor, or employer as making sales 27 at retail at the retail price for the purposes of this act. 00801'01