HB-5246, As Passed Senate, December 17, 2003                                

SUBSTITUTE FOR

HOUSE BILL NO. 5246

                                                                             A bill to amend 1975 PA 228, entitled                                             

"Single business tax act,"                                                  

by amending section 38g (MCL 208.38g), as amended by 2002 PA                

726.                                                                        

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 38g. (1) Subject to the criteria under this section, an                

2   eligible taxpayer may claim a credit against the tax imposed by             

3   this act as determined under subsections (20) to (25); and                  

4   subject to the criteria under this section, a qualified taxpayer            

5   that has a preapproval letter issued after December 31, 1999 and            

6   before January 1, 2008, provided that the project is completed              

7   not more than 5 years after the preapproval letter for the                  

8   project is issued, or an assignee under subsection (17) or (18)             

9   may claim a credit that has been approved under subsection (2) or           

10  (3) against the tax imposed by this act equal to either of the              

1   following:                                                                  

2       (a) If the total of all credits for a project is                            

3   $1,000,000.00 or less, 10% of the cost of the qualified                     

4   taxpayer's eligible investment paid or accrued by the qualified             

5   taxpayer on an eligible property provided that the project does             

6   not exceed the amount stated in the preapproval letter.  If                 

7   eligible investment exceeds the amount of eligible investment in            

8   the preapproval letter for that project, the total of all credits           

9   for the project shall not exceed the total of all credits on the            

10  certificate of completion.                                                  

11      (b) If the total of all credits for a project is more than                  

12  $1,000,000.00 but $30,000,000.00 or less and, except as provided            

13  in subsection (5)(b), the project is located in a qualified local           

14  governmental unit, a percentage as determined by the Michigan               

15  economic growth authority not to exceed 10% of the cost of the              

16  qualified taxpayer's eligible investment as determined under                

17  subsection (8) paid or accrued by the qualified taxpayer on an              

18  eligible property.  If eligible investment exceeds the amount of            

19  eligible investment in the preapproval letter for that project,             

20  the total of all credits for the project shall not exceed the               

21  total of all credits on the certificate of completion.                      

22      (2) If the cost of a project will be for $10,000,000.00 or                  

23  less, a qualified taxpayer shall apply to the  department

24  Michigan economic growth authority for approval of the project              

25  under this subsection.  An application under this subsection                

26  shall state whether the project is a multiphase project.  The               

27  state treasurer or a designee of the state treasurer

1   chairperson of the Michigan economic growth authority or his or             

2   her designee is authorized to approve an application or project             

3   under this subsection.  Only the  state treasurer chairperson of           

4   the Michigan economic growth authority is authorized to deny an             

5   application or project under this subsection.  A project shall be           

6   approved or denied not more than 45 days after receipt of the               

7   application.  If the  state treasurer or the state treasurer's

8   chairperson of the Michigan economic growth authority or his or             

9   her designee does not approve or deny an application within 45              

10  days after the application is received by the  department

11  Michigan economic growth authority, the application is considered           

12  approved as written.  The total of all credits for all projects             

13  approved under this subsection shall not exceed $30,000,000.00 in           

14  any calendar year.  The criteria in subsection (6) shall be used            

15  when approving projects under this subsection.  When approving              

16  projects under this subsection, priority shall be given to                  

17  projects on a facility.  The total of all credits for an approved           

18  project under this subsection shall not exceed $1,000,000.00.  A            

19  taxpayer may apply under this subsection instead of subsection              

20  (3) for approval of a project that will be for more than                    

21  $10,000,000.00 but the total of all credits for that project                

22  shall not exceed $1,000,000.00.  If the  state treasurer or a               

23  designee of the state treasurer chairperson of the Michigan                

24  economic growth authority or his or her designee approves a                 

25  project under this subsection, the  state treasurer or a designee           

26  of the state treasurer chairperson of the Michigan economic                

27  growth authority or his or her designee shall issue a preapproval           

1   letter that states that the taxpayer is a qualified taxpayer; the           

2   maximum total eligible investment for the project on which                  

3   credits may be claimed and the maximum total of all credits for             

4   the project when the project is completed and a certificate of              

5   completion is issued; and the project number assigned by the                

6   department Michigan economic growth authority.  If a project is           

7   denied under this subsection, a taxpayer is not prohibited from             

8   subsequently applying under this subsection or subsection (3) for           

9   the same project or for another project.                                    

10      (3) If the cost of a project will be for more than                          

11  $10,000,000.00 and, except as provided in subsection (5)(b), the            

12  project is located in a qualified local governmental unit, a                

13  qualified taxpayer shall apply to the Michigan economic growth              

14  authority for approval of the project.  The Michigan economic               

15  growth authority shall approve or deny the project not more than            

16  65 days after receipt of the application.  A project under this             

17  subsection shall not be approved without the concurrence of the             

18  state treasurer.  If the Michigan economic growth authority does            

19  not approve or deny the application within 65 days after it                 

20  receives the application, the Michigan economic growth authority            

21  shall send the application to the state treasurer.  The state               

22  treasurer shall approve or deny the application within 5 days               

23  after receipt of the application.  If the state treasurer does              

24  not deny the application within the 5 days after receipt of the             

25  application, the application is considered approved.  The                   

26  Michigan economic growth authority shall approve a limited number           

27  of projects under this subsection during each calendar year as              

1   provided in subsection (5).  The Michigan economic growth                   

2   authority shall use the criteria in subsection (6) when approving           

3   projects under this subsection, when determining the total amount           

4   of eligible investment, and when determining the percentage of              

5   eligible investment for the project to be used to calculate a               

6   credit.  The total of all credits for an approved project under             

7   this subsection shall not exceed the amount designated in the               

8   preapproval letter for that project.  If the Michigan economic              

9   growth authority approves a project under this subsection, the              

10  Michigan economic growth authority shall issue a preapproval                

11  letter that states that the taxpayer is a qualified taxpayer; the           

12  percentage of eligible investment for the project determined by             

13  the Michigan economic growth authority for purposes of subsection           

14  (1)(b); the maximum total eligible investment for the project on            

15  which credits may be claimed and the maximum total of all credits           

16  for the project when the project is completed and a certificate             

17  of completion is issued; and the project number assigned by the             

18  Michigan economic growth authority.  The Michigan economic growth           

19  authority shall send a copy of the preapproval letter to the                

20  department.  If a project is denied under this subsection, a                

21  taxpayer is not prohibited from subsequently applying under this            

22  subsection or subsection (2) for the same project or for another            

23  project.                                                                    

24      (4) If the project is on property that is functionally                      

25  obsolete, the taxpayer shall include, with the application, an              

26  affidavit signed by a level 3 or level 4 assessor, that states              

27  that it is the assessor's expert opinion that the property is               

1   functionally obsolete and the underlying basis for that opinion.            

2       (5) The Michigan economic growth authority may approve not                  

3   more than 15 projects each calendar year under subsection (3),              

4   and the following limitations apply:                                        

5       (a) Of the 15 projects allowed under this subsection, the                   

6   total of all credits for each project may be more than                      

7   $10,000,000.00 but $30,000,000.00 or less for up to 3 projects.             

8       (b) Of the 15 projects allowed under this subsection, up to 3               

9   projects may be approved for projects that are not in a qualified           

10  local governmental unit if the property is a facility for which             

11  eligible activities are identified in a brownfield plan.  For               

12  purposes of this subdivision, a facility includes a building or             

13  complex of buildings that was used by a state or federal agency             

14  and that is no longer being used for the purpose for which it was           

15  used by the state or federal agency.                                        

16      (c) Of the 3 projects allowed under subdivision (a), 1 may be               

17  a project that also qualifies under subdivision (b).                        

18      (6) The Michigan economic growth authority shall review all                 

19  applications for projects under subsection (3) and, if an                   

20  application is approved, shall determine the maximum total of all           

21  credits for that project.  Before approving a project for which             

22  the total of all credits will be more than $10,000,000.00 but               

23  $30,000,000.00 or less only, the Michigan economic growth                   

24  authority shall determine that the project would not occur in               

25  this state without the tax credit offered under subsection (3),             

26  except that the Michigan economic growth authority may approve 1            

27  project the construction of which began after January 1, 2000 and           

1   before January 1, 2001 without determining that the eligible                

2   investment would not occur in this state without the tax credit             

3   offered under this section.  The Michigan economic growth                   

4   authority shall consider the following criteria to the extent               

5   reasonably applicable to the type of project proposed when                  

6   approving a project under subsection (3) and the  state treasurer           

7   or a designee of the state treasurer chairperson of the Michigan           

8   economic growth authority or his or her designee shall consider             

9   the following criteria to the extent reasonably applicable to the           

10  type of project proposed when approving a project under                     

11  subsection (2) or when considering an amendment to a project                

12  under subsection (31):                                                      

13      (a) The overall benefit to the public.                                      

14      (b) The extent of reuse of vacant buildings and redevelopment               

15  of blighted property.                                                       

16      (c) Creation of jobs.                                                       

17      (d) Whether the eligible property is in an area of high                     

18  unemployment.                                                               

19      (e) The level and extent of contamination alleviated by the                 

20  qualified taxpayer's eligible activities to the extent known to             

21  the qualified taxpayer.                                                     

22      (f) The level of private sector contribution.                               

23      (g) The cost gap that exists between the site and a similar                 

24  greenfield site as determined by the Michigan economic growth               

25  authority.                                                                  

26      (h) If the qualified taxpayer is moving from another location               

27  in this state, whether the move will create a brownfield.                   

1       (i) Whether the financial statements of the qualified                       

2   taxpayer indicate that it is financially sound and that the                 

3   project is economically sound.                                              

4       (j) Any other criteria that the Michigan economic growth                    

5   authority or the  state treasurer chairperson of the Michigan              

6   economic growth authority, as applicable, considers appropriate             

7   for the determination of eligibility under subsection (2) or                

8   (3).                                                                        

9       (7) A qualified taxpayer may apply for projects under                       

10  subsection (2) or (3) for eligible investment on more than 1                

11  eligible property in a tax year.  Each project approved and each            

12  project for which a certificate of completion is issued under               

13  this section shall be for eligible investment on 1 eligible                 

14  property.                                                                   

15      (8) When a project under subsection (2) or (3) is completed,                

16  the taxpayer shall submit documentation that the project is                 

17  completed, an accounting of the cost of the project, the eligible           

18  investment of each taxpayer if there is more than 1 taxpayer                

19  eligible for a credit for the project, and, if the taxpayer is              

20  not the owner or lessee of the eligible property on which the               

21  eligible investment was made at the time the project is                     

22  completed, that the taxpayer was the owner or lessee of that                

23  eligible property when all eligible investment of the taxpayer              

24  was made.  The  state treasurer or a designee of the state                  

25  treasurer chairperson of the Michigan economic growth authority            

26  or his or her designee, for projects approved under subsection              

27  (2), or the Michigan economic growth authority, for projects                

1   approved under subsection (3), shall verify that the project is             

2   completed.   For projects approved under subsection (3), the The

3   Michigan economic growth authority shall conduct an on-site                 

4   inspection as part of the verification process.  When the                   

5   completion of the project is verified, a certificate of                     

6   completion shall be issued to each qualified taxpayer that has              

7   made eligible investment on that eligible property.  The                    

8   certificate of completion shall state the total amount of all               

9   credits for the project and that total shall not exceed the                 

10  maximum total of all credits listed in the preapproval letter for           

11  the project under subsection (2) or (3) as applicable and shall             

12  state all of the following:                                                 

13      (a) That the taxpayer is a qualified taxpayer.                              

14      (b) The total cost of the project and the eligible investment               

15  of each qualified taxpayer.                                                 

16      (c) Each qualified taxpayer's credit amount.                                

17      (d) The qualified taxpayer's federal employer identification                

18  number or the Michigan treasury number assigned to the taxpayer.            

19      (e) The project number.                                                     

20      (f) For a project approved under subsection (3) for which the               

21  total of all credits is more than $10,000,000.00 but                        

22  $30,000,000.00 or less, the total of all credits and the schedule           

23  on which the annual credit amount shall be claimed by the                   

24  qualified taxpayer.                                                         

25      (g) For a multiphase project under subsection  (33) (32),                  

26  the amount of each credit assigned and the amount of all credits            

27  claimed in each tax year before the year in which the project is            

1   completed.                                                                  

2       (9) Except as otherwise provided in this section, qualified                 

3   taxpayers shall claim credits under subsections (2) and (3) in              

4   the tax year in which the certificate of completion is issued.              

5   For a project approved under subsection (3) for which the total             

6   of all credits is more than $10,000,000.00 but $30,000,000.00 or            

7   less, the qualified taxpayer shall claim 10% of its approved                

8   credit each year for 10 years.  A credit assigned based on a                

9   multiphase project shall be claimed in the year in which the                

10  credit is assigned.                                                         

11      (10) The cost of eligible investment for leased machinery,                  

12  equipment, or fixtures is the cost of that property had the                 

13  property been purchased minus the lessor's estimate, made at the            

14  time the lease is entered into, of the market value the property            

15  will have at the end of the lease.  A credit for property                   

16  described in this subsection is allowed only if the cost of that            

17  property had the property been purchased and the lessor's                   

18  estimate of the market value at the end of the lease are provided           

19  to  the department or  the Michigan economic growth authority.  ,           

20  as applicable.

21      (11) For credits under subsections (2) and (3), credits                     

22  claimed by a lessee of eligible property are subject to the total           

23  of all credits limitation under this section.                               

24      (12) Each qualified taxpayer and assignee under subsection                  

25  (17) or (18) that claims a credit under subsection (1)(a) or (b)            

26  shall attach a copy of the certificate of completion and, if the            

27  credit was assigned, a copy of the assignment form provided for             

1   under this section to the annual return filed under this act on             

2   which the credit under subsection (2) or (3) is claimed.  An                

3   assignee of a credit based on a multiphase project shall attach a           

4   copy of the assignment form provided for under this section and             

5   the component completion certificate provided for in                        

6   subsection (32) to the annual return filed under this act on                

7   which the credit is claimed but is not required to file a copy of           

8   a certificate of completion.                                                

9       (13) Except as otherwise provided in this subsection or                     

10  subsection (15), (17), (19), or (32), a credit under subsection             

11  (2) or (3) shall be claimed in the tax year in which the                    

12  certificate of completion is issued to the qualified taxpayer.              

13  For a project described in subsection (8)(f) for which a schedule           

14  for claiming annual credit amounts is designated on the                     

15  certificate of completion by the Michigan economic growth                   

16  authority, the annual credit amount shall be claimed in the tax             

17  year specified on the certificate of completion.                            

18      (14) The credits approved under this section shall be                       

19  calculated after application of all other credits allowed under             

20  this act.  The credits under subsections (2) and (3) shall be               

21  calculated before the calculation of credits under subsections              

22  (20) to (25) and before the credits under sections 37c and 37d.             

23      (15) If the credit allowed under subsection (2) or (3) for                  

24  the tax year and any unused carryforward of the credit allowed              

25  under subsection (2) or (3) exceed the qualified taxpayer's or              

26  assignee's tax liability for the tax year, that portion that                

27  exceeds the tax liability for the tax year shall not be refunded            

1   but may be carried forward to offset tax liability in subsequent            

2   tax years for 10 years or until used up, whichever occurs first.            

3   Except as otherwise provided in this subsection, the maximum time           

4   allowed under the carryforward provisions under this subsection             

5   begins with the tax year in which the certificate of completion             

6   is issued to the qualified taxpayer.  If the qualified taxpayer             

7   assigns all or any portion of its credit approved under                     

8   subsection (2) or (3), the maximum time allowed under the                   

9   carryforward provisions for an assignee begins to run with the              

10  tax year in which the assignment is made and the assignee first             

11  claims a credit, which shall be the same tax year.  The maximum             

12  time allowed under the carryforward provisions for an annual                

13  credit amount for a credit allowed under subsection (3) begins to           

14  run in the tax year for which the annual credit amount is                   

15  designated on the certificate of completion issued under this               

16  section.                                                                    

17      (16) If a project or credit under subsection (2) or (3) is                  

18  for the addition of personal property, if the cost of that                  

19  personal property is used to calculate a credit under subsection            

20  (2) or (3), and if the personal property is sold or disposed of             

21  or transferred from eligible property to any other location, the            

22  qualified taxpayer that sold, disposed of, or transferred the               

23  personal property shall add the same percentage as determined               

24  pursuant to subsection (1) of the federal basis of the personal             

25  property used for determining gain or loss as of the date of the            

26  sale, disposition, or transfer to the qualified taxpayer's tax              

27  liability after application of all credits under this act for the           

1   tax year in which the sale, disposition, or transfer occurs.  If            

2   a qualified taxpayer has an unused carryforward of a credit under           

3   subsection (2) or (3), the amount otherwise added under this                

4   subsection to the qualified taxpayer's tax liability may instead            

5   be used to reduce the qualified taxpayer's carryforward under               

6   subsection (15).                                                            

7       (17) For credits under subsections (2) and (3) and except as                

8   otherwise provided in this subsection, if a qualified taxpayer              

9   pays or accrues eligible investment on or to an eligible property           

10  that is leased for a minimum term of 10 years or sold to another            

11  taxpayer for use in a business activity, the qualified taxpayer             

12  may assign all or a portion of the credit based on that eligible            

13  investment to the lessee or purchaser of that eligible property.            

14  A credit assignment under this subsection shall only be made to a           

15  taxpayer that when the assignment is complete will be a qualified           

16  taxpayer.  All credit assignments under this subsection are                 

17  irrevocable and, except for a credit based on a multiphase                  

18  project, shall be made in the tax year in which the certificate             

19  of completion is issued, unless the assignee is an unknown                  

20  lessee.  If a qualified taxpayer wishes to assign all or a                  

21  portion of its credit to a lessee but the lessee is unknown in              

22  the tax year in which the certificate of completion is issued,              

23  the qualified taxpayer may delay claiming and assigning the                 

24  credit until the first tax year in which the lessee is known.  A            

25  qualified taxpayer may claim a portion of a credit and assign the           

26  remaining credit amount.  Except as otherwise provided in this              

27  subsection, if the qualified taxpayer both claims and assigns               

1   portions of the credit, the qualified taxpayer shall claim the              

2   portion it claims in the tax year in which the certificate of               

3   completion is issued or for a credit assigned and claimed for a             

4   multiphase project before a certificate of completion is issued,            

5   the taxpayer shall claim the credit in the year in which the                

6   credit is assigned.  If a qualified taxpayer assigns all or a               

7   portion of the credit and the eligible property is leased to more           

8   than 1 taxpayer, the qualified taxpayer shall determine the                 

9   amount of credit assigned to each lessee.  A lessee shall not               

10  subsequently assign a credit or any portion of a credit assigned            

11  under this subsection.  A purchaser may subsequently assign a               

12  credit or any portion of a credit assigned to the purchaser under           

13  this subsection to a lessee of the eligible property.  The credit           

14  assignment under this subsection shall be made on a form                    

15  prescribed by the  department Michigan economic growth                     

16  authority.  The qualified taxpayer shall send a copy of the                 

17  completed assignment form to the  department Michigan economic             

18  growth authority in the tax year in which the assignment is                 

19  made.  The assignee shall attach a copy of the completed                    

20  assignment form to its annual return required to be filed under             

21  this act, for the tax year in which the assignment is made and              

22  the assignee first claims a credit, which shall be the same tax             

23  year.  In addition to all other procedures under this subsection,           

24  the following apply if the total of all credits for a project is            

25  more than $10,000,000.00 but $30,000,000.00 or less:                        

26      (a) The credit shall be assigned based on the schedule                      

27  contained in the certificate of completion.                                 

1       (b) If the qualified taxpayer assigns all or a portion of the               

2   credit amount, the qualified taxpayer shall assign the annual               

3   credit amount for each tax year separately.                                 

4       (c) More than 1 annual credit amount may be assigned to any 1               

5   assignee and the qualified taxpayer may assign all or a portion             

6   of each annual credit amount to any assignee.                               

7       (d) The qualified taxpayer shall not assign more than the                   

8   annual credit amount for each tax year.                                     

9       (18) If a qualified taxpayer is a partnership, limited                      

10  liability company, or subchapter S corporation, the qualified               

11  taxpayer may assign all or a portion of a credit allowed under              

12  subsection (2) or (3) to its partners, members, or shareholders,            

13  based on their proportionate share of ownership of the                      

14  partnership, limited liability company, or subchapter S                     

15  corporation or based on an alternative method approved by the               

16  department Michigan economic growth authority.  A credit                  

17  assignment under this subsection is irrevocable and, except for a           

18  credit assignment based on a multiphase project, shall be made in           

19  the tax year in which a certificate of completion is issued.  A             

20  qualified taxpayer may claim a portion of a credit and assign the           

21  remaining credit amount.  If the qualified taxpayer both claims             

22  and assigns portions of the credit, the qualified taxpayer shall            

23  claim the portion it claims in the tax year in which a                      

24  certificate of completion is issued.  A partner, member, or                 

25  shareholder that is an assignee shall not subsequently assign a             

26  credit or any portion of a credit assigned under this                       

27  subsection.  The credit assignment under this subsection shall be           

1   made on a form prescribed by the  department Michigan economic             

2   growth authority.  The qualified taxpayer shall send a copy of              

3   the completed assignment form to the  department Michigan                  

4   economic growth authority in the tax year in which the assignment           

5   is made.  A partner, member, or shareholder who is an assignee              

6   shall attach a copy of the completed assignment form to its                 

7   annual return required under this act, for the tax year in which            

8   the assignment is made and the assignee first claims a credit,              

9   which shall be the same tax year.  In addition to all other                 

10  procedures under this subsection, the following apply if the                

11  total of all credits for a project is more than $10,000,000.00              

12  but $30,000,000.00 or less:                                                 

13      (a) The credit shall be assigned based on the schedule                      

14  contained in the certificate of completion.                                 

15      (b) If the qualified taxpayer assigns all or a portion of the               

16  credit amount, the qualified taxpayer shall assign the annual               

17  credit amount for each tax year separately.                                 

18      (c) More than 1 annual credit amount may be assigned to any 1               

19  assignee and the qualified taxpayer may assign all or a portion             

20  of each annual credit amount to any assignee.                               

21      (d) The qualified taxpayer shall not assign more than the                   

22  annual credit amount for each tax year.                                     

23      (19) A qualified taxpayer or assignee under subsection (17)                 

24  or (18) shall not claim a credit under subsection (1)(a) or (b)             

25  based on eligible investment on which a credit claimed under                

26  section 38d was based.                                                      

27      (20) In addition to the other credits allowed under this                    

1   section and sections 37c and 37d, for tax years that begin after            

2   December 31, 1999 and for a period of time not to exceed 20 years           

3   as determined by the Michigan economic growth authority, an                 

4   eligible taxpayer may credit against the tax imposed by section             

5   31 the amount certified each year by the Michigan economic growth           

6   authority that is 1 of the following:                                       

7       (a) For an eligible business under section 8(5)(a) of the                   

8   Michigan economic growth authority act, 1995 PA 24, MCL 207.808,            

9   an amount that is not more than 50% of 1 or both of the following           

10  as determined by the Michigan economic growth authority:                    

11                                                                               (i) An amount determined under the Michigan economic growth                         

12  authority act, 1995 PA 24, MCL 207.801 to 207.810, that does not            

13  exceed the payroll of the eligible taxpayer attributable to                 

14  employees who perform retained jobs multiplied by the tax rate              

15  for the tax year.                                                           

16      (ii) The tax liability attributable to the eligible                          

17  taxpayer's business activity multiplied by a fraction the                   

18  numerator of which is the ratio of the value of new capital                 

19  investment to all of the taxpayer's property located in this                

20  state plus the ratio of the taxpayer's payroll attributable to              

21  retained jobs to all of the taxpayer's payroll in this state and            

22  the denominator of which is 2.                                              

23      (b) For an eligible business under section 8(5)(b) of the                   

24  Michigan economic growth authority act, 1995 PA 24, MCL 207.808,            

25  an amount that is not more than 1 or both of the following as               

26  determined by the Michigan economic growth authority:                       

27                                                                               (i) An amount determined under the Michigan economic growth                         

1   authority act, 1995 PA 24, MCL 207.801 to 207.810, that does not            

2   exceed the payroll of the eligible taxpayer attributable to                 

3   employees who perform retained jobs multiplied by the tax rate              

4   for the tax year.                                                           

5       (ii) The tax liability attributable to eligible taxpayer's                   

6   business activity multiplied by a fraction the numerator of which           

7   is the ratio of the value of capital investment to all of the               

8   taxpayer's property located in this state plus the ratio of the             

9   taxpayer's payroll attributable to retained jobs to all of the              

10  taxpayer's payroll in this state and the denominator of which is            

11  2.                                                                          

12      (21) An eligible taxpayer shall not claim a credit under                    

13  subsection (20) unless the Michigan economic growth authority has           

14  issued a certificate under section 9 of the Michigan economic               

15  growth authority act, 1995 PA 24, MCL 207.809, to the taxpayer.             

16  The eligible taxpayer shall attach the certificate to the return            

17  filed under this act on which a credit under subsection (20) is             

18  claimed.                                                                    

19      (22) An affiliated group as defined in this act, a controlled               

20  group of corporations as defined in section 1563 of the internal            

21  revenue code and further described in 26  C.F.R. CFR 1.414(b)-1            

22  and 1.414(c)-1 to 1.414(c)-5, or an entity under common control             

23  as defined by the internal revenue code shall claim only 1 credit           

24  under subsection (20) for each tax year based on each written               

25  agreement whether or not a combined or consolidated return is               

26  filed.                                                                      

27      (23) A credit shall not be claimed by a taxpayer under                      

House Bill No. 5246 (H-2) as amended December 10, 2003

1   subsection (20) if the eligible taxpayer's initial certification            

2   under section 9 of the Michigan economic growth authority act,              

3   1995 PA 24, MCL 207.809, is issued after December 31,  2003

4   2009.  [If the Michigan economic growth authority or a designee of the

5   Michigan economic growth authority requests that a taxpayer who claims

6   the credit under subsection (20) get a statement prepared by a

7   certified public accountant verifying that the actual number of new

8   jobs created is the same number of new jobs used to calculate the credit

9   under subsection (20), the taxpayer shall get the statement and attach

10  that statement to its annual return under this act on which the credit under subsection (20) is claimed.]

11      (24) If the credit allowed under subsection (20)(a)(ii) or                   

12  (b)(ii) for the tax year and any unused carryforward of the                  

13  credit allowed by subsection (20)(a)(ii) or (b)(ii) exceed the                

14  taxpayer's tax liability for the tax year, that portion that                

15  exceeds the tax liability for the tax year shall not be refunded            

16  but may be carried forward to offset tax liability in subsequent            

17  tax years for 10 years or until used up, whichever occurs first.            

18      (25) If the credit allowed under subsection (20)(a)(i) or                   

19  (b)(i) exceeds the tax liability of the eligible taxpayer for the           

20  tax year, the excess shall be refunded to the eligible taxpayer.            

21      (26) An eligible taxpayer that claims a credit under                        

22  subsection (1)(a) or (b) is not prohibited from claiming a credit           

23  under subsection (20).  However, the eligible taxpayer shall not            

24  claim a credit under both subsections (1)(a) or (b) and (20)                

25  based on the same costs.                                                    

26      (27) Eligible investment attributable or related to the                     

27  operation of a professional sports stadium, and eligible                    

1   investment that is associated or affiliated with the operation of           

2   a professional sports stadium, including, but not limited to, the           

3   operation of a parking lot or retail store, shall not be used as            

4   a basis for a credit under subsection (2) or (3).  Professional             

5   sports stadium does not include a professional sports stadium               

6   that will no longer be used by a professional sports team on and            

7   after the date that an application related to that professional             

8   sports stadium is filed under subsection (2) or (3).                        

9       (28) Eligible investment attributable or related to the                     

10  operation of a casino, and eligible investment that is associated           

11  or affiliated with the operation of a casino, including, but not            

12  limited to, the operation of a parking lot, hotel, motel, or                

13  retail store, shall not be used as a basis for a credit under               

14  subsection (2) or (3).  As used in this subsection, "casino"                

15  means a casino regulated by this state pursuant to the Michigan             

16  gaming control and revenue act, the Initiated Law of 1996,                  

17  MCL 432.201 to 432.226.                                                     

18      (29) Eligible investment attributable or related to the                     

19  construction of a new landfill or the expansion of an existing              

20  landfill regulated under part 115 of the natural resources and              

21  environmental protection act, 1994 PA 451, MCL 324.11501 to                 

22  324.11550, shall not be used as a basis for a credit under                  

23  subsection (2) or (3).                                                      

24      (30) The  department Michigan economic growth authority

25  annually shall prepare and submit to the house of representatives           

26  and senate committees responsible for tax policy and economic               

27  development issues a report on the credits under subsection (2).            

1   The report shall include, but is not limited to, all of the                 

2   following:                                                                  

3       (a) A listing of the projects under subsection (2) that were                

4   approved in the calendar year.                                              

5       (b) The total amount of eligible investment for projects                    

6   approved under subsection (2) in the calendar year.                         

7       (31) If, after a taxpayer's project has been approved and the               

8   taxpayer has received a preapproval letter but before the project           

9   is completed, the taxpayer determines that the project cannot be            

10  completed as preapproved, the taxpayer may petition  the                    

11  department for projects approved under subsection (2) or  the               

12  Michigan economic growth authority  for projects approved under             

13  subsection (3)  to amend the project.  The total of eligible                

14  investment for the project as amended shall not exceed the amount           

15  allowed in the preapproval letter for that project.                         

16      (32) A project under subsection (2) may be a multiphase                     

17  project but only if the project is an industrial or manufacturing           

18  project.  If a project is a multiphase project, when each                   

19  component of the multiphase project is completed, the taxpayer              

20  shall submit documentation that the component is complete, an               

21  accounting of the cost of the component, and the eligible                   

22  investment for the component of each taxpayer eligible for a                

23  credit for the project of which the component is a part to the              

24  state treasurer Michigan economic growth authority or the                 

25  designee of the  state treasurer Michigan economic growth                  

26  authority, who shall verify that the component is complete.  When           

27  the completion of the component is verified, a component                    

1   completion certificate shall be issued to the qualified taxpayer            

2   which shall state that the taxpayer is a qualified taxpayer, the            

3   credit amount for the component, the qualified taxpayer's federal           

4   employer identification number or the Michigan treasury number              

5   assigned to the taxpayer, and the project number.  The taxpayer             

6   may assign all or part of the credit for a multiphase project as            

7   provided in this section after a component completion certificate           

8   for a component is issued.  The qualified taxpayer may transfer             

9   ownership of or lease the completed component and assign a                  

10  proportionate share of the credit for the entire project to the             

11  qualified taxpayer that is the new owner or lessee.  A multiphase           

12  project shall not be divided into more than 3 components.  A                

13  component is considered to be completed when a certificate of               

14  occupancy has been issued by the local municipality in which the            

15  project is located for all of the buildings or facilities that              

16  comprise the completed component and a component completion                 

17  certificate is issued.  A credit assigned based on a multiphase             

18  project shall be claimed by the assignee in the tax year in which           

19  the assignment is made.  The total of all credits for a                     

20  multiphase project shall not exceed the amount stated in the                

21  preapproval letter for the project under subsection (1)(a).  If             

22  all components of a multiphase project are not completed by 10              

23  years after the date on which the preapproval letter for the                

24  project was issued, the qualified taxpayer that received the                

25  preapproval letter for the project shall pay to the state                   

26  treasurer, as a penalty, an amount equal to the sum of all                  

27  credits claimed and assigned for all components of the multiphase           

1   project and no credits based on that multiphase project shall be            

2   claimed after that date by the qualified taxpayer or any assignee           

3   of the qualified taxpayer.  The penalty under this subsection is            

4   subject to interest on the amount of the credit claimed or                  

5   assigned determined individually for each component at the rate             

6   in section 23(2) of 1941 PA 122, MCL 205.23, beginning on the               

7   date that the credit for that component was claimed or assigned.            

8   As used in this subsection, "proportionate share" means the same            

9   percentage of the total of all credits for the project that the             

10  qualified investment for the completed component is of the total            

11  qualified investment stated in the preapproval letter for the               

12  entire project.                                                             

13      (33) As used in this section:                                               

14      (a) "Annual credit amount" means the maximum amount that a                  

15  qualified taxpayer is eligible to claim each tax year for a                 

16  project for which the total of all credits is more than                     

17  $10,000,000.00 but $30,000,000.00 or less, which shall be 10% of            

18  the qualified taxpayer's credit amount approved under subsection            

19  (3).                                                                        

20      (b) "Authority" means a brownfield redevelopment authority                  

21  created under the brownfield redevelopment financing act, 1996              

22  PA 381, MCL 125.2651 to 125.2672.                                           

23      (c) "Authorized business", "full-time job", "new capital                    

24  investment", "qualified high-technology business", "retained                

25  jobs", and "written agreement" mean those terms as defined in the           

26  Michigan economic growth authority act, 1995 PA 24, MCL 207.801             

27  to 207.810.                                                                 

1       (d) "Blighted", "brownfield plan", "eligible activities",                   

2   "eligible property", "facility", "functionally obsolete", and               

3   "response activity" mean those terms as defined in the brownfield           

4   redevelopment financing act, 1996 PA 381, MCL 125.2651 to                   

5   125.2672.                                                                   

6       (e) "Eligible investment" means demolition, construction,                   

7   restoration, alteration, renovation, or improvement of buildings            

8   or site improvements on eligible property and the addition of               

9   machinery, equipment, and fixtures to eligible property after the           

10  date that eligible activities on that eligible property have                

11  started pursuant to a brownfield plan under the brownfield                  

12  redevelopment financing act, 1996 PA 381, MCL 125.2651 to                   

13  125.2672, and after the date that the preapproval letter is                 

14  issued, except that the date that the preapproval letter is                 

15  issued is not a limitation for 1 project the construction of                

16  which began after January 1, 2000 and before January 1, 2001                

17  without the Michigan economic growth authority determining that             

18  the project would not occur in this state without the tax credit            

19  offered under this section as provided in subsection (7), if the            

20  costs of the eligible investment are not otherwise reimbursed to            

21  the taxpayer or paid for on behalf of the taxpayer from any                 

22  source other than the taxpayer.  The addition of leased                     

23  machinery, equipment, or fixtures to eligible property by a                 

24  lessee of the machinery, equipment, or fixtures is eligible                 

25  investment if the lease of the machinery, equipment, or fixtures            

26  has a minimum term of 10 years or is for the expected useful life           

27  of the machinery, equipment, or fixtures, and if the owner of the           

1   machinery, equipment, or fixtures is not the qualified taxpayer             

2   with regard to that machinery, equipment, or fixtures.                      

3       (f) "Eligible taxpayer" means an eligible business that meets               

4   the criteria under section 8(5) of the Michigan economic growth             

5   authority act, 1995 PA 24, MCL 207.808.                                     

6       (g) "Michigan economic growth authority" means the Michigan                 

7   economic growth authority created in the Michigan economic growth           

8   authority act, 1995 PA 24, MCL 207.801 to 207.810.                          

9       (h) "Multiphase project" means a project for which the total                

10  of all credits is $1,000,000.00 or less for a project approved              

11  under subsection (2) that has more than 1 component, each of                

12  which can be completed separately.                                          

13      (i) "Payroll" and "tax rate" mean those terms as defined in                 

14  section 37c.                                                                

15      (j) "Personal property" means that term as defined in section               

16  8 of the general property tax act, 1893 PA 206, MCL 211.8, except           

17  that personal property does not include either of the following:            

18                                                                               (i) Personal property described in section 8(h), (i), or (j)                        

19  of the general property tax act, 1893 PA 206, MCL 211.8.                    

20      (ii) Buildings described in section 14(6) of the general                     

21  property tax act, 1893 PA 206, MCL 211.14.                                  

22      (k) "Project" means the total of all eligible investment on                 

23  an eligible property or, for purposes of subsection (5)(b), all             

24  eligible investment on property not in a qualified local                    

25  governmental unit that is a facility.                                       

26                                                                               (l) "Qualified local governmental unit" means that term as                          

27  defined in the obsolete property rehabilitation act, 2000 PA 146,           

1   MCL 125.2781 to 125.2797.                                                   

2       (m) "Qualified taxpayer" means a taxpayer that meets both of                

3   the following criteria:                                                     

4                                                                                (i) Owns or leases eligible property.                                               

5       (ii) Certifies that, except as otherwise provided in this                    

6   subparagraph, the department of environmental quality has not               

7   sued or issued a unilateral order to the taxpayer pursuant to               

8   part 201 of the natural resources and environmental protection              

9   act, 1994 PA 451, MCL 324.20101 to 324.20142, to compel response            

10  activity on or to the eligible property, or expended any state              

11  funds for response activity on or to the eligible property and              

12  demanded reimbursement for those expenditures from the qualified            

13  taxpayer.  However, if the taxpayer has completed all response              

14  activity required by part 201 of the natural resources and                  

15  environmental protection act, 1994 PA 451, MCL 324.20101 to                 

16  324.20142, is in compliance with any deed restriction or                    

17  administrative or judicial order related to the required response           

18  activity, and has reimbursed the state for all costs incurred by            

19  the state related to the required response activity, the taxpayer           

20  meets the criteria under this subparagraph.                                 

21      (n) "Tax liability attributable to authorized business                      

22  activity" means the tax liability imposed by this act after the             

23  calculation of credits provided in sections 36, 37, and 39.                 

24      Enacting section 1.  This amendatory act does not take                      

25  effect unless House Bill No. 5255 of the 92nd Legislature is                

26  enacted into law.