March 15, 2006, Introduced by Rep. Caswell and referred to the Committee on Tax Policy.
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending sections 2 and 3a (MCL 205.92 and 205.93a), as amended
by 2004 PA 172.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Person" means an individual, firm, partnership, joint
venture, association, social club, fraternal organization,
municipal or private corporation whether or not organized for
profit, company, limited liability company, estate, trust,
receiver, trustee, syndicate, the United States, this state,
county, or any other group or combination acting as a unit, and the
plural as well as the singular number, unless the intention to give
a more limited meaning is disclosed by the context.
(b) "Use" means the exercise of a right or power over tangible
personal property incident to the ownership of that property
including transfer of the property in a transaction where
possession is given.
(c) "Storage" means a keeping or retention of property in this
state for any purpose after the property loses its interstate
character.
(d) "Seller" means the person from whom a purchase is made and
includes every person selling tangible personal property or
services for storage, use, or other consumption in this state. If,
in the opinion of the department, it is necessary for the efficient
administration of this act to regard a salesperson, representative,
peddler, or canvasser as the agent of a dealer, distributor,
supervisor, or employer under whom the person operates or from whom
he or she obtains tangible personal property or services sold by
him or her for storage, use, or other consumption in this state,
irrespective of whether or not he or she is making the sales on his
or her own behalf or on behalf of the dealer, distributor,
supervisor, or employer, the department may so consider him or her,
and may consider the dealer, distributor, supervisor, or employer
as the seller for the purpose of this act.
(e) "Purchase" means to acquire for a consideration, whether
the acquisition is effected by a transfer of title, of possession,
or of both, or a license to use or consume; whether the transfer is
absolute or conditional, and by whatever means the transfer is
effected; and whether consideration is a price or rental in money,
or by way of exchange or barter.
(f) "Purchase price" or "price" means the total amount of
consideration paid by the consumer to the seller, including cash,
credit, property, and services, for which tangible personal
property or services are sold, leased, or rented, valued in money,
whether received in money or otherwise, and applies to the measure
subject to use tax. Purchase price includes the following
subparagraphs (i) through (vi) and excludes subparagraphs (vii)
through (viii):
(i) Seller's cost of the property sold.
(ii) Cost of materials used, labor or service cost, interest,
losses, costs of transportation to the seller, taxes imposed on the
seller other than taxes imposed by this act, and any other expense
of the seller.
(iii) Charges by the seller for any services necessary to
complete the sale, other than the following:
(A) An amount received or billed by the taxpayer for
remittance to the employee as a gratuity or tip, if the gratuity or
tip is separately identified and itemized on the guest check or
billed to the customer.
(B) Labor or service charges involved in maintenance and
repair work on tangible personal property of others if separately
itemized.
(iv) Delivery charges incurred or to be incurred before the
completion of the transfer of ownership of tangible personal
property from the seller to the purchaser.
(v) Installation charges incurred or to be incurred before the
completion of the transfer of ownership of tangible personal
property from the seller to the purchaser.
(vi) Credit for any trade-in.
(vii) Interest, financing, or carrying charges from credit
extended on the sale of personal property or services, if the
amount is separately stated on the invoice, bill of sale, or
similar document given to the purchaser.
(viii) Any taxes legally imposed directly on the consumer that
are separately stated on the invoice, bill of sale, or similar
document given to the purchaser.
(g) "Consumer" means the person who has purchased tangible
personal property or services for storage, use, or other
consumption in this state and includes a person acquiring tangible
personal property if engaged in the business of constructing,
altering, repairing, or improving the real estate of others.
(h) "Business" means all activities engaged in by a person or
caused to be engaged in by a person with the object of gain,
benefit, or advantage, either direct or indirect.
(i) "Department" means the department of treasury.
(j) "Tax" includes all taxes, interest, or penalties levied
under this act.
(k) "Tangible personal property" means personal property that
can be seen, weighed, measured, felt, or touched or that is in any
other manner perceptible to the senses and includes electricity,
water, gas, steam, and prewritten computer software.
(l) "Textiles" means goods that are made of or incorporate
woven or nonwoven fabric, including, but not limited to, clothing,
shoes, hats, gloves, handkerchiefs, curtains, towels, sheets,
pillows, pillowcases, tablecloths, napkins, aprons, linens, floor
mops, floor mats, and thread. Textiles also include materials used
to repair or construct textiles, or other goods used in the rental,
sale, or cleaning of textiles.
(m) "Interstate motor carrier" means a person who operates or
causes to be operated a qualified commercial motor vehicle on a
public road or highway in this state and at least 1 other state or
Canadian province.
(n) "Qualified commercial motor vehicle" means that term as
defined in section 1(i), (j), and (k) of the motor carrier fuel tax
act, 1980 PA 119, MCL 207.211.
(o) "Diesel fuel" means that term as defined in section 2(p)
of the motor fuel tax act, 2000 PA 403, MCL 207.1002.
(p) "Sale" means a transaction by which tangible personal
property or services are purchased or rented for storage, use, or
other consumption in this state.
(q) "Premanufactured modular building unit" means a building
designed and constructed pursuant to the Stille-DeRossett-Hale
single state construction code act, 1972 PA 230, MCL 125.1501 to
125.1531, that is manufactured in 1 or more sections in a factory
for installation on a permanent foundation at its final location.
Premanufactured modular building unit does not include a mobile
home or a manufactured home that is constructed on a permanent
chassis in compliance with the national manufactured housing
construction and safety standards act of 1974, 42 USC 5401 to 5426.
(r) "Manufactured home" means that term as defined in section
9102(1)(aaa) of the uniform commercial code, 1962 PA 174, MCL
440.9102.
Sec. 3a. (1) The use or consumption of the following is taxed
under this act in the same manner as tangible personal property is
taxed under this act:
(a) Except as provided in section 3b, intrastate telephone,
telegraph, leased wire, and other similar communications, including
local telephone exchange and long distance telephone service that
both originates and terminates in Michigan, and telegraph, private
line, and teletypewriter service between places in Michigan, but
excluding telephone service by coin-operated installations,
switchboards, concentrator-identifiers, interoffice circuitry and
their accessories for telephone answering service, and directory
advertising proceeds.
(b) Rooms or lodging furnished by hotelkeepers, motel
operators, and other persons furnishing accommodations that are
available to the public on the basis of a commercial and business
enterprise, irrespective of whether or not membership is required
for use of the accommodations, except rooms and lodging rented for
a continuous period of more than 1 month. As used in this act,
"hotel" or "motel" means a building or group of buildings in which
the public may obtain accommodations for a consideration,
including, without limitation, such establishments as inns, motels,
tourist homes, tourist houses or courts, lodging houses, rooming
houses, nudist camps, apartment hotels, resort lodges and cabins,
camps operated by other than nonprofit organizations but not
including those licensed under 1973 PA 116, MCL 722.111 to 722.128,
and any other building or group of buildings in which
accommodations are available to the public, except accommodations
rented for a continuous period of more than 1 month and
accommodations furnished by hospitals or nursing homes.
(c) Except as provided in section 3b, interstate telephone
communications that either originate or terminate in this state and
for which the charge for the service is billed to a Michigan
service address or phone number by the provider either within or
outside this state including calls between this state and any place
within or without the United States of America outside of this
state. However, if the tax under this act is levied at a rate of
6%, this subdivision does not apply to a wide area
telecommunication service or a similar type service, an 800 prefix
service or similar type service, an interstate private network and
related usage charges, or an international call either inbound or
outbound.
(d) The laundering or cleaning of textiles under a sale,
rental, or service agreement with a term of at least 5 days. This
subdivision does not apply to the laundering or cleaning of
textiles used by a restaurant or retail sales business. As used in
this subdivision, "restaurant" means a food service establishment
defined and licensed under the food law of 2000, 2000 PA 92, MCL
289.1101 to 289.8111.
(e) 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.
(f) For a manufacturer who affixes its product to real estate
and maintains an inventory of its product that is available for
sale to others by publication or price list, the direct production
costs and indirect production costs of the product affixed to the
real estate that are incident to and necessary for production or
manufacturing operations or processes, as defined by the
department.
(g) For a manufacturer who affixes its product to real estate
but does not maintain an inventory of its product available for
sale to others or make its product available for sale to others by
publication or price list, the sum of the materials cost of the
property and the cost of labor to manufacture, fabricate, or
assemble
the property, but does not include including the cost
of labor to cut, bend, assemble, or attach the property at the site
for affixation to real estate.
(h) For a manufacturer of a premanufactured modular building
unit or a manufactured home, if the premanufactured modular
building unit or the manufactured home is permanently affixed to
real estate and the manufacturer does not maintain an inventory of
its product available for sale to others, the sum of the materials
cost of the premanufactured modular building unit or manufactured
home and the cost of labor to manufacture, fabricate, or assemble
the premanufactured modular building unit or manufactured home, but
not including the cost of labor to cut, bend, assemble, or attach
the premanufactured modular building unit or manufactured home at
the site for affixation to real estate. If the manufacturer of a
premanufactured modular building unit or manufactured home sells
the premanufactured modular building unit or manufactured home to
another for permanent affixation to real estate, the manufacturer
is not required to perform the affixation of the premanufactured
modular building unit or manufactured home to the real estate if
the premanufactured modular building unit or manufactured home is
permanently affixed to the real estate by the purchaser.
(2) If charges for intrastate telecommunications services or
telecommunications services between this state and another state
and other billed services not subject to the tax under this act are
aggregated with and not separately stated from charges for
telecommunications services that are subject to the tax under this
act, the nontaxable telecommunications services and other
nontaxable billed services are subject to the tax under this act
unless the service provider can reasonably identify charges for
telecommunications services not subject to the tax under this act
from its books and records that are kept in the regular course of
business.
(3) If charges for intrastate telecommunications services or
telecommunications services between this state and another state
and other billed services not subject to the tax under this act are
aggregated with and not separately stated from telecommunications
services that are subject to the tax under this act, a customer may
not rely upon the nontaxability of those telecommunications
services and other billed services unless the customer's service
provider separately states the charges for nontaxable
telecommunications services and other nontaxable billed services
from taxable telecommunications services or the service provider
elects, after receiving a written request from the customer in the
form required by the provider, to provide verifiable data based
upon the service provider's books and records that are kept in the
regular course of business that reasonably identify the nontaxable
services.
(4) As used in this section:
(a) "Fabricate" means to modify or prepare tangible personal
property for affixation or assembly.
(b) "Manufacture" means to convert or condition tangible
personal property by changing the form, composition, quality,
combination, or character of the property.
(c) "Manufacturer" means a person who manufactures,
fabricates, or assembles tangible personal property.
Enacting section 1. This amendatory act takes effect January
1, 2006.