HB-4383, As Passed House, April 17, 2007

SUBSTITUTE FOR

HOUSE BILL NO. 4383

     A bill to amend 1937 PA 94, entitled

"Use tax act,"

by amending section 3a (MCL 205.93a), as amended by 2004 PA 172.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     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 an 800 prefix service or

similar type service. Before June 1, 2007, 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. Beginning June 1,

2007, a wide area telecommunication service or a similar type

service, an interstate private network and related usage charges,

or an international call either inbound or outbound is taxed under

this act in the same manner as interstate telephone communications.

     (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 the cost of labor to

cut, bend, assemble, or attach the property at the site for

affixation to real estate.

     (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.