HB-4386, As Passed House, April 17, 2007
March 1, 2007, Introduced by Rep. Condino and referred to the Committee on Tax Policy.
A bill to amend 1941 PA 122, entitled
"An act to establish the revenue collection duties of the
department of treasury; to prescribe its powers and duties as the
revenue collection agency of this state; to prescribe certain
powers and duties of the state treasurer; to establish the
collection duties of certain other state departments for money or
accounts owed to this state; to regulate the importation, stamping,
and disposition of certain tobacco products; to provide for the
transfer of powers and duties now vested in certain other state
boards, commissions, departments, and offices; to prescribe certain
duties of and require certain reports from the department of
treasury; to provide procedures for the payment, administration,
audit, assessment, levy of interests or penalties on, and appeals
of taxes and tax liability; to prescribe its powers and duties if
an agreement to act as agent for a city to administer, collect, and
enforce the city income tax act on behalf of a city is entered into
with any city; to provide an appropriation; to abolish the state
board of tax administration; to prescribe penalties and provide
remedies; and to declare the effect of this act,"
(MCL 205.1 to 205.31) by adding section 30d.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 30d. (1) A person has substantial nexus for a tax
administered under this act if the person and an in-state business
are related parties and if 1 or more of the following apply:
(a) The person and the in-state business use an identical or
substantially similar name, trade name, trademark, or goodwill, to
develop, promote, or maintain sales.
(b) The person and the in-state business pay for each other's
services in whole or in part contingent upon the volume or value of
sales.
(c) The person and the in-state business share a common
business plan or substantially coordinate their business plans.
(2) A person has a substantial nexus if 1 or more of the
conditions under subsection (1) are met, notwithstanding the
existence of an agency relationship or lack of an agency
relationship with the in-state business and without regard to its
form of business organization.
(3) Two entities are related parties under this section if 1
of the entities meets 1 or more of the following tests with respect
to the other entity:
(a) One entity is a corporation and the other entity and any
party, for which section 318 of the internal revenue code, 26 USC
318, requires an attribution of ownership of stock from that party
to the entity, own directly, indirectly, beneficially, or
constructively at least 50% of the value of the corporation's
outstanding stock.
(b) One or both entities is a limited liability company,
partnership, estate, or trust, none of which is treated as a
corporation for federal income tax purposes, and that limited
liability company, partnership, estate, or trust and its members,
partners, or beneficiaries own directly, indirectly, beneficially,
or constructively, in the aggregate, at least 50% of the profits,
capital, stock, or value of the other entity or both entities.
(c) One entity is related taxpayer to the other entity under
section 267 of the internal revenue code, 26 USC 267.
(4) For purposes of this section, an in-state business is a
business that maintains 1 or more locations within this state or a
business that has 1 or more employees that conduct business
activity within this state.
(5) The provisions of this section are not exclusive and shall
not, subject to due process and the commerce clause of the United
States constitution, be construed to limit the extent of this
state's jurisdiction to impose a tax administered under this act.