HB-5874, As Passed House, June 27, 2008

HOUSE BILL No. 5874

March 11, 2008, Introduced by Rep. McDowell and referred to the Committee on Agriculture.

A bill to amend 1893 PA 206, entitled

"The general property tax act,"

by amending section 9 (MCL 211.9), as amended by 2006 PA 550.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 9. (1) The following personal property, and real property

described in subdivision (j)(i), is exempt from taxation:

(a) The personal property of charitable, educational, and

scientific institutions incorporated under the laws of this state.

This exemption does not apply to secret or fraternal societies, but

the personal property of all charitable homes of secret or

fraternal societies and nonprofit corporations that own and operate

facilities for the aged and chronically ill in which the net income

from the operation of the nonprofit corporations or secret or

fraternal societies does not inure to the benefit of a person other

than the residents is exempt.

(b) The property of all library associations, circulating

libraries, libraries of reference, and reading rooms owned or

supported by the public and not used for gain.

sons of veterans' unions, and of the women's relief corps connected

with them, of young men's Christian associations, women's Christian

temperance union associations, young people's Christian unions, a

boy or girl scout or camp fire girls organization, 4-H clubs, and

other similar associations.

(d) Pensions receivable from the United States.

(e) The property of Indians who are not citizens.

(f) The personal property owned and used by a householder such

as customary furniture, fixtures, provisions, fuel, and other

similar equipment, wearing apparel including personal jewelry,

family pictures, school books, library books of reference, and

allied items. Personal property is not exempt under this

subdivision if it is used to produce income, if it is held for

speculative investment, or if it constitutes an inventory of goods

for sale in the regular course of trade.

(g) Household furnishings, provisions, and fuel of not more

than $5,000.00 in taxable value, of each social or professional

fraternity, sorority, and student cooperative house recognized by

the educational institution at which it is located.

(h) The working tools of a mechanic of not more than $500.00

in taxable value. "Mechanic", as used in this subdivision, means a

person skilled in a trade pertaining to a craft or in the

construction or repair of machinery if the person's employment by

others is dependent on his or her furnishing the tools.

(i) Fire engines and other implements used in extinguishing

fires owned or used by an organized or independent fire company.

(j) Property actually used in agricultural operations and farm

implements held for sale or resale by retail servicing dealers for

use in agricultural production. As used in this subdivision,

"agricultural operations" means farming in all its branches,

including cultivation of the soil, growing and harvesting of an

agricultural, horticultural, or floricultural commodity, dairying,

raising of livestock, bees, fur-bearing animals, or poultry, turf

and tree farming, raising and harvesting of fish, and any practices

performed by a farmer or on a farm as an incident to, or in

conjunction with, farming operations, but excluding retail sales

and food processing operations. Property used in agricultural

operations includes all of the following:

(i) A methane digester and a methane digester electric

generating system if the person claiming the exemption complies

with all of the following:

(A) After the construction of the methane digester or the

methane digester electric generating system is completed, the

person claiming the exemption submits to the local tax collecting

unit an application for the exemption and a copy of certification

from the department of agriculture that it has verified that the

farm operation on which the methane digester or methane digester

electric generating system is located is in compliance with the

appropriate system of the Michigan agriculture environmental

assurance program in the year immediately preceding the year in

which the affidavit is submitted. Three years after an application

for exemption is approved and every 3 years thereafter, the person

claiming the exemption shall submit to the local tax collecting

unit an affidavit attesting that the department of agriculture has

verified that the farm operation on which the methane digester or

methane digester electric generating system is located is in

compliance with the appropriate system of the Michigan agriculture

environmental assurance program. The application for the exemption

under this subparagraph shall be in a form prescribed by the

department of treasury and shall be provided to the person claiming

the exemption by the local tax collecting unit.

(B) When the application is submitted to the local tax

collecting unit, the person claiming the exemption also submits

certification provided by the department of environmental quality

that he or she is not currently being investigated for a violation

of part 31 of the natural resources and environmental protection

act, 1994 PA 451, MCL 324.3101 to 324.3133, that within a 3-year

period immediately preceding the date the application is submitted

to the local tax collecting unit, he or she has not been found

guilty of a criminal violation under part 31 of the natural

resources and environmental protection act, 1994 PA 451, MCL

324.3101 to 324.3133, and that within a 1-year period immediately

preceding the date the application is submitted to the local tax

collecting unit, he or she has not been found responsible for a

civil violation that resulted in a civil fine of $10,000.00 or more

under part 31 of the natural resources and environmental protection

act, 1994 PA 451, MCL 324.3101 to 324.3133.

access for not more than 2 universities to collect information

regarding the effectiveness of the methane digester and the methane

digester electric generating system in generating electricity and

processing animal waste and production area waste. Information

collected under this sub-subparagraph shall not be provided to the

public in a manner that would identify the owner of the methane

digester or the methane digester electric generating system or the

farm operation on which the methane digester or the methane

digester electric generating system is located. The identity of the

owner of the methane digester or the methane digester electric

generating system and the identity of the owner and location of the

farm operation on which the methane digester or the methane

digester electric generating system is located are exempt from

disclosure under the freedom of information act, 1976 PA 442, MCL

15.231 to 15.246. As used in this sub-subparagraph, "university"

means a public 4-year institution of higher education created under

article VIII of the state constitution of 1963.

(D) The person claiming the exemption ensures that the methane

digester and methane digester electric generating system are

operated under the specific supervision and control of persons

certified by the department of agriculture as properly qualified to

operate the methane digester, methane digester electric generating

system, and related waste treatment and control facilities. The

department of agriculture shall consult with the department of

House Bill No. 5874 as amended June 27, 2008

environmental quality and the Michigan state university cooperative

extension service in developing the operator certification program.

(ii) A biomass gasification system. As used in this

subparagraph, "biomass gasification system" means apparatus and

equipment that thermally decomposes agricultural, food, or animal

waste at high temperatures and in an oxygen-free or a controlled

oxygen-restricted environment into a gaseous fuel and the equipment

used to generate electricity or heat from the gaseous fuel or store

the gaseous fuel for future generation of electricity or heat.

(iii) A thermal depolymerization system. As used in this

subparagraph, "thermal depolymerization system" means apparatus and

equipment that use heat to break down natural and synthetic

polymers and that can accept only organic waste.

(iv) Machinery that is capable of simultaneously harvesting

grain or other crops and biomass [and machinery used for the purpose of

harvesting biomass.

] As

used in this subparagraph, "biomass" means crop residue used to

produce energy or agricultural crops grown specifically for the

production of alternative energy.

(v) (iv) Machinery used to prepare the crop for market operated

incidental to a farming operation that does not substantially alter

the form, shape, or substance of the crop and is limited to

cleaning, cooling, washing, pitting, grading, sizing, sorting,

drying, bagging, boxing, crating, and handling if not less than 33%

of the volume of the crops processed in the year ending on the

applicable tax day or in at least 3 of the immediately preceding 5

years were grown by the farmer in Michigan who is the owner or user

of the crop processing machinery.

(k) Personal property of not more than $500.00 in taxable

value used by a householder in the operation of a business in the

householder's dwelling or at 1 other location in the city,

township, or village in which the householder resides.

(l) The products, materials, or goods processed or otherwise

and in whatever form, but expressly excepting alcoholic beverages,

located in a public warehouse, United States customs port of entry

bonded warehouse, dock, or port facility on December 31 of each

year, if those products, materials, or goods are designated as in

transit to destinations outside this state pursuant to the

published tariffs of a railroad or common carrier by filing the

freight bill covering the products, materials, or goods with the

agency designated by the tariffs, entitling the shipper to

transportation rate privileges. Products in a United States customs

port of entry bonded warehouse that arrived from another state or a

foreign country, whether awaiting shipment to another state or to a

final destination within this state, are considered to be in

transit and temporarily at rest, and not subject to the collection

of taxes under this act. To obtain an exemption for products,

materials, or goods under this subdivision, the owner shall file a

sworn statement with, and in the form required by, the assessing

officer of the tax district in which the warehouse, dock, or port

facility is located, at a time between the tax day, December 31,

and before the assessing officer closes the assessment rolls

describing the products, materials, or goods, and reporting their

cost and value as of December 31 of each year. The status of

persons and products, materials, or goods for which an exemption is

requested is determined as of December 31, which is the tax day.

Any property located in a public warehouse, dock, or port facility

on December 31 of each year that is exempt from taxation under this

subdivision but that is not shipped outside this state pursuant to

the particular tariff under which the transportation rate privilege

was established shall be assessed upon the immediately succeeding

or a subsequent assessment roll by the assessing officer and taxed

at the same rate of taxation as other taxable property for the year

or years for which the property was exempted to the owner at the

time of the omission unless the owner or person entitled to

possession of the products, materials, or goods is a resident of,

or authorized to do business in, this state and files with the

assessing officer, with whom statements of taxable property are

required to be filed, a statement under oath that the products,

materials, or goods are not for sale or use in this state and will

be shipped to a point or points outside this state. If a person,

firm, or corporation claims exemption by filing a sworn statement,

the person, firm, or corporation shall append to the statement of

taxable property required to be filed in the immediately succeeding

year or, if a statement of taxable property is not filed for the

immediately succeeding year, to a sworn statement filed on a form

required by the assessing officer, a complete list of the property

for which the exemption was claimed with a statement of the manner

of shipment and of the point or points to which the products,

materials, or goods were shipped from the public warehouse, dock,

or port facility. The assessing officer shall assess the products,

materials, or goods not shipped to a point or points outside this

state upon the immediately succeeding assessment roll or on a

subsequent assessment roll and the products, materials, or goods

shall be taxed at the same rate of taxation as other taxable

property for the year or years for which the property was exempted

to the owner at the time of the omission. The records, accounts,

and books of warehouses, docks, or port facilities, individuals,

partnerships, corporations, owners, or those in possession of

tangible personal property shall be open to and available for

inspection, examination, or auditing by assessing officers. A

warehouse, dock, port facility, individual, partnership,

corporation, owner, or person in possession of tangible personal

property shall report within 90 days after shipment of products,

materials, or goods in transit, for which an exemption under this

section was claimed or granted, the destination of shipments or

parts of shipments and the cost value of those shipments or parts

of shipments to the assessing officer. A warehouse, dock, port

facility, individual, partnership, corporation, or owner is subject

to a fine of $100.00 for each failure to report the destination and

cost value of shipments or parts of shipments as required in this

subdivision. A person, firm, individual, partnership, corporation,

or owner failing to report products, materials, or goods located in

a warehouse, dock, or port facility to the assessing officer is

subject to a fine of $100.00 and a penalty of 50% of the final

amount of taxes found to be assessable for the year on property not

reported, the assessable taxes and penalty to be spread on a

subsequent assessment roll in the same manner as general taxes on

personal property. For the purpose of this subdivision, a public

warehouse, dock, or port facility means a warehouse, dock, or port

facility owned or operated by a person, firm, or corporation

engaged in the business of storing products, materials, or goods

for hire for profit who issues a schedule of rates for storage of

the products, materials, or goods and who issues warehouse receipts

pursuant to 1909 PA 303, MCL 443.50 to 443.55. A United States

customs port of entry bonded warehouse means a customs warehouse

within a classification designated by 19 CFR 19.1 and that is

located in a port of entry, as defined by 19 CFR 101.1. A portion

of a public warehouse, United States customs port of entry bonded

warehouse, dock, or port facility leased to a tenant or a portion

of any premises owned or leased or operated by a consignor or

consignee or an affiliate or subsidiary of the consignor or

consignee is not a public warehouse, dock, or port facility.

(m) Personal property owned by a bank or trust company

organized under the laws of this state, a national banking

association, or an incorporated bank holding company as defined in

section 1841 of the bank holding company act of 1956, 12 USC 1841,

that controls a bank, national banking association, trust company,

or industrial bank subsidiary located in this state. Buildings

owned by a state or national bank, trust company, or incorporated

bank holding company and situated upon lands of which the state or

national bank, trust company, or incorporated bank holding company

is not the owner of the fee are considered real property and are

not exempt from taxation. Personal property owned by a state or

national bank, trust company, or incorporated bank holding company

that is leased, loaned, or otherwise made available to and used by

a private individual, association, or corporation in connection

with a business conducted for profit is not exempt from taxation.

(n) Farm products, processed or otherwise, the ultimate use of

which is for human or animal consumption as food, except wine,

beer, and other alcoholic beverages regularly placed in storage in

a public warehouse, dock, or port facility while in storage are

considered in transit and only temporarily at rest and are not

subject to personal property taxation. The assessing officer is the

determining authority as to what constitutes, is defined as, or

classified as, farm products as used in this subdivision. The

records, accounts, and books of warehouses, docks, or port

facilities, individuals, partnerships, corporations, owners, or

those in possession of farm products shall be open to and available

for inspection, examination, or auditing by assessing officers.

(o) Sugar, in solid or liquid form, produced from sugar beets,

dried beet pulp, and beet molasses if owned or held by processors.

(p) The personal property of a parent cooperative preschool.

As used in this subdivision and section 7z, "parent cooperative

preschool" means a nonprofit, nondiscriminatory educational

institution maintained as a community service and administered by

parents of children currently enrolled in the preschool, that

provides an educational and developmental program for children

younger than compulsory school age, that provides an educational

program for parents, including active participation with children

in preschool activities, that is directed by qualified preschool

personnel, and that is licensed under 1973 PA 116, MCL 722.111 to

722.128.

(q) All equipment used exclusively in wood harvesting, but not

including portable or stationary sawmills or other equipment used

in secondary processing operations. As used in this subdivision,

"wood harvesting" means clearing land for forest management

purposes, planting trees, all forms of cutting or chipping trees,

and loading trees on trucks for removal from the harvest area.

(r) Liquefied petroleum gas tanks located on residential or

agricultural property used to store liquefied petroleum gas for

residential or agricultural property use.

(s) Water conditioning systems used for a residential

dwelling.

(t) For taxes levied after December 31, 2000, aircraft

excepted from the registration provisions of the aeronautics code

of the state of Michigan, 1945 PA 327, MCL 259.1 to 259.208, and

all other aircraft operating under the provisions of a certificate

issued under 14 CFR part 121, and all spare parts for such

aircraft.

(2) As used in this section:

(a) "Biogas" means a mixture of gases composed primarily of

methane and carbon dioxide.

(b) "Methane digester" means a system designed to facilitate

the production, recovery, and storage of biogas from the anaerobic

microbial digestion of animal or food waste.