September 19, 2007, Introduced by Reps. Meisner, Gillard, Alma Smith, Warren, Wojno, Bieda, Cushingberry, Clack, Angerer, Kathleen Law, Byrnes, Tobocman and Condino and referred to the Committee on Tax Policy.
A bill to amend 1933 PA 167, entitled
"General sales tax act,"
by amending sections 2, 4a, 4g, 4i, 4m, 4r, 4t, 4x, 4aa, and 6a
(MCL 205.52, 205.54a, 205.54g, 205.54i, 205.54m, 205.54r, 205.54t,
205.54x, 205.54aa, and 205.56a), sections 2, 4a, 4g, 4i, 4m, 4r,
and 4t as amended by 2004 PA 173, section 4x as amended by 2006 PA
17, section 4aa as added by 2002 PA 617, and section 6a as amended
by 1993 PA 325.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. (1) Except as provided in section 2a, there is levied
upon and there shall be collected from all persons engaged in the
business of making sales at retail, by which ownership of tangible
personal property is transferred for consideration, an annual tax
for the privilege of engaging in that business equal to 6%, of the
gross proceeds of the business, plus the penalty and interest if
applicable as provided by law, less deductions allowed by this act.
(2) The tax under subsection (1) also applies to the
following:
(a) 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.
(b) The sale of a prepaid telephone calling card or a prepaid
authorization number or code for telephone use, rather than for
resale, including the reauthorization of a prepaid telephone
calling card or a prepaid authorization number or code.
(c) A conditional sale, installment lease sale, or other
transfer of property, if title is retained as security for the
purchase but is intended to be transferred later.
(3) Any person engaged in the business of making sales at
retail who is at the same time engaged in some other kind of
business, occupation, or profession not taxable under this act
shall keep books to show separately the transactions used in
determining
the tax levied by under this act. If the person fails
to keep separate books, there shall be levied upon him or her the
tax provided for in subsection (1) equal to 6% of the entire gross
proceeds of both or all of his or her businesses. The taxes levied
by this section are a personal obligation of the taxpayer.
(4)
A Before October 1, 2007,
a meal provided free of charge
or at a reduced rate to an employee during work hours by a food
service
establishment licensed by the Michigan department of
agriculture
under the food law of 2000,
2000 PA 92, MCL 289.1101 to
289.8111, for the convenience of the employer is not considered
transferred for consideration.
Sec. 4a. (1) Subject to subsection (2), the following are
exempt from the tax under this act:
(a) A sale of tangible personal property not for resale to a
nonprofit school, nonprofit hospital, or nonprofit home for the
care and maintenance of children or aged persons operated by an
entity
of government, a regularly organized church, religious , or
fraternal organization, a veterans' organization, or a corporation
incorporated under the laws of this state, if the income or benefit
from the operation does not inure, in whole or in part, to an
individual or private shareholder, directly or indirectly, and if
the activities of the entity or agency are carried on exclusively
for the benefit of the public at large and are not limited to the
advantage, interests, and benefits of its members or any restricted
group. A sale of tangible personal property to a parent cooperative
preschool is exempt from taxation under this act. As used in this
subdivision, "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 by
the
department of consumer and industry services pursuant to 1973
PA 116, MCL 722.111 to 722.128.
(b) A sale of tangible personal property not for resale to a
regularly organized church or house of religious worship, except
the following:
(i) Sales in activities that are mainly commercial enterprises.
(ii) Sales of vehicles licensed for use on public highways
other than a passenger van or bus with a manufacturer's rated
seating capacity of 10 or more that is used primarily for the
transportation of persons for religious purposes.
(c) The sale of food to bona fide enrolled students by a
school or other educational institution not operated for profit.
(d) The sale of a vessel designated for commercial use of
registered tonnage of 500 tons or more, if produced upon special
order of the purchaser, and bunker and galley fuel, provisions,
supplies, maintenance, and repairs for the exclusive use of the
vessel engaged in interstate commerce.
(e) A sale of tangible personal property to persons engaged in
a business enterprise and using or consuming the tangible personal
property in the tilling, planting, caring for, or harvesting of the
things of the soil; in the breeding, raising, or caring for
livestock, poultry, or horticultural products, including transfers
of livestock, poultry, or horticultural products for further
growth; or in the direct gathering of fish, by net, line, or
otherwise only by an owner-operator of the business enterprise, not
including a charter fishing business enterprise. This exemption
includes agricultural land tile, which means fired clay or
perforated plastic tubing used as part of a subsurface drainage
system for land, and subsurface irrigation pipe, if the land tile
or irrigation pipe is used in the production of agricultural
products as a business enterprise. This exemption includes a
portable grain bin, which means a structure that is used or is to
be used to shelter grain and that is designed to be disassembled
without significant damage to its component parts. This exemption
also includes grain drying equipment and natural or propane gas
used to fuel that equipment for agricultural purposes. This
exemption does not include transfers of food, fuel, clothing, or
any similar tangible personal property for personal living or human
consumption. This exemption does not include tangible personal
property permanently affixed and becoming a structural part of real
estate.
(f) The sale of a copyrighted motion picture film or a
newspaper
or periodical admitted under federal postal laws and
regulations effective September 1, 1985 as second-class mail matter
or as a controlled circulation publication or qualified to accept
legal notices for publication in this state, as defined by law, or
any
other newspaper or periodical of general circulation,
established not less than 2 years, and published not less than once
a week, or, before October 1, 2007, a periodical admitted under
federal postal laws and regulations effective September 1, 1985 as
second-class mail. Tangible personal property used or consumed in
producing a copyrighted motion picture film, a newspaper published
more than 14 times per year, or a periodical published more than 14
times per year, and not becoming a component part of that film,
newspaper, or periodical is subject to the tax. Tangible personal
property used or consumed in producing a newspaper published 14
times or less per year or a periodical published 14 times or less
per year and that portion or percentage of tangible personal
property used or consumed in producing an advertising supplement
that becomes a component part of a newspaper or periodical is
exempt from the tax under this subdivision. A claim for a refund
for taxes paid before January 1, 1999, under this subdivision shall
be made before June 30, 1999. For purposes of this subdivision,
tangible personal property that becomes a component part of a
newspaper or periodical and consequently not subject to tax
includes an advertising supplement inserted into and circulated
with a newspaper or periodical that is otherwise exempt from tax
under this subdivision, if the advertising supplement is delivered
directly to the newspaper or periodical by a person other than the
advertiser, or the advertising supplement is printed by the
newspaper or periodical.
(g) A sale of tangible personal property to persons licensed
to operate commercial radio or television stations if the property
is used in the origination or integration of the various sources of
program material for commercial radio or television transmission.
This subdivision does not include a vehicle licensed and titled for
use on public highways or property used in the transmission to or
receiving from an artificial satellite.
(h) The sale of a prosthetic device, durable medical
equipment, or mobility enhancing equipment.
(i) The sale of a vehicle not for resale to a Michigan
nonprofit corporation organized exclusively to provide a community
with ambulance or fire department services.
(j) A sale of tangible personal property to inmates in a penal
or correctional institution purchased with scrip or its equivalent
issued and redeemed by the institution.
(k) A sale of textbooks sold by a public or nonpublic school
to or for the use of students enrolled in any part of a
kindergarten through twelfth grade program.
(l) A Before
October 1, 2007, a sale of tangible
personal
property installed as a component part of a water pollution control
facility for which a tax exemption certificate is issued pursuant
to part 37 of the natural resources and environmental protection
act, 1994 PA 451, MCL 324.3701 to 324.3708, or an air pollution
control facility for which a tax exemption certificate is issued
pursuant to part 59 of the natural resources and environmental
protection act, 1994 PA 451, MCL 324.5901 to 324.5908.
(m) The sale or lease of the following to an industrial
laundry after December 31, 1997:
(i) Textiles and disposable products including, but not limited
to, soap, paper, chemicals, tissues, deodorizers and dispensers,
and all related items such as packaging, supplies, hangers, name
tags, and identification tags.
(ii) Equipment, whether owned or leased, used to repair and
dispense textiles including, but not limited to, roll towel
cabinets, slings, hardware, lockers, mop handles and frames, and
carts.
(iii) Machinery, equipment, parts, lubricants, and repair
services used to clean, process, and package textiles and related
items, whether owned or leased.
(iv) Utilities such as electric, gas, water, or oil.
(v) Production washroom equipment and mending and packaging
supplies and equipment.
(vi) Material handling equipment including, but not limited to,
conveyors, racks, and elevators and related control equipment.
(vii) Wastewater pretreatment equipment and supplies and
related maintenance and repair services.
(n) A sale of tangible personal property to a person holding a
direct payment permit under section 8 of the use tax act, 1937 PA
94, MCL 205.98.
(2) The tangible personal property under subsection (1) is
exempt only to the extent that that property is used for the exempt
purpose if one is stated in subsection (1). The exemption is
limited to the percentage of exempt use to total use determined by
a reasonable formula or method approved by the department.
Sec. 4g. (1) The following are exempt from the tax under this
act:
(a) Sales of drugs for human use that can only be legally
dispensed by prescription or food or food ingredients, except
prepared food intended for immediate human consumption and, after
October 1, 2007, food and food ingredients sold from a vending
machine.
(b) The deposit on a returnable container for a beverage or
the deposit on a carton or case that is used for returnable
containers.
(c) Food or tangible personal property purchased under the
federal food stamp program or meals eligible to be purchased under
the federal food stamp program.
(d) Fruit or vegetable seeds and fruit or vegetable plants if
purchased at a place of business authorized to accept food stamps
by the food and nutrition service of the United States department
of agriculture or a place of business that has made a complete and
proper application for authorization to accept food stamps but has
been denied authorization and provides proof of denial to the
department of treasury.
(e) Live animals purchased with the intent to be slaughtered
for human consumption.
(2)
Food Before October 1,
2007, food or drink heated or
cooled mechanically, electrically, or by other artificial means to
an average temperature above 75 degrees Fahrenheit or below 65
degrees Fahrenheit before sale and sold from a vending machine,
except milk, nonalcoholic beverages in a sealed container, and
fresh fruit, is subject to the tax under this act. The tax due
under this act on the sale of food or drink from a vending machine
selling both taxable items and items exempt under this subsection
shall be calculated under this act based on 1 of the following as
determined by the taxpayer:
(a) Actual gross proceeds from sales at retail.
(b) Forty-five percent of proceeds from the sale of items
subject to tax under this act or exempt from the tax levied under
this act, other than from the sale of carbonated beverages.
(3) "Food and food ingredients" means substances, whether in
liquid, concentrated, solid, frozen, dried, or dehydrated form,
that are sold for ingestion or chewing by humans and are consumed
for their taste or nutritional value. Food and food ingredients do
not include alcoholic beverages and tobacco.
(4) "Prepared food" means the following:
(a) Food sold in a heated state or that is heated by the
seller.
(b) Two or more food ingredients mixed or combined by the
seller for sale as a single item.
(c) Food sold with eating utensils provided by the seller,
including knives, forks, spoons, glasses, cups, napkins, straws, or
plates, but not including a container or packaging used to
transport the food.
(5) Prepared food does not include the following:
(a) Food that is only cut, repackaged, or pasteurized by the
seller.
(b) Raw eggs, fish, meat, poultry, and foods containing those
raw items requiring cooking by the consumer in recommendations
contained in section 3-401.11 of part 3-4 of chapter 3 of the 2001
food code published by the food and drug administration of the
public health service of the department of health and human
services, to prevent foodborne illness.
(c) Food sold in an unheated state by weight or volume as a
single item, without eating utensils.
(d) Bakery items, including bread, rolls, buns, biscuits,
bagels, croissants, pastries, doughnuts, danish, cakes, tortes,
pies, tarts, muffins, bars, cookies, and tortillas, sold without
eating utensils.
(6) "Prepared food intended for immediate human consumption"
means prepared food and, after October 1, 2007, food and food
ingredients sold from a vending machine.
Sec. 4i. (1) As used in this section, "bad debt" means any
portion of a debt that is related to a sale at retail taxable under
this act for which gross proceeds are not otherwise deductible or
excludable and that is eligible to be claimed, or could be eligible
to be claimed if the taxpayer kept accounts on an accrual basis, as
a deduction pursuant to section 166 of the internal revenue code,
26 USC 166. A bad debt shall not include any finance charge,
interest, or sales tax on the purchase price, uncollectible amounts
on property that remains in the possession of the taxpayer until
the full purchase price is paid, expenses incurred in attempting to
collect any account receivable or any portion of the debt
recovered, any accounts receivable that have been sold to and
remain in the possession of a third party for collection, and
repossessed property.
(2) In computing the amount of tax levied under this act for
any month, before October 1, 2007, a taxpayer may deduct the amount
of bad debts from his or her gross proceeds used for the
computation of the tax. The amount of gross proceeds deducted must
be charged off as uncollectible on the books and records of the
taxpayer at the time the debt becomes worthless and deducted on the
return for the period during which the bad debt is written off as
uncollectible in the claimant's books and records and must be
eligible to be deducted for federal income tax purposes. For
purposes of this section, before October 1, 2007, a claimant who is
not required to file a federal income tax return may deduct a bad
debt on a return filed for the period in which the bad debt becomes
worthless and is written off as uncollectible in the claimant's
books and records and would be eligible for a bad debt deduction
for federal income tax purposes if the claimant was required to
file a federal income tax return. If a consumer or other person
pays all or part of a bad debt with respect to which a taxpayer
claimed a deduction under this section, the taxpayer is liable for
the amount of taxes deducted in connection with that portion of the
debt for which payment is received and shall remit these taxes in
his or her next payment to the department. Any payments made on a
bad debt shall be applied proportionally first to the taxable price
of the property and the tax on the property and second to any
interest, service, or other charge.
(3) Any claim for a bad debt deduction under this section
shall be supported by that evidence required by the department. The
department shall review any change in the rate of taxation
applicable to any taxable sales by a taxpayer claiming a deduction
pursuant to this section and shall ensure that the deduction on any
bad debt does not result in the taxpayer claiming the deduction
recovering any more or less than the taxes imposed on the sale that
constitutes the bad debt.
(4) If a certified service provider assumed filing
responsibility under the streamlined sales and use tax
administration act, 2004 PA 174, MCL 205.801 to 205.833, the
certified service provider may, before October 1, 2007, claim, on
behalf of the taxpayer, any bad debt allowable to the taxpayer and
shall credit or refund that amount of bad debt allowed or refunded
to the taxpayer.
(5) If the books and records of a taxpayer under the
streamlined sales and use tax agreement under the streamlined sales
and use tax administration act, 2004 PA 174, MCL 205.801 to
205.833, that claims a bad debt allowance support an allocation of
the bad debts among member states of that agreement, the taxpayer
may allocate the bad debts.
Sec.
4m. A Before October 1,
2007, a sale of rail freight or
passenger cars, locomotives or other rolling stock, roadway
machines and work equipment primarily of a flanged wheel nature,
accessories, attachments including parts and materials used for
repair, lubricants, or fuel, used in rail operations is exempt from
the tax under this act. This exemption does not include vehicles
licensed and titled for use on public highways.
Sec. 4r. (1) All of the following are exempt from the tax
under this act:
(a)
The Before October 1,
2007, the product of the out-of-
state usage percentage and the gross proceeds otherwise taxable
under this act from the sale of a qualified truck or a trailer
designed to be drawn behind a qualified truck, purchased after
December 31, 1996 and before May 1, 1999 by an interstate motor
carrier and used in interstate commerce.
(b)
A Before October 1, 2007,
a sale of rolling stock
purchased by an interstate motor carrier or for rental or lease to
an interstate motor carrier and used in interstate commerce.
(2) As used in this section:
(a) "Interstate motor carrier" means a person engaged in the
business of carrying persons or property, other than themselves,
their employees, or their own property, for hire across state
lines, whose fleet mileage was driven at least 10% outside of this
state in the immediately preceding tax year.
(b) "Out-of-state usage percentage" is a fraction, the
numerator of which is the number of miles driven outside of this
state in the immediately preceding tax year by qualified trucks
used by the interstate motor carrier and the denominator of which
is the total miles driven in the immediately preceding tax year by
qualified trucks used by the interstate motor carrier. Miles driven
by qualified trucks used solely in intrastate commerce shall not be
included in calculating the out-of-state usage percentage.
(c) "Qualified truck" means a commercial motor vehicle power
unit that has 2 axles and a gross vehicle weight rating in excess
of 10,000 pounds or a commercial motor vehicle power unit that has
3 or more axles.
(d) "Rolling stock" means a qualified truck, a trailer
designed to be drawn behind a qualified truck, and parts affixed to
either a qualified truck or a trailer designed to be drawn behind a
qualified truck.
Sec. 4t. (1) The sale of tangible personal property to the
following after March 30, 1999, subject to subsection (2) are
exempt from the tax under this act:
(a) An industrial processor for use or consumption in
industrial processing.
(b) A person, whether or not the person is an industrial
processor, if the tangible personal property is intended for
ultimate use in and is used in industrial processing by an
industrial processor.
(c) A person, whether or not the person is an industrial
processor, if the tangible personal property is used by that person
to perform an industrial processing activity for or on behalf of an
industrial processor.
(d)
A Before October 1, 2007,
a person, whether or not the
person is an industrial processor, if the tangible personal
property is 1 of the following:
(i) A computer used in operating industrial processing
equipment.
(ii) Equipment used in a computer assisted manufacturing
system.
(iii) Equipment used in a computer assisted design or
engineering system integral to an industrial process.
(iv) A subunit or electronic assembly comprising a component in
a computer integrated industrial processing system.
(v) Computer equipment used in connection with the computer
assisted production, storage, and transmission of data if the
equipment would have been exempt had the data transfer been made
using tapes, disks, CD-ROMs, or similar media by a company whose
business includes publishing doctoral dissertations and information
archiving, and that sells the majority of the company's products to
nonprofit organizations exempt under section 4q.
(vi) Equipment used in the production of prewritten computer
software or software modified or adapted to the user's needs or
equipment by the seller, only if the software is available for sale
from a seller of software on an as-is basis or as an end product
without modification or adaptation.
(2) The property under subsection (1) is exempt only to the
extent that the property is used for the exempt purpose stated in
this section. The exemption is limited to the percentage of exempt
use to total use determined by a reasonable formula or method
approved by the department.
(3) Industrial processing includes the following activities:
(a) Production or assembly.
(b) Research or experimental activities.
(c) Engineering related to industrial processing.
(d) Inspection, quality control, or testing to determine
whether particular units of materials or products or processes
conform to specified parameters at any time before materials or
products first come to rest in finished goods inventory storage.
(e) Planning, scheduling, supervision, or control of
production or other exempt activities.
(f) Design, construction, or maintenance of production or
other exempt machinery, equipment, and tooling.
(g) Remanufacturing.
(h) Processing of production scrap and waste up to the point
it is stored for removal from the plant of origin.
(i) Recycling of used materials for ultimate sale at retail or
reuse.
(j) Production material handling.
(k) Storage of in-process materials.
(4) Property that is eligible for an industrial processing
exemption includes the following:
(a) Property that becomes an ingredient or component part of
the finished product to be sold ultimately at retail.
(b) Machinery, equipment, tools, dies, patterns, foundations
for machinery or equipment, or other processing equipment used in
an industrial processing activity and in their repair and
maintenance.
(c) Property that is consumed or destroyed or that loses its
identity in an industrial processing activity.
(d) Tangible personal property, not permanently affixed and
not becoming a structural part of real estate, that becomes a part
of, or is used and consumed in installation and maintenance of,
systems used for an industrial processing activity.
(e) Fuel or energy used or consumed for an industrial
processing activity.
(f) Machinery, equipment, or materials used within a plant
site or between plant sites operated by the same person for
movement of tangible personal property in the process of
production.
(g) Office equipment, including data processing equipment,
used for an industrial processing activity.
(5) Property that is not eligible for an industrial processing
exemption includes the following:
(a) Tangible personal property permanently affixed and
becoming a structural part of real estate including building
utility systems such as heating, air conditioning, ventilating,
plumbing, lighting, and electrical distribution, to the point of
the last transformer, switch, valve, or other device at which point
usable power, water, gas, steam, or air is diverted from
distribution circuits for use in industrial processing.
(b) Office equipment, including data processing equipment used
for nonindustrial processing purposes.
(c) Office furniture or office supplies.
(d) An industrial processor's own product or finished good
that it uses or consumes for purposes other than industrial
processing.
(e) Tangible personal property used for receiving and storage
of materials, supplies, parts, or components purchased by the user
or consumer.
(f) Tangible personal property used for receiving or storage
of natural resources extracted by the user or consumer.
(g) Vehicles, including special bodies or attachments,
required to display a vehicle permit or license plate to operate on
public highways, except for a vehicle bearing a manufacturer's
plate or a specially designed vehicle, together with parts, used to
mix and agitate materials at a plant or job site in the concrete
manufacturing process.
(h) Tangible personal property used for the preparation of
food or beverages by a retailer for ultimate sale at retail through
its own locations.
(i) Tangible personal property used or consumed for the
preservation or maintenance of a finished good once it first comes
to rest in finished goods inventory storage.
(j) Returnable shipping containers or materials, except as
provided in subsection (4)(f).
(k) Tangible personal property used in the production of
computer software originally designed for the exclusive use and
special needs of the purchaser.
(6) Industrial processing does not include the following
activities:
(a) Purchasing, receiving, or storage of raw materials.
(b) Sales, distribution, warehousing, shipping, or advertising
activities.
(c) Administrative, accounting, or personnel services.
(d) Design, engineering, construction, or maintenance of real
property and nonprocessing equipment.
(e) Plant security, fire prevention, or medical or hospital
services.
(7) As used in this section:
(a) "Industrial processing" means the activity of converting
or conditioning tangible personal property by changing the form,
composition, quality, combination, or character of the property for
ultimate sale at retail or for use in the manufacturing of a
product to be ultimately sold at retail. Industrial processing
begins when tangible personal property begins movement from raw
materials storage to begin industrial processing and ends when
finished goods first come to rest in finished goods inventory
storage.
(b) "Industrial processor" means a person who performs the
activity of converting or conditioning tangible personal property
for ultimate sale at retail or use in the manufacturing of a
product to be ultimately sold at retail.
(c) "Product", as used in subdivision (e), includes, but is
not limited to, a prototype, pilot model, process, formula,
invention, technique, patent, or similar property, whether intended
to be used in a trade or business or to be sold, transferred,
leased, or licensed.
(d) "Remanufacturing" means the activity of overhauling,
retrofitting, fabricating, or repairing a product or its component
parts for ultimate sale at retail.
(e) "Research or experimental activity" means activity
incident to the development, discovery, or modification of a
product or a product related process. Research or experimental
activity also includes activity necessary for a product to satisfy
a government standard or to receive government approval. Research
or experimental activity does not include the following:
(i) Ordinary testing or inspection of materials or products for
quality control purposes.
(ii) Efficiency surveys.
(iii) Management surveys.
(iv) Market or consumer surveys.
(v) Advertising or promotions.
(vi) Research in connection with literacy, historical, or
similar projects.
Sec. 4x. (1) A sale to a domestic air carrier of 1 or more of
the following is exempt from the tax under this act:
(a) An aircraft that has a maximum certificated takeoff weight
of at least 6,000 pounds for use solely in the transport of air
cargo, passengers, or a combination of air cargo and passengers.
(b)
Parts Before October 1,
2007, parts and materials,
excluding shop equipment or fuel, affixed or to be affixed to an
aircraft that has a maximum certificated takeoff weight of at least
6,000 pounds for use solely in the transport of air cargo,
passengers, or a combination of air cargo and passengers.
(2)
The Before October 1,
2007, the tax levied under this act
does not apply to the sale of parts or materials, excluding shop
equipment or fuel, affixed or to be affixed to an aircraft that
meets all of the following conditions:
(a) The aircraft leaves this state within 15 days after the
sooner of the issuance of the final billing or authorized approval
for final return to service, completion of the maintenance record
entry, and completion of the test flight and ground test for
inspection as required under 14 CFR 91.407.
(b) The aircraft was not based in this state or registered in
this state before the parts or materials are affixed to the
aircraft and the aircraft is not based in this state or registered
in this state after the parts or materials are affixed to the
aircraft.
(3) The tax levied under this act does not apply to the sale
of an aircraft temporarily located in this state for the purpose of
prepurchase evaluation or the purpose of prepurchase evaluation and
postsale customization if all of the following conditions are
satisfied:
(a) The aircraft leaves this state within 15 days after
authorized approval for final return to service, completion of the
maintenance record entry, and completion of the test flight and
ground test for inspection as required under 14 CFR 91.407.
(b) The aircraft was not based in this state or registered in
this state before the prepurchase evaluation or prepurchase
evaluation and postsale customization are completed and the
aircraft is not based in this state or registered in this state
after the prepurchase evaluation or prepurchase evaluation and
postsale customization are completed.
(4) A sale of an aircraft to a person for subsequent lease to
a domestic air carrier operating under a certificate issued by the
federal aviation administration under 14 CFR 121, for use solely in
the regularly scheduled transport of passengers is exempt from the
tax under this act.
(5) As used in this section:
(a) "Based in this state" means hangared or stored in this
state for not less than 10 days in not less than 3 nonconsecutive
months during the immediately preceding 12-month period.
(b) "Domestic air carrier" is limited to entities engaged
primarily in the commercial transport for hire of air cargo,
passengers, or a combination of air cargo and passengers as a
business activity.
(c) "Prepurchase evaluation" means an examination of an
aircraft to provide a potential purchaser with information relevant
to the potential purchase.
(d) "Postsale customization" means any improvement,
maintenance, or repair that is performed on an aircraft following a
transfer of ownership of the aircraft.
(e) "Registered in this state" means an aircraft registered
with the state transportation department, bureau of aeronautics or
registered with the federal aviation administration to an address
located in this state.
Sec.
4aa. (1) The Before
October 1, 2007, the tax under this
act does not apply to the sale of a motor vehicle, recreational
watercraft, snowmobile, or all terrain vehicle, not for resale, to
a resident tribal member if the motor vehicle, recreational
watercraft, snowmobile, or all terrain vehicle is for personal use
and is principally garaged, berthed, or stored within that resident
tribal member's tribe agreement area.
(2) The tax under this act does not apply to the sale of a
mobile home, not for resale, to a resident tribal member if the
mobile home is to be used as that resident tribal member's
principal residence and the mobile home is located within that
resident tribal member's tribe agreement area.
(3) As used in this section, "resident tribal member" means an
individual who meets all of the following criteria:
(a) Is an enrolled member of a federally recognized tribe.
(b) The individual's tribe has an agreement with this state
pursuant to section 30c of 1941 PA 122, MCL 205.30c, that is in
full force and effect.
(c) The individual's principal place of residence is located
within the agreement area as designated in the agreement under
subdivision (b).
Sec. 6a. (1) At the time of purchase or shipment from a
refiner, pipeline terminal operator, or marine terminal operator, a
purchaser or receiver of gasoline shall prepay a portion of the tax
imposed by this act at the rate provided in this section to the
refiner, pipeline terminal operator, or marine terminal operator
for the purchase or receipt of gasoline. If the purchase or receipt
of gasoline is made outside this state for shipment into and
subsequent sale within this state, the purchaser or receiver, other
than a refiner, pipeline terminal operator, or marine terminal
operator, shall make the prepayment required by this section
directly to the department. Prepayments shall be made at a cents
per gallon rate determined by the department and shall be based on
6% of the statewide average retail price of a gallon of self-serve
unleaded regular gasoline as determined and certified by the
department rounded up to the nearest 1/10 of 1 cent. A person who
makes prepayments direct to the department shall make those
prepayments according to the schedule in subsection (5).
(2) The rate of prepayment applied pursuant to subsection (1)
shall be determined every 6 months by the department unless the
department certifies that the change in the statewide average
retail price of a gallon of self-serve unleaded regular gasoline
has been less than 10% during the 6-month period. However, the rate
shall be determined not less than annually.
(3) A person subject to tax under this act who makes
prepayment to another person as required by this section may claim
an estimated prepayment credit on its regular monthly return filed
pursuant to section 6. The credit shall be for prepayments made
during the month for which the return is required and shall be
based upon the difference between prepayments made in the
immediately preceding month and collections of prepaid tax received
from sales or transfers. A sale or transfer for which collection of
prepaid tax is due the taxpayer is subject to a bad debt deduction
under section 4i, whether or not the sale or transfer is a sale at
retail. The credit shall not be reduced because of actual
shrinkage. A taxpayer who does not, in the ordinary course of
business sell gasoline in each month of the year, may, with the
approval of the department, base the initial prepayment deduction
in each tax year on prepayments made in a month other than the
immediately
preceding month. Estimated prepayment credits claimed
with
the return due in January 1984 shall be based on the
taxpayer's
retail sales of gasoline in December 1983. The
difference in actual prepayments shall be reconciled on the annual
return in accordance with procedures prescribed by the department.
(4) At the option of the taxpayer the estimated prepayment
credit
may be claimed on the return required to be filed under Act
No.
150 of the Public Acts of 1927, being sections 207.101 to
207.202
of the Michigan Compiled Laws the
motor fuel tax act, 2000
PA 403, MCL 207.1001 to 207.1170, instead of a claim for the credit
on the return required to be filed under section 6. Prepayments
claimed on the motor fuel tax return shall be based on the
difference in the prepayments made in the immediately preceding
month and collections of prepaid tax received from sales or
transfer and shall be for prepayments made in the month in which
the return is due. A taxpayer electing an option under this
subsection shall be entitled to a deduction under section 4i as
permitted by subsection (3). Amounts credited pursuant to this
section shall not be deducted from amounts required to be credited
to
the Michigan transportation fund pursuant to section 18b of
Act
No.
150 of the Public Acts of 1927, being section 207.118b of the
Michigan
Compiled Laws 143 of the
motor fuel tax act, 2000 PA 403,
MCL 207.1143. The department may establish procedures for the
election of claims under subsection (3) and this subsection to
avoid duplication of claims.
(5) Notwithstanding the other provisions for the payment and
remitting of tax due under this act, a refiner, pipeline terminal
operator, or marine terminal operator shall account for and remit
to the department the prepayments received pursuant to this section
in accordance with the following schedule:
(a) On or before the twenty-fifth of each month, prepayments
received after the end of the preceding month and before the
sixteenth of the month in which the prepayments are made.
(b) On or before the tenth of each month, payments received
after the fifteenth and before the end of the preceding month.
(6) A refiner, pipeline terminal operator, or marine terminal
operator who fails to remit prepayments made by a purchaser or
receiver
of gasoline is subject to the penalties provided by Act
No.
122 of the Public Acts of 1941, being sections 205.1 to 205.31
of
the Michigan Compiled Laws 1941
PA 122, MCL 205.1 to 205.31.
(7) The refiner, pipeline terminal operator, or marine
terminal operator shall not receive a deduction under section 4 for
receiving and remitting prepayments from a purchaser or receiver
pursuant to this section.
(8) The purchaser or receiver of gasoline who makes
prepayments is not subject to further liability for the amount of
the prepayment if the refiner, pipeline terminal operator, or
marine terminal operator fails to remit the prepayment.
(9) As used in this section:
(a) "Marine terminal operator" means a person who stores
gasoline at a boat terminal transfer defined as a dock, a tank, or
equipment contiguous to a dock or a tank, including equipment used
in the unloading of gasoline from a ship and in transferring the
gasoline to a tank pending wholesale bulk reshipment.
(b) "Pipeline terminal operator" means a person who stores
gasoline in tanks and equipment used in receiving and storing
gasoline from interstate and intrastate pipelines pending wholesale
bulk reshipment.
(c) "Purchase" or "shipment" does not include an exchange of
gasoline, or an exchange transaction, between refiners, pipeline
terminal operators, or marine terminal operators.
(d) "Refiner" means a person who manufactures or produces
gasoline by any process involving substantially more than the
blending of gasoline.