November 28, 2007, Introduced by Rep. Calley and referred to the Committee on Tax Policy.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending sections 7hh and 8a (MCL 211.7hh and 211.8a), section
7hh as added by 2004 PA 252 and section 8a as amended by 1998 PA
537.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 7hh. (1) Notwithstanding the tax day provided in section
2 and except as limited in subsection (5) and otherwise provided in
subsection (7), for taxes levied after December 31, 2004, real and
personal property of a qualified start-up business is exempt from
taxes levied under this act for each tax year in which all of the
following occur:
(a) The qualified start-up business applies for the exemption
as provided in subsection (2) or (3).
(b) The governing body of the local tax collecting unit adopts
a resolution approving the exemption as provided in subsection (4).
(2) Except as otherwise provided in subsection (3), a
qualified start-up business may claim the exemption under this
section by filing an affidavit on or before May 1 in each tax year
with the assessor of the local tax collecting unit. The affidavit
shall be in a form prescribed by the state tax commission. The
affidavit shall state that the qualified start-up business was
eligible for and claimed the qualified start-up business credit
under section 31a of the single business tax act, 1975 PA 228, MCL
208.31a, or section 415 of the Michigan business tax act, 2007 PA
36, MCL 208.1415, for the applicant's last tax year ending before
May 1. The affidavit shall include all of the following:
(a) A copy of the qualified start-up business's annual return
filed under the single business tax act, 1975 PA 228, MCL 208.1 to
208.145, or the Michigan business tax act, 2007 PA 36, MCL 208.1101
to 208.1601, in which the qualified start-up business claimed the
qualified start-up business credit under section 31a of the single
business tax act, 1975 PA 228, MCL 208.31a, or section 415 of the
Michigan business tax act, 2007 PA 36, MCL 208.1415.
(b) A statement authorizing the department of treasury to
release information contained in the qualified start-up business's
annual return filed under the single business tax act, 1975 PA 228,
MCL 208.1 to 208.145, or the Michigan business tax act, 2007 PA 36,
MCL 208.1101 to 208.1601, that pertains to the qualified start-up
business credit claimed under section 31a of the single business
tax act, 1975 PA 228, MCL 208.31a, or section 415 of the Michigan
business tax act, 2007 PA 36, MCL 208.1415.
(3) If a qualified start-up business applies for an extension
for filing its annual single business tax return under section 73
of the single business tax act, 1975 PA 228, MCL 208.73, or section
505 of the Michigan business tax act, 2007 PA 36, MCL 208.1505, the
qualified start-up business may claim the exemption under this
section after May 1 if all of the following conditions are met:
(a) The governing body of the local tax collecting unit adopts
a resolution under subsection (4)(b) approving the exemption for
all qualified start-up businesses that apply for an extension for
filing the annual single business tax return under section 73 of
the single business tax act, 1975 PA 228, MCL 208.73, or section
505 of the Michigan business tax act, 2007 PA 36, MCL 208.1505.
(b) The qualified start-up business submits a copy of its
application for an extension for filing its annual single business
tax return under section 73 of the single business tax act, 1975 PA
228, MCL 208.73, or section 505 of the Michigan business tax act,
2007 PA 36, MCL 208.1505, and the affidavit described in subsection
(2) to the December board of review provided in section 53b. For
purposes of section 53b, an exemption granted under this subsection
shall be considered the correction of a clerical error.
(4) On or before its last meeting in May in each tax year, the
governing body of a local tax collecting unit may adopt a
resolution approving the exemption provided in this section. The
clerk of the local tax collecting unit shall notify in writing the
assessor of the local tax collecting unit and the legislative body
of each taxing unit that levies ad valorem property taxes in the
local tax collecting unit. Before acting on the resolution, the
governing body of the local tax collecting unit shall afford the
assessor and a representative of the affected taxing units an
opportunity for a hearing. A resolution approving the exemption
provided in this section may be for 1 or both of the following:
(a) One or more of the individual qualified start-up
businesses that claim the exemption under this section by filing an
affidavit on or before May 1 as provided in subsection (2).
(b) All qualified start-up businesses that claim the exemption
under this section after May 1 as provided in subsection (3).
(5) A qualified start-up business shall not receive the
exemption under this section for more than a total of 5 tax years.
A qualified start-up business may receive the exemption under this
section in nonconsecutive tax years.
(6) If an exemption under this section is erroneously granted,
the tax rolls shall be corrected for the current tax year and the 3
immediately preceding tax years. The property that had been subject
to that exemption shall be immediately placed on the tax roll by
the local tax collecting unit if the local tax collecting unit has
possession of the tax roll or by the county treasurer if the county
has possession of the tax roll as though the exemption had not been
granted. A corrected tax bill shall be issued for the tax year
being adjusted by the local tax collecting unit if the local tax
collecting unit has possession of the tax roll or by the county
treasurer if the county has possession of the tax roll. If an owner
pays the corrected tax bill issued under this subsection within 60
days after the corrected tax bill is issued, that owner is not
liable for any penalty or interest on the additional tax. If an
owner pays a corrected tax bill issued under this subsection more
than 60 days after the corrected tax bill is issued, the owner is
liable for the penalties and interest that would have accrued if
the exemption had not been granted from the date the taxes were
originally levied.
(7) Real and personal property of a qualified start-up
business is not exempt from collection of the following:
(a) A special assessment levied by the local tax collecting
unit in which the property is located.
(b) Ad valorem property taxes specifically levied for the
payment of principal and interest of obligations approved by the
electors or obligations pledging the unlimited taxing power of the
local governmental unit.
(c) A tax levied under section 705 or 1212 of the revised
school code, 1976 PA 451, MCL 380.705 and 380.1212.
(8) As used in this section, "qualified start-up business"
means that term as defined in section 31a of the single business
tax act, 1975 PA 228, MCL 208.31a, or section 415 of the Michigan
business tax act, 2007 PA 36, MCL 208.1415.
Sec. 8a. (1) Qualified personal property made available by a
person that is a qualified business for use by another person shall
not be assessed to the qualified business and instead is assessable
and taxable to the user who acquires or possesses the qualified
personal property to the extent provided for in this section.
Property assessed under this section shall not be required to be
assessed separately from other personal property assessed to the
user.
(2) A person who is a qualified business that makes available
qualified personal property shall file the statement required by
section
18 19 not later than February 1. A person to whom
qualified
personal property is taxable as provided in this section shall file
the
statement required by section 18 19 by February 20 and shall
include the qualified personal property on that statement. The
statement filed by the qualified business shall include, itemized
for each user, all of the following for all qualified personal
property:
(a) The name of the qualified business.
(b) The user responsible for payment of the tax.
(c) The type of property.
(d) The location of the property, as indicated in the records
of the qualified business.
(e) The purchase price including sales tax, freight, and
installation.
(f) The year the property was purchased.
(g) If the qualified business is the manufacturer of the
property, the original selling price, and if there is no original
selling price, then the original cost.
(h) The amount and frequency of periodic payments required of
the user.
(i) An affirmation that the person making the statement is a
qualified business and that property included in the statement is
qualified personal property as defined in this section.
(3) A user of qualified personal property may request from the
assessor, and the assessor shall provide, a copy of that portion of
the statement filed by the qualified business by February 1 that
includes qualified personal property for that user. If a good faith
statement is not filed by February 1, or if property is not
included in the statement required to be filed by February 1, then
that property omitted or not reported is assessable and taxable to
the person who makes the property available regardless of whether
the person is a qualified business or the property is qualified
personal property.
(4) A designee of the local tax collecting unit who is a
certified assessor may examine the books and records of a person
who
files the statement required by section 18 19 that
are
necessary to determine if property included in the statement
required
by section 18 19 is qualified personal property. A person
is not required to be a certified personal property examiner to
examine books and records pursuant to this subsection.
(5) The state tax commission shall develop additions to the
statement
required by section 18 19 necessary to assure that
property reported pursuant to subsection (2) is certified under
oath to be qualified personal property reported by a person to whom
qualified personal property is taxable.
(6) As used in this section:
(a) "Employee" means a person who performs a service for wages
or other remuneration under a contract of hire, written or oral,
express or implied.
(b) "Qualified business" means a for-profit business that
obtains services relating to that business from 30 or fewer
employees or employees of independent contractors performing
services substantially similar to employees during a random week in
the
year ending on the tax day. If a person is an entity under
common
control or is a member of an affiliated group as those terms
are
used in section 36(7) of the single business tax act, 1975 PA
228,
MCL 208.36 a unified business
group as that term is defined in
section 117 of the Michigan business tax act, 2007 PA 36, MCL
208.1117, the number of employees from whom services are obtained
includes all employees of the unitary business group and employees
of independent contractors of the unitary business group rendering
services to the qualified business.
(c) "Qualified personal property" means property on which a
retail sales tax has been paid or liability accrued contemporaneous
with the user acquiring possession of the property, or on which
sales tax would be payable if the property was not exempt, and that
is subject to an agreement entered into after December 31, 1993 to
which all of the following apply:
(i) A party engaged in a for-profit business obtains the right
to use or possess personal property in exchange for making periodic
payments for a noncancelable term of 12 months or more.
(ii) The party making periodic payments can obtain legal title
to the property by making all the periodic payments or all of the
periodic payments and a final payment that is less than the true
cash value of the property determined using state tax commission
cost multipliers for personal property.
(iii) The written agreement between the qualified business and
the party making periodic payments requires that party to report
the
property as qualified personal property pursuant to section 18
19 and to pay taxes assessed against the property.
(d) "Random week" means a 7-day period during a calendar year
beginning on a Monday and ending on a Sunday that is selected at
random. Not later than January 15 each year, the state tax
commission shall establish the random week for the immediately
preceding year.
(7) This section does not affect the requirements for
reporting or assessing personal property acquired or possessed by a
nonprofit organization.