SB-0563, As Passed Senate, December 15, 2011

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE SUBSTITUTE FOR

 

SENATE BILL NO. 563

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1893 PA 206, entitled

 

"The general property tax act,"

 

by amending section 9 (MCL 211.9), as amended by 2008 PA 337.

 

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.

 

     (c) The property of posts of the grand army of the republic,

 

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, collecting,

 

evaporating, and preparing maple syrup if the owner of the property

 

has $25,000.00 or less in annual gross wholesale sales, 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.

 

     (C) The person claiming an exemption cooperates by allowing

 

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

 

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 energy.

 

     (v) 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.

 

     (vi) Machinery used to install land tile on property exempt

 

under section 7ee as qualified agricultural property. If machinery

 

is used to install land tile on property other than qualified

 

agricultural property, that machinery is exempt only to the extent

 

that it is used to install land tile on qualified agricultural

 

property. A person claiming an exemption under this section shall

 

indicate the machinery's percentage of exempt use in the statement

 

submitted under section 19. As used in this subparagraph, "land

 

tile" means fired clay or perforated plastic tubing used as part of

 

a subsurface drainage system for land.

 

     (vii) Machinery used to install or implement soil and water

 

conservation techniques on property exempt under section 7ee as

 

qualified agricultural property. If machinery is used to install or

 

implement soil and water conservation techniques on property other

 

than qualified agricultural property, that machinery is exempt only

 

to the extent that it is used to install or implement soil and

 

water conservation techniques on qualified agricultural property. A

 

person claiming an exemption under this section shall indicate the

 

machinery's percentage of exempt use in the statement submitted

 

under section 19. As used in this subparagraph, "soil and water

 

conservation techniques" means techniques for the conservation of

 

soil and water described in the field office technical guide

 

published by the natural resources conservation service of the

 

United States department of agriculture.

 

     (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 real property that 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 under this section. 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 under

 

this section.

 

     (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 the collection of taxes under this act. 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.

 

     (c) "Methane digester electric generating system" means a

 

methane digester and the apparatus and equipment used to generate

 

electricity or heat from biogas or to store biogas for the future

 


generation of electricity or heat.