HB-6026, As Passed House, December 14, 2012HB-6026, As Passed Senate, December 12, 2012

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 6026

A bill to amend 1937 PA 94, entitled

"Use tax act,"

by amending sections 3, 19, and 21 (MCL 205.93, 205.109, and

205.111), section 3 as amended by 2007 PA 103, section 19 as added

by 2004 PA 172, and section 21 as amended by 2010 PA 37, and by

adding sections 2c and 10a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 2c. As used in this act:

(a) "Authority" means the metropolitan areas metropolitan

authority created under the Michigan metropolitan areas

metropolitan authority act.

(b) "Basic school operating mills" means school operating

mills used to calculate the state portion of a local school

district's foundation allowance under section 20 of the state

school aid act of 1979, 1979 PA 94, MCL 388.1620, and levied under

section 1211 of the revised school code, 1976 PA 451, MCL 380.1211,

by a local school district that receives from this state a portion

of its foundation allowance, as calculated under section 20(4) of

the state school aid act of 1979, 1979 PA 94, MCL 388.1620.

areas component tax described in section 3(5) and included in the

specific tax levied under section 3(1).

(d) "State component" means the state component tax described

in section 3(5) and included in the specific tax levied under

section 3(1).

(e) "State fiscal year" means the annual period fiscal

beginning on October 1 of each year and ending on September 30 in

the immediately succeeding year.

Sec. 3. (1) There is levied upon and there shall be collected

from every person in this state a specific tax for the privilege of

using, storing, or consuming tangible personal property in this

state at a total rate equal to 6% of the price of the property or

services specified in section 3a or 3b. The tax levied under this

act applies to a person who acquires tangible personal property or

services that are subject to the tax levied under this act for any

tax-exempt use who subsequently converts the tangible personal

property or service to a taxable use, including an interim taxable

use. If tangible personal property or services are converted to a

taxable use, the tax levied under this act shall be imposed without

regard to any subsequent tax-exempt use. Penalties and interest

shall be added to the tax if applicable as provided in this act.

For the purpose of the proper administration of this act and to

prevent the evasion of the tax, all of the following shall be

presumed:

(a) That tangible personal property purchased is subject to

the tax if brought into this state within 90 days of the purchase

date and is considered as acquired for storage, use, or other

consumption in this state.

(b) That tangible personal property used solely for personal,

nonbusiness purposes that is purchased outside of this state and

that is not an aircraft is exempt from the tax levied under this

act if 1 or more of the following conditions are satisfied:

(i) The property is purchased by a person who is not a resident

of this state at the time of purchase and is brought into this

state more than 90 days after the date of purchase.

(ii) The property is purchased by a person who is a resident of

this state at the time of purchase and is brought into this state

more than 360 days after the date of purchase.

(2) The tax imposed by this section for the privilege of

using, storing, or consuming a vehicle, ORV, manufactured housing,

aircraft, snowmobile, or watercraft shall be collected before the

transfer of the vehicle, ORV, manufactured housing, aircraft,

snowmobile, or watercraft, except a transfer to a licensed dealer

or retailer for purposes of resale that arises by reason of a

transaction made by a person who does not transfer vehicles, ORVs,

manufactured housing, aircraft, snowmobiles, or watercraft in the

ordinary course of his or her business done in this state. The tax

on a vehicle, ORV, snowmobile, and watercraft shall be collected by

the secretary of state before the transfer of the vehicle, ORV,

snowmobile, or watercraft registration. The tax on manufactured

housing shall be collected by the department of ~~consumer and~~

~~industry services~~ licensing and regulatory affairs, mobile home

commission, or its agent before the transfer of the certificate of

title. The tax on an aircraft shall be collected by the department

of treasury. The price tax base of a new or previously owned car or

truck held for resale by a dealer and that is not exempt under

section 4(1)(c) is the purchase price of the car or truck

multiplied by 2.5% plus $30.00 per month beginning with the month

that the dealer uses the car or truck in a nonexempt manner.

(3) The following transfers or purchases are not subject to

use tax:

(a) A transaction or a portion of a transaction if the

transferee or purchaser is the spouse, mother, father, brother,

sister, child, stepparent, stepchild, stepbrother, stepsister,

grandparent, grandchild, legal ward, or a legally appointed

guardian with a certified letter of guardianship, of the

transferor.

(b) A transaction or a portion of a transaction if the

transfer is a gift to a beneficiary in the administration of an

estate.

snowmobile, or watercraft that has once been subjected to the

Michigan sales or use tax is transferred in connection with the

organization, reorganization, dissolution, or partial liquidation

House Bill No. 6026 as amended December 12, 2012

of an incorporated or unincorporated business and the beneficial

ownership is not changed.

(d) If an insurance company licensed to conduct business in

this state acquires ownership of a late model distressed vehicle as

defined in section 12a of the Michigan vehicle code, 1949 PA 300,

MCL 257.12a, through payment of damages in response to a claim or

when the person who owned the vehicle before the insurance company

reacquires ownership from the company as part of the settlement of

a claim.

(4) The department may utilize the services, information, or

records of any other department or agency of state government or of

the authority in the performance of its duties under this act, and

other departments or agencies of state government and the authority

are required to furnish those services, information, or records

upon the request of the department.

(5) ~~Any decrease in the rate of the tax levied under~~

~~subsection (1) on services subject to tax under this act shall~~

~~apply only to billings rendered on or after the effective date of~~

~~the decrease.~~Beginning on October 1, 2015, the specific tax levied

under subsection (1) includes both a state component tax levied by

this state and a metropolitan areas component tax levied by the

authority at the following rates in each of the following state

fiscal years:

(a) For fiscal year 2015-2016, the metropolitan areas

component rate is that rate calculated by the department of

treasury sufficient to generate <<$41,700,000.00>> in revenue and the

state component rate is that rate determined by subtracting the

House Bill No. 6026 as amended December 12, 2012

metropolitan areas component rate from 6%.

(b) For fiscal year 2016-2017, the metropolitan areas

component rate is that rate calculated by the department of

treasury sufficient to generate <<$257,500,000.00>> in revenue and the

state component rate is that rate determined by subtracting the

metropolitan areas component rate from 6%.

component rate is that rate calculated by the department of

treasury sufficient to generate <<$277,100,000.00>> in revenue and the

state component rate is that rate determined by subtracting the

metropolitan areas component rate from 6%.

(d) For fiscal year 2018-2019, the metropolitan areas

component rate is that rate calculated by the department of

treasury sufficient to generate <<$293,800,000.00>> in revenue and the

state component rate is that rate determined by subtracting the

metropolitan areas component rate from 6%.

(e) For fiscal year 2019-2020, the metropolitan areas

component rate is that rate calculated by the department of

treasury sufficient to generate <<$311,300,000.00>> in revenue and the

state component rate is that rate determined by subtracting the

metropolitan areas component rate from 6%.

(f) For fiscal year 2020-2021, the metropolitan areas

component rate is that rate calculated by the department of

treasury sufficient to generate <<$326,800,000.00>> in revenue and the

state component rate is that rate determined by subtracting the

metropolitan areas component rate from 6%.

(g) For fiscal year 2021-2022, the metropolitan areas

House Bill No. 6026 as amended December 12, 2012

component rate is that rate calculated by the department of

treasury sufficient to generate <<$345,200,000.00>> in revenue and the

state component rate is that rate determined by subtracting the

metropolitan areas component rate from 6%.

<<(h) For fiscal year 2022-2023, the metropolitan areas component rate is that rate calculated by the department of treasury sufficient to

generate $362,400,000.00 in revenue and the state component rate is

that rate determined by subtracting the metropolitan areas component

rate from 6%.

(i)>> For fiscal year <<2023-2024>> and each fiscal year

thereafter,

the metropolitan areas component rate is that rate calculated by

the department of treasury sufficient to generate the amount

distributed under this section in the immediately preceding year

adjusted by an industrial and commercial personal property growth

factor calculated by the department of treasury and the state

component rate is that rate determined by subtracting the

metropolitan areas component rate from 6%.

(6) The state component includes the portion of the use tax

imposed at the additional rate of 2% approved by the electors of

this state on March 15, 1994 and dedicated for aid to schools under

section 21(2). The metropolitan areas component does not include

the portion of the use tax imposed at the additional rate of 2%

approved by the electors of this state on March 15, 1994.

(7) The total combined rate of the tax levied by this state

and the authority under this act, including both the state

component and the metropolitan areas component, shall not exceed

6%.

Sec 10a. The department shall administer under this act and

under 1941 PA 22, MCL 205.1 to 205.31, the receipt and collection

of the metropolitan areas component on behalf of the authority as

an agent of the authority. The department may enter into an

agreement with the authority relating to the receipt and collection

of the metropolitan areas component and the payment of authority

revenue generated by the metropolitan areas component to the

authority.

Sec. 19. The tax collected by the seller from the consumer or

lessee under this act is for the benefit of this state, the

authority, and the metropolitan areas of this state and a person

other than this state, the authority, and the metropolitan areas of

this state shall not derive a benefit from the collection or

payment of this tax.

Sec. 21. (1) Except as provided in subsections (2), ~~and~~ (3),

and (4), all money received and collected under this act shall be

deposited by the department of treasury in the state treasury to

the credit of the general fund, to be disbursed only by

appropriations by the legislature.

(2) The collections from the use tax imposed at the additional

rate of 2% approved by the electors March 15, 1994 shall be

deposited in the state school aid fund established in section 11 of

article IX of the state constitution of 1963.

~~(3) For the fiscal year ending September 30, 2010 only,~~

~~$9,500,000.00 shall be deposited by the department of treasury into~~

~~the Michigan promotion fund. As used in this subsection, "Michigan~~

~~promotion fund" means the fund created in section 39 of the~~

~~Michigan strategic fund act, 1984 PA 270, MCL 125.2039.~~

(3) From the money received and collected under this act for

the state component, an amount equal to all revenue lost under the

state education tax act, 1993 PA 331, MCL 211.901 to 211.906, and

all revenue lost from basic school operating mills as a result of

House Bill No. 6026 as amended December 12, 2012

the exemption of personal property under section 9m, 9n, and 9o of

the general property tax act, 1893 PA 206, MCL 211.9m, 211.9n, and

211.9o, as determined by the department, shall be deposited into

the school aid fund established by section 11 of article IX of the

state constitution of 1963. <<Funds deposited into the school aid fund

under this subsection shall not include the portion of the state

component of the use tax imposed at the additional rate of 2% approved

by the electors of this state on March 15, 1994 and dedicated for aid

to schools under subsection (2).>>

(4) All money received and collected under this act for the

metropolitan areas component shall not be deposited in the state

treasury as state funds and shall be transmitted to the authority

for deposit in the treasury of the authority, to be disbursed by

the authority only as authorized under the Michigan metropolitan

areas metropolitan authority act. The metropolitan areas component

is a local tax, not a state tax, and money received and collected

for the metropolitan areas component is money of the authority and

not money of this state.

Enacting section 1. This amendatory act does not take effect

unless approved by a majority of the qualified electors of this

state voting on the question at an election to be held on the

August regular election date in 2014. This amendatory act shall be

submitted to the qualified electors of this state at that election

as provided by the Michigan election law, 1954 PA 116, MCL 168.1 to

168.992. When submitted to the qualified electors of this state,

this amendatory act shall be presented with the following question:

"APPROVAL OR DISAPPROVAL OF THE AMENDATORY ACT DEDICATING A PORTION

OF USE TAX REVENUE TO BENEFIT METROPOLITAN AREAS THROUGHOUT THIS

STATE

The amendatory act adopted by the Legislature would:

1. Dedicate a portion of the existing state use tax as a local

tax levied by a new metropolitan areas authority.

2. Distribute revenue from that local tax throughout the state

for local purposes, including police and fire protection.

3. Increase that portion of the state use tax currently

dedicated for aid to schools.

4. Prohibit the total use tax rate from exceeding the

constitutional limit of 6%.

Should this amendatory act be approved?

YES [ ]

NO [ ]".

Enacting section 2. If approved by the qualified electors of

this state as provided in enacting section 2, this amendatory act

takes effect January 1, 2015.