November 10, 2011, Introduced by Reps. Segal, Meadows, Jackson, Brown, Liss, Barnett, Slavens, Lindberg, Switalski, Irwin and Howze and referred to the Committee on Banking and Financial Services.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 625 (MCL 206.625), as added by 2011 PA 38.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 625. (1) Except as otherwise provided in this section,
the following are exempt from the tax imposed by this part:
(a) The United States, this state, other states, and the
agencies, political subdivisions, and enterprises of the United
States, this state, and other states.
(b) A person who is exempt from federal income tax under the
internal revenue code except the following:
(i) An organization included under section 501(c)(12) or
501(c)(16) of the internal revenue code.
(ii) An organization exempt under section 501(c)(4) of the
internal revenue code that would be exempt under section 501(c)(12)
of the internal revenue code except that it failed to meet the
requirements in section 501(c)(12) that 85% or more of its income
consist of amounts collected from members.
(iii) The tax base attributable to unrelated business activities
giving rise to the unrelated business taxable income of an exempt
person.
(c) A foreign person that is domiciled in a member country of
the North American free trade agreement is not subject to taxation
under this part if the foreign person is domiciled in a subnational
jurisdiction that does not impose an income tax on a similarly
situated person domiciled in this state whose presence in the
foreign country is the same as the foreign person's presence in the
United States. If a qualifying foreign person is domiciled in a
subnational jurisdiction that does not impose an income tax on
businesses, but instead imposes some other type of subnational
business tax, that foreign person is not subject to taxation under
this part if that subnational business tax is not imposed on a
similarly situated person domiciled in this state whose presence in
the foreign country is the same as the foreign person's presence in
the United States.
(d) A Michigan business development corporation as defined
under section 3 of the business development corporation act.
(e) That portion of the tax base of a financial institution
that is a loan participant and attributable to its participation in
a qualified loan transaction. As used in this subdivision, "loan
participant" and "qualified loan transaction" mean these terms as
defined in section 3 of the business development corporation act.
(2) Notwithstanding any other provision of this part to the
contrary, a foreign person subject to tax under this part shall
calculate its corporate income tax base under this section. Except
as otherwise provided in this section, the corporate income tax
base of a foreign person is subject to all adjustments and other
provisions of this part. However, the corporate income tax base
shall not include proceeds from sales where title passes outside
the United States.
(3) Except as otherwise provided in this section, the
corporate income tax base of a foreign person includes the sum of
business income and the adjustments under section 623 that are
related to United States business activity.
(4) The sales factor for a foreign person is a fraction, the
numerator of which is the taxpayer's total sales in this state
where title passes inside the United States during the tax year and
the denominator of which is the taxpayer's total sales in the
United States where title passes inside the United States during
the tax year.
(5) As used in this section:
(a) "Business income" means, for a foreign person, gross
income attributable to the taxpayer's United States business
activity and gross income derived from sources within the United
States minus the deductions allowed under the internal revenue code
that are related to that gross income. Gross income includes the
proceeds from sales shipped or delivered to any purchaser within
the United States and for which title transfers within the United
States; proceeds from services performed within the United States;
and a pro rata proportion of the proceeds from services performed
both within and outside the United States to the extent the
recipient receives benefit of the services within the United
States.
(b) "Domiciled" means the location of the headquarters of the
trade or business from which the trade or business of the foreign
person is principally managed and directed.
(c) "Foreign person" means a person formed under the laws of a
foreign country or a political subdivision of a foreign country,
whether or not the person is subject to taxation under the internal
revenue code.
Enacting section 1. This amendatory act takes effect January
1, 2012.
Enacting section 2. This amendatory act does not take effect
unless all of the following bills of the 96th Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 5168(request no.
01418'11).
(b) Senate Bill No.____ or House Bill No. 5169(request no.
01519'11).