SB-0822, As Passed Senate, March 27, 2014
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 822
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 local community stabilization
authority created under the local community stabilization 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.
(c) "Local community stabilization share" means the local
community stabilization share tax described in section 3(5),
authorized by the amendatory act that added this section, and
included in the specific tax levied under section 3(1).
(d) "Personal property growth factor" means the average annual
growth rate for industrial and commercial personal property taxable
value from 1996 through 2012 rounded up to the nearest tenth of a
percent, which is 1.0%.
(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.
(f) "State share" means the state share tax described in
section 3(5) and included in the specific tax levied under section
3(1).
Sec. 3. (1) There is levied upon and there shall be collected
from every person in this state a specific tax, including both the
local community stabilization share and the state share, for the
privilege of using, storing, or consuming tangible personal
property in this state at a total combined 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.
(c) If a vehicle, ORV, manufactured housing, aircraft,
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
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 share tax levied by this
state and a local community stabilization share tax authorized by
the amendatory act that added section 2c and levied by the
authority, which replaces the reduced state share at the following
rates in each of the following state fiscal years:
(a) For fiscal year 2015-2016, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $96,100,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(b) For fiscal year 2016-2017, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $380,600,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(c) For fiscal year 2017-2018, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $410,500,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(d) For fiscal year 2018-2019, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $437,700,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(e) For fiscal year 2019-2020, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $465,900,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(f) For fiscal year 2020-2021, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $491,500,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(g) For fiscal year 2021-2022, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $521,300,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(h) For fiscal year 2022-2023, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $548,000,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(i) For fiscal year 2023-2024, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $561,700,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(j) For fiscal year 2024-2025, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $569,800,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(k) For fiscal year 2025-2026, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $571,400,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(l) For fiscal year 2026-2027, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $572,200,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(m) For fiscal year 2027-2028, the local community
stabilization share tax rate to be levied by the authority is that
rate calculated by the department of treasury on behalf of the
authority sufficient to generate $572,600,000.00 in revenue and the
state share tax rate is that rate determined by subtracting the
local community stabilization share tax rate from 6%.
(n) For fiscal year 2028-2029 and each fiscal year thereafter,
the local community stabilization share tax rate to be levied by
the authority is that rate calculated by the department of treasury
on behalf of the authority sufficient to generate the amount
distributed under this section in the immediately preceding year
adjusted by the personal property growth factor and the state share
tax rate is that rate determined by subtracting the local community
stabilization share tax rate from 6%.
(6) The state share 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 local community stabilization share 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 share,
as reduced by the amendatory act that added this subsection, and
the local community stabilization share, shall not exceed the
constitutional limit of 6% under section 8 of article IX of the
state constitution of 1963. The authority shall not increase any
tax or tax rate, but is authorized to and shall levy the local
community stabilization share at the rate provided in subsection
(5).
Sec. 10a. The department shall administer under this act and
under 1941 PA 122, MCL 205.1 to 205.31, the receipt and collection
of the local community stabilization share 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 local community stabilization share and the
payment of authority revenue generated by the local community
stabilization share to the authority, which is dedicated to local
purposes, including, but not limited to, police safety, fire
protection, and ambulance emergency services.
Sec. 19. (1) The tax collected by the seller from the consumer
or
lessee under this act is for the benefit of this state, and a
the authority, and the metropolitan areas of this state, including,
but not limited to, local communities within the metropolitan
areas. 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.
(2) The legislature finds and declares that the purpose of the
amendatory act that added this subsection is modernizing the tax
system to help small businesses grow and create jobs in this state.
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 share, 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
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 state school aid fund established by section 11 of article IX
of the state constitution of 1963. Funds deposited into the state
school aid fund under this subsection shall not include the portion
of the state share 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) Money received and collected under this act for the local
community stabilization share is not state funds, shall not be
credited to the state treasury, 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 local
community stabilization authority act. The local community
stabilization share is a local tax, not a state tax, and money
received and collected for the local community stabilization share
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 registered and qualified
electors of this state voting on the question at an election to be
held on the August regular election date in 2014. Except as
otherwise provided in this enacting section, this amendatory act
shall be submitted to the registered and qualified electors of this
state at that election as provided by the Michigan election law,
1954 PA 116, MCL 168.1 to 168.992, and for the purpose of complying
with section 31 of article IX of the state constitution of 1963.
Notwithstanding other law, when submitted to the registered and
qualified electors of this state, this amendatory act shall be
presented with the following question:
"APPROVAL OR DISAPPROVAL OF AMENDATORY ACT TO REDUCE STATE USE TAX
AND REPLACE WITH A LOCAL COMMUNITY STABILIZATION SHARE TO MODERNIZE
THE TAX SYSTEM TO HELP SMALL BUSINESSES GROW AND CREATE JOBS
The amendatory act adopted by the Legislature would:
1. Reduce the state use tax and replace with a local community
stabilization share of the tax for the purpose of modernizing the
tax system to help small businesses grow and create jobs in
Michigan.
2. Require Local Community Stabilization Authority to provide
revenue to local governments dedicated for local purposes,
including police safety, fire protection, and ambulance emergency
services.
3. Increase portion of state use tax dedicated for aid to
local school districts.
4. Prohibit Authority from increasing taxes.
5. Prohibit total use tax rate from exceeding existing
constitutional 6% limitation.
Should this law be approved?
YES [ ]
NO [ ]".
Enacting section 2. If approved by the registered and
qualified electors of this state as provided in enacting section 1,
this amendatory act takes effect January 1, 2015.