SB-0830, As Passed Senate, March 27, 2014

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 830

     A bill to levy a tax on certain personal property; to provide

for the administration, collection, and distribution of the tax; to

impose certain duties on persons and certain state departments; to

impose penalties; and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1. This act shall be known and may be cited as the

"alternative state essential services assessment act".

     Sec. 3. As used in this act:

     (a) "Acquisition cost" means the fair market value of personal

property at the time of acquisition by the current owner, including

the cost of freight, sales tax, and installation, and other

capitalized costs, except capitalized interest. There is a

rebuttable presumption that the acquisition price paid by the

current owner for personal property, and any costs of freight,

sales tax, and installation, and other capitalized costs, except

capitalized interest, reflect the fair market value of the personal

property. For personal property exempt under section 9m or 9n of

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

that would otherwise be exempt under section 7k of the general

property tax act, 1893 PA 206, MCL 211.7k, and for personal

property subject to an extended industrial facilities exemption

certificate under section 11a of 1974 PA 198, MCL 207.561a,

acquisition cost means 1/2 of the fair market value of that

personal property at the time of acquisition by the current owner.

The acquisition cost for personal property exempt under the

renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696, is

$0.00 except for the 3 years immediately preceding the expiration

of the exemption of that personal property under the renaissance

zone act, 1996 PA 376, MCL 125.2681 to 125.2696, during which

period of time the acquisition cost for that personal property

means the fair market value of that personal property at the time

of acquisition by the current owner multiplied by the percentage

reduction in the exemption as provided in section 9(3) of the

renaissance zone act, 1996 PA 376, MCL 125.2689. The state tax

commission may provide guidelines for circumstances in which the

actual acquisition price is not determinative of fair market value

and the basis of determining fair market value in those

circumstances, including when that property is idle, obsolete, or

surplus.

     (b) "Assessment" means the alternative state essential

services assessment levied under section 5.

Senate Bill No. 830 (H-1) as amended March 25, 2014

     (c) "Assessment year" means the year in which the alternative

state essential services assessment levied under section 5 is due.

     (d) "Eligible claimant" means a person that owns, leases, or

is in the possession of eligible personal property.

     (e) "Eligible personal property" means personal property

exempt from the tax levied under the state essential services

assessment act and determined to be subject to the alternative

state essential services assessment as provided in section 9 of the

state essential services assessment act.

     Sec. 5. (1) Beginning January 1, 2016, the alternative state

essential services assessment is levied on all eligible personal

property as provided in this section.

     (2) The assessment under this section is a state tax on the

eligible personal property owned by, leased to, or in the

possession of an eligible claimant on December 31 of the year

immediately preceding the assessment year and shall be calculated

as follows:

     (a) For eligible personal property [acquired] by the eligible

claimant in a year 1 to 5 years before the assessment year,

multiply the acquisition cost of the eligible personal property by

50% of the mills levied under section 5(2)(a) of the state

essential services assessment act.

     (b) For eligible personal property [acquired] by the eligible

claimant in a year 6 to 10 years before the assessment year,

multiply the acquisition cost of the eligible personal property by

50% of the mills levied under section 5(2)(b) of the state

essential services assessment act.

Senate Bill No. 830 (H-1) as amended March 25, 2014

     (c) For eligible personal property [acquired] by the eligible

claimant in a year more than 10 years before the assessment year,

multiply the acquisition cost of the eligible personal property by

50% of the mills levied under section 5(2)(c) of the state

essential services assessment act.

     Sec. 7. (1) The department of treasury shall collect and

administer the alternative state essential services assessment as

provided in this section.

     (2) Not later than May 1 in each assessment year, the

department of treasury shall make available in electronic form to

each eligible claimant a statement for calculation of the

assessment as provided in section 5.

     (3) Not later than September 15 in each assessment year, each

eligible claimant shall submit electronically to the department of

treasury the completed statement and full payment of the assessment

levied under section 5 for that assessment year as calculated in

section 5(2). The department of treasury may waive or delay the

electronic filing requirement at its discretion. A statement

submitted by an eligible claimant shall include all of the eligible

claimant's eligible personal property located in this state subject

to the assessment levied under section 5 and, beginning in 2019,

specify the location of that property on December 31 of the year

immediately preceding the assessment year.

     (4) If an eligible claimant does not submit the statement and

full payment of the assessment levied under section 5 by September

15, the department of treasury shall issue a notice to the eligible

claimant not later than October 15. The notice shall include a

statement explaining the consequences of nonpayment as set forth in

subsection (5) and instructing the eligible claimant of its

potential responsibility under subsection (5)(e). An eligible

claimant shall submit payment in full by November 1 of the

assessment year along with a penalty of 1% per week on the unpaid

balance for each week payment is not made in full up to a maximum

of 5% of the total amount due and unpaid. For the eligible

claimant's first assessment year, the penalty shall be waived if

the eligible claimant submits the statement and full payment of the

assessment levied under section 5 within 7 business days of

September 15.

     (5) If an eligible claimant does not submit payment in full

and any penalty due under subsection (4) by November 1, all of the

following shall apply:

     (a) The state tax commission shall direct the assessor to

rescind for the assessment year any exemption described in section

9m or 9n of the general property tax act, 1893 PA 206, MCL 211.9m

and 211.9n, granted for the eligible personal property.

     (b) The state tax commission shall rescind for the assessment

year any exemption under section 9f of the general property tax

act, 1893 PA 206, MCL 211.9f, which exemption was approved under

section 9f of the general property tax act, 1893 PA 206, MCL

211.9f, after 2013.

     (c) The state tax commission shall rescind for the assessment

year any exemption for eligible personal property subject to an

extended industrial facilities exemption certificate under section

11a of 1974 PA 198, MCL 207.561a.

     (d) The state tax commission shall rescind for the assessment

year any extended exemption for eligible personal property under

section 9f(8)(a) of the general property tax act, 1893 PA 206, MCL

211.9f.

     (e) The claimant shall file not later than November 10 a

statement under section 19 of the general property tax act, 1893 PA

206, MCL 211.19, for all property for which the exemption has been

rescinded under this section.

     (f) All taxes due as a result of a rescission by the

department of treasury or by the state tax commission under

subdivisions (a) to (d) that were not billed under the general

property tax act, 1893 PA 206, MCL 211.1 to 211.155, or under 1974

PA 198, MCL 207.551 to 207.572, on the summer bill shall be billed

under the general property tax act, 1893 PA 206, MCL 211.1 to

211.155, or under 1974 PA 198, MCL 207.551 to 207.572, on the

winter tax bill.

     (g) A person who files a statement under section 7 shall

provide access to the books and records relating to the

description; the date of purchase, lease, or acquisition; and the

purchase price, lease amount, or value of all industrial personal

property and commercial personal property owned by, leased by, or

in the possession of that person or a related entity if requested

by the assessor of the local tax collecting unit, county

equalization department, or department of treasury for the year in

which the statement is filed and the immediately preceding 3 years.

     (6) An eligible claimant may appeal an assessment levied under

section 5 or a penalty or rescission under this section to the

state tax commission by filing a petition not later than December

31 in that tax year. The department of treasury may appeal to the

state tax commission by filing a petition for the current calendar

year and 3 immediately preceding calendar years. The state tax

commission shall decide any appeal based on the written petition

and the written recommendation of state tax commission staff and any

other relevant information. The department of treasury or any

eligible claimant may appeal the decision of the state tax

commission to the Michigan tax tribunal.

     Sec. 9. (1) Proceeds of the assessment collected under section

7 shall be credited to the general fund.

     (2) Beginning in fiscal year 2014-2015 and each fiscal year

thereafter, the legislature shall appropriate funds in an amount

equal to the necessary expenses incurred by the department of

treasury in implementing this act.

     Enacting section 1. This act does not take effect unless

Senate Bill No. 822 of the 97th Legislature is 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.

     Enacting section 2. The legislature declares that stable local

government funding and a tax system that allows individuals, small

businesses, and large businesses to thrive and create jobs in this

state are priorities of state government. The legislature also

declares that all state priorities should be considered in enacting

any legislation that has a fiscal impact and that any costs should

be managed in a fiscally responsible way. In furtherance of these

objectives, the legislature has reduced the state use tax under

section 3 of the use tax act, 1937 PA 94, MCL 205.93, and replaced

the portion reduced with a use tax levied by the local community

stabilization authority on behalf of local units of government

throughout this state to provide more stable funding for local

units of government than exists today. It is the intent of the

legislature to offset the fiscal impact on the state general fund

resulting from the reduction of the state use tax with new revenue

generated by the assessment levied under this act and with new

revenue resulting from the expiration of over $630,000,000.00 in

expiring refundable tax credits that were awarded to individual

businesses under tax laws enacted by past legislatures.