SB-0822, As Passed House, March 25, 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.