HOUSE BILL NO. 5605

A bill relating to the promotion of convention business and tourism in this state; to provide for promotion, regulation, registration, or licensure of certain short-term rentals and hosting platforms; to provide for imposition and collection of a statewide excise tax; to provide for the disbursement of the excise tax; to establish the functions and duties of certain state departments, agencies, and employees and certain local units of government; to allow local units of government to register and regulate short-term rentals; and to prescribe penalties and remedies.

the people of the state of michigan enact:

Sec. 1. This act may be cited as the "Michigan short-term rental regulation and taxation act".

Sec. 2. As used in this act:

(a) "Booking transaction" means when a hosting platform facilitates a short-term rental transaction by directly or indirectly enabling the reservation of a short-term rental or collecting or processing room charges for a short-term rental.

(b) "Department" means the department of treasury.

(c) "Hosting platform" means a platform, third-party website, software, online-enabled application, mobile phone application, or some other similar electronic or non-electronic process through which a short-term rental located in this state may be advertised, listed, or offered as available.

(d) "Local unit of government" means a county, city, township, or village.

(e) "Michigan housing and community development fund" means the Michigan housing and community development fund created in section 58a of the state housing development authority act of 1965, 1966 PA 346, MCL 125.1458a.

(f) "Owner" means the owner of a short-term rental located within this state or, if the short-term rental is operated or managed by a person other than the owner, then the owner agent of that short-term rental.

(g) "Owner agent" means a person who operates or manages property offered for short-term rental.

(h) "Room charge" means the charge imposed for the use or occupancy of a short-term rental, excluding charges for food, beverages, state use tax, telephone service or like services paid in connection with the charge, and reimbursement of the excise tax imposed by this act.

(i) "Short-term rental" means the rental of all or a portion of a residential dwelling, including, but not limited to, any single-family residence, 1- to 4-family house or dwelling unit, or condominium unit for terms of not more than 30 consecutive days. Short-term rental also includes rooms or lodging furnished by hotelkeepers, motel operators, and other persons furnishing accommodations as described in section 3a(1)(b) of the use tax act, 1937 PA 94, MCL 205.93a. Short-term rentals do not include convention hotels as defined in section 3 of the state convention facility development act, 1985 PA 106, MCL 207.623.

(j) "Short-term rental excise tax" or "excise tax" means the short-term rental excise tax levied on each short-term rental  transaction under section 3.

(k) "Use tax" means the tax imposed under the use tax act, 1937 PA 94, MCL 205.91 to 205.111.

Sec. 3. A statewide excise tax known as the short-term rental excise tax is levied on the room charge of each use or occupancy of a short-term rental located in a county in which a convention hotel is located as described in section 3 of the state convention facility development act, 1985 PA 106, MCL 207.623. The rate of the short-term rental excise tax is the same percentage rate of the room charge that is levied under section 4 of the state convention facility development act, 1985 PA 106, MCL 207.624.

Sec. 4. (1) The excise tax imposed by this act shall be collected at the same time and remitted in the same manner as the use tax.

(2) A local unit of government shall not levy any additional accommodation tax in excess of the statewide excise tax described in subsection (1). A local unit of government may not continue to levy, assess, and collect an excise tax authorized by law before the effective date of this act.

Sec. 5. (1) The excise tax imposed by this act shall be administered by the state treasurer under 1941 PA 122, MCL 205.1 to 205.31.

(2) The state treasurer shall prescribe the forms necessary for the administration of this act and may promulgate necessary rules under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

(3) The excise tax imposed under this act is in addition to any other tax, fee, or assessment imposed by law.

Sec. 6. An owner of a short-term rental may reimburse himself or herself by adding the amount of the excise tax to the room charge charged to short-term rental guests only if the owner or owner agent discloses it on the bill or receipt provided to the short-term rental guest.

Sec. 7. Proceeds from the collection of the excise tax imposed by this act shall be deposited in the state treasury, credited to a restricted account, and, upon appropriation, distributed as follows:

(a) Twenty percent to the Michigan housing and community development fund.

(b) Eighty percent proportionally to the local unit of government in which the short-term rental is located for which the excise tax was paid.

Sec. 8. (1) Except as otherwise provided in this section, an owner or an owner agent of a short-term rental is responsible for remitting the excise tax imposed under this act.

(2) An owner may elect to have an owner agent, hosting platform, or other intermediary collect and remit room charges, use taxes, assessments, and the excise tax described in this act through a written agreement. However, if a short-term rental is offered through a hosting platform, the hosting platform shall collect and remit the use taxes and the excise tax imposed under this act to the department of treasury.

(3) Nothing in subsection (1) shall be construed to interfere with the ability of a hosting platform and an owner or owner agent to enter into a written agreement regarding the fulfillment of the requirements of this act.

(4) If a short-term rental is offered through a hosting platform, the owner, owner's agent, or operator is jointly and severally liable with the hosting platform for the collection and remittance of the excise tax imposed under this act.

(5) Nothing in this act shall relieve owners, owner agents, or operators from any responsibilities with respect to excise taxes imposed under this act for booking transactions completed other than through hosting platforms.

(6) A hosting platform is relieved of liability under this act for failure to collect the correct amount of excise tax to the extent that the hosting platform can show that the error was due to incorrect or insufficient information given to the hosting platform by the owner, owner's agent, or operator, whether intentional or unintentional.

(7) A hosting platform that collects the use tax and the excise tax as required by this section may deduct and retain a portion of the excise tax in the same amount and in the same manner as described in section 4f of the use tax act, 1937 PA 94, MCL 205.94f.

(8) If payment for the room charges for a short-term rental is collected and remitted by a hosting platform and the amount collected and remitted is incorrect due to an error or omission of the owner, owner's agent, or operator of the short-term rental, then the hosting platform is not liable for the error or omission.

(9) A hosting platform shall not release any personally identifiable information relating to an owner, owner agent, operator of the short-term rental, or guest except as required by law.

(10) The regulation of a hosting platform is limited to the provisions provided in this act.

Sec. 9. (1) An owner or owner agent of a short-term rental who violates this act is responsible for a civil fine and may be ordered by the department to pay a civil fine of not more than $1,000.00 for each violation.

(2) A hosting platform that violates this act is responsible for a civil fine and may be ordered by the department to pay a civil fine of not more than $25,000.00 for each violation.

Sec. 10. (1) A local unit of government may enact reasonable regulations for short-term rentals, not including hosting platforms, to safeguard health and safety including 1 or more of the following:

(a) Noise.

(b) The number of individuals who may occupy a dwelling.

(c) Property maintenance.

(d) Health and sanitation.

(e) Traffic control.

(f) Solid and hazardous waste and pollution control.

(g) Liability insurance covering loss or liability for short-term rental use.

(h) Designation of an emergency contact and availability of the owner or an owner agent within a specified distance of the short-term rental.

(i) Inspection program to determine health and safety compliance.

(j) The compliance process.

(2) A local unit of government may by ordinance or resolution provide for the licensure or registration of short-term rentals and charge fees not to exceed the actual and reasonable costs of administration of the license or registration program. A local unit of government may develop a procedure to suspend or revoke a license or registration in the event a short-term rental owner or owner agent is found in contravention with the ordinance or resolution described in this subsection. The procedure shall include proper due process, including formal licensure review processes, reasonable notification of licensure or registration suspension or revocation, reasonable means and opportunity for the licensee to request a redetermination, and the ability for a formal determination hearing on the request by the licensee. If a local unit of government provides for the licensure or regulation of short-term rentals, then that licensure or regulation program must provide that the local unit of government must respond to an application for licensure or regulation within 30 days of receipt or that application is considered approved.

(3) An owner of a short-term rental shall maintain liability insurance of $1,000,000.00 or more on each short-term rental while it is being offered for rent unless that short-term rental is offered through a hosting platform that maintains equal or greater insurance coverage. Insurance coverage described in this subsection must defend and indemnify the owner agent and owners for third-party claims for bodily injury and property damage that arise out of the operation of the short-term rental.

(4) A local unit of government may not ban short-term rentals in an ordinance.

(5) A local unit of government shall not restrict the use of a short-term rental or regulate it based solely on its classification, frequency of use, use, ownership, or occupancy.

(6) Not later than 180 days after the effective date of this act, the department shall convene a meeting of and work with representatives of all of the following to create a model ordinance that addresses the regulatory issues described in subsection (1):

(a) Local units of government.

(b) Hosting platform operators.

(c) Owners and owner agents.