HOUSE BILL No. 5173

 

 

October 24, 2017, Introduced by Reps. Alexander and Kahle and referred to the Committee on Tax Policy.

 

     A bill to amend 1933 PA 167, entitled

 

"General sales tax act,"

 

by amending section 4a (MCL 205.54a), as amended by 2016 PA 431.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 4a. (1) Subject to subsection (2), the following are

 

exempt from the tax under this act:

 

     (a) A sale of tangible personal property not for resale to a

 

nonprofit school, nonprofit hospital, or nonprofit home for the

 

care and maintenance of children or aged persons operated by an

 

entity of government, a regularly organized church, religious, or

 

fraternal organization, a veterans' organization, or a corporation

 

incorporated under the laws of this state, if the income or benefit

 

from the operation does not inure, in whole or in part, to an

 

individual or private shareholder, directly or indirectly, and if

 


the activities of the entity or agency are carried on exclusively

 

for the benefit of the public at large and are not limited to the

 

advantage, interests, and benefits of its members or any restricted

 

group. A sale of tangible personal property to a parent cooperative

 

preschool is exempt from taxation under this act. As used in this

 

subdivision, "parent cooperative preschool" means a nonprofit,

 

nondiscriminatory educational institution, maintained as a

 

community service and administered by parents of children currently

 

enrolled in the preschool, that provides an educational and

 

developmental program for children younger than compulsory school

 

age, that provides an educational program for parents, including

 

active participation with children in preschool activities, that is

 

directed by qualified preschool personnel, and that is licensed

 

pursuant to 1973 PA 116, MCL 722.111 to 722.128.

 

     (b) A sale of tangible personal property not for resale to a

 

regularly organized church or house of religious worship, except

 

the following:

 

     (i) Sales in activities that are mainly commercial

 

enterprises.

 

     (ii) Sales of vehicles licensed for use on public highways

 

other than a passenger van or bus with a manufacturer's rated

 

seating capacity of 10 or more that is used primarily for the

 

transportation of persons for religious purposes.

 

     (c) The sale of food to bona fide enrolled students by a

 

school or other educational institution not operated for profit.

 

     (d) The sale of a vessel designated for commercial use of

 

registered tonnage of 500 tons or more, if produced upon special


order of the purchaser, and bunker and galley fuel, provisions,

 

supplies, maintenance, and repairs for the exclusive use of the

 

vessel engaged in interstate commerce.

 

     (e) A sale of tangible personal property to persons engaged in

 

a business enterprise and using or consuming the tangible personal

 

property in the tilling, planting, draining, caring for, or

 

harvesting of the things of the soil; in the breeding, raising, or

 

caring for livestock, poultry, or horticultural products, including

 

transfers of livestock, poultry, or horticultural products for

 

further growth; or in the direct gathering of fish, by net, line,

 

or otherwise only by an owner-operator of the business enterprise,

 

not including a charter fishing business enterprise. This exemption

 

includes machinery that is capable of simultaneously harvesting

 

grain or other crops and biomass and machinery used for the purpose

 

of harvesting biomass. This exemption includes agricultural land

 

tile, which means fired clay or perforated plastic tubing used as

 

part of a subsurface drainage system for land, and subsurface

 

irrigation pipe, if the land tile or irrigation pipe is used in the

 

production of agricultural products as a business enterprise. This

 

exemption includes a portable grain bin, which means a structure

 

that is used or is to be used to shelter grain and that is designed

 

to be disassembled without significant damage to its component

 

parts. This exemption also includes grain drying equipment and the

 

fuel or energy source that powers that equipment for agricultural

 

purposes. This exemption also includes tangible personal property

 

affixed to or to be affixed to and directly used in the operation

 

of either a portable grain bin or grain drying equipment. This


exemption includes a sale of agricultural land tile, subsurface

 

irrigation pipe, portable grain bins, and grain drying equipment to

 

a person in the business of constructing, altering, repairing, or

 

improving real estate for others to the extent that it is affixed

 

to or made a structural part of real estate and is used for a

 

purpose exempt under this subsection. This exemption does not

 

include transfers of food, fuel, clothing, or any similar tangible

 

personal property for personal living or human consumption. Except

 

for agricultural land tile, subsurface irrigation pipe, portable

 

grain bins, and grain drying equipment, this exemption does not

 

include tangible personal property permanently affixed and becoming

 

a structural part of real estate. As used in this subdivision,

 

"biomass" means crop residue used to produce energy or agricultural

 

crops grown specifically for the production of energy.

 

     (f) The sale of a copyrighted motion picture film or a

 

newspaper or periodical admitted under federal postal laws and

 

regulations effective September 1, 1985 as second-class mail matter

 

or as a controlled circulation publication or qualified to accept

 

legal notices for publication in this state, as defined by law, or

 

any other newspaper or periodical of general circulation,

 

established not less than 2 years, and published not less than once

 

a week. Tangible personal property used or consumed in producing a

 

copyrighted motion picture film, a newspaper published more than 14

 

times per year, or a periodical published more than 14 times per

 

year, and not becoming a component part of that film, newspaper, or

 

periodical is subject to the tax. Tangible personal property used

 

or consumed in producing a newspaper published 14 times or less per


year or a periodical published 14 times or less per year and that

 

portion or percentage of tangible personal property used or

 

consumed in producing an advertising supplement that becomes a

 

component part of a newspaper or periodical is exempt from the tax

 

under this subdivision. For purposes of this subdivision, tangible

 

personal property that becomes a component part of a newspaper or

 

periodical and consequently not subject to tax includes an

 

advertising supplement inserted into and circulated with a

 

newspaper or periodical that is otherwise exempt from tax under

 

this subdivision, if the advertising supplement is delivered

 

directly to the newspaper or periodical by a person other than the

 

advertiser, or the advertising supplement is printed by the

 

newspaper or periodical.

 

     (g) A sale of tangible personal property to persons licensed

 

to operate commercial radio or television stations if the property

 

is used in the origination or integration of the various sources of

 

program material for commercial radio or television transmission.

 

This subdivision does not include a vehicle licensed and titled for

 

use on public highways or property used in the transmission to or

 

receiving from an artificial satellite.

 

     (h) The sale of a prosthetic device, durable medical

 

equipment, or mobility enhancing equipment.

 

     (i) The sale of a vehicle not for resale to a Michigan

 

nonprofit corporation organized exclusively to provide a community

 

with ambulance or fire department services.

 

     (j) Before October 1, 2012, a sale of tangible personal

 

property to inmates in a penal or correctional institution


purchased with scrip or its equivalent issued and redeemed by the

 

institution.

 

     (k) A sale of textbooks sold by a public or nonpublic school

 

to or for the use of students enrolled in any part of a

 

kindergarten through twelfth grade program.

 

     (l) A sale of tangible personal property installed as a

 

component part of a water pollution control facility for which a

 

tax exemption certificate is issued pursuant to part 37 of the

 

natural resources and environmental protection act, 1994 PA 451,

 

MCL 324.3701 to 324.3708, or an air pollution control facility for

 

which a tax exemption certificate is issued pursuant to part 59 of

 

the natural resources and environmental protection act, 1994 PA

 

451, MCL 324.5901 to 324.5908.

 

     (m) The sale or lease of the following to an industrial

 

laundry after December 31, 1997:

 

     (i) Textiles and disposable products including, but not

 

limited to, soap, paper, chemicals, tissues, deodorizers and

 

dispensers, and all related items such as packaging, supplies,

 

hangers, name tags, and identification tags.

 

     (ii) Equipment, whether owned or leased, used to repair and

 

dispense textiles including, but not limited to, roll towel

 

cabinets, slings, hardware, lockers, mop handles and frames, and

 

carts.

 

     (iii) Machinery, equipment, parts, lubricants, and repair

 

services used to clean, process, and package textiles and related

 

items, whether owned or leased.

 

     (iv) Utilities such as electric, gas, water, or oil.


     (v) Production washroom equipment and mending and packaging

 

supplies and equipment.

 

     (vi) Material handling equipment including, but not limited

 

to, conveyors, racks, and elevators and related control equipment.

 

     (vii) Wastewater pretreatment equipment and supplies and

 

related maintenance and repair services.

 

     (n) A sale of tangible personal property to a person holding a

 

direct payment permit under section 8 of the use tax act, 1937 PA

 

94, MCL 205.98.

 

     (o) The sale of a dental prosthesis.

 

     (2) The tangible personal property under subsection (1) is

 

exempt only to the extent that that property is used for the exempt

 

purpose if one is stated in subsection (1). The exemption is

 

limited to the percentage of exempt use to total use determined by

 

a reasonable formula or method approved by the department.

 

     Enacting section 1. This amendatory act is retroactive and

 

effective beginning July 1, 2017.