February 26, 2019, Introduced by Senators MCMORROW, GEISS, CHANG, ALEXANDER, MCCANN, ANANICH, WOJNO, POLEHANKI, IRWIN, HERTEL, MOSS, BULLOCK and HOLLIER and referred to the Committee on Finance.
A bill to amend 1933 PA 167, entitled
"General sales tax act,"
by amending section 4a (MCL 205.54a), as amended by 2018 PA 113.
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
organization, 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
(i) Sales in activities that are mainly commercial
(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) Except as otherwise provided under subsection (3), a sale
of tangible personal property to a person engaged in a business
enterprise that uses or consumes the tangible personal property,
directly or indirectly, for either the tilling, planting, draining,
caring for, maintaining, or harvesting of things of the soil or the
breeding, raising, or caring for livestock, poultry, or
horticultural products, including the transfers of livestock,
poultry, or horticultural products for further growth.
(f) Except as otherwise provided under subsection (3), a sale
of any of the following to a person engaged in a business
enterprise that uses or consumes the following for purposes as
described in subdivision (e):
(i) Machinery that is capable of simultaneously harvesting
grain or other crops and biomass and machinery used for the purpose
of harvesting biomass.
(ii) Agricultural land tile and subsurface irrigation pipe.
(iii) Portable grain bins, including tangible personal
property affixed or to be affixed to portable grain bins and
directly used in the operation of a portable grain bin.
(iv) Grain drying equipment and the fuel or energy source that
powers that equipment, including tangible personal property affixed
or to be affixed to that equipment and directly used in the
operation of grain drying equipment.
(v) Tangible personal property purchased and installed as a
component part of a structure such as a barn or shop, including,
but not limited to, a water supply system, heating and cooling
system, lighting system, milking system, or any other appurtenance
used for purposes described in this subdivision or subdivision (e),
including the maintenance or improvement of existing structures, to
the extent that it is not permanently affixed to and does not
become a structural part of real estate. For purposes of this
subparagraph and subsection (3), property installed as a component
part of a structure as provided in this subparagraph is not
permanently affixed to or a structural part of real estate if it is
assembled and installed in a manner that it can be disassembled
without affecting the physical structural functionality of the
original structure and reassembled and reused for any of the
purposes described in this subdivision or subdivision (e).
(vi) Greenhouses, including tangible personal property affixed
to or to be affixed to greenhouses and directly used in the
operation of a greenhouse. For purposes of subsection (3), a
greenhouse is not permanently affixed to or a structural part of
real estate if it is assembled and installed in a manner that it
can be disassembled and reassembled without affecting the
functionality of the greenhouse upon being reassembled.
(g) The sale of agricultural land tile, subsurface irrigation
pipe, portable grain bins, greenhouses, 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 and made a structural part of real estate for others and
is used for an exempt purpose described under subdivision (e) or
(h) The sale of tangible personal property used in the direct
gathering of fish, by net, line, or otherwise, by an owner-operator
of a business enterprise, not including a charter fishing business
(i) 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.
(j) 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.
(k) The sale of a prosthetic device, durable medical
equipment, or mobility enhancing equipment.
(l) 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.
(m) 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
(n) 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.
(o) 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.
(p) The sale or lease of the following to an industrial
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
(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.
(q) 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.
(r) The sale of a dental prosthesis.
(s) A sale of tangible personal property that is specifically
designed for, and directly used in, the harvesting of aquatic
vegetation from the waters of the state, including parts and
materials used for repairs of that tangible personal property, to a
person engaged in a business enterprise of harvesting aquatic
vegetation and ultimately used for purposes described in
subdivision (e) or (f). This exemption does not include a motor
vehicle licensed or required to be licensed for use on the public
roads or highways of this state or tangible personal property
permanently affixed to and becoming a structural part of real
(t) The sale of feminine hygiene products after June 30, 2019.
As used in this subdivision, "feminine hygiene products" means
tampons, sanitary napkins, and other similar tangible personal
(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.
(3) The exemptions under subsection (1)(e), (f), (g), and (h)
do not include transfers of food, fuel, clothing, or any similar
tangible personal property for personal living or human consumption
or tangible personal property permanently affixed to and becoming a
structural part of real estate unless it is agricultural land tile,
subsurface irrigation pipe, a portable grain bin, or grain drying
Subsections Subsection (1)(e), (f), and (g) as amended by
amendatory act that added this subsection are 2018 PA 113 is
intended to be retroactive and to apply to all periods open under
27a of 1941 PA 122, MCL 205.27a, but
do does not apply to
any refund claims filed prior to April 9, 2018.
(5) As used in this section:
(a) "Agricultural land tile" means fired clay or perforated
plastic tubing used as part of a subsurface drainage system for
(b) "Algae" means any of the group of nonvascular aquatic
plants which do not have stems, flowers, leaves, and roots, and
which are single-celled, colonial, or filamentous forms.
(c) "Aquatic vegetation" means both algae and higher aquatic
(d) "Biomass" means crop residue used to produce energy or
agricultural crops grown specifically for the production of energy.
(e) "Greenhouse" means a structure covered with transparent or
translucent materials for the purpose of admitting natural light
and controlling the atmosphere for growing horticultural products.
Greenhouse does not include a structure primarily used to grow
(f) "Higher aquatic plant" means any of the group of
vascularized plants which have true stems, flowers, leaves, and
roots, which live in water, and which belong to the class
(g) "Portable grain bin" 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.
(h) "Waters of the state" means that term as defined in
section 3302 of the natural resources and environmental protection
act, 1994 PA 451, MCL 324.3302.
Enacting section 1. The legislature shall annually appropriate
sufficient funds from the state general fund to the state school
aid fund created in section 11 of article IX of the state
constitution of 1963 to fully compensate for any loss of revenue to
the state school aid fund resulting from the enactment of this