HOUSE BILL No. 6069 September 16, 1998, Introduced by Rep. Middleton 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 1996 PA 435. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 4a. A person subject to tax under this act may exclude 2 from the amount of the gross proceeds used for the computation of 3 the tax, a sale of tangible personal property: 4 (a) Not for resale to a nonprofit school, nonprofit hospi- 5 tal, or nonprofit home for the care and maintenance of children 6 or aged persons operated by an entity of government, a regularly 7 organized church, religious, or fraternal organization, a 8 veterans' organization, or a corporation incorporated under the 9 laws of the state, if the income or benefit from the operation 10 does not inure, in whole or in part, to an individual or private 11 shareholder, directly or indirectly, and if the activities of the 06473'98 CSC 2 1 entity or agency are carried on exclusively for the benefit of 2 the public at large and are not limited to the advantage, inter- 3 ests, and benefits of its members or any restricted group. At 4 the time of the transfer of this tangible personal property, the 5 transferee shall sign a statement, in a form approved by the 6 department, stating that the property is to be used or consumed 7 in connection with the operation of the institution or agency and 8 that the institution or agency qualifies as an exempt entity 9 under this subdivision. The statement shall be accepted by all 10 courts as prima facie evidence of the exemption and the statement 11 shall provide that if the claim for tax exemption is disallowed 12 the transferee will reimburse the transferor for the amount of 13 tax involved. A sale of tangible personal property to a parent 14 cooperative preschool is exempt from taxation under this act. As 15 used in this subdivision, "parent cooperative preschool" means a 16 nonprofit, nondiscriminatory educational institution, maintained 17 as a community service and administered by parents of children 18 currently enrolled in the preschool, that provides an educational 19 and developmental program for children younger than compulsory 20 school age, that provides an educational program for parents, 21 including active participation with children in preschool activi- 22 ties, that is directed by qualified preschool personnel, and that 23 is licensed by the department of consumer and industry services 24 pursuant toAct No. 116 of the Public Acts of 1973, being sec-25tions 722.111 to 722.128 of the Michigan Compiled Laws1973 PA 26 116, MCL 722.111 TO 722.128. 06473'98 3 1 (b) Not for resale to a regularly organized church or house 2 of religious worship, except the following: 3 (i) Sales in activities that are mainly commercial 4 enterprises. 5 (ii) Sales of vehicles licensed for use on public highways 6 other than a passenger van or bus with a manufacturer's rated 7 seating capacity of 10 or more that is used primarily for the 8 transportation of persons for religious purposes. 9 (c) To bona fide enrolled students, of food by a school or 10 other educational institution not operated for profit. 11 (d) Affixed to and made a structural part of real estate 12 excepted from the definition of "sale at retail" under section 13 1(1)(c). 14 (e) That is a vessel designated for commercial use of regis- 15 tered tonnage of 500 tons or more, if produced upon special order 16 of the purchaser, and bunker and galley fuel, provisions, sup- 17 plies, maintenance, and repairs for the exclusive use of the 18 vessel engaged in interstate commerce. 19 (f) To persons engaged in a business enterprise and using or 20 consuming the tangible personal property in the tilling, plant- 21 ing, caring for, or harvesting of the things of the soil; in the 22 breeding, raising, or caring for livestock, poultry, or horticul- 23 tural products, including transfers of livestock, poultry, or 24 horticultural products for further growth; or in the direct gath- 25 ering of fish, by net, line, or otherwise only by an 26 owner-operator of the business enterprise, not including a 27 charter fishing business enterprise. This exemption includes 06473'98 4 1 agricultural land tile, which means fired clay or perforated 2 plastic tubing used as part of a subsurface drainage system for 3 land, and subsurface irrigation pipe, if the land tile or irriga- 4 tion pipe is used in the production of agricultural products as a 5 business enterprise. At the time of the transfer of this tangi- 6 ble personal property, the transferee shall sign a statement, in 7 a form approved by the department, stating that the property is 8 to be used or consumed in connection with the production of 9 horticultural or agricultural products as a business enterprise, 10 or in connection with fishing as an owner-operator business 11 enterprise. The statement shall be accepted by all courts as 12 prima facie evidence of the exemption. This exemption includes a 13 portable grain bin, which means a structure that is used or is to 14 be used to shelter grain and that is designed to be disassembled 15 without significant damage to its component parts. THIS EXEMP- 16 TION ALSO INCLUDES GASOLINE USED TO FUEL GRAIN DRYERS FOR AGRI- 17 CULTURAL PURPOSES. This exemption does not include transfers of 18 food, fuel, clothing, or any similar tangible personal property 19 for personal living or human consumption. This exemption does 20 not include tangible personal property permanently affixed and 21 becoming a structural part of real estate. 22 (g) To the following: 23 (i) An industrial processor for use or consumption in indus- 24 trial processing. Property used or consumed in industrial pro- 25 cessing does not include tangible personal property permanently 26 affixed and becoming a structural part of real estate; office 27 furniture, office supplies, and administrative office equipment; 06473'98 5 1 or vehicles licensed and titled for use on public highways, other 2 than a specially designed vehicle, together with parts, used to 3 mix and agitate materials added at a plant or jobsite in the con- 4 crete manufacturing process. Industrial processing does not 5 include receiving and storage of raw materials purchased or 6 extracted by the user or consumer; or the preparation of food and 7 beverages by a retailer for retail sale. As used in this subdi- 8 vision, "industrial processor" means a person who transforms, 9 alters, or modifies tangible personal property by changing the 10 form, composition, or character of the property for ultimate sale 11 at retail or sale to another industrial processor to be further 12 processed for ultimate sale at retail. Sales to a person per- 13 forming a service who does not act as an industrial processor 14 while performing this service shall not be excluded under this 15 subdivision except as provided in subparagraph (ii). 16 (ii) A person, whether or not the person is an industrial 17 processor, if the tangible personal property is a computer used 18 in operating industrial processing equipment; equipment used in a 19 computer assisted manufacturing system; equipment used in a com- 20 puter assisted design or engineering system integral to an indus- 21 trial process; or a subunit or electronic assembly comprising a 22 component in a computer integrated industrial processing system. 23 (h) That is a copyrighted motion picture film or a newspaper 24 or periodical admitted under federal postal laws and regulations 25 effective September 1, 1985 as second-class mail matter or as a 26 controlled circulation publication or qualified to accept legal 27 notices for publication in this state, as defined by law, or any 06473'98 6 1 other newspaper or periodical of general circulation, established 2 not less than 2 years, and published not less than once a week. 3 Tangible personal property used or consumed, and not becoming a 4 component part of a copyrighted motion picture film, newspaper, 5 or periodical, except that portion or percentage of tangible per- 6 sonal property used or consumed in producing an advertising sup- 7 plement that becomes a component part of a newspaper or periodi- 8 cal is subject to tax. For purposes of this subdivision, tangi- 9 ble personal property that becomes a component part of a newspa- 10 per or periodical and consequently not subject to tax includes an 11 advertising supplement inserted into and circulated with a news- 12 paper or periodical that is otherwise exempt from tax under this 13 subdivision, if the advertising supplement is delivered directly 14 to the newspaper or periodical by a person other than the adver- 15 tiser, or the advertising supplement is printed by the newspaper 16 or periodical. 17 (i) To persons licensed to operate commercial radio or tele- 18 vision stations if the property is used in the origination or 19 integration of the various sources of program material for com- 20 mercial radio or television transmission. This subdivision does 21 not include a vehicle licensed and titled for use on public high- 22 ways or property used in the transmission to or receiving from an 23 artificial satellite. 24 (j) That is a hearing aid, contact lenses if prescribed for 25 a specific disease that precludes the use of eyeglasses, or any 26 other apparatus, device, or equipment used to replace or 27 substitute for a part of the human body, or used to assist the 06473'98 7 1 disabled person to lead a reasonably normal life if the tangible 2 personal property is purchased on a written prescription or order 3 issued by a health professional as defined by section 21005 of 4 the public health code,Act No. 368 of the Public Acts of 1978,5being section 333.21005 of the Michigan Compiled Laws1978 PA 6 368, MCL 333.21005; a hearing aid battery; or eyeglasses pre- 7 scribed or dispensed to correct the person's vision by an oph- 8 thalmologist, optometrist, or optician. 9 (k) To persons for use or consumption in the rendition of 10 any combination of services, the use or consumption of which is 11 taxable under section 3a(a) or (c) of the use tax act,Act12No. 94 of the Public Acts of 1937, being section 205.93a of the13Michigan Compiled Laws1937 PA 94, MCL 205.93A, except that this 14 exemption is limited to the tangible personal property located on 15 the premises of the subscriber and to central office equipment or 16 wireless equipment, directly used or consumed in transmitting, 17 receiving, or switching or the monitoring of switching of a 2-way 18 interactive communication. As used in this subdivision, central 19 office equipment or wireless equipment does not include distribu- 20 tion equipment including cable or wire facilities. 21 (l) That is a vehicle not for resale to a Michigan nonprofit 22 corporation organized exclusively to provide a community with 23 ambulance or fire department services. 24 (m) To inmates in a penal or correctional institution pur- 25 chased with scrip issued and redeemed by the institution. 06473'98 8 1 (n) To or for the use of students enrolled in any part of a 2 kindergarten through twelfth grade program, of textbooks sold by 3 a public or nonpublic school. 4 (o) Installed as a component part of a water pollution con- 5 trol facility for which a tax exemption certificate is issued 6 pursuant to part 37(water pollution control facilities; tax7exemption)of the natural resources and environmental protection 8 act,Act No. 451 of the Public Acts of 1994, being sections9324.3701 to 324.3708 of the Michigan Compiled Laws1994 PA 451, 10 MCL 324.3701 TO 324.3708, or an air pollution control facility 11 for which a tax exemption certificate is issued pursuant to part 12 59(air pollution control facility; tax exemption)of the natu- 13 ral resources and environmental protection act,Act No. 451 of14the Public Acts of 1994, being sections 324.5901 to 324.5908 of15the Michigan Compiled Laws1994 PA 451, MCL 324.5901 TO 16 324.5908. 17 (p) To a purchaser of a new motor vehicle purchased before 18 January 1, 1993 if the purchaser qualifies for a special regis- 19 tration under section 226(12) of the Michigan vehicle code,Act20No. 300 of the Public Acts of 1949, being section 257.226 of the21Michigan Compiled Laws1949 PA 300, MCL 257.226, and the vehicle 22 is purchased through a country determined by the department to be 23 providing a like or complete exemption for the purchase of a new 24 motor vehicle to be removed from that country. 06473'98 Final page. 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