SENATE BILL NO. 716


  September 30, 1997, Introduced by Senators BULLARD, BENNETT,
            SHUGARS and GOUGEON and referred to the Committee on 
       Finance.
     


        A bill to amend 1933 PA 167, entitled

   "General sales tax act,"

   by amending section 1 (MCL 205.51), as amended by 1995 PA 209.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         Sec. 1.  (1) As used in this act:

 2         (a) "Person" means an individual, firm, partnership, joint

 3    venture, association, social club, fraternal organization, munic-

 4    ipal or private corporation  ,  whether organized
             for profit or

 5    not, company, estate, trust, receiver, trustee, syndicate, the

 6    United States, this state, county, or any other group or combina-

 7    tion acting as a unit, and includes the plural as well as the

 8    singular number, unless the intention to give a more limited

 9    meaning is disclosed by the context.

10         (b) "Sale at retail" means a transaction by which the

11    ownership of tangible personal property is transferred for


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 1    consideration, if the transfer is made in the ordinary course of

 2    the transferor's business and is made to the transferee for con-

 3    sumption or use, or for any purpose other than for resale, or for

 4    lease, if the rental receipts are taxable under the use tax act,

 5     Act No. 94 of the Public Acts of 1937, being sections
             205.91 to

 6     205.111 of the Michigan Compiled Laws  1937 PA 94,
                       MCL 205.91 TO

 7    205.111, in the form of tangible personal property to a person

 8    licensed under this act, or for demonstration purposes or lending

 9    or leasing to a public or parochial school offering a course in

10    automobile driving.  However, a vehicle purchased by the school

11    shall be certified for driver education and shall not be reas-

12    signed for personal use of the school's administrative

13    personnel.  For a dealer selling a new car or truck, the exemp-

14    tion for demonstration purposes shall be determined by the number

15    of new cars and trucks sold during the current calendar year or

16    the immediately preceding year without regard to specific make or

17    style in accordance with the following schedule of 0 to 25, 2

18    units; 26 to 100, 7 units; 101 to 500, 20 units; 501 or more, 25

19    units; but not to exceed 25 cars and trucks in a calendar year

20    for demonstration purposes.

21         (c) "Sale at retail" includes the sale of tangible personal

22    property to persons directly engaged in the business of con-

23    structing, altering, repairing, or improving real estate for

24    others except property affixed to and made a structural part of

25    the real estate of a nonprofit hospital or nonprofit housing.  A

26    nonprofit hospital or nonprofit housing includes only the

27    property of a nonprofit hospital or the homes or dwelling places



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 1    constructed by a nonprofit housing entity qualified as exempt

 2    pursuant to section 15a of the state housing development author-

 3    ity act of 1966,  Act No. 346 of the Public Acts of 1966,
             being

 4     section 125.1415a of the Michigan Compiled Laws 
                       1966 PA 346, MCL

 5    125.1415A, the income or property of which does not directly or

 6    indirectly inure to the benefit of an individual, private stock-

 7    holder, or other private person.

 8         (d) "Sale at retail" includes a conditional sale, install-

 9    ment lease sale,  and  OR other transfer of
             property if title is

10    retained as security for the purchase price but is intended to be

11    transferred later.

12         (e) "Sale at retail" includes the sale of electricity, natu-

13    ral or artificial gas, or steam if THE SALE IS made to the con-

14    sumer or user for consumption or use rather than for resale.

15    SALE AT RETAIL ALSO INCLUDES THE SALE OF A PREPAID TELEPHONE

16    CALLING CARD OR A PREPAID AUTHORIZATION NUMBER FOR TELEPHONE USE.

17    Sale at retail does not include the sale of water through water

18    mains or the sale of water delivered in bulk tanks in quantities

19    of not less than 500 gallons.

20         (f) "Sale at retail" includes computer software offered for

21    general sale to the public or software modified or adapted to the

22    user's needs or equipment by the seller, only if the software is

23    available for sale from a seller of software on an as is basis or

24    as an end product without modification or adaptation.  Sale at

25    retail does not include specific charges for technical support or

26    for adapting or modifying prewritten, standard, or canned

27    computer software programs to a purchaser's needs or equipment if



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 1    those charges are separately stated and identified.  Sale at

 2    retail does not include computer software originally designed for

 3    the exclusive use and special needs of the purchaser.  As used in

 4    this subdivision, "computer software" means a set of statements

 5    or instructions that when incorporated in a machine usable medium

 6    is capable of causing a machine or device having information pro-

 7    cessing capabilities to indicate, perform, or achieve a particu-

 8    lar function, task, or result.

 9         (g) "Sale at retail" does not include an isolated transac-

10    tion by a person not licensed or required to be licensed under

11    this act, in which tangible personal property is offered for

12    sale, sold, transferred, and delivered by the owner.

13         (h) "Sale at retail" does not include a commercial advertis-

14    ing element if the commercial advertising element is used to

15    create or develop a print, radio, television, or other advertise-

16    ment, the commercial advertising element is discarded or returned

17    to the provider after the advertising message is completed, and

18    the commercial advertising element is custom developed by the

19    provider for the purchaser.  As used in this subdivision,

20    "commercial advertising element" means a negative or positive

21    photographic image, an audiotape or videotape master, a layout, a

22    manuscript, writing of copy, a design, artwork, an illustration,

23    retouching, and mechanical or keyline instructions.  "Sale at

24    retail" includes black and white or full color process separation

25    elements, an audiotape reproduction, or a videotape

26    reproduction.





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 1         (i) "Gross proceeds" means the amount received in money,

 2    credits, subsidies, property, or other money's worth in

 3    consideration of a sale at retail within this state, without a

 4    deduction for the cost of the property sold, the cost of material

 5    used, the cost of labor or service purchased, an amount paid for

 6    interest or a discount, a tax paid on cigarettes or tobacco pro-

 7    ducts at the time of purchase, a tax paid on beer or liquor at

 8    the time of purchase or other expenses.  Also, a deduction is not

 9    allowed for losses.  Gross proceeds does not include an amount

10    received or billed by the taxpayer for remittance to the employee

11    as a gratuity or tip, if the gratuity or tip is separately iden-

12    tified and itemized on the guest check or billed to the

13    customer.  In a taxable sale at retail of a motor vehicle, if

14    another motor vehicle is used as part payment of the purchase

15    price, the value of the motor vehicle used as part payment of the

16    purchase price shall be that value agreed to by the parties to

17    the sale as evidenced by the signed statement executed pursuant

18    to section 251 of the Michigan vehicle code,  Act No. 300 of
             the

19     Public Acts of 1949, being section 257.251 of the Michigan

20     Compiled Laws  1949 PA 300, MCL 257.251.  A credit
                       or refund for

21    returned goods or a refund less an allowance for use made for a

22    motor vehicle returned under  Act No. 87 of the Public Acts
             of

23     1986, being sections 257.1401 to 257.1410 of the Michigan

24     Compiled Laws  1986 PA 87, MCL 257.1401 TO
                       257.1410, as certified

25    by the manufacturer on a form provided by the department of trea-

26    sury, may be deducted.





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 1         (j) "Business" includes an activity engaged in by a person

 2    or caused to be engaged in by that person with the object of

 3    gain, benefit, or advantage, either direct or indirect.

 4         (k) "Tax year" or "taxable year" means the fiscal year of

 5    the state or the taxpayer's fiscal year if permission is obtained

 6    by the taxpayer from the department to use the taxpayer's fiscal

 7    year as the tax period instead.

 8         (l) "Department" means the revenue division of the
             depart-

 9    ment of treasury.

10         (m) "Taxpayer" means a person subject to a tax under this

11    act.

12         (n) "Tax" includes a tax, interest, or penalty levied under

13    this act.

14         (2) If the department determines that it is necessary for

15    the efficient administration of this act to regard an unlicensed

16    person, including a salesperson, representative, peddler, or can-

17    vasser as the agent of the dealer, distributor, supervisor, or

18    employer under whom the unlicensed person operates or from whom

19    the unlicensed person obtains the tangible personal property sold

20    by the unlicensed person, irrespective of whether the unlicensed

21    person is making sales on the unlicensed person's own behalf or

22    on behalf of the dealer, distributor, supervisor, or employer,

23    the department may so regard the unlicensed person and may regard

24    the dealer, distributor, supervisor, or employer as making sales

25    at retail at the retail price for the purposes of this act.







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