SENATE BILL NO. 193 February 2, 1999, Introduced by Senators JAYE, STEIL and GOSCHKA 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 1998 PA 451. 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 not, 5 company, estate, trust, receiver, trustee, syndicate, the United 6 States, this state, county, or any other group or combination 7 acting as a unit, and includes the plural as well as the singular 8 number, unless the intention to give a more limited meaning is 9 disclosed by the context. 10 (b) "Sale at retail" means a transaction by which the 11 ownership of tangible personal property is transferred for 00076'99 CSC 2 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 1937 PA 94, MCL 205.91 to 205.111, in the form of tangible per- 6 sonal property to a person licensed under this act, or for demon- 7 stration purposes or lending or leasing to a public or parochial 8 school offering a course in automobile driving. However, a vehi- 9 cle purchased by the school shall be certified for driver educa- 10 tion and shall not be reassigned for personal use of the school's 11 administrative personnel. For a dealer selling a new car or 12 truck, the exemption for demonstration purposes shall be deter- 13 mined by the number of new cars and trucks sold during the cur- 14 rent calendar year or the immediately preceding year without 15 regard to specific make or style in accordance with the following 16 schedule of 0 to 25, 2 units; 26 to 100, 7 units; 101 to 500, 20 17 units; 501 or more, 25 units; but not to exceed 25 cars and 18 trucks in a calendar year for demonstration purposes. 19 (c) "Sale at retail" includes the sale of tangible personal 20 property to persons directly engaged in the business of con- 21 structing, altering, repairing, or improving real estate for 22 others except property affixed to and made a structural part of 23 the real estate of a nonprofit hospital or nonprofit housing. A 24 nonprofit hospital or nonprofit housing includes only the prop- 25 erty of a nonprofit hospital or the homes or dwelling places con- 26 structed by a nonprofit housing entity qualified as exempt 27 pursuant to section 15a of the state housing development 00076'99 3 1 authority act of 1966, 1966 PA 346, MCL 125.1415a, the income or 2 property of which does not directly or indirectly inure to the 3 benefit of an individual, private stockholder, or other private 4 person. For taxes assessed after December 31, 1990 and before 5 January 1, 1996, as used in this subdivision, "hospital" 6 includes, but is not limited to, an entity that meets all of the 7 following qualifications: 8 (i) Is a separately organized entity, or a group of entities 9 sufficiently related to be considered a single employer for pur- 10 poses of section 414 of the internal revenue code of 1986, the 11 primary purpose of which is to provide medical, obstetrical, psy- 12 chiatric, or surgical care or nursing. Nursing includes care 13 provided by skilled nurses in a long-term care facility. 14 (ii)Prior toBEFORE January 1, 1996, initiated an appeal 15 of taxes assessed under this act on tangible personal property 16 used to construct a facility after December 31, 1990 and before 17 January 1, 1996, the primary purpose of which is to provide medi- 18 cal, obstetrical, psychiatric, or surgical care or nursing. 19 Nursing includes a long-term care facility. 20 (d) "Sale at retail" includes a conditional sale, install- 21 ment lease sale, or other transfer of property if title is 22 retained as security for the purchase price but is intended to be 23 transferred later. 24 (e) "Sale at retail" includes the sale of electricity, natu- 25 ral or artificial gas, or steam if the sale is made to the con- 26 sumer or user for consumption or use rather than for resale. 27 Sale at retail also includes the sale of a prepaid telephone 00076'99 4 1 calling card or a prepaid authorization number for telephone use, 2 rather than for resale. Sale at retail also includes the reau- 3 thorization of a prepaid telephone calling card or a prepaid 4 authorization number. Sale at retail does not include the sale 5 of water through water mains or the sale of water delivered in 6 bulk tanks in quantities of not less than 500 gallons. 7 (f) "Sale at retail" includes computer software offered for 8 general sale to the public or software modified or adapted to the 9 user's needs or equipment by the seller, only if the software is 10 available for sale from a seller of software on an as-is basis or 11 as an end product without modification or adaptation. Sale at 12 retail does not include specific charges for technical support or 13 for adapting or modifying prewritten, standard, or canned com- 14 puter software programs to a purchaser's needs or equipment if 15 those charges are separately stated and identified. Sale at 16 retail does not include computer software originally designed for 17 the exclusive use and special needs of the purchaser. As used in 18 this subdivision, "computer software" means a set of statements 19 or instructions that when incorporated in a machine-usable medium 20 is capable of causing a machine or device having information pro- 21 cessing capabilities to indicate, perform, or achieve a particu- 22 lar function, task, or result. 23 (g) "Sale at retail" includes the sale of tangible personal 24 property by an industrial laundry under a sale, rental, or serv- 25 ice agreement with a term of at least 5 days. 26 (h) "Sale at retail" does not include an isolated 27 transaction by a person not licensed or required to be licensed 00076'99 5 1 under this act, in which tangible personal property is offered 2 for sale, sold, transferred, and delivered by the owner. 3 (i) "Sale at retail" does not include a commercial advertis- 4 ing element if the commercial advertising element is used to 5 create or develop a print, radio, television, or other advertise- 6 ment, the commercial advertising element is discarded or returned 7 to the provider after the advertising message is completed, and 8 the commercial advertising element is custom-developed by the 9 provider for the purchaser. As used in this subdivision, 10 "commercial advertising element" means a negative or positive 11 photographic image, an audiotape or videotape master, a layout, a 12 manuscript, writing of copy, a design, artwork, an illustration, 13 retouching, and mechanical or keyline instructions. Sale at 14 retail includes black and white or full color process separation 15 elements, an audiotape reproduction, or a videotape 16 reproduction. 17 (j) "Gross proceeds" means the amount received in money, 18 credits, subsidies, property, or other money's worth in consider- 19 ation of a sale at retail within this state, without a deduction 20 for the cost of the property sold, the cost of material used, the 21 cost of labor or service purchased, an amount paid for interest 22 or a discount, a tax paid on cigarettes or tobacco products at 23 the time of purchase, a tax paid on beer or liquor at the time of 24 purchase or other expenses. Also, a deduction is not allowed for 25 losses. Gross proceeds do not include an amount received or 26 billed by the taxpayer for remittance to the employee as a 27 gratuity or tip, if the gratuity or tip is separately identified 00076'99 6 1 and itemized on the guest check or billed to the customer. In a 2 taxable sale at retail of a motor vehicle, if another motor vehi- 3 cle is used as part payment of the purchase price, the value of 4 the motor vehicle used as part payment of the purchase price 5 shall be that value agreed to by the parties to the sale as evi- 6 denced by the signed statement executed pursuant to section 251 7 of the Michigan vehicle code, 1949 PA 300, MCL 257.251. IF A 8 MOTOR VEHICLE, TITLED WATERCRAFT, OR MANUFACTURED HOME IS USED AS 9 PART PAYMENT IN A TAXABLE SALE AT RETAIL OF ANOTHER MOTOR VEHI- 10 CLE, TITLED WATERCRAFT, OR MANUFACTURED HOME, RESPECTIVELY, THE 11 GROSS PROCEEDS IS THE DIFFERENCE BETWEEN THE AGREED-UPON VALUE OF 12 THE MOTOR VEHICLE, TITLED WATERCRAFT, OR MANUFACTURED HOME USED 13 AS PART PAYMENT OF THE PURCHASE PRICE AND THE FULL RETAIL PRICE 14 OF THE MOTOR VEHICLE, TITLED WATERCRAFT, OR MANUFACTURED HOME 15 BEING PURCHASED. A credit or refund for returned goods or a 16 refund less an allowance for use made for a motor vehicle 17 returned under 1986 PA 87, MCL 257.1401 to 257.1410, as certified 18 by the manufacturer on a form provided by the department of trea- 19 sury, may be deducted. 20 (k) "Business" includes an activity engaged in by a person 21 or caused to be engaged in by that person with the object of 22 gain, benefit, or advantage, either direct or indirect. 23 (l) "Tax year" or "taxable year" means the fiscal year of 24 the state or the taxpayer's fiscal year if permission is obtained 25 by the taxpayer from the department to use the taxpayer's fiscal 26 year as the tax period instead. 00076'99 7 1 (m) "Department" means the revenue division of the 2 department of treasury. 3 (n) "Taxpayer" means a person subject to a tax under this 4 act. 5 (o) "Tax" includes a tax, interest, or penalty levied under 6 this act. 7 (p) "Textiles" means goods that are made of or incorporate 8 woven or nonwoven fabric, including, but not limited to, cloth- 9 ing, shoes, hats, gloves, handkerchiefs, curtains, towels, 10 sheets, pillows, pillow cases, tablecloths, napkins, aprons, 11 linens, floor mops, floor mats, and thread. Textiles also 12 include materials used to repair or construct textiles,or 13 other goods used in the rental, sale, or cleaning of textiles. 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 17 canvasser, as the agent of the dealer, distributor, supervisor, 18 or employer under whom the unlicensed person operates or from 19 whom the unlicensed person obtains the tangible personal property 20 sold by the unlicensed person, irrespective of whether the unli- 21 censed person is making sales on the unlicensed person's own 22 behalf or on behalf of the dealer, distributor, supervisor, or 23 employer, the department may so regard the unlicensed person and 24 may regard the dealer, distributor, supervisor, or employer as 25 making sales at retail at the retail price for the purposes of 26 this act. 00076'99 Final page. CSC