HOUSE BILL No. 4543 March 28, 2001, Introduced by Rep. Bisbee and referred to the Committee on Tax Policy. A bill to amend 1937 PA 94, entitled "Use tax act," by amending section 2 (MCL 205.92), as amended by 2000 PA 391. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 2. 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 or not organized for profit, 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 the plural as well as the singular number, 8 unless the intention to give a more limited meaning is disclosed 9 by the context. 10 (b) "Use" means the exercise of a right or power over 11 tangible personal property incident to the ownership of that 02587'01 MRM 2 1 property including transfer of the property in a transaction 2 where possession is given. 3 (c) "Storage" means a keeping or retention of property in 4 this state for any purpose after the property loses its inter- 5 state character. 6 (d) "Seller" means the person from whom a purchase is made 7 and includes every person selling tangible personal property or 8 services for storage, use, or other consumption in this state. 9 If, in the opinion of the department, it is necessary for the 10 efficient administration of this act to regard a salesperson, 11 representative, peddler, or canvasser as the agent of a dealer, 12 distributor, supervisor, or employer under whom the person oper- 13 ates or from whom he or she obtains tangible personal property or 14 services sold by him or her for storage, use, or other consump- 15 tion in this state, irrespective of whether or not he or she is 16 making the sales on his or her own behalf or on behalf of the 17 dealer, distributor, supervisor, or employer, the department may 18 so consider him or her, and may consider the dealer, distributor, 19 supervisor, or employer as the seller for the purpose of this 20 act. 21 (e) "Purchase" means to acquire for a consideration, whether 22 the acquisition is effected by a transfer of title, of posses- 23 sion, or of both, or a license to use or consume; whether the 24 transfer is absolute or conditional, and by whatever means the 25 transfer is effected; and whether consideration is a price or 26 rental in money, or by way of exchange or barter. 02587'01 3 1 (f) "Price" means the aggregate value in money of anything 2 paid or delivered, or promised to be paid or delivered, by a 3 consumer to a seller in the consummation and complete performance 4 of the transaction by which tangible personal property or serv- 5 ices are purchased or rented for storage, use, or other consump- 6 tion in this state, without a deduction for the cost of the prop- 7 erty sold, cost of materials used, labor or service cost, inter- 8 est or discount paid, or any other expense. The price of tangi- 9 ble personal property, for affixation to real estate, withdrawn 10 by a construction contractor from inventory available for sale to 11 others or made available by publication or price list as a fin- 12 ished product for sale to others is the finished goods inventory 13 value of the property. If a construction contractor manufac- 14 tures, fabricates, or assembles tangible personal property before 15 affixing it to real estate, the price of the property is equal to 16 the sum of the materials cost of the property and the cost of 17 labor to manufacture, fabricate, or assemble the property but 18 does not include the cost of labor to cut, bend, assemble, or 19 attach property at the site of affixation to real estate. For 20 the purposes of the preceding sentence, for property withdrawn by 21 a construction contractor from inventory available for sale to 22 others or made available by publication or price list as a fin- 23 ished product for sale to others, the materials cost of the prop- 24 erty means the finished goods inventory value of the property. 25 For purposes of this subdivision, "manufacture" means to convert 26 or condition tangible personal property by changing the form, 27 composition, quality, combination, or character of the property 02587'01 4 1 and "fabricate" means to modify or prepare tangible personal 2 property for affixation or assembly. The price of a motor vehi- 3 cle, trailer coach, or titled watercraft is the full retail price 4 of the motor vehicle, trailer coach, or titled watercraft being 5 purchased. The tax collected by the seller from the consumer or 6 lessee under this act is not considered part of the price, but is 7 a tax collection for the benefit of the state, and a person other 8 than the state shall not derive a benefit from the collection or 9 payment of this tax. A price does not include an assessment 10 imposed under the convention and tourism marketing act, 1980 11 PA 383, MCL 141.881 to 141.889, 1974 PA 263, MCL 141.861 to 12 141.867, the state convention facility development act, 1985 13 PA 106, MCL 207.621 to 207.640, the regional tourism marketing 14 act, 1989 PA 244, MCL 141.891 to 141.900, 1991 PA 180, 15 MCL 207.751 to 207.759, or the community convention or tourism 16 marketing act, 1980 PA 395, MCL 141.871 to 141.880, that was 17 added to charges for rooms or lodging otherwise subject, pursuant 18 to section 3a, to tax under this act. Price does not include 19 specific charges for technical support or for adapting or modify- 20 ing prewritten, standard, or canned computer software programs to 21 a purchaser's needs or equipment if the charges are separately 22 stated and identified. PRICE DOES NOT INCLUDE A PERSONAL PROP- 23 ERTY TAX INCLUDED IN RENTAL RECEIPTS OR SEPARATELY ITEMIZED ON 24 RENTAL RECEIPTS. The tax imposed under this act shall not be com- 25 puted or collected on rental receipts if the tangible personal 26 property rented or leased has previously been subjected to a 27 Michigan sales or use tax when purchased by the lessor. 02587'01 5 1 (g) "Consumer" means the person who has purchased tangible 2 personal property or services for storage, use, or other consump- 3 tion in this state and includes a person acquiring tangible per- 4 sonal property if engaged in the business of constructing, alter- 5 ing, repairing, or improving the real estate of others. 6 (h) "Business" means all activities engaged in by a person 7 or caused to be engaged in by a person with the object of gain, 8 benefit, or advantage, either direct or indirect. 9 (i) "Department" means the revenue division of the depart- 10 ment of treasury. 11 (j) "Tax" includes all taxes, interest, or penalties levied 12 under this act. 13 (k) "Tangible personal property" includes computer software 14 offered for general use by the public or software modified or 15 adapted to the user's needs or equipment by the seller, only if 16 the software is available from a seller of software on an as is 17 basis or as an end product without modification or adaptation. 18 Tangible personal property does not include computer software 19 originally designed for the exclusive use and special needs of 20 the purchaser. As used in this subdivision, "computer software" 21 means a set of statements or instructions that when incorporated 22 in a machine usable medium is capable of causing a machine or 23 device having information processing capabilities to indicate, 24 perform, or achieve a particular function, task, or result. 25 (l) "Tangible personal property" beginning September 20, 26 1999, includes electricity, natural or artificial gas, or steam 27 and also the transmission and distribution of electricity used by 02587'01 6 1 the consumer or user of the electricity, whether the electricity 2 is purchased from the delivering utility or from another 3 provider. 4 (m) "Tangible personal property" does not include a commer- 5 cial advertising element if the commercial advertising element is 6 used to create or develop a print, radio, television, or other 7 advertisement, the commercial advertising element is discarded or 8 returned to the provider after the advertising message is com- 9 pleted, and the commercial advertising element is custom devel- 10 oped by the provider for the purchaser. As used in this subdivi- 11 sion, "commercial advertising element" means a negative or posi- 12 tive photographic image, an audiotape or videotape master, a 13 layout, a manuscript, writing of copy, a design, artwork, an 14 illustration, retouching, and mechanical or keyline 15 instructions. "Tangible personal property" includes black and 16 white or full color process separation elements, an audiotape 17 reproduction, or a videotape reproduction. 18 (n) "Textiles" means goods that are made of or incorporate 19 woven or nonwoven fabric, including, but not limited to, cloth- 20 ing, shoes, hats, gloves, handkerchiefs, curtains, towels, 21 sheets, pillows, pillowcases, tablecloths, napkins, aprons, 22 linens, floor mops, floor mats, and thread. Textiles also 23 include materials used to repair or construct textiles, or other 24 goods used in the rental, sale, or cleaning of textiles. 02587'01 Final page. MRM