May 25, 2005, Introduced by Senators THOMAS, HARDIMAN, VAN WOERKOM and GARCIA and referred to the Committee on Economic Development, Small Business and Regulatory Reform.
A bill to amend 1975 PA 228, entitled
"Single business tax act,"
by amending section 39e (MCL 208.39e), as amended by 2002 PA 622.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 39e. (1) A taxpayer may claim a credit against the tax
imposed by this act for 1 or more of the following as applicable:
(a) The credit allowed under subsection (2).
(b) The credit allowed under subsection (6).
(2) For tax years that begin after December 31, 2002, a
taxpayer that is certified under the Michigan next energy authority
act, 2002 PA 593, MCL 207.821 to 207.827, as an eligible taxpayer
may claim a nonrefundable credit for the tax year equal to the
amount determined under subdivision (a) or (b), whichever is less:
(a) The amount by which the taxpayer's tax liability
attributable to qualified business activity for the tax year
exceeds the taxpayer's baseline tax liability attributable to
qualified business activity.
(b) For tax years that begin after December 31, 2002, 10% of
the amount by which the taxpayer's adjusted qualified business
activity performed in this state outside of a renaissance zone for
the tax year exceeds the taxpayer's adjusted qualified business
activity performed in this state outside of a renaissance zone for
the 2001 tax year.
(3) For any tax year in which the eligible taxpayer's tax
liability attributable to qualified business activity for the tax
year does not exceed the taxpayer's baseline tax liability
attributable to qualified business activity, the eligible taxpayer
shall not claim the credit allowed under subsection (2).
(4) An affiliated group as defined in this act, a controlled
group of corporations as defined in section 1563 of the internal
revenue
code and further described in 26 C.F.R. CFR 1.414(b)-1
and 1.414(c)-1 to 1.414(c)-5, or an entity under common control as
defined by the internal revenue code shall not take the credit
allowed under subsection (2) unless the qualified business activity
of the group or entities is consolidated.
(5) A taxpayer that claims a credit under subsection (2) shall
attach a copy of each of the following as issued pursuant to the
Michigan next energy authority act, 2002 PA 593, MCL 207.821 to
207.827, to the annual return required under this act for each tax
year in which the taxpayer claims the credit allowed under
subsection (2):
(a) The proof of certification that the taxpayer is an
eligible taxpayer for the tax year.
(b) The proof of certification of the taxpayer's tax liability
attributable to qualified business activity for the tax year.
(c) The proof of certification of the taxpayer's baseline tax
liability attributable to qualified business activity.
(6) For tax years that begin after December 31, 2002, a
taxpayer that is a qualified alternative energy entity may claim a
credit for the taxpayer's qualified payroll amount. A taxpayer
shall claim the credit under this subsection after all allowable
nonrefundable credits under this act.
(7) If the credit allowed under subsection (6) exceeds the tax
liability of the taxpayer for the tax year, that portion of the
credit that exceeds the tax liability shall be refunded.
(8) Notwithstanding any other provision of this act and except
as provided in this subsection, for tax years that begin after
December 31, 2002, a person whose apportioned or allocated gross
receipts are less than $350,000.00 for the tax year need not file a
return or pay the tax as provided under this act. For tax years
that begin after December 31, 2005, if a person is engaged in the
person's first or second year of business activity in this state
and the person's apportioned or allocated gross receipts are less
than $500,000.00 for the tax year, the person need not file a
return or pay the tax as provided under this act.
(9) As used in this section:
(a) "Adjusted qualified business activity performed in this
state outside of a renaissance zone" means either of the following:
(i) Except as provided in subparagraph (ii), the taxpayer's
payroll for qualified business activity performed in this state
outside of a renaissance zone.
(ii) For a partnership, limited liability company, S
corporation, or individual, the amount determined under
subparagraph (i) plus the product of the following as related to the
taxpayer:
(A) Business income.
(B) The apportionment factor as determined under chapter 3.
(C) The alternative energy business activity factor.
(b) "Alternative energy business activity factor" means a
fraction the numerator of which is the ratio of the value of the
taxpayer's property used for qualified business activity and
located in this state outside of a renaissance zone for the year
for which the factor is being calculated to the value of all of the
taxpayer's property located in this state for that year plus the
ratio of the taxpayer's payroll for qualified business activity
performed in this state outside of a renaissance zone for that year
to all of the taxpayer's payroll in this state for that year and
the denominator of which is 2.
(c) "Alternative energy marine propulsion system",
"alternative energy system", "alternative energy vehicle", and
"alternative energy technology" mean those terms as defined in the
Michigan next energy authority act, 2002 PA 593, MCL 207.821 to
207.827.
(d) "Alternative energy zone" means a renaissance zone
designated as an alternative energy zone by the board of the
Michigan strategic fund under section 8a of the Michigan
renaissance zone act, 1996 PA 376, MCL 125.2688a.
(e) "Baseline tax liability attributable to qualified business
activity" means the taxpayer's tax liability for the 2001 tax year
multiplied by the taxpayer's alternative energy business activity
factor for the 2001 tax year. A taxpayer with a 2001 tax year of
less than 12 months shall annualize the amount calculated under
this subdivision as necessary to determine baseline tax liability
attributable to qualified business activity that reflects a 12-
month period.
(f) "Eligible taxpayer" means a taxpayer that has proof of
certification of qualified business activity under the Michigan
next energy authority act, 2002 PA 593, MCL 207.821 to 207.827.
(g) "Payroll" means total salaries and wages before deducting
any personal or dependency exemptions.
(h) "Qualified alternative energy entity" means a taxpayer
located in an alternative energy zone.
(i) "Qualified business activity" means research, development,
or manufacturing of an alternative energy marine propulsion system,
an alternative energy system, an alternative energy vehicle,
alternative energy technology, or renewable fuel.
(j) "Qualified employee" means an individual who is employed
by a qualified alternative energy entity, whose job
responsibilities are related to the research, development, or
manufacturing activities of the qualified alternative energy
entity, and whose regular place of employment is within an
alternative energy zone.
(k) "Qualified payroll amount" means an amount equal to
payroll of the qualified alternative energy entity attributable to
all qualified employees in the tax year of the qualified
alternative energy entity for which the credit under subsection (6)
is being claimed, multiplied by the tax rate for that tax year.
(l) "Renaissance zone" means a renaissance zone designated
under the Michigan renaissance zone act, 1996 PA 376, MCL 125.2681
to 125.2696.
(m) "Renewable fuel" means 1 or more of the following:
(i) Biodiesel or biodiesel blends containing at least 20%
biodiesel. As used in this subparagraph, "biodiesel" means a diesel
fuel substitute consisting of methyl or ethyl esters produced from
the transesterification of animal or vegetable fats with methanol
or ethanol.
(ii) Biomass. As used in this subparagraph, "biomass" means
residues from the wood and paper products industries, residues from
food production and processing, trees and grasses grown
specifically to be used as energy crops, and gaseous fuels produced
from solid biomass, animal wastes, municipal waste, or landfills.
(n) "Tax liability attributable to qualified business
activity" means the taxpayer's tax liability multiplied by the
taxpayer's alternative energy business activity factor for the tax
year.
(o) "Tax rate" means the rate imposed under sections 51, 51d,
and 51e of the income tax act of 1967, 1967 PA 281, MCL 206.51,
206.51d, and 206.51e, annualized as necessary, for the tax year in
which the qualified alternative energy entity claims a credit under
subsection (6).