June 7, 2007, Introduced by Rep. Bieda and referred to the Committee on Tax Policy.
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending sections 2, 3, and 7 (MCL 205.92, 205.93, and 205.97),
sections 2 and 3 as amended by 2004 PA 172.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Person" means an individual, firm, partnership, joint
venture, association, social club, fraternal organization,
municipal or private corporation whether or not organized for
profit, company, limited liability company, estate, trust,
receiver, trustee, syndicate, the United States, this state,
county, or any other group or combination acting as a unit, and the
plural as well as the singular number, unless the intention to give
a more limited meaning is disclosed by the context.
(b) "Use" means the exercise of a right or power over tangible
personal property incident to the ownership of that property
including transfer of the property in a transaction where
possession is given. Converting tangible personal property acquired
for a use exempt from the tax levied under this act to a use not
exempt from the tax levied under this act is a taxable use.
(c) "Storage" means a keeping or retention of property in this
state for any purpose after the property loses its interstate
character.
(d) "Seller" means the person from whom a purchase is made and
includes every person selling tangible personal property or
services for storage, use, or other consumption in this state. If,
in the opinion of the department, it is necessary for the efficient
administration of this act to regard a salesperson, representative,
peddler, or canvasser as the agent of a dealer, distributor,
supervisor, or employer under whom the person operates or from whom
he or she obtains tangible personal property or services sold by
him or her for storage, use, or other consumption in this state,
irrespective of whether or not he or she is making the sales on his
or her own behalf or on behalf of the dealer, distributor,
supervisor, or employer, the department may so consider him or her,
and may consider the dealer, distributor, supervisor, or employer
as the seller for the purpose of this act.
(e) "Purchase" means to acquire for a consideration, whether
the acquisition is effected by a transfer of title, of possession,
or of both, or a license to use or consume; whether the transfer is
absolute or conditional, and by whatever means the transfer is
effected; and whether consideration is a price or rental in money,
or by way of exchange or barter. Purchase includes converting
tangible personal property acquired for a use exempt from the tax
levied under this act to a use not exempt from the tax levied under
this act.
(f) "Purchase price" or "price" means the total amount of
consideration paid by the consumer to the seller, including cash,
credit, property, and services, for which tangible personal
property or services are sold, leased, or rented, valued in money,
whether received in money or otherwise, and applies to the measure
subject to use tax. Purchase price includes the following
subparagraphs (i) through (vi) and excludes subparagraphs (vii)
through (viii):
(i) Seller's cost of the property sold.
(ii) Cost of materials used, labor or service cost, interest,
losses, costs of transportation to the seller, taxes imposed on the
seller other than taxes imposed by this act, and any other expense
of the seller.
(iii) Charges by the seller for any services necessary to
complete the sale, other than the following:
(A) An amount received or billed by the taxpayer for
remittance to the employee as a gratuity or tip, if the gratuity or
tip is separately identified and itemized on the guest check or
billed to the customer.
(B) Labor or service charges involved in maintenance and
repair work on tangible personal property of others if separately
itemized.
(iv) Delivery charges incurred or to be incurred before the
completion of the transfer of ownership of tangible personal
property from the seller to the purchaser.
(v) Installation charges incurred or to be incurred before the
completion of the transfer of ownership of tangible personal
property from the seller to the purchaser.
(vi) Credit for any trade-in.
(vii) Interest, financing, or carrying charges from credit
extended on the sale of personal property or services, if the
amount is separately stated on the invoice, bill of sale, or
similar document given to the purchaser.
(viii) Any taxes legally imposed directly on the consumer that
are separately stated on the invoice, bill of sale, or similar
document given to the purchaser.
(g) "Consumer" means the person who has purchased tangible
personal property or services for storage, use, or other
consumption
in this state and includes, a but
is not limited to, 1
or more of the following:
(i) A person acquiring tangible personal property if engaged in
the business of constructing, altering, repairing, or improving the
real estate of others.
(ii) A person who has converted tangible personal property or
services acquired for storage, use, or consumption in this state
that is exempt from the tax levied under this act to storage, use,
or consumption in this state that is not exempt from the tax levied
under this act.
(h) "Business" means all activities engaged in by a person or
caused to be engaged in by a person with the object of gain,
benefit, or advantage, either direct or indirect.
(i) "Department" means the department of treasury.
(j) "Tax" includes all taxes, interest, or penalties levied
under this act.
(k) "Tangible personal property" means personal property that
can be seen, weighed, measured, felt, or touched or that is in any
other manner perceptible to the senses and includes electricity,
water, gas, steam, and prewritten computer software.
(l) "Textiles" means goods that are made of or incorporate
woven or nonwoven fabric, including, but not limited to, clothing,
shoes, hats, gloves, handkerchiefs, curtains, towels, sheets,
pillows, pillowcases, tablecloths, napkins, aprons, linens, floor
mops, floor mats, and thread. Textiles also include materials used
to repair or construct textiles, or other goods used in the rental,
sale, or cleaning of textiles.
(m) "Interstate motor carrier" means a person who operates or
causes to be operated a qualified commercial motor vehicle on a
public road or highway in this state and at least 1 other state or
Canadian province.
(n) "Qualified commercial motor vehicle" means that term as
defined in section 1(i), (j), and (k) of the motor carrier fuel tax
act, 1980 PA 119, MCL 207.211.
(o) "Diesel fuel" means that term as defined in section 2(p)
of the motor fuel tax act, 2000 PA 403, MCL 207.1002.
(p) "Sale" means a transaction by which tangible personal
property or services are purchased or rented for storage, use, or
other consumption in this state.
Sec. 3. (1) There is levied upon and there shall be collected
from every person in this state a specific tax for the privilege of
using, storing, or consuming tangible personal property in this
state at a rate equal to 6% of the price of the property or
services specified in section 3a or 3b. The tax levied under this
act applies to a person who acquires tangible personal property or
services that are subject to the tax levied under this act for any
tax-exempt use who subsequently converts the tangible personal
property or service to a taxable use, including an interim taxable
use. If tangible personal property or services are converted to a
taxable use, the tax levied under this act shall be imposed without
regard to any subsequent tax-exempt use. Penalties and interest
shall be added to the tax if applicable as provided in this act.
For the purpose of the proper administration of this act and to
prevent the evasion of the tax, all of the following shall be
presumed:
(a) That tangible personal property purchased is subject to
the tax if brought into this state within 90 days of the purchase
date and is considered as acquired for storage, use, or other
consumption in this state.
(b) That tangible personal property used solely for personal,
nonbusiness purposes that is purchased outside of this state and
that is not an aircraft is exempt from the tax levied under this
act if 1 or more of the following conditions are satisfied:
(i) The property is purchased by a person who is not a resident
of this state at the time of purchase and is brought into this
state more than 90 days after the date of purchase.
(ii) The property is purchased by a person who is a resident of
this state at the time of purchase and is brought into this state
more than 360 days after the date of purchase.
(2) The tax imposed by this section for the privilege of
using, storing, or consuming a vehicle, ORV, manufactured housing,
aircraft, snowmobile, or watercraft shall be collected before the
transfer of the vehicle, ORV, manufactured housing, aircraft,
snowmobile, or watercraft, except a transfer to a licensed dealer
or retailer for purposes of resale that arises by reason of a
transaction made by a person who does not transfer vehicles, ORVs,
manufactured housing, aircraft, snowmobiles, or watercraft in the
ordinary course of his or her business done in this state. The tax
on a vehicle, ORV, snowmobile, and watercraft shall be collected by
the secretary of state before the transfer of the vehicle, ORV,
snowmobile, or watercraft registration. The tax on manufactured
housing shall be collected by the department of consumer and
industry services, mobile home commission, or its agent before the
transfer of the certificate of title. The tax on an aircraft shall
be collected by the department of treasury. The price tax base of a
new or previously owned car or truck held for resale by a dealer
and that is not exempt under section 4(1)(c) is the purchase price
of the car or truck multiplied by 2.5% plus $30.00 per month
beginning with the month that the dealer uses the car or truck in a
nonexempt manner.
(3) The following transfers or purchases are not subject to
use tax:
(a) A transaction or a portion of a transaction if the
transferee or purchaser is the spouse, mother, father, brother,
sister, child, stepparent, stepchild, stepbrother, stepsister,
grandparent, grandchild, legal ward, or a legally appointed
guardian with a certified letter of guardianship, of the
transferor.
(b) A transaction or a portion of a transaction if the
transfer is a gift to a beneficiary in the administration of an
estate.
(c) If a vehicle, ORV, manufactured housing, aircraft,
snowmobile, or watercraft that has once been subjected to the
Michigan sales or use tax is transferred in connection with the
organization, reorganization, dissolution, or partial liquidation
of an incorporated or unincorporated business and the beneficial
ownership is not changed.
(d) If an insurance company licensed to conduct business in
this state acquires ownership of a late model distressed vehicle as
defined in section 12a of the Michigan vehicle code, 1949 PA 300,
MCL 257.12a, through payment of damages in response to a claim or
when the person who owned the vehicle before the insurance company
reacquires ownership from the company as part of the settlement of
a claim.
(4) The department may utilize the services, information, or
records of any other department or agency of state government in
the performance of its duties under this act, and other departments
or agencies of state government are required to furnish those
services, information, or records upon the request of the
department.
(5) Any decrease in the rate of the tax levied under
subsection (1) on services subject to tax under this act shall
apply only to billings rendered on or after the effective date of
the decrease.
Sec.
7. (1) Each consumer person storing, using, or otherwise
consuming in this state tangible personal property or services
purchased
for or subsequently converted to such purpose or purposes
shall
be is liable for the tax imposed by levied under this act,
and
such that liability shall not be extinguished until the tax
levied under this act has been paid to the department.
(2) A person who acquires tangible personal property or
services for any tax-exempt use who subsequently converts the
tangible personal property or service to a taxable use, including
an interim taxable use, is liable for the tax levied under this
act. If tangible personal property or services are converted to a
taxable use, the tax levied under this act shall be imposed without
regard to any subsequent tax-exempt use. The payment to the
department of the tax, interest, and any penalty assessed by the
department
shall relieve relieves the seller, who sold the property
or
services with regard to the storing, use, or other consumption
on which the tax was paid from the payment of the amount of the tax
which
that he or
she may be required under this act to
collect from
the purchaser.
Enacting section 1. It is the intent of the legislature that
this amendatory act clarify that a person who acquires tangible
personal property for a purpose exempt under the use tax act, 1937
PA 94, MCL 205.91 to 205.111, who subsequently converts that
property to a use taxable under the use tax act, 1937 PA 94, MCL
205.91 to 205.111, is liable for the tax levied under the use tax
act, 1937 PA 94, MCL 205.91 to 205.111.
Enacting section 2. This amendatory act is retroactive and is
effective beginning September 30, 2002 and for all tax years that
are open under the statute of limitations provided in section 27a
of 1941 PA 122, MCL 205.27a.