September 19, 2007, Introduced by Reps. Meisner, Gillard, Alma Smith, Warren, Wojno, Cushingberry, Clack, Angerer, Kathleen Law, Byrnes, Tobocman and Condino and referred to the Committee on Tax Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 30, 51, 261, 266, and 270 (MCL 206.30,
206.51, 206.261, 206.266, and 206.270), section 30 as amended by
2005 PA 214, section 51 as amended by 1999 PA 6, section 261 as
amended by 2000 PA 195, section 266 as amended by 2006 PA 52, and
section 270 as amended by 2005 PA 234; and to repeal acts and
parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 30. (1) "Taxable income" means, for a person other than
2 a corporation, estate, or trust, adjusted gross income as defined
3 in the internal revenue code subject to the following adjustments
1 under this section:
2 (a) Add gross interest income and dividends derived from
3 obligations or securities of states other than Michigan, in the
4 same amount that has been excluded from adjusted gross income
5 less related expenses not deducted in computing adjusted gross
6 income because of section 265(a)(1) of the internal revenue code.
7 (b) Add taxes on or measured by income to the extent the
8 taxes have been deducted in arriving at adjusted gross income.
9 (c) Add losses on the sale or exchange of obligations of the
10 United States government, the income of which this state is
11 prohibited from subjecting to a net income tax, to the extent
12 that the loss has been deducted in arriving at adjusted gross
13 income.
14 (d) Deduct, to the extent included in adjusted gross income,
15 income derived from obligations, or the sale or exchange of
16 obligations, of the United States government that this state is
17 prohibited by law from subjecting to a net income tax, reduced by
18 any interest on indebtedness incurred in carrying the obligations
19 and by any expenses incurred in the production of that income to
20 the extent that the expenses, including amortizable bond
21 premiums, were deducted in arriving at adjusted gross income.
22 (e) Deduct, to the extent included in adjusted gross income,
23 compensation, including retirement benefits, received for
24 services in the armed forces of the United States.
25 (f) Deduct the following to the extent included in adjusted
26 gross income:
27 (i) Retirement or pension benefits received from a federal
1 public retirement system or from a public retirement system of or
2 created by this state or a political subdivision of this state.
3 (ii) Retirement or pension benefits received from a public
4 retirement system of or created by another state or any of its
5 political subdivisions if the income tax laws of the other state
6 permit a similar deduction or exemption or a reciprocal deduction
7 or exemption of a retirement or pension benefit received from a
8 public retirement system of or created by this state or any of
9 the political subdivisions of this state.
10 (iii) Social security benefits as defined in section 86 of the
11 internal revenue code.
12 (iv)
Before October 1, 1994, retirement or pension benefits
13 from any other retirement or pension system as follows:
14 (A) For a single return, the sum of not more than $7,500.00.
15 (B) For a joint return, the sum of not more than $10,000.00.
16 (iv) (v) After September 30, 1994, retirement Retirement or
17 pension benefits not deductible under subparagraph (i) or
18 subdivision (e) from any other retirement or pension system or
19 benefits from a retirement annuity policy in which payments are
20 made for life to a senior citizen, to a maximum of $30,000.00 for
21 a single return and $60,000.00 for a joint return. The maximum
22 amounts allowed under this subparagraph shall be reduced by the
23 amount of the deduction for retirement or pension benefits
24 claimed under subparagraph (i) or
subdivision (e) and for tax
25 years after the 1996 tax year by
the amount of a deduction
26 claimed under subdivision (r). For the 1995 tax year and each tax
27 year after 1995, the The
maximum amounts allowed under this
1 subparagraph shall be adjusted by the percentage increase in the
2 United States consumer price index for the immediately preceding
3 calendar year. The department shall annualize the amounts
4 provided in this subparagraph and subparagraph (iv) as
necessary.
5 for tax years that end after September 30, 1994. As used in this
6 subparagraph, "senior citizen" means that term as defined in
7 section 514.
8 (v) (vi) The
amount determined to be the section 22 amount
9 eligible for the elderly and the permanently and totally disabled
10 credit provided in section 22 of the internal revenue code.
11 (g) Adjustments resulting from the application of section
12 271.
13 (h) Adjustments with respect to estate and trust income as
14 provided in section 36.
15 (i) Adjustments resulting from the allocation and
16 apportionment provisions of chapter 3.
17 (j) Deduct political contributions as described in section 4
18 of the Michigan campaign finance act, 1976 PA 388, MCL 169.204,
19 or 2 USC 431, not in excess of $50.00 per annum, or $100.00 per
20 annum for a joint return.
21 (k) Deduct, to the extent included in adjusted gross income,
22 wages not deductible under section 280C of the internal revenue
23 code.
24 (l) Deduct the following payments made by the taxpayer in the
25 tax year:
26 (i) The amount of payment made under an advance tuition
27 payment contract as provided in the Michigan education trust act,
1 1986 PA 316, MCL 390.1421 to 390.1442.
2 (ii) The amount of payment made under a contract with a
3 private sector investment manager that meets all of the following
4 criteria:
5 (A) The contract is certified and approved by the board of
6 directors of the Michigan education trust to provide equivalent
7 benefits and rights to purchasers and beneficiaries as an advance
8 tuition payment contract as described in subparagraph (i).
9 (B) The contract applies only for a state institution of
10 higher education as defined in the Michigan education trust act,
11 1986 PA 316, MCL 390.1421 to 390.1442, or a community or junior
12 college in Michigan.
13 (C) The contract provides for enrollment by the contract's
14 qualified beneficiary in not less than 4 years after the date on
15 which the contract is entered into.
16 (D) The contract is entered into after either of the
17 following:
18 (I) The purchaser has had his or her offer to enter into an
19 advance tuition payment contract rejected by the board of
20 directors of the Michigan education trust, if the board
21 determines that the trust cannot accept an unlimited number of
22 enrollees upon an actuarially sound basis.
23 (II) The board of directors of the Michigan education trust
24 determines that the trust can accept an unlimited number of
25 enrollees upon an actuarially sound basis.
26 (m) If an advance tuition payment contract under the
27 Michigan education trust act, 1986 PA 316, MCL 390.1421 to
1 390.1442, or another contract for which the payment was
2 deductible under subdivision (l) is terminated and the qualified
3 beneficiary under that contract does not attend a university,
4 college, junior or community college, or other institution of
5 higher education, add the amount of a refund received by the
6 taxpayer as a result of that termination or the amount of the
7 deduction taken under subdivision (l) for payment made under that
8 contract, whichever is less.
9 (n) Deduct from the taxable income of a purchaser the amount
10 included as income to the purchaser under the internal revenue
11 code after the advance tuition payment contract entered into
12 under the Michigan education trust act, 1986 PA 316, MCL 390.1421
13 to 390.1442, is terminated because the qualified beneficiary
14 attends an institution of postsecondary education other than
15 either a state institution of higher education or an institution
16 of postsecondary education located outside this state with which
17 a state institution of higher education has reciprocity.
18 (o) Add, to the extent deducted in determining adjusted
19 gross income, the net operating loss deduction under section 172
20 of the internal revenue code.
21 (p) Deduct a net operating loss deduction for the taxable
22 year as determined under section 172 of the internal revenue code
23 subject to the modifications under section 172(b)(2) of the
24 internal revenue code and subject to the allocation and
25 apportionment provisions of chapter 3 of this act for the taxable
26 year in which the loss was incurred.
27 (q) For a tax year beginning after 1986, deduct Deduct,
to
1 the extent included in adjusted gross income, benefits from a
2 discriminatory self-insurance medical expense reimbursement plan.
3 (r) After September 30, 1994 and before the 1997 tax year, a
4 taxpayer who is a senior citizen may deduct, to the extent
5 included in adjusted gross income, interest and dividends
6 received in the tax year not to exceed $1,000.00 for a single
7 return or $2,000.00 for a joint return. However, for tax years
8 before the 1997 tax year, the deduction under this subdivision
9 shall not be taken if the taxpayer takes a deduction for
10 retirement benefits under subdivision (e) or a deduction under
11 subdivision (f)(i), (ii), (iv), or
(v). For tax years after the 1996
12 tax year, a A taxpayer who is a senior citizen may deduct to the
13 extent included in adjusted gross income, interest, dividends,
14 and capital gains received in the tax year not to exceed
15 $3,500.00 for a single return and $7,000.00 for a joint return
16 for the 1997 tax year, and $7,500.00
for a single return and
17 $15,000.00 for a joint return. for tax years after the 1997 tax
18 year. For tax years after the 1996 tax year, the The maximum
19 amounts allowed under this subdivision shall be reduced by the
20 amount of a deduction claimed for retirement benefits under
21 subdivision (e) or a deduction claimed under subdivision (f)(i),
22 (ii), (iv), or (v). For the 1995 tax year, for the 1996 tax year,
23 and for each tax year after the 1998 tax year, the The maximum
24 amounts allowed under this subdivision shall be adjusted by the
25 percentage increase in the United States consumer price index for
26 the immediately preceding calendar year. The department shall
27 annualize the amounts provided in this subdivision as necessary.
1 for tax years that end after September 30, 1994. As used in this
2 subdivision, "senior citizen" means that term as defined in
3 section 514.
4 (s) Deduct, to the extent included in adjusted gross income,
5 all of the following:
6 (i) The amount of a refund received in the tax year based on
7 taxes paid under this act.
8 (ii) The amount of a refund received in the tax year based on
9 taxes paid under the city income tax act, 1964 PA 284, MCL
10 141.501 to 141.787.
11 (iii) The amount of a credit received in the tax year based on
12 a claim filed under sections 520 and 522 to the extent that the
13 taxes used to calculate the credit were not used to reduce
14 adjusted gross income for a prior year.
15 (t) Add the amount paid by the state on behalf of the
16 taxpayer in the tax year to repay the outstanding principal on a
17 loan taken on which the taxpayer defaulted that was to fund an
18 advance tuition payment contract entered into under the Michigan
19 education trust act, 1986 PA 316, MCL 390.1421 to 390.1442, if
20 the cost of the advance tuition payment contract was deducted
21 under subdivision (l) and was financed with a Michigan education
22 trust secured loan.
23 (u) For the 1998 tax year and each tax year after the 1998
24 tax year, deduct Deduct
the amount calculated under section
30d.
25 (v) For tax years that begin on and after January 1, 1994,
26 deduct Deduct, to the extent included in adjusted gross income,
27 any amount, and any interest earned on that amount, received in
1 the tax year by a taxpayer who is a Holocaust victim as a result
2 of a settlement of claims against any entity or individual for
3 any recovered asset pursuant to the German act regulating
4 unresolved property claims, also known as Gesetz zur Regelung
5 offener Vermogensfragen, as a result of the settlement of the
6 action entitled In re: Holocaust victim assets litigation, CV-96-
7 4849, CV-96-5161, and CV-97-0461 (E.D. NY), or as a result of any
8 similar action if the income and interest are not commingled in
9 any way with and are kept separate from all other funds and
10 assets of the taxpayer. As used in this subdivision:
11 (i) "Holocaust victim" means a person, or the heir or
12 beneficiary of that person, who was persecuted by Nazi Germany or
13 any Axis regime during any period from 1933 to 1945.
14 (ii) "Recovered asset" means any asset of any type and any
15 interest earned on that asset including, but not limited to, bank
16 deposits, insurance proceeds, or artwork owned by a Holocaust
17 victim during the period from 1920 to 1945, withheld from that
18 Holocaust victim from and after 1945, and not recovered,
19 returned, or otherwise compensated to the Holocaust victim until
20 after 1993.
21 (w) For tax years that begin after December 31, 1999, deduct
22 Deduct, to the extent not deducted in determining adjusted gross
23 income, both of the following:
24 (i) The total of all
contributions made on and after October
25 1, 2000 by the taxpayer in
the tax year less qualified
26 withdrawals made in the tax year to education savings accounts
27 pursuant to the Michigan education savings program act, 2000 PA
1 161, MCL 390.1471 to 390.1486, not to exceed $5,000.00 for a
2 single return or $10,000.00 for a joint return per tax year.
3 (ii) The amount under section 30f.
4 (x) For tax years that begin after December 31, 1999, add
5 Add, to the extent not included in adjusted gross income, the
6 amount of money withdrawn by the taxpayer in the tax year from
7 education savings accounts, not to exceed the total amount
8 deducted under subdivision (w) in the tax year and all previous
9 tax years, if the withdrawal was not a qualified withdrawal as
10 provided in the Michigan education savings program act, 2000 PA
11 161, MCL 390.1471 to 390.1486. This subdivision does not apply to
12 withdrawals that are less than the sum of all contributions made
13 to an education savings account in all previous tax years for
14 which no deduction was claimed under subdivision (w), less any
15 contributions for which no deduction was claimed under
16 subdivision (w) that were withdrawn in all previous tax years.
17 (y) For tax years that begin after December 31, 1999, deduct
18 Deduct, to the extent included in adjusted gross income, the
19 amount of a distribution from individual retirement accounts that
20 qualify under section 408 of the internal revenue code if the
21 distribution is used to pay qualified higher education expenses
22 as that term is defined in the Michigan education savings program
23 act, 2000 PA 161, MCL 390.1471 to 390.1486.
24 (z) For tax years that begin after December 31, 2000, deduct
25 Deduct, to the extent included in adjusted gross income, an
26 amount equal to the qualified charitable distribution made in the
27 tax year by a taxpayer to a charitable organization. The amount
1 allowed under this subdivision shall be equal to the amount
2 deductible by the taxpayer under section 170(c) of the internal
3 revenue code with respect to the qualified charitable
4 distribution in the tax year in which the taxpayer makes the
5 distribution to the qualified charitable organization, reduced by
6 both the amount of the deduction for retirement or pension
7 benefits claimed by the taxpayer under subdivision (f)(i), (ii),
8 (iv), or (v) and by 2 times the total amount of credits claimed
9 under sections 260 and 261 for the tax year. As used in this
10 subdivision, "qualified charitable distribution" means a
11 distribution of assets to a qualified charitable organization by
12 a taxpayer not more than 60 days after the date on which the
13 taxpayer received the assets as a distribution from a retirement
14 or pension plan described in subsection (8)(a). A distribution is
15 to a qualified charitable organization if the distribution is
16 made in any of the following circumstances:
17 (i) To an organization described in section 501(c)(3) of the
18 internal revenue code except an organization that is controlled
19 by a political party, an elected official or a candidate for an
20 elective office.
21 (ii) To a charitable remainder annuity trust or a charitable
22 remainder unitrust as defined in section 664(d) of the internal
23 revenue code; to a pooled income fund as defined in section
24 642(c)(5) of the internal revenue code; or for the issuance of a
25 charitable gift annuity as defined in section 501(m)(5) of the
26 internal revenue code. A trust, fund, or annuity described in
27 this subparagraph is a qualified charitable organization only if
1 no person holds any interest in the trust, fund, or annuity other
2 than 1 or more of the following:
3 (A) The taxpayer who received the distribution from the
4 retirement or pension plan.
5 (B) The spouse of an individual described in sub-
6 subparagraph (A).
7 (C) An organization described in section 501(c)(3) of the
8 internal revenue code.
9 (aa) A taxpayer who is a resident tribal member may deduct,
10 to the extent included in adjusted gross income, all nonbusiness
11 income earned or received in the tax year and during the period
12 in which an agreement entered into between the taxpayer's tribe
13 and this state pursuant to section 30c of 1941 PA 122, MCL
14 205.30c, is in full force and effect. As used in this
15 subdivision:
16 (i) "Business income" means business income as defined in
17 section 4 and apportioned under chapter 3.
18 (ii) "Nonbusiness income" means nonbusiness income as defined
19 in section 14 and, to the extent not included in business income,
20 all of the following:
21 (A) All income derived from wages whether the wages are
22 earned within the agreement area or outside of the agreement
23 area.
24 (B) All interest and passive dividends.
25 (C) All rents and royalties derived from real property
26 located within the agreement area.
27 (D) All rents and royalties derived from tangible personal
1 property, to the extent the personal property is utilized within
2 the agreement area.
3 (E) Capital gains from the sale or exchange of real property
4 located within the agreement area.
5 (F) Capital gains from the sale or exchange of tangible
6 personal property located within the agreement area at the time
7 of sale.
8 (G) Capital gains from the sale or exchange of intangible
9 personal property.
10 (H) All pension income and benefits including, but not
11 limited to, distributions from a 401(k) plan, individual
12 retirement accounts under section 408 of the internal revenue
13 code, or a defined contribution plan, or payments from a defined
14 benefit plan.
15 (I) All per capita payments by the tribe to resident tribal
16 members, without regard to the source of payment.
17 (J) All gaming winnings.
18 (iii) "Resident tribal member" means an individual who meets
19 all of the following criteria:
20 (A) Is an enrolled member of a federally recognized tribe.
21 (B) The individual's tribe has an agreement with this state
22 pursuant to section 30c of 1941 PA 122, MCL 205.30c, that is in
23 full force and effect.
24 (C) The individual's principal place of residence is located
25 within the agreement area as designated in the agreement under
26 sub-subparagraph (B).
27 (bb) For tax years that begin after December 31, 2006,
1 deduct, to the extent included in adjusted gross income, all or a
2 portion of the gain, as determined under this section, realized
3 from an initial equity investment of not less than $100,000.00
4 made by the taxpayer before December 31, 2009, in a qualified
5 business, if an amount equal to the sum of the taxpayer's basis
6 in the investment as determined under the internal revenue code
7 plus the gain, or a portion of that amount, is reinvested in an
8 equity investment in a qualified business within 1 year after the
9 sale or disposition of the investment in the qualified business.
10 If the amount of the subsequent investment is less than the sum
11 of the taxpayer's basis from the prior equity investment plus the
12 gain from the prior equity investment, the amount of a deduction
13 under this section shall be reduced by the difference between the
14 sum of the taxpayer's basis from the prior equity investment plus
15 the gain from the prior equity investment and the subsequent
16 investment. As used in this subdivision:
17 (i) "Advanced automotive, manufacturing, and materials
18 technology" means any technology that involves 1 or more of the
19 following:
20 (A) Materials with engineered properties created through the
21 development of specialized process and synthesis technology.
22 (B) Nanotechnology, including materials, devices, or systems
23 at the atomic, molecular, or macromolecular level, with a scale
24 measured in nanometers.
25 (C) Microelectromechanical systems, including devices or
26 systems integrating microelectronics with mechanical parts and a
27 scale measured in micrometers.
1 (D) Improvements to vehicle safety, vehicle performance,
2 vehicle production, or environmental impact, including, but not
3 limited to, vehicle equipment and component parts.
4 (E) Any technology that involves an alternative energy
5 vehicle or its components. "Alternative energy vehicle" means
6 that term as defined in section 2 of the Michigan next energy
7 authority act, 2002 PA 593, MCL 207.822.
8 (F) A new technology, device, or system that enhances or
9 improves the manufacturing process of wood, timber, or
10 agricultural-based products.
11 (G) Advanced computing or electronic device technology
12 related to technology described under this subparagraph.
13 (H) Design, engineering, testing, or diagnostics related to
14 technology described under this subparagraph.
15 (I) Product research and development related to technology
16 described under this subparagraph.
17 (ii) "Advanced computing" means any technology used in the
18 design and development of 1 or more of the following:
19 (A) Computer hardware and software.
20 (B) Data communications.
21 (C) Information technologies.
22 (iii) "Alternative energy technology" means applied research
23 or commercialization of new or next generation technology in 1 or
24 more of the following:
25 (A) Alternative energy technology as that term is defined in
26 section 2 of the Michigan next energy authority act, 2002 PA 593,
27 MCL 207.822.
1 (B) Devices or systems designed and used solely for the
2 purpose of generating energy from agricultural crops, residue and
3 waste generated from the production and processing of
4 agricultural products, animal wastes, or food processing wastes,
5 not including a conventional gasoline or diesel fuel engine or a
6 retrofitted conventional gasoline or diesel fuel engine.
7 (C) A new technology, product, or system that permits the
8 utilization of biomass for the production of specialty,
9 commodity, or foundational chemicals or of novel or economical
10 commodity materials through the application of biotechnology that
11 minimizes, complements, or replaces reliance on petroleum for the
12 production.
13 (D) Advanced computing or electronic device technology
14 related to technology described under this subparagraph.
15 (E) Design, engineering, testing, or diagnostics related to
16 technology described under this subparagraph.
17 (F) Product research and development related to a technology
18 described under this subparagraph.
19 (iv) "Competitive edge technology" means 1 or more of the
20 following:
21 (A) Advanced automotive, manufacturing, and materials
22 technology.
23 (B) Alternative energy technology.
24 (C) Homeland security and defense technology.
25 (D) Life sciences technology.
26 (v) "Electronic device technology" means any technology that
27 involves microelectronics, semiconductors, electronic equipment,
1 and instrumentation, radio frequency, microwave, and millimeter
2 electronics; optical and optic-electrical devices; or data and
3 digital communications and imaging devices.
4 (vi) "Homeland security and defense technology" means
5 technology that assists in the assessment of threats or damage to
6 the general population and critical infrastructure, protection
7 of, defense against, or mitigation of the effects of foreign or
8 domestic threats, disasters, or attacks, or support for crisis or
9 response management, including, but not limited to, 1 or more of
10 the following:
11 (A) Sensors, systems, processes, or equipment for
12 communications, identification and authentication, screening,
13 surveillance, tracking, and data analysis.
14 (B) Advanced computing or electronic device technology
15 related to technology described under this subparagraph.
16 (C) Aviation technology including, but not limited to,
17 avionics, airframe design, sensors, early warning systems, and
18 services related to the technology described in this
19 subparagraph.
20 (D) Design, engineering, testing, or diagnostics related to
21 technology described under this subparagraph.
22 (E) Product research and development related to technology
23 described under this subparagraph.
24 (vii) "Life sciences technology" means any technology derived
25 from life sciences intended to improve human health or the
26 overall quality of human life, including, but not limited to,
27 systems, processes, or equipment for drug or gene therapies,
1 biosensors, testing, medical devices or instrumentation with a
2 therapeutic or diagnostic value, a pharmaceutical or other
3 product that requires United States food and drug administration
4 approval or registration prior to its introduction in the
5 marketplace and is a drug or medical device as defined by the
6 federal food, drug, and cosmetic act, 21 USC 301 to 399, or 1 or
7 more of the following:
8 (A) Advanced computing or electronic device technology
9 related to technology described under this subparagraph.
10 (B) Design, engineering, testing, or diagnostics related to
11 technology or the commercial manufacturing of technology
12 described under this subparagraph.
13 (C) Product research and development related to technology
14 described under this subparagraph.
15 (viii) "Life sciences" means science for the examination or
16 understanding of life or life processes, including, but not
17 limited to, all of the following:
18 (A) Bioengineering.
19 (B) Biomedical engineering.
20 (C) Genomics.
21 (D) Proteomics.
22 (E) Molecular and chemical ecology.
23 (F) Biotechnology, including any technology that uses living
24 organisms, cells, macromolecules, microorganisms, or substances
25 from living organisms to make or modify a product for useful
26 purposes. Biotechnology or life sciences do not include any of
27 the following:
1 (I) Activities prohibited under section 2685 of the public
2 health code, 1978 PA 368, MCL 333.2685.
3 (II) Activities prohibited under section 2688 of the public
4 health code, 1978 PA 368, MCL 333.2688.
5 (III) Activities prohibited under section 2690 of the public
6 health code, 1978 PA 368, MCL 333.2690.
7 (IV) Activities prohibited under section 16274 of the public
8 health code, 1978 PA 368, MCL 333.16274.
9 (V) Stem cell research with human embryonic tissue.
10 (ix) "Qualified business" means a business that complies with
11 all of the following:
12 (A) The business is a seed or early stage business as
13 defined in section 3 of the Michigan early stage venture
14 investment act of 2003, 2003 PA 296, MCL 125.2233.
15 (B) The business has its headquarters in this state, is
16 domiciled in this state, or has a majority of its employees
17 working a majority of their time in this state.
18 (C) The business has a preinvestment valuation of less than
19 $10,000,000.00.
20 (D) The business has been in existence less than 5 years.
21 This sub-subparagraph does not apply to a business, the business
22 activity of which is derived from research at an institution of
23 higher education located within this state or an organization
24 exempt from federal taxation under section 501c(3) of the
25 internal revenue code and that is located within this state.
26 (E) The business is engaged only in competitive edge
27 technology.
1 (F) The business is certified by the Michigan strategic fund
2 as meeting the requirements of sub-subparagraphs (A) to (E) at
3 the time of each proposed investment.
4 (cc) For tax years that begin on and after January 1, 2008,
5 add, to the extent deducted in determining adjusted gross income,
6 an amount equal to the difference between the amount deducted in
7 accordance with section 168 of the internal revenue code and the
8 amount that would have been deductible if the deduction was
9 determined in accordance with section 168 of the internal revenue
10 code as it existed and applied prior to March 9, 2002.
11 (2) The following Except
as otherwise provided in subsection
12
(7), a personal exemptions exemption of $2,500.00 multiplied by
13 the number of personal or dependency exemptions allowable on the
14 taxpayer's federal income tax return pursuant to the internal
15 revenue code shall be subtracted in the calculation that
16 determines taxable income.
:
17 (a) For a tax year beginning during 1987 ..... $ 1,600.00.
18 (b) For a tax year beginning during 1988 ..... $ 1,800.00.
19 (c) For a tax year beginning during 1989 ..... $ 2,000.00.
20 (d) For a tax year beginning after 1989
21 and before 1995 ................................... $ 2,100.00.
22 (e) For a tax year beginning during 1995
23 or 1996 ........................................... $ 2,400.00.
24 (f) Except as otherwise provided in
25 subsection (7), for a tax year beginning after
26 1996 ............................... $ 2,500.00.
27 (3) A Except
as otherwise provided in subsection (7), a
1 single additional exemption determined as follows shall be
2 subtracted in the calculation that determines taxable income in
3 each of the following circumstances:
4 (a) For tax years beginning after 1989 and before 2000,
5 $900.00 in each of the following circumstances:
6 (i) The
taxpayer is a paraplegic, a quadriplegic, a
7 hemiplegic, a person who is blind as defined in section 504, or a
8 person who is totally and permanently disabled as defined in
9 section 522.
10 (ii) The
taxpayer is a deaf person as defined in section 2 of
11 the deaf persons' interpreters act, 1982 PA 204, MCL 393.502.
12 (iii) The
taxpayer is 65 years of age or older.
13 (iv) The
return includes unemployment compensation that
14 amounts to 50% or more of adjusted gross income.
15 (a) (b) For tax years beginning after 1999, $1,800.00 for
16 each taxpayer and every dependent of the taxpayer who is 65 years
17 of age or older. When a dependent of a taxpayer files an annual
18 return under this act, the taxpayer or dependent of the taxpayer,
19 but not both, may claim the additional exemption allowed under
20 this subdivision. As used in this subdivision and subdivision
21 (c), "dependent" means that term as defined in section 30e.
22 (b) (c) For tax years beginning after 1999, $1,800.00 for
23 each taxpayer and every dependent of the taxpayer who is a deaf
24 person as defined in section 2 of the deaf persons' interpreters
25 act, 1982 PA 204, MCL 393.502; a paraplegic, a quadriplegic, or a
26 hemiplegic; a person who is blind as defined in section 504; or a
27 person who is totally and permanently disabled as defined in
1 section 522. When a dependent of a taxpayer files an annual
2 return under this act, the taxpayer or dependent of the taxpayer,
3 but not both, may claim the additional exemption allowed under
4 this subdivision.
5 (c) (d) For tax years beginning after 1999, $1,800.00 if the
6 taxpayer's return includes unemployment compensation that amounts
7 to 50% or more of adjusted gross income.
8 (4) For a tax year beginning after 1987, an An individual
9 with respect to whom a deduction under section 151 of the
10 internal revenue code is allowable to another federal taxpayer
11 during the tax year is not considered to have an allowable
12 federal exemption for purposes of subsection (2), but may
13 subtract $500.00 $1,500.00
in the calculation that determines
14 taxable income for a tax year. beginning in 1988, $1,000.00 for a
15 tax year beginning after 1988 and before 2000, and $1,500.00 for
16 a tax year beginning after 1999.
17 (5) A nonresident or a part-year resident is allowed that
18 proportion of an exemption or deduction allowed under subsection
19 (2), (3), or (4) that the taxpayer's portion of adjusted gross
20 income from Michigan sources bears to the taxpayer's total
21 adjusted gross income.
22 (6) For a tax year beginning after 1987, in In calculating
23 taxable income, a taxpayer shall not subtract from adjusted gross
24 income the amount of prizes won by the taxpayer under the
25 McCauley-Traxler-Law-Bowman-McNeely lottery act, 1972 PA 239, MCL
26 432.1 to 432.47.
27 (7) For each tax year, after the 1997 tax year, the personal
1 exemption allowed under subsection (2) shall be adjusted by
2 multiplying the exemption for the tax year beginning in 1997 by a
3 fraction, the numerator of which is the United States consumer
4 price index for the state fiscal year ending in the tax year
5 prior to the tax year for which the adjustment is being made and
6 the denominator of which is the United States consumer price
7 index for the 1995-96 state fiscal year. The resultant product
8 shall be rounded to the nearest $100.00 increment. The personal
9 exemption for the tax year shall be determined by adding $200.00
10 to that rounded amount. As used in this section, "United States
11 consumer price index" means the United States consumer price
12 index for all urban consumers as defined and reported by the
13 United States department of labor, bureau of labor statistics.
14 For each tax year, after the 2000 tax year, the exemptions
15 allowed under subsection (3) shall be adjusted by multiplying the
16 exemption amount under subsection (3) for the tax year beginning
17 in 2000 by a fraction, the
numerator of which is the United
18 States consumer price index for the state fiscal year ending the
19 tax year prior to the tax year for which the adjustment is being
20 made and the denominator of which is the United States consumer
21 price index for the 1998-1999 state fiscal year. The resultant
22 product shall be rounded to the nearest $100.00 increment.
23 (8) As used in subsection (1)(f), "retirement or pension
24 benefits" means distributions from all of the following:
25 (a) Except as provided in subdivision (d), qualified pension
26 trusts and annuity plans that qualify under section 401(a) of the
27 internal revenue code, including all of the following:
1 (i) Plans for self-employed persons, commonly known as Keogh
2 or HR 10 HR10 plans.
3 (ii) Individual retirement accounts that qualify under
4 section 408 of the internal revenue code if the distributions are
5 not made until the participant has reached 59-1/2 years of age,
6 except in the case of death, disability, or distributions
7 described by section 72(t)(2)(A)(iv) of the internal revenue code.
8 (iii) Employee annuities or tax-sheltered annuities purchased
9 under section 403(b) of the internal revenue code by
10 organizations exempt under section 501(c)(3) of the internal
11 revenue code, or by public school systems.
12 (iv) Distributions from a 401(k) plan attributable to
13 employee contributions mandated by the plan or attributable to
14 employer contributions.
15 (b) The following retirement and pension plans not qualified
16 under the internal revenue code:
17 (i) Plans of the United States, state governments other than
18 this state, and political subdivisions, agencies, or
19 instrumentalities of this state.
20 (ii) Plans maintained by a church or a convention or
21 association of churches.
22 (iii) All other unqualified pension plans that prescribe
23 eligibility for retirement and predetermine contributions and
24 benefits if the distributions are made from a pension trust.
25 (c) Retirement or pension benefits received by a surviving
26 spouse if those benefits qualified for a deduction prior to the
27 decedent's death. Benefits received by a surviving child are not
1 deductible.
2 (d) Retirement and pension benefits do not include:
3 (i) Amounts received from a plan that allows the employee to
4 set the amount of compensation to be deferred and does not
5 prescribe retirement age or years of service. These plans
6 include, but are not limited to, all of the following:
7 (A) Deferred compensation plans under section 457 of the
8 internal revenue code.
9 (B) Distributions from plans under section 401(k) of the
10 internal revenue code other than plans described in subdivision
11 (a)(iv).
12 (C) Distributions from plans under section 403(b) of the
13 internal revenue code other than plans described in subdivision
14 (a)(iii).
15 (ii) Premature distributions paid on separation, withdrawal,
16 or discontinuance of a plan prior to the earliest date the
17 recipient could have retired under the provisions of the plan.
18 (iii) Payments received as an incentive to retire early unless
19 the distributions are from a pension trust.
20 Sec. 51. (1) For receiving, earning, or otherwise acquiring
21 income from any source whatsoever, there is levied and imposed
22 upon the taxable income of every person other than a corporation
23 a tax at the following rates in the following circumstances:
24 (a) Before May 1, 1994, 4.6%.
25 (b) After April 30, 1994 and before January 1, 2000, 4.4%.
26 (c) For tax years that begin on and after January 1, 2000
27 and before January 1, 2002, and
on and after January 1, 2003, the
1 rate under section 51b, 51c, 51d, or 51e, as applicable 4.2%.
2 (d) For tax years that begin on and after January 1, 2002
3 and before January 1, 2003, 4.1%.
4 (e) On and after January 1, 2003 and before July 1, 2004,
5 4.0%.
6 (f) On and after July 1, 2004, 3.9%.
7 (2) The following percentages of the net revenues collected
8 under this section and sections 51b, 51c, 51d, and 51e shall be
9 deposited in the state school aid fund created in section 11 of
10 article IX of the state constitution of 1963:
11 (a) Beginning October 1, 1994 and before October 1, 1996,
12 14.4% of the gross collections before refunds from the tax levied
13 under this section.
14 (b) After September 30, 1996 and before January 1, 2000,
15 23.0% of the gross collections before refunds from the tax levied
16 under this section.
17 (c) Beginning January 1, 2000, that percentage of the gross
18 collections before refunds from the tax levied under this section
19 that is equal to 1.012% divided by the income tax rate levied
20 under this section. or section 51b, 51c, 51d, or 51e, as
21 applicable.
22 (3) The department shall annualize rates provided in
23 subsection (1) as necessary for tax years that end after April
24 30, 1994. The applicable annualized rate shall be imposed upon
25 the taxable income of every person other than a corporation for
26 those tax years.
27 (4) The taxable income of a nonresident shall be computed in
1 the same manner that the taxable income of a resident is
2 computed, subject to the allocation and apportionment provisions
3 of this act.
4 (5) A resident beneficiary of a trust whose taxable income
5 includes all or part of an accumulation distribution by a trust,
6 as defined in section 665 of the internal revenue code, shall be
7 allowed a credit against the tax otherwise due under this act.
8 The credit shall be all or a proportionate part of any tax paid
9 by the trust under this act for any preceding taxable year that
10 would not have been payable if the trust had in fact made
11 distribution to its beneficiaries at the times and in the amounts
12 specified in section 666 of the internal revenue code. The credit
13 shall not reduce the tax otherwise due from the beneficiary to an
14 amount less than would have been due if the accumulation
15 distribution were excluded from taxable income.
16 (6) The taxable income of a resident who is required to
17 include income from a trust in his or her federal income tax
18 return under the provisions of subpart E of part I of subchapter
19 J of chapter 1 of the internal revenue code, 26 U.S.C. USC 671 to
20 679, shall include items of income and deductions from the trust
21 in taxable income to the extent required by this act with respect
22 to property owned outright.
23 (7) It is the intention of this section that the income
24 subject to tax of every person other than corporations shall be
25 computed in like manner and be the same as provided in the
26 internal revenue code subject to adjustments specifically
27 provided for in this act.
1 (8) As used in this section: and sections 51b, 51c,
51d, and
2 51e:
3 (a) "Person other than a corporation" means a resident or
4 nonresident individual or any of the following:
5 (i) A partner in a partnership as defined in the internal
6 revenue code.
7 (ii) A beneficiary of an estate or a trust as defined in the
8 internal revenue code.
9 (iii) An estate or trust as defined in the internal revenue
10 code.
11 (b) "Taxable income" means taxable income as defined in this
12 act subject to the applicable source and attribution rules
13 contained in this act.
14 Sec. 261. (1) For the 1989 tax year and each tax year after
15 1989 and subject to the applicable limitations in this section, a
16 taxpayer may credit against the tax imposed by this act 50% of
17 the amount the taxpayer contributes during the tax year to an
18 endowment fund of a community foundation or for the 1992 tax year
19 and each tax year after 1992 and subject to the applicable
20 limitations in this section, a taxpayer may credit against the
21 tax imposed by this act 50% of the cash amount the taxpayer
22 contributes during the tax year to a shelter for homeless
23 persons, food kitchen, food bank, or other entity located in this
24 state, the primary purpose of which is to provide overnight
25 accommodation, food, or meals to persons who are indigent if a
26 contribution to that entity is tax deductible for the donor under
27 the internal revenue code.
1 (2) For a taxpayer other than a resident estate or trust,
2 the credit allowed by this section for a contribution to a
3 community foundation shall not exceed $100.00, or $200.00 for a
4 husband and wife filing a joint return for tax years before the
5 2000 tax year and $100.00 or $200.00 for a husband and wife
6 filing a joint return for tax years after the 1999 tax year. For
7 the 1992 tax year and each tax year after 1992, a taxpayer may
8 claim an additional credit under this section not to exceed
9 $100.00, or $200.00 for a husband and wife filing a joint return,
10 for total cash contributions made in the tax year to shelters for
11 homeless persons, food kitchens, food banks, and, except for
12 community foundations, other entities allowed under subsection
13 (1). For a resident estate or trust, the credit allowed by this
14 section for a contribution to a community foundation shall not
15 exceed 10% of the taxpayer's tax liability for the tax year
16 before claiming any credits allowed by this act or $5,000.00,
17 whichever is less. For the 1992 tax year and each tax year after
18 1992, a resident estate or trust may claim an additional credit
19 under this section not to exceed 10% of the taxpayer's tax
20 liability for the tax year before claiming any credits allowed by
21 this act or $5,000.00, whichever is less, for total cash
22 contributions made in the tax year to shelters for homeless
23 persons, food kitchens, food banks, and, except for community
24 foundations, other entities allowed under subsection (1). For a
25 resident estate or trust, the amount used to calculate the
26 credits under this section shall not have been deducted in
27 arriving at federal taxable income.
1 (3) The credits allowed under this section are nonrefundable
2 so that a taxpayer shall not claim under this section a total
3 credit amount that reduces the taxpayer's tax liability to less
4 than zero.
5 (4) As used in this section, "community foundation" means an
6 organization that applies for certification on or before May 15
7 of the tax year for which the taxpayer is claiming the credit and
8 that the department certifies for that tax year as meeting all of
9 the following requirements:
10 (a) Qualifies for exemption from federal income taxation
11 under section 501(c)(3) of the internal revenue code.
12 (b) Supports a broad range of charitable activities within
13 the specific geographic area of this state that it serves, such
14 as a municipality or county.
15 (c) Maintains an ongoing program to attract new endowment
16 funds by seeking gifts and bequests from a wide range of
17 potential donors in the community or area served.
18 (d) Is publicly supported as defined by the regulations of
19 the United States department of treasury, 26 C.F.R. CFR 1.170A-
20 9(e)(10). To maintain certification, the community foundation
21 shall submit documentation to the department annually that
22 demonstrates compliance with this subdivision.
23 (e) Is not a supporting organization as an organization is
24 described in section 509(a)(3) of the internal revenue code and
25 the regulations of the United States department of treasury, 26
26 C.F.R. CFR 1.509(a)-4 and 1.509(a)-5.
27 (f) Meets the requirements for treatment as a single entity
1 contained in the regulations of the United States department of
2 treasury, 26 C.F.R. CFR
1.170A-9(e)(11).
3 (g) Except as provided in subsection (6), is incorporated or
4 established as a trust at least 6 months before the beginning of
5 the tax year for which the credit under this section is claimed
6 and that has an endowment value of at least $100,000.00 before
7 the expiration of 18 months after the community foundation is
8 incorporated or established.
9 (h) Has an independent governing body representing the
10 general public's interest and that is not appointed by a single
11 outside entity.
12 (i) Provides evidence to the department that the community
13 foundation has, before the expiration of 6 months after the
14 community foundation is incorporated or established, and
15 maintains continually during the tax year for which the credit
16 under this section is claimed, at least 1 part-time or full-time
17 employee.
18 (j) For community foundations that have an endowment value
19 of $1,000,000.00 or more only, the community foundation is
20 subject to an annual independent financial audit and provides
21 copies of that audit to the department not more than 3 months
22 after the completion of the audit. For community foundations that
23 have an endowment value of less than $1,000,000.00, the community
24 foundation is subject to an annual review and an audit every
25 third year.
26 (k) In addition to all other criteria listed in this
27 subsection for a community foundation that is incorporated or
1 established after the effective date of the amendatory act that
2 added this subdivision, operates in a county of this state that
3 was not served by a community foundation when the community
4 foundation was incorporated or established or operates as a
5 geographic component of an existing certified community
6 foundation.
7 (5) An entity other than a community foundation may request
8 that the department determine if a contribution to that entity
9 qualifies for the credit under this section. The department shall
10 make a determination and respond to a request no later than 30
11 days after the department receives the request.
12 (6) A taxpayer may claim a credit under this section for
13 contributions to a community foundation made before the
14 expiration of the 18-month period after a community foundation
15 was incorporated or established during which the community
16 foundation must build an endowment value of $100,000.00 as
17 provided in subsection (4)(g). If the community foundation does
18 not reach the required $100,000.00 endowment value during that
19 18-month period, contributions to the community foundation made
20 after the date on which the 18-month period expires shall not be
21 used to calculate a credit under this section. At any time after
22 the expiration of the 18-month period under subsection (4)(g)
23 that the community foundation has an endowment value of
24 $100,000.00, the community foundation may apply to the department
25 for certification under this section.
26 (7) On or before July 1 of each year, the department shall
27 report to the house committee on tax policy and the senate
1 finance committee the total amount of tax credits claimed under
2 this section and under section 38c of the single business tax
3 act, 1975 PA 228, MCL 208.38c, or section 425 of the Michigan
4 business tax act, 2007 PA 36, MCL 208.1425, for the immediately
5 preceding tax year.
6 Sec. 266. (1) A qualified taxpayer with a rehabilitation
7 plan certified after December 31, 1998 may credit against the tax
8 imposed by this act the amount determined pursuant to subsection
9 (2) for the qualified expenditures for the rehabilitation of a
10 historic resource pursuant to the rehabilitation plan in the year
11 in which the certification of completed rehabilitation of the
12 historic resource is issued provided that the certification of
13 completed rehabilitation was issued not more than 5 years after
14 the rehabilitation plan was certified by the Michigan historical
15 center.
16 (2) The credit allowed under this section shall be 25% of
17 the qualified expenditures that are eligible for the credit under
18 section 47(a)(2) of the internal revenue code if the taxpayer is
19 eligible for the credit under section 47(a)(2) of the internal
20 revenue code or, if the taxpayer is not eligible for the credit
21 under section 47(a)(2) of the internal revenue code, 25% of the
22 qualified expenditures that would qualify under section 47(a)(2)
23 of the internal revenue code except that the expenditures are
24 made to a historic resource that is not eligible for the credit
25 under section 47(a)(2) of the internal revenue code, subject to
26 both of the following:
27 (a) A taxpayer with qualified expenditures that are eligible
1 for the credit under section 47(a)(2) of the internal revenue
2 code may not claim a credit under this section for those
3 qualified expenditures unless the taxpayer has claimed and
4 received a credit for those qualified expenditures under section
5 47(a)(2) of the internal revenue code.
6 (b) A credit under this section shall be reduced by the
7 amount of a credit received by the taxpayer for the same
8 qualified expenditures under section 47(a)(2) of the internal
9 revenue code.
10 (3) To be eligible for the credit under this section, the
11 taxpayer shall apply to and receive from the Michigan historical
12 center certification that the historic significance, the
13 rehabilitation plan, and the completed rehabilitation of the
14 historic resource meet the criteria under subsection (6) and
15 either of the following:
16 (a) All of the following criteria:
17 (i) The historic resource contributes to the significance of
18 the historic district in which it is located.
19 (ii) Both the rehabilitation plan and completed
20 rehabilitation of the historic resource meet the federal
21 secretary of the interior's standards for rehabilitation and
22 guidelines for rehabilitating historic buildings, 36 CFR part 67.
23 (iii) All rehabilitation work has been done to or within the
24 walls, boundaries, or structures of the historic resource or to
25 historic resources located within the property boundaries of the
26 resource.
27 (b) The taxpayer has received certification from the
1 national park service that the historic resource's significance,
2 the rehabilitation plan, and the completed rehabilitation qualify
3 for the credit allowed under section 47(a)(2) of the internal
4 revenue code.
5 (4) If a qualified taxpayer is eligible for the credit
6 allowed under section 47(a)(2) of the internal revenue code, the
7 qualified taxpayer shall file for certification with the center
8 to qualify for the credit allowed under section 47(a)(2) of the
9 internal revenue code. If the qualified taxpayer has previously
10 filed for certification with the center to qualify for the credit
11 allowed under section 47(a)(2) of the internal revenue code,
12 additional filing for the credit allowed under this section is
13 not required.
14 (5) The center may inspect a historic resource at any time
15 during the rehabilitation process and may revoke certification of
16 completed rehabilitation if the rehabilitation was not undertaken
17 as represented in the rehabilitation plan or if unapproved
18 alterations to the completed rehabilitation are made during the 5
19 years after the tax year in which the credit was claimed. The
20 center shall promptly notify the department of a revocation.
21 (6) Qualified expenditures for the rehabilitation of a
22 historic resource may be used to calculate the credit under this
23 section if the historic resource meets 1 of the criteria listed
24 in subdivision (a) and 1 of the criteria listed in subdivision
25 (b):
26 (a) The resource is 1 of the following during the tax year
27 in which a credit under this section is claimed for those
1 qualified expenditures:
2 (i) Individually listed on the national register of historic
3 places or state register of historic sites.
4 (ii) A contributing resource located within a historic
5 district listed on the national register of historic places or
6 the state register of historic sites.
7 (iii) A contributing resource located within a historic
8 district designated by a local unit pursuant to an ordinance
9 adopted under the local historic districts act, 1970 PA 169, MCL
10 399.201 to 399.215.
11 (b) The resource meets 1 of the following criteria during
12 the tax year in which a credit under this section is claimed for
13 those qualified expenditures:
14 (i) The historic resource is located in a designated historic
15 district in a local unit of government with an existing ordinance
16 under the local historic districts act, 1970 PA 169, MCL 399.201
17 to 399.215.
18 (ii) The historic resource is located in an incorporated
19 local unit of government that does not have an ordinance under
20 the local historic districts act, 1970 PA 169, MCL 399.201 to
21 399.215, and has a population of less than 5,000.
22 (iii) The historic resource is located in an unincorporated
23 local unit of government.
24 (iv) The historic resource is located in an incorporated
25 local unit of government that does not have an ordinance under
26 the local historic districts act, 1970 PA 169, MCL 399.201 to
27 399.215, and is located within the boundaries of an association
1 that has been chartered under 1889 PA 39, MCL 455.51 to 455.72.
2 (7) A credit amount assigned under section 39c(7) of the
3 single business tax act, 1975 PA 228, MCL 208.39c, or section 435
4 of the Michigan business tax act, 2007 PA 36, MCL 208.1435, may
5 be claimed against the partner's, member's, or shareholder's tax
6 liability under this act as provided in section 39c(7) of the
7 single business tax act, 1975 PA 228, MCL 208.39c, or section 435
8 of the Michigan business tax act, 2007 PA 36, MCL 208.1435.
9 (8) If the credit allowed under this section for the tax
10 year and any unused carryforward of the credit allowed by this
11 section exceed the taxpayer's tax liability for the tax year,
12 that portion that exceeds the tax liability for the tax year
13 shall not be refunded but may be carried forward to offset tax
14 liability in subsequent tax years for 10 years or until used up,
15 whichever occurs first.
16 (9) If the taxpayer sells a historic resource for which a
17 credit under this section was claimed less than 5 years after the
18 year in which the credit was claimed, the following percentage of
19 the credit amount previously claimed relative to that historic
20 resource shall be added back to the tax liability of the taxpayer
21 in the year of the sale:
22 (a) If the sale is less than 1 year after the year in which
23 the credit was claimed, 100%.
24 (b) If the sale is at least 1 year but less than 2 years
25 after the year in which the credit was claimed, 80%.
26 (c) If the sale is at least 2 years but less than 3 years
27 after the year in which the credit was claimed, 60%.
1 (d) If the sale is at least 3 years but less than 4 years
2 after the year in which the credit was claimed, 40%.
3 (e) If the sale is at least 4 years but less than 5 years
4 after the year in which the credit was claimed, 20%.
5 (f) If the sale is 5 years or more after the year in which
6 the credit was claimed, an addback to the taxpayer's tax
7 liability shall not be made.
8 (10) If a certification of completed rehabilitation is
9 revoked under subsection (5) less than 5 years after the year in
10 which a credit was claimed, the following percentage of the
11 credit amount previously claimed relative to that historic
12 resource shall be added back to the tax liability of the taxpayer
13 in the year of the revocation:
14 (a) If the revocation is less than 1 year after the year in
15 which the credit was claimed, 100%.
16 (b) If the revocation is at least 1 year but less than 2
17 years after the year in which the credit was claimed, 80%.
18 (c) If the revocation is at least 2 years but less than 3
19 years after the year in which the credit was claimed, 60%.
20 (d) If the revocation is at least 3 years but less than 4
21 years after the year in which the credit was claimed, 40%.
22 (e) If the revocation is at least 4 years but less than 5
23 years after the year in which the credit was claimed, 20%.
24 (f) If the revocation is 5 years or more after the year in
25 which the credit was claimed, an addback to the taxpayer's tax
26 liability shall not be made.
27 (11) The department of history, arts, and libraries through
1 the Michigan historical center may impose a fee to cover the
2 administrative cost of implementing the program under this
3 section.
4 (12) The qualified taxpayer shall attach all of the
5 following to the qualified taxpayer's annual return under this
6 act:
7 (a) Certification of completed rehabilitation.
8 (b) Certification of historic significance related to the
9 historic resource and the qualified expenditures used to claim a
10 credit under this section.
11 (c) A completed assignment form if the qualified taxpayer is
12 an assignee under section 39c of the single business tax act,
13 1975 PA 228, MCL 208.39c, or section 435 of the Michigan business
14 tax act, 2007 PA 36, MCL 208.1435, of any portion of a credit
15 allowed under that section.
16 (13) The department of history, arts, and libraries shall
17 promulgate rules to implement this section pursuant to the
18 administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
19 24.328.
20 (14) The total of the credits claimed under this section and
21 section 39c of the single business tax act, 1975 PA 228, MCL
22 208.39c, or section 435 of the Michigan business tax act, 2007 PA
23 36, MCL 208.1435, for a rehabilitation project shall not exceed
24 25% of the total qualified expenditures eligible for the credit
25 under this section for that rehabilitation project.
26 (15) The department of history, arts, and libraries through
27 the Michigan historical center shall report all of the following
1 to the legislature annually for the immediately preceding state
2 fiscal year:
3 (a) The fee schedule used by the center and the total amount
4 of fees collected.
5 (b) A description of each rehabilitation project certified.
6 (c) The location of each new and ongoing rehabilitation
7 project.
8 (16) As used in this section:
9 (a) "Contributing resource" means a historic resource that
10 contributes to the significance of the historic district in which
11 it is located.
12 (b) "Historic district" means an area, or group of areas not
13 necessarily having contiguous boundaries, that contains 1
14 resource or a group of resources that are related by history,
15 architecture, archaeology, engineering, or culture.
16 (c) "Historic resource" means a publicly or privately owned
17 historic building, structure, site, object, feature, or open
18 space located within a historic district designated by the
19 national register of historic places, the state register of
20 historic sites, or a local unit acting under the local historic
21 districts act, 1970 PA 169, MCL 399.201 to 399.215; or that is
22 individually listed on the state register of historic sites or
23 national register of historic places and includes all of the
24 following:
25 (i) An owner-occupied personal residence or a historic
26 resource located within the property boundaries of that personal
27 residence.
1 (ii) An income-producing commercial, industrial, or
2 residential resource or a historic resource located within the
3 property boundaries of that resource.
4 (iii) A resource owned by a governmental body, nonprofit
5 organization, or tax-exempt entity that is used primarily by a
6 taxpayer lessee in a trade or business unrelated to the
7 governmental body, nonprofit organization, or tax-exempt entity
8 and that is subject to tax under this act.
9 (iv) A resource that is occupied or utilized by a
10 governmental body, nonprofit organization, or tax-exempt entity
11 pursuant to a long-term lease or lease with option to buy
12 agreement.
13 (v) Any other resource that could benefit from
14 rehabilitation.
15 (d) "Local unit" means a county, city, village, or township.
16 (e) "Long-term lease" means a lease term of at least 27.5
17 years for a residential resource or at least 31.5 years for a
18 nonresidential resource.
19 (f) "Michigan historical center" or "center" means the state
20 historic preservation office of the Michigan historical center of
21 the department of history, arts, and libraries or its successor
22 agency.
23 (g) "Open space" means undeveloped land, a naturally
24 landscaped area, or a formal or man-made landscaped area that
25 provides a connective link or a buffer between other resources.
26 (h) "Person" means an individual, partnership, corporation,
27 association, governmental entity, or other legal entity.
1 (i) "Qualified expenditures" means capital expenditures that
2 qualify for a rehabilitation credit under section 47(a)(2) of the
3 internal revenue code if the taxpayer is eligible for the credit
4 under section 47(a)(2) of the internal revenue code or, if the
5 taxpayer is not eligible for the credit under section 47(a)(2) of
6 the internal revenue code, the qualified expenditures that would
7 qualify under section 47(a)(2) of the internal revenue code
8 except that the expenditures are made to a historic resource that
9 is not eligible for the credit under section 47(a)(2) of the
10 internal revenue code, that were paid not more than 5 years after
11 the certification of the rehabilitation plan that included those
12 expenditures was approved by the center, and that were paid after
13 December 31, 1998 for the rehabilitation of a historic resource.
14 Qualified expenditures do not include capital expenditures for
15 nonhistoric additions to a historic resource except an addition
16 that is required by state or federal regulations that relate to
17 historic preservation, safety, or accessibility.
18 (j) "Qualified taxpayer" means a person that is an assignee
19 under section 39c of the single business tax act, 1975 PA 228,
20 MCL 208.39c, or section 435 of the Michigan business tax act,
21 2007 PA 36, MCL 208.1435, or either owns the resource to be
22 rehabilitated or has a long-term lease agreement with the owner
23 of the historic resource and that has qualified expenditures for
24 the rehabilitation of the historic resource equal to or greater
25 than 10% of the state equalized valuation of the property. If the
26 historic resource to be rehabilitated is a portion of a historic
27 or nonhistoric resource, the state equalized valuation of only
1 that portion of the property shall be used for purposes of this
2 subdivision. If the assessor for the local tax collecting unit in
3 which the historic resource is located determines the state
4 equalized valuation of that portion, that assessor's
5 determination shall be used for purposes of this subdivision. If
6 the assessor does not determine that state equalized valuation of
7 that portion, qualified expenditures, for purposes of this
8 subdivision, shall be equal to or greater than 5% of the
9 appraised value as determined by a certified appraiser. If the
10 historic resource to be rehabilitated does not have a state
11 equalized valuation, qualified expenditures for purposes of this
12 subdivision shall be equal to or greater than 5% of the appraised
13 value of the resource as determined by a certified appraiser.
14 (k) "Rehabilitation plan" means a plan for the
15 rehabilitation of a historic resource that meets the federal
16 secretary of the interior's standards for rehabilitation and
17 guidelines for rehabilitation of historic buildings under 36 CFR
18 part 67.
19 Sec. 270. (1) For tax years that begin after December 31,
20 2008, a taxpayer to whom a tax voucher certificate is issued or a
21 taxpayer that is the transferee of a tax voucher certificate may
22 use the tax voucher certificate to pay any liability of the
23 taxpayer under section 51 or to pay any amount owed by the
24 taxpayer under section 351.
25 (2) A tax voucher certificate shall be used for the purposes
26 allowed under subsection (1) and only in a tax year that begins
27 after December 31, 2008.
1 (3) The amount of the tax voucher that may be used to pay a
2 liability due under this act in any tax year shall not exceed the
3 lesser of the following:
4 (a) The amount of the tax voucher stated in the tax voucher
5 certificate held by the taxpayer.
6 (b) The amount authorized to be used in the tax year under
7 the terms of the tax voucher certificate.
8 (c) The taxpayer’s liability under this act for the tax year
9 for which the tax voucher is used.
10 (4) If the amount of any tax voucher certificate held by a
11 taxpayer or transferee exceeds the amount the taxpayer may use
12 under subsection (3)(b) or (c) in a tax year, that excess may be
13 used by the taxpayer or transferee to pay, subject to the
14 limitations of subsection (3), any future liability of the
15 taxpayer or transferee under this act.
16 (5) The tax voucher certificate, and any completed transfer
17 form that was issued pursuant to the Michigan early stage venture
18 investment act of 2003, 2003 PA 296, MCL 125.2231 to 125.2263,
19 shall be attached to the annual return under this act. The
20 department may prescribe and implement alternative methods of
21 reporting and recording ownership, transfer, and utilization of
22 tax voucher certificates that are not inconsistent with the
23 provisions of this act. The department shall administer this
24 section to assure that any amount of a tax voucher certificate
25 used to pay any liability under this act shall not also be
26 applied to pay any liability of the taxpayer or any other person
27 under the single business tax act, 1975 PA 228, MCL 208.1 to
1 208.145 Michigan
business tax act, 2007 PA 36, MCL 208.1101 to
2 208.1601. The department shall take any action necessary to
3 enforce and effectuate the permissible issuance and use of tax
4 voucher certificates in a manner authorized under this section
5 and the Michigan early stage venture investment act of 2003, 2003
6 PA 296, MCL 125.2231 to 125.2263.
7 (6) As used in this section:
8 (a) "Certificate" or "tax voucher certificate" means the tax
9 voucher certificate issued under section 23 of the Michigan early
10 stage venture capital investment act of 2003, 2003 PA 296, MCL
11 125.2253, or any replacement tax voucher certificate issued under
12 former section 37e(9)(b) or (d) of the single business tax act,
13 1975 PA 228, MCL 208.37e or section 419 of the Michigan business
14 tax act, 2007 PA 36, MCL 208.1419.
15 (b) "Transferee" means a taxpayer to whom a tax voucher
16 certificate has been transferred under section 23 of the Michigan
17 early stage venture investment act of 2003, 2003 PA 296, MCL
18 125.2253, and former section 37e of the single business tax act,
19 1975 PA 228, MCL 208.37e or section 419 of the Michigan business
20 tax act, 2007 PA 36, MCL 208.1419.
21 Enacting section 1. Sections 51c, 51d, and 51e of the income
22 tax act of 1967, 1967 PA 281, MCL 206.51c, 206.51d, and 206.51e,
23 are repealed.