February 21, 2008, Introduced by Reps. Corriveau, Miller, LeBlanc, McDowell, Byrum, Byrnes, Wojno, Lemmons, Scott, Ebli, Donigan, Vagnozzi, Young, Simpson, Hopgood, Spade, Gonzales, Sheltrown, Brown, Espinoza, Bennett, Mayes, Valentine, Polidori, Cheeks, Hammon, Dean, Alma Smith, Clack, Hammel, Melton, Coulouris, Meadows, Bauer, Griffin, Kathleen Law, Meisner and Angerer and referred to the Committee on Commerce.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 435 (MCL 208.1435), as amended by 2007 PA 216.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 435. (1) A qualified taxpayer with a rehabilitation plan
certified after December 31, 2007 or a qualified taxpayer that has
a rehabilitation plan certified before January 1, 2008 under
section 39c of former 1975 PA 228 for the rehabilitation of an
historic resource for which a certification of completed
rehabilitation has been issued after the end of the taxpayer's last
tax year may credit against the tax imposed by this act the amount
determined pursuant to subsection (2) for the qualified
expenditures for the rehabilitation of an historic resource
pursuant to the rehabilitation plan in the year in which the
certification of completed rehabilitation of the historic resource
is issued provided that the certification of completed
rehabilitation was issued not more than 5 years after the
rehabilitation plan was certified by the Michigan historical
center.
(2) The credit allowed under this section shall be 25% of the
qualified expenditures that are eligible for the credit under
section 47(a)(2) of the internal revenue code if the taxpayer is
eligible for the credit under section 47(a)(2) of the internal
revenue code or, if the taxpayer is not eligible for the credit
under section 47(a)(2) of the internal revenue code, 25% of the
qualified expenditures that would qualify under section 47(a)(2) of
the internal revenue code except that the expenditures are made to
an historic resource that is not eligible for the credit under
section 47(a)(2) of the internal revenue code, subject to both of
the following:
(a) A taxpayer with qualified expenditures that are eligible
for the credit under section 47(a)(2) of the internal revenue code
may not claim a credit under this section for those qualified
expenditures unless the taxpayer has claimed and received a credit
for those qualified expenditures under section 47(a)(2) of the
internal revenue code.
(b) A credit under this section shall be reduced by the amount
of a credit received by the taxpayer for the same qualified
expenditures under section 47(a)(2) of the internal revenue code.
(3)
To Subject to subsection
(5), to be eligible for the
credit under this section, the taxpayer shall apply to and receive
from the Michigan historical center certification that the historic
significance, the rehabilitation plan, and the completed
rehabilitation of the historic resource meet the criteria under
subsection
(6) (8) and either of the following:
(a) All of the following criteria:
(i) The historic resource contributes to the significance of
the historic district in which it is located.
(ii) Both the rehabilitation plan and completed rehabilitation
of the historic resource meet the federal secretary of the
interior's standards for rehabilitation and guidelines for
rehabilitating historic buildings, 36 CFR part 67.
(iii) All rehabilitation work has been done to or within the
walls, boundaries, or structures of the historic resource or to
historic resources located within the property boundaries of the
property.
(b) The taxpayer has received certification from the national
park service that the historic resource's significance, the
rehabilitation plan, and the completed rehabilitation qualify for
the credit allowed under section 47(a)(2) of the internal revenue
code.
(4) Beginning July 1, 2008, the center shall give preference
to an applicant if the applicant agrees, in writing, to do all of
the following:
(a) Hire only residents of this state to assist in the
rehabilitation of a historic resource unless the center determines
that the rehabilitation cannot be completed by using only residents
of this state.
(b) Contract with businesses that agree to hire only residents
of this state to assist in the rehabilitation of a historic
resource unless the center determines that the rehabilitation
cannot be completed by using only residents of this state.
(5) A qualified taxpayer that is a business is not able to
claim the credit under this section unless that qualified taxpayer
enters into a contract with the center that provides that, for any
work on the rehabilitation plan, the qualified taxpayer will not
hire or contract with any business entity that hires an individual
who is not authorized under federal law to work in the United
States and that the qualified taxpayer will comply in good faith
with the verification requirements in 8 USC 1324a to ensure that
all employees hired by the qualified taxpayer or employees of any
contractors hired by the qualified taxpayer are authorized to work
in the United States. The contract with the qualified taxpayer
described in this subsection shall also contain a remedy provision
that provides for all of, but not limited to, the following:
(a) A requirement that the qualified taxpayer is not eligible
to claim any future credits under this section if the qualified
taxpayer is determined to be in violation of the provisions of this
section, as determined by the center.
(b) A requirement that the qualified taxpayer may be required
to repay some or all of the credits received under this section if
the qualified taxpayer is determined to be in violation of the
provisions of this section as determined by the center.
(6) (4)
If a qualified taxpayer is eligible
for the credit
allowed under section 47(a)(2) of the internal revenue code, the
qualified taxpayer shall file for certification with the center to
qualify for the credit allowed under section 47(a)(2) of the
internal revenue code. If the qualified taxpayer has previously
filed for certification with the center to qualify for the credit
allowed under section 47(a)(2) of the internal revenue code,
additional filing for the credit allowed under this section is not
required.
(7) (5)
The center may inspect an historic
resource at any
time during the rehabilitation process and may revoke certification
of completed rehabilitation if the rehabilitation was not
undertaken as represented in the rehabilitation plan or if
unapproved alterations to the completed rehabilitation are made
during the 5 years after the tax year in which the credit was
claimed. The center shall promptly notify the department of a
revocation.
(8) (6)
Qualified expenditures for the
rehabilitation of an
historic resource may be used to calculate the credit under this
section if the historic resource meets 1 of the criteria listed in
subdivision (a) and 1 of the criteria listed in subdivision (b):
(a) The resource is 1 of the following during the tax year in
which a credit under this section is claimed for those qualified
expenditures:
(i) Individually listed on the national register of historic
places or state register of historic sites.
(ii) A contributing resource located within an historic
district listed on the national register of historic places or the
state register of historic sites.
(iii) A contributing resource located within an historic
district designated by a local unit pursuant to an ordinance
adopted under the local historic districts act, 1970 PA 169, MCL
399.201 to 399.215.
(b) The resource meets 1 of the following criteria during the
tax year in which a credit under this section is claimed for those
qualified expenditures:
(i) The historic resource is located in a designated historic
district in a local unit of government with an existing ordinance
under the local historic districts act, 1970 PA 169, MCL 399.201 to
399.215.
(ii) The historic resource is located in an incorporated local
unit of government that does not have an ordinance under the local
historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and
has a population of less than 5,000.
(iii) The historic resource is located in an unincorporated
local unit of government.
(iv) The historic resource is located in an incorporated local
unit of government that does not have an ordinance under the local
historic districts act, 1970 PA 169, MCL 399.201 to 399.215, and is
located within the boundaries of an association that has been
chartered under 1889 PA 39, MCL 455.51 to 455.72.
(9) (7)
If a qualified taxpayer is a
partnership, limited
liability company, or subchapter S corporation, the qualified
taxpayer may assign all or any portion of a credit allowed under
this section to its partners, members, or shareholders, based on
the partner's, member's, or shareholder's proportionate share of
ownership or based on an alternative method approved by the
department. A credit assignment under this subsection is
irrevocable and shall be made in the tax year in which a
certificate of completed rehabilitation is issued. A qualified
taxpayer may claim a portion of a credit and assign the remaining
credit amount. A partner, member, or shareholder that is an
assignee shall not subsequently assign a credit or any portion of a
credit assigned to the partner, member, or shareholder under this
subsection. A credit amount assigned under this subsection may be
claimed against the partner's, member's, or shareholder's tax
liability under this act or under the income tax act of 1967, 1967
PA 281, MCL 206.1 to 206.532. A credit assignment under this
subsection shall be made on a form prescribed by the department.
The qualified taxpayer and assignees shall send a copy of the
completed assignment form to the department in the tax year in
which the assignment is made and attach a copy of the completed
assignment form to the annual return required to be filed under
this act for that tax year.
(10) (8)
If the credit allowed under this
section for the tax
year and any unused carryforward of the credit allowed by this
section exceed the taxpayer's tax liability for the tax year, that
portion that exceeds the tax liability for the tax year shall not
be refunded but may be carried forward to offset tax liability in
subsequent tax years for 10 years or until used up, whichever
occurs first. An unused carryforward of a credit under section 39c
of former 1975 PA 228 that was unused at the end of the last tax
year for which former 1975 PA 228 was in effect may be claimed
against the tax imposed under this act for the years the
carryforward would have been available under section 39c of former
1975 PA 228.
(11) (9)
If the taxpayer sells an historic
resource for which
a credit was claimed under this section or under section 39c of
former 1975 PA 228 less than 5 years after the year in which the
credit was claimed, the following percentage of the credit amount
previously claimed relative to that historic resource shall be
added back to the tax liability of the taxpayer in the year of the
sale:
(a) If the sale is less than 1 year after the year in which
the credit was claimed, 100%.
(b) If the sale is at least 1 year but less than 2 years after
the year in which the credit was claimed, 80%.
(c) If the sale is at least 2 years but less than 3 years
after the year in which the credit was claimed, 60%.
(d) If the sale is at least 3 years but less than 4 years
after the year in which the credit was claimed, 40%.
(e) If the sale is at least 4 years but less than 5 years
after the year in which the credit was claimed, 20%.
(f) If the sale is 5 years or more after the year in which the
credit was claimed, an addback to the taxpayer's tax liability
shall not be made.
(12) (10)
If a certification of completed
rehabilitation is
revoked
under subsection (5) (7) less than 5 years after the year
in which a credit was claimed under this section or under section
39c of former 1975 PA 228, the following percentage of the credit
amount previously claimed relative to that historic resource shall
be added back to the tax liability of the taxpayer in the year of
the revocation:
(a) If the revocation is less than 1 year after the year in
which the credit was claimed, 100%.
(b) If the revocation is at least 1 year but less than 2 years
after the year in which the credit was claimed, 80%.
(c) If the revocation is at least 2 years but less than 3
years after the year in which the credit was claimed, 60%.
(d) If the revocation is at least 3 years but less than 4
years after the year in which the credit was claimed, 40%.
(e) If the revocation is at least 4 years but less than 5
years after the year in which the credit was claimed, 20%.
(f) If the revocation is 5 years or more after the year in
which the credit was claimed, an addback to the taxpayer's tax
liability shall not be made.
(13) (11)
The department of history, arts,
and libraries
through the Michigan historical center may impose a fee to cover
the administrative cost of implementing the program under this
section.
(14) (12)
The qualified taxpayer shall attach
all of the
following to the qualified taxpayer's annual return required under
this act or under the income tax act of 1967, 1967 PA 281, MCL
206.1 to 206.532, if applicable, on which the credit is claimed:
(a) Certification of completed rehabilitation.
(b) Certification of historic significance related to the
historic resource and the qualified expenditures used to claim a
credit under this section.
(c) A completed assignment form if the qualified taxpayer has
assigned any portion of a credit allowed under this section to a
partner, member, or shareholder or if the taxpayer is an assignee
of any portion of a credit allowed under this section.
(15) (13)
The department of history, arts,
and libraries shall
promulgate rules to implement this section pursuant to the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328.
(16) (14)
The total of the credits claimed
under this section
and section 266 of the income tax act of 1967, 1967 PA 281, MCL
206.266, for a rehabilitation project shall not exceed 25% of the
total qualified expenditures eligible for the credit under this
section for that rehabilitation project.
(17) (15)
The department of history, arts,
and libraries
through the Michigan historical center shall report all of the
following to the legislature annually for the immediately preceding
state fiscal year:
(a) The fee schedule used by the center and the total amount
of fees collected.
(b) A description of each rehabilitation project certified.
(c) The location of each new and ongoing rehabilitation
project.
(d) The number of Michigan residents employed in new jobs in
the immediately preceding year.
(e) The total number of new jobs created in the immediately
preceding year.
(f) The specific reasons for each determination of exemption
from the provisions of subsection (4)(a) or (b) made by the center
and the number of jobs related to each determination.
(18) (16)
For purposes of this section,
taxpayer includes a
person subject to the tax imposed under chapter 2A or 2B.
(19) (17)
As used in this section:
(a) "Contributing resource" means an historic resource that
contributes to the significance of the historic district in which
it is located.
(b) "Historic district" means an area, or group of areas not
necessarily having contiguous boundaries, that contains 1 resource
or a group of resources that are related by history, architecture,
archaeology, engineering, or culture.
(c) "Historic resource" means a publicly or privately owned
historic building, structure, site, object, feature, or open space
located within an historic district designated by the national
register of historic places, the state register of historic sites,
or a local unit acting under the local historic districts act, 1970
PA 169, MCL 399.201 to 399.215, or that is individually listed on
the state register of historic sites or national register of
historic places, and includes all of the following:
(i) An owner-occupied personal residence or a historic resource
located within the property boundaries of that personal residence.
(ii) An income-producing commercial, industrial, or residential
resource or an historic resource located within the property
boundaries of that resource.
(iii) A resource owned by a governmental body, nonprofit
organization, or tax-exempt entity that is used primarily by a
taxpayer lessee in a trade or business unrelated to the
governmental body, nonprofit organization, or tax-exempt entity and
that is subject to tax under this act.
(iv) A resource that is occupied or utilized by a governmental
body, nonprofit organization, or tax-exempt entity pursuant to a
long-term lease or lease with option to buy agreement.
(v) Any other resource that could benefit from rehabilitation.
(d) "Last tax year" means the taxpayer's tax year under former
1975 PA 228 that begins after December 31, 2006 and before January
1, 2008.
(e) "Local unit" means a county, city, village, or township.
(f) "Long-term lease" means a lease term of at least 27.5
years for a residential resource or at least 31.5 years for a
nonresidential resource.
(g) "Michigan historical center" or "center" means the state
historic preservation office of the Michigan historical center of
the department of history, arts, and libraries or its successor
agency.
(h) "Open space" means undeveloped land, a naturally
landscaped area, or a formal or man-made landscaped area that
provides a connective link or a buffer between other resources.
(i) "Person" means an individual, partnership, corporation,
association, governmental entity, or other legal entity.
(j) "Qualified expenditures" means capital expenditures that
qualify for a rehabilitation credit under section 47(a)(2) of the
internal revenue code if the taxpayer is eligible for the credit
under section 47(a)(2) of the internal revenue code or, if the
taxpayer is not eligible for the credit under section 47(a)(2) of
the internal revenue code, the qualified expenditures that would
qualify under section 47(a)(2) of the internal revenue code except
that the expenditures are made to an historic resource that is not
eligible for the credit under section 47(a)(2) of the internal
revenue code that were paid not more than 5 years after the
certification of the rehabilitation plan that included those
expenditures was approved by the center, and that were paid after
December 31, 1998 for the rehabilitation of an historic resource.
Qualified expenditures do not include capital expenditures for
nonhistoric additions to an historic resource except an addition
that is required by state or federal regulations that relate to
historic preservation, safety, or accessibility.
(k) "Qualified taxpayer" means a person that is an assignee
under
subsection (7) (9) or either owns the resource to be
rehabilitated or has a long-term lease agreement with the owner of
the historic resource and that has qualified expenditures for the
rehabilitation of the historic resource equal to or greater than
10% of the state equalized valuation of the property. If the
historic resource to be rehabilitated is a portion of an historic
or nonhistoric resource, the state equalized valuation of only that
portion of the property shall be used for purposes of this
subdivision. If the assessor for the local tax collecting unit in
which the historic resource is located determines the state
equalized valuation of that portion, that assessor's determination
shall be used for purposes of this subdivision. If the assessor
does not determine that state equalized valuation of that portion,
qualified expenditures, for purposes of this subdivision, shall be
equal to or greater than 5% of the appraised value as determined by
a certified appraiser. If the historic resource to be rehabilitated
does not have a state equalized valuation, qualified expenditures
for purposes of this subdivision shall be equal to or greater than
5% of the appraised value of the resource as determined by a
certified appraiser.
(l) "Rehabilitation plan" means a plan for the rehabilitation
of an historic resource that meets the federal secretary of the
interior's standards for rehabilitation and guidelines for
rehabilitation of historic buildings under 36 CFR part 67.
Enacting section 1. This amendatory act is retroactive and is
effective for taxes levied on and after January 1, 2008.