September 24, 2008, Introduced by Reps. Tobocman, Hammel, Alma Smith, Gonzales, Byrnes, Brown, Johnson, Palsrok, Huizenga and Dean and referred to the Committee on New Economy and Quality of Life.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 266 (MCL 206.266), as amended by 2007 PA 94.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 266. (1) A qualified taxpayer with a rehabilitation plan
certified after December 31, 1998 may credit against the tax
imposed by this act the amount determined pursuant to subsection
(2) for the qualified expenditures for the rehabilitation of a
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.
Only those expenditures that
are paid to incurred during
the time periods prescribed for the credit under section 47(a)(2)
of the internal revenue code and any related treasury regulations
shall be considered qualified expenditures.
(2) The credit allowed under this section shall be 25% of the
qualified expenditures that are eligible, or would have been
eligible except that the taxpayer entered into an agreement under
subsection (12), 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 a 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 or the taxpayer has entered into an agreement
under subsection (12).
(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 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) 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
resource.
(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) 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.
(5) The center may inspect a 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.
(6) Qualified expenditures for the rehabilitation of a
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 a historic district
listed on the national register of historic places or the state
register of historic sites.
(iii) A contributing resource located within a 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.
(v) The historic resource is subject to a historic
preservation easement.
(7)
A credit amount assigned under section 39c(7) of the
single
business tax act, former 1975 PA 228
, MCL 208.39c, or
section 435 of the Michigan business tax act, 2007 PA 36, MCL
208.1435, may be claimed against the partner's, member's, or
shareholder's tax liability under this act as provided in section
39c(7)
of the single business tax act, former
1975 PA 228 ,
MCL
208.39c,
or section 435 of the Michigan
business tax act, 2007 PA
36, MCL 208.1435.
(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. For projects for which a certificate of completed
rehabilitation is issued after December 31, 2008 and for which the
credit amount allowed is less than $250,000.00, a qualified
taxpayer may elect to forgo the carryover period and receive a
refund of the amount of the credit that exceeds the qualified
taxpayer's tax liability. The amount of the refund shall be equal
to 90% of the amount of the credit that exceeds the qualified
taxpayer's tax liability. An election under this subsection shall
be made in the year that a certificate of completed rehabilitation
is issued and shall be irrevocable.
(9)
If the For tax years
beginning before January 1, 2009, if
a taxpayer sells a historic resource for which a credit under this
section was claimed 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.
(10)
If For tax years beginning
before January 1, 2009, if a
certification of completed rehabilitation is revoked under
subsection (5) less than 5 years after the year in which a 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
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.
(11) Except as otherwise provided under subsections (12) and
(13), for tax years beginning after December 31, 2008, if a
certificate of completed rehabilitation is revoked under subsection
(10) or is sold or disposed of less than 5 years after the historic
resource is placed in service as defined in section 47(b)(1) of the
internal revenue code and related treasury regulations, the
following percentage of the credit amount previously claimed
relative to that historic resource shall be added back to the tax
liability of the qualified taxpayer that received the certificate
of completed rehabilitation and not the assignee in the year of the
revocation:
(a) If the revocation is less than 1 year after the historic
resource is placed in service, 100%.
(b) If the revocation is at least 1 year but less than 2 years
after the historic resource is placed in service, 80%.
(c) If the revocation is at least 2 years but less than 3
years after the historic resource is placed in service, 60%.
(d) If the revocation is at least 3 years but less than 4
years after the historic resource is placed in service, 40%.
(e) If the revocation is at least 4 years but less than 5
years after the historic resource is placed in service, 20%.
(f) If the revocation is at least 5 years or more after the
historic resource is placed in service, an add back to the
qualified taxpayer tax liability shall not be required.
(12) Subsection (11) shall not apply if the qualified taxpayer
enters into a written agreement with the state historic
preservation office that will allow for the transfer or sale of the
historic resource and provides the following:
(a) Reasonable assurance that subsequent to the transfer the
property will remain a historic resource during the 5-year period
after the historic resource is placed in service.
(b) A method that the department can recover an amount from
the taxpayer equal to the appropriate percentage of credit added
back as described under subsection (11).
(c) An encumbrance on the title to the historic resource being
sold or transferred, stating that the property must remain a
historic resource throughout the 5-year period after the historic
resource is placed in service.
(d) A provision for the payment by the taxpayer of all legal
and professional fees associated with the drafting, review, and
recording of the written agreement required under this subsection.
(13) For tax years beginning after December 31, 2008, if the
qualified taxpayer that received the certificate of completed
rehabilitation sells the historic resource for which the credit was
claimed under this section less than 5 years after the year in
which the credit was claimed and that certificate of completed
rehabilitation is revoked less than 5 years after the historic
resource was placed in service as defined in section 47(b)(1) of
the internal revenue code and related treasury regulations as a
result of unapproved alterations made by the purchaser of the
historic resource, then the appropriate percentage as described
under subsection (11) of the credit amount previously claimed
relative to that historic resource shall be added to the tax
liability of the purchaser in the year of the revocation.
(14) (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.
(15) (12)
The qualified taxpayer shall attach
all of the
following to the qualified taxpayer's annual return under this act:
(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 is
an
assignee under section 39c of the single business tax act,
former
1975 PA 228 ,
MCL 208.39c, or section 435 of the Michigan
business tax act, 2007 PA 36, MCL 208.1435, of any portion of a
credit allowed under that section.
(16) (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.
(17) (14)
The total of the credits claimed
under this section
and
section 39c of the single business tax act, former 1975
PA 228
,
MCL 208.39c, or section 435 of the Michigan
business tax act,
2007 PA 36, MCL 208.1435, for a rehabilitation project shall not
exceed 25% of the total qualified expenditures eligible for the
credit under this section for that rehabilitation project.
(18) (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.
(19) (16)
As used in this section:
(a) "Contributing resource" means a 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 a 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 a 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) "Local unit" means a county, city, village, or township.
(e) "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.
(f) "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.
(g) "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.
(h) "Person" means an individual, partnership, corporation,
association, governmental entity, or other legal entity.
(i) "Qualified expenditures" means capital expenditures that
qualify, or would qualify except that the taxpayer entered into an
agreement under subsection (12), 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 a
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
a
historic
resource. Qualified expenditures do
not include capital
expenditures for nonhistoric additions to a historic resource
except an addition that is required by state or federal regulations
that relate to historic preservation, safety, or accessibility.
(j)
"Qualified taxpayer" means a person that is an assignee
under
section 39c of the single business tax act, 1975 PA 228, MCL
208.39c,
or section 435 of the Michigan business tax act, 2007 PA
36,
MCL 208.1435, 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 a 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.
(k) "Rehabilitation plan" means a plan for the rehabilitation
of a 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 takes effect January
1, 2009.