March 1, 2007, Introduced by Senators BRATER, SCHAUER and THOMAS and referred to the Committee on Finance.
A bill to provide for the levy, assessment, and collection of
an excise tax on certain services; to provide exemptions; to
appropriate the proceeds; to prescribe certain powers and duties of
certain state departments; and to prescribe penalties.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"service providers excise tax act".
Sec. 3. As used in this act:
(a) "Affiliated group" means 2 or more United States
corporations, 1 of which owns or controls, directly or indirectly,
80% or more of the capital stock or other ownership interest with
voting rights of the other United States corporation or United
States corporations.
(b) "Controlled group" means a controlled group of
corporations as defined by section 1563 of the internal revenue
code, 26 USC 1563.
(c) "Department" means the department of treasury.
(d) "Employee" means an employee as defined in section 3401(c)
of the internal revenue code, 26 USC 3401, in effect on January 1,
2007. A requirement that an employer withhold taxes from a person
for federal income tax purposes is prima facie evidence that the
person is an employee.
(e) "Entities under common control" means entities described
in the United States department of treasury regulation 1.414(c)
relating to 2 or more trades or businesses qualifying for pension,
profit-sharing, and stock bonus plans.
(f) "Gross receipts" means the total amount of consideration,
including cash, credit, property, and services, for which services
are sold, valued in money, whether received in money or otherwise,
without any deduction for the service provider’s cost of the
service sold, the cost of materials used or installed, labor or
service cost, interest, losses, costs of transportation to the
service provider, taxes imposed on the service provider other than
the tax imposed under this act, and any other expense of the
service provider. Gross receipts do not include the following:
(i) Discounts, including cash, term, or coupons that are not
reimbursed by a third party that are allowed by a service provider
and taken by a service provider on a sale of a service.
(ii) Interest, financing, and carrying charges from credit
extended on the sale of services, if the amount is separately
stated on the invoice, bill of sale, or similar document given to
the purchaser.
(iii) Any taxes legally imposed directly on the purchaser that
are separately stated on the invoice, bill of sale, or similar
document given to the purchaser.
(g) "Intermediary" means a person to whom a service is sold
who specifically charges a third person for that service and that
third person is the ultimate recipient of that service.
(h) "NAICS" means North American industry classification
system, 2002 as produced by the United States office of management
and budget.
(i) "Parent cooperative preschool" means a nonprofit,
nondiscriminatory educational institution, maintained as a
community service and administered by parents of children currently
enrolled in the preschool, that provides an educational and
developmental program for children younger than compulsory school
age, that provides an educational program for parents, including
active participation with children in preschool activities, that is
directed by qualified preschool personnel, and that is licensed by
the department of labor and economic growth pursuant to 1973 PA
116, MCL 722.111 to 722.128.
(j) "Person" means an individual, firm, partnership, joint
venture, association, social club, fraternal organization,
municipal or private corporation whether or not organized for
profit, company, limited liability company, estate, trust,
receiver, trustee, syndicate, the United States, this state, any
political subdivision of this state, or any other group or
combination acting as a unit, unless the intention to give a more
limited meaning is indicated by the context.
(k) "Service" means an activity engaged in for another person
for a fee, retainer, commission, or other consideration, including
a professional service, which activity predominantly involves the
performance or delivery of a task or process as distinguished from
the transfer or production of tangible personal property. In
determining whether an activity is a service for purposes of this
act, the intended use, principal objective, or ultimate objective
of contracting parties is not controlling.
(l) "Service provider" means a person performing or delivering
a service. However, if the department determines that it is
necessary for the efficient administration of this act to regard a
person as an agent of a dealer, distributor, supervisor, employer,
or person under whom they operate or on behalf of whom they perform
or deliver a service, irrespective of whether that person is
performing or delivering a service on his or her own behalf or on
behalf of that dealer, distributor, supervisor, employer, or other
person, the department may regard that person as an agent and may
consider the dealer, distributor, supervisor, employer, or person
under whom they operate or on behalf of whom they perform or
deliver a service as performing or delivering a service for the
purposes of this act.
(m) "Taxpayer" means a person subject to the tax levied under
this act.
(n) "United States corporation" means a domestic corporation
as that term is defined in section 7701(a)(3) and (4) of the
internal revenue code, 26 USC 7701.
Sec. 5. (1) There is levied upon and there shall be collected
from every person performing or delivering a service in a
transaction, in which that service is received in this state by the
purchaser or the purchaser’s designee, a specific tax at a rate
equal to 2% of the gross receipts from the provision of the
service.
(2) The department may use the services, information, or
records of any other department or agency of state government in
the performance of its duties under this act, and other departments
or agencies of state government shall furnish those services,
information, or records upon the request of the department.
Sec. 7. (1) Services subject to the tax levied under this act
include, but are not limited to, the following:
(a) Admission to presentations of performing arts companies,
as described in NAICS industry group code 7111, except as otherwise
provided in section 9(1)(kk).
(b) Admission to spectator sports, including, but not limited
to, professional or semiprofessional sports teams or clubs that are
primarily engaged in live sporting events, racetracks, and other
spectator sports, as described in NAICS industry group code 7112,
except as otherwise provided in section 9(1)(jj).
(c) Admission to motion picture and video exhibitions, as
described in NAICS industry code 51213.
(d) Cable and other program distribution, as described in
NAICS industry group code 5175.
(e) Operation of amusement parks and arcades, as described in
NAICS industry group code 7131.
(f) Dues and fees for golf courses and country clubs, as
described in NAICS industry code 71391.
(g) Operation of skiing facilities, as described in NAICS
industry code 71392.
(h) Operation of marinas, as described in NAICS industry code
71393.
(i) Operation of bowling centers, as described in NAICS
industry code 71395.
(j) Repair and maintenance services, as described in NAICS
subsector code 811.
(k) Personal care services, as described in NAICS industry
group code 8121.
(l) Dry cleaning and laundry services, as described in NAICS
industry group code 8123.
(m) Other personal services, as described in NAICS industry
code 812990, which include, but are not limited to, bail bonding
services, dating services, shoe shine services, social escort
services, and wedding planning services.
(n) Exterminating and pest control services, as described in
NAICS industry code 56171.
(o) Janitorial services, as described in NAICS industry code
56172.
(p) Landscaping services, as described in NAICS industry code
56173.
(q) Carpet and upholstery cleaning services, as described in
NAICS industry code 56174.
(r) Other services to buildings and dwellings, as described in
NAICS industry code 56179, which include, but are not limited to,
chimney cleaning, drain or gutter cleaning, swimming pool cleaning
and maintenance, and ventilation duct cleaning.
(s) Transit and ground passenger transport services, as
described in NAICS industry group code 4853 and NAICS industry code
48841.
(t) Scenic and sightseeing transportation services, as
described in NAICS subsector code 487.
(u) Travel agency services, as described in NAICS industry
code 56151.
(v) Tour operator services, as described in NAICS industry
code 56152.
(w) Other travel arrangement and reservation services, as
described in NAICS industry code 56169, which include, but are not
limited to, condominium time-share exchange services, convention or
visitors bureau services, automobile club services, and ticket
services.
(x) Other amusement and recreation services, as described in
NAICS industry code 71399, which include, but are not limited to,
pool parlors, dance halls, miniature golf courses, coin-operated
amusement devices but not gambling devices, riding stables, and
recreational day camps that are noninstructional.
(y) The renting or leasing of miniwarehouses and self-storage
units, as described in NAICS industry code 53113.
(z) Operation of warehousing and storage facilities, as
described in NAICS subsector code 493.
(aa) Investigation, guard, and armored car services, as
described in NAICS industry code 56161.
(bb) Security systems services, as described in NAICS industry
code 56162.
(cc) Waste collection services, as described in NAICS industry
group code 5621.
(dd) Operation of waste treatment and disposal facilities, as
described in NAICS industry group code 5622.
(ee) Remediation and other waste management services, as
described in NAICS industry group code 5629.
(ff) Veterinary services, as described in NAICS industry code
54194.
(gg) Operation of fitness and recreational sports centers, as
described in NAICS industry code 71394.
(hh) Death care services, as described in NAICS industry group
code 8122, which include, but are not limited to, cremation,
embalming, providing facilities for wakes, funeral home services,
and interment.
(ii) Legal services, as described in NAICS industry group code
5411.
(jj) Accounting services, as described in NAICS industry group
code 5412.
(kk) Architectural, engineering, and related services, as
described in NAICS industry group code 5413.
(ll) Insurance agency and brokerage services, as described in
NAICS industry code 52421.
(mm) Claims adjusting services, as described in NAICS industry
code 524291.
(nn) Third party administration services of insurance or
pension funds, as described in NAICS industry code 524292.
(oo) Other insurance-related activities, as described in NAICS
industry code 524298, which include, but are not limited to,
advisory services and rate-making services.
(pp) Providing investment advice, as described in NAICS
industry code 52393.
(qq) Acting as real estate agents and brokers, as described in
NAICS industry group code 5312.
(rr) Real estate-related services, as described in NAICS
industry group code 5313, which include, but are not limited to,
managing real estate for others and appraising real estate.
(ss) Courier and messenger services, as described in NAICS
subsector code 492.
(tt) Office administration services, as described in NAICS
industry group code 5611.
(uu) Facilities support services, as described in NAICS
industry group code 5612.
(vv) Employment placement agency services, as described in
NAICS industry code 56131.
(ww) Temporary help services, as described in NAICS industry
code 56132, except as otherwise provided in section 9(1)(pp).
(xx) Services provided by professional employer organizations,
as described in NAICS industry code 56133, except as otherwise
provided in section 9(1)(pp).
(yy) Document preparation services, as described in NAICS
industry 56141.
(zz) Telephone call center services, as described in NAICS
industry code 56142.
(aaa) Business service center services, as described in NAICS
industry code 56143.
(bbb) Collection agency services, as described in NAICS
industry code 56144.
(ccc) Credit bureau services, as described in NAICS industry
code 56145.
(ddd) Other business support services, as described in NAICS
industry code 56149, which include, but are not limited to, bar
code imprinting, court reporting, fund-raising on a contract or fee
basis, mail presorting, and repossession services.
(eee) Packaging and labeling services, as described in NAICS
industry code 56191.
(fff) Convention and trade show organizer services, as
described in NAICS industry code 56192.
(ggg) Other support services, as described in NAICS industry
code 56199, which include, but are not limited to, bartering
services, bottle exchanging, cloth cutting for the trade, driving
on a contract or fee basis, inventory-taking services, and water
softening and conditioning services.
(hhh) Management, scientific, and technical consulting
services, as described in NAICS industry group code 5416.
(iii) Advertising and related services, as described in NAICS
industry group code 5418.
(jjj) Management of nonfinancial intangible assets, as
described in NAICS subsector code 533.
(kkk) Other professional, scientific, and technical services,
as described in NAICS industry group code 5419, which include, but
are not limited to, market research, photographic services,
translation services, consumer credit counseling, pipeline or power
line inspection, and handwriting analysis.
(lll) Construction services, as described in NAICS sector code
23.
(mmm) Rail transportation services, as described in NAICS
subsector code 482, to the extent services are provided for freight
transportation.
(nnn) Truck transportation services, as described in NAICS
subsector code 484.
(2) The specific designation of a service, business, or
profession in subsection (1) is illustrative and is not exclusive
and shall not limit the scope of services subject to the tax levied
under this act.
Sec. 9. (1) The following services are exempt from the tax
levied under this act:
(a) Services performed or delivered by an employee for his or
her employer.
(b) Services performed or delivered by a nonprofit school or
nonprofit educational institution serving any segment of students
through grade 12.
(c) Services performed or delivered by a church, hospital,
parent cooperative preschool, or organization that is exempt from
federal income tax under section 501(c)(3) or 501(c)(4) of the
internal revenue code, 26 USC 501, up to a total aggregate amount
of gross receipts of $5,000.00 in any calendar year. A club,
association, auxiliary, or other organization affiliated with a
church, hospital, parent cooperative preschool, or organization
that is exempt from federal income tax under section 501(c)(3) or
501(c)(4) of the internal revenue code, 26 USC 501, is not
considered a separate person for purposes of the exemption under
this subdivision.
(d) Wired telecommunications services, as described in NAICS
industry group code 5171.
(e) Wireless telecommunications services, as described in
NAICS industry group code 5172.
(f) Accommodations, as described in NAICS subsector code 721,
except accommodations rented for a continuous period of more than 1
month and accommodations furnished by a hospital or nursing home.
(g) Water and sewer system services, as described in NAICS
industry group code 2213.
(h) Air transportation services, as described in NAICS
subsector code 481.
(i) Water transportation services, as described in NAICS
subsector code 483.
(j) Pipeline transportation, as described in NAICS subsector
code 486.
(k) Publishing, as described in NAICS subsector code 511.
(l) Motion pictures, as described in NAICS subsector code 512,
except motion picture and video exhibition services are subject to
the tax levied under this act as provided in section 7(1)(c).
(m) Sound recording, as described in NAICS industry group code
5122.
(n) Broadcasting, as described in NAICS subsector codes 515
and 516, except that cable and other programming distribution
services are subject to the tax levied under this act as provided
in section 7(1)(d).
(o) Information and data processing, as described in NAICS
subsector codes 518 and 519.
(p) Promoters of performing arts, sports, and similar events,
as described in NAICS industry group code 7113.
(q) Agents and managers for artists, athletes, entertainers,
and other public figures, as described in NAICS industry group code
7114.
(r) Independent artists, writers, and performers, as described
in NAICS industry group code 7115.
(s) Museums, historical sites, zoos, and parks, as described
in NAICS subsector code 712.
(t) Gambling services authorized by law, as described in NAICS
industry group code 7132.
(u) Educational services, as described in NAICS sector code
61.
(v) Health care and social assistance services, as described
in NAICS sector code 62.
(w) Leasing residential buildings and dwellings, as described
in NAICS industry code 53111.
(x) Leasing nonresidential buildings, as described in NAICS
industry code 53112, except that miniwarehouses and self-storage
units are subject to the tax levied under this act as provided in
section 7(1)(y).
(y) Leasing other real estate property, as described in NAICS
industry code 53119.
(z) Religious, grant-making, and civic services, as described
in NAICS subsector code 813.
(aa) Internet access services.
(bb) Computer systems design and related services, as
described in NAICS industry group code 5415.
(cc) Scientific research and development services, as
described in NAICS industry group code 5417.
(dd) Finance and insurance services, as described in NAICS
sector code 52, except all of the following services are subject to
the tax levied under this act:
(i) Insurance agency and brokerage services, as described in
NAICS industry code 52421, as provided in section 7(1)(ll).
(ii) Claims adjusting services, as described in NAICS industry
code 524291, as provided in section 7(1)(mm).
(iii) Third party administration services of insurance or
pension funds, as described in NAICS industry code 524292, as
provided in section 7(1)(nn).
(iv) Providing investment advice, as described in NAICS
industry code 52393, as provided in section 7(1)(pp).
(ee) Services performed or delivered by the organizing entity
of a qualified athletic event, if that organizing entity is or
would be exempt from the tax levied under the general sales tax
act, 1933 PA 167, MCL 205.1 to 205.78, as provided in section 5b of
the general sales tax act, 1933 PA 167, MCL 205.55b, but only for
services included in corporate sponsor contracts for the event.
(ff) Rail transportation services, as described in NAICS
subsector code 482, to the extent services are provided for
passenger transportation.
(gg) Interurban and rural bus transportation services, as
described in NAICS industry group code 4852.
(hh) Urban transit system services, as described in NAICS
industry group code 4851.
(ii) Personal instruction services.
(jj) Admission to an intercollegiate sporting event, contest,
exhibition, or program.
(kk) Admission to a concert, theatrical performance, recital,
or dance performance that meets both of the following conditions:
(i) Occurs on the campus of a nonprofit postsecondary
institution.
(ii) Is predominantly performed by students of the nonprofit
postsecondary institution, faculty of the nonprofit postsecondary
institution, or a combination of students and faculty.
(ll) Admission to a state fair or to a county fair.
(mm) Parking fees subject to the airport parking tax act, 1987
PA 248, MCL 207.371 to 207.383.
(nn) Services provided by this state or any political
subdivision of this state that are funded by any tax or special
assessment.
(oo) Services that this state is prohibited from taxing under
the constitution or laws of the United States or under the state
constitution of 1963.
(pp) The portion of gross receipts for temporary help services
and professional employer organizations, as described in NAICS
industry codes 56132 and 56133, which reimburses the service
provider for payments made by the service provider to or on behalf
of an employee or for federal social insurance payments made with
respect to an employee. As used in this subdivision, "federal
social insurance payments" include, but are not limited to, FICA
and medicare payments.
(2) Services sold to any of the following are exempt from the
tax levied under this act:
(a) A nonprofit school, nonprofit hospital, or nonprofit home
for the care and maintenance of children or aged persons operated
by an entity of government, a regularly organized church,
religious, or fraternal organization, a veterans' organization, or
a corporation incorporated under the laws of this state, if the
income or benefit from the operation does not inure, in whole or in
part, to an individual or private shareholder, directly or
indirectly, and if the activities of the entity or agency are
carried on exclusively for the benefit of the public at large and
are not limited to the advantage, interests, and benefits of its
members or any restricted group.
(b) A parent cooperative preschool.
(c) A regularly organized church or house of religious
worship, except when the service is used or consumed in an activity
that is mainly a commercial enterprise.
(d) Persons engaged in a business enterprise and using or
consuming the service in the tilling, planting, caring for, or
harvesting of the things of the soil; in the breeding, raising, or
caring for livestock, poultry, or horticultural products, including
transfers of livestock, poultry, or horticultural products for
further growth; or in the direct gathering of fish, by net, line,
or otherwise only by an owner-operator of the business enterprise,
but not a charter fishing business enterprise. A service is exempt
under this subdivision only to the extent that that service is used
for the exempt purpose stated.
(e) The holder of a water pollution control facility tax
exemption certificate issued under part 37 of the natural resources
and environmental protection act, 1994 PA 451, MCL 324.3701 to
324.3708, or an air pollution control facility tax exemption
certificate issued under part 59 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.5901 to
324.5908, if the service is used to install a facility as that term
is defined in section 3701 or 5901 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.3701 and
324.5901.
(f) The United States, its unincorporated agencies and
instrumentalities, any incorporated agency or instrumentality of
the United States wholly owned by the United States or by a
corporation wholly owned by the United States, the American Red
Cross and its chapters and branches, and this state or its
departments and institutions or any of its political subdivisions.
(g) An organization not operated for profit and exempt from
federal income tax under section 501(c)(3) or 501(c)(4) of the
internal revenue code, 26 USC 501, but only to the extent that the
service is used to carry out the purposes of the organization as
stated in the organization's bylaws or articles of incorporation or
organization. The exemption under this subdivision is limited to
the percentage of exempt use to total use determined by a
reasonable formula or method approved by the department.
(h) A manufacturer, for direct use by the manufacturer in
manufacturing. As used in this subdivision:
(i) "Manufacturer" means a person engaged in manufacturing.
(ii) "Manufacturing" means the activity of transforming,
altering, or modifying tangible personal property by changing the
form, composition, or character of the tangible personal property
for ultimate sale at retail.
(i) An extractor, for direct use by the extractor in an
extractive operation. As used in this section:
(i) "Extractive operation" means the taking or extracting from
land for resale ore, oil, gas, coal, timber, stone, gravel, clay,
minerals, or other natural resource material.
(ii) "Extractor" means a person engaged in an extractive
operation.
(j) The organizing entity of a qualified athletic event, if
that organizing entity is or would be exempt from the tax levied
under the general sales tax act, 1933 PA 167, MCL 205.1 to 205.78,
as provided in section 5b of the general sales tax act, 1933 PA
167, MCL 205.55b, but only for services included in corporate
sponsor contracts for the event.
(k) An intermediary.
(l) A member of an affiliated group, a controlled group, or
entities under common control, when sold to another member of the
same affiliated group, controlled group, or entities under common
control.
Sec. 11. For the purpose of proper administration of this act
and to prevent evasion of the tax levied under this act, evidence
that a service has been received in this state is prima facie
evidence that the service is subject to tax.
Sec. 13. (1) A person engaged in the business of performing or
delivering services in this state that exceeds the deduction
allowed in section 17(1)(b) shall register with the department and
give the name and address of each agent operating in this state,
the location of all places of business in this state, and any other
information that the department requires relevant to the
enforcement of this act.
(2) The department of labor and economic growth shall not
issue to any foreign person engaged in the business of performing
or delivering services a certificate of authority to do business in
this state or approve and file any proposed documents of
organization submitted to it by any domestic person authorizing or
permitting that person to conduct any business of performing or
delivering services in this state unless the foreign person or
domestic person submits with the application for the certificate of
authority or proposed documents of organization an application for
registration of the person under this act. The application shall be
transmitted to the department by the department of labor and
economic growth.
(3) A person that submits a certificate of dissolution or
requests a certificate of withdrawal from this state shall request
a certificate from the department stating that taxes are not due
under section 27a of 1941 PA 122, MCL 205.27a, not more than 60
days after submitting the certificate of dissolution or requesting
the certificate of withdrawal. A person that does not request a
certificate stating that taxes are not due as required under this
section is subject to the penalties provided under section 24 of
1941 PA 122, MCL 205.24.
Sec. 15. (1) Except as otherwise provided in subsections (2)
and (4), every person performing or delivering a service subject to
the tax levied under this act and required to register with the
department under section 13, on or before the twentieth day of each
calendar month, shall file with the department a return for the
preceding calendar month, in a form prescribed by the department,
showing information the department considers necessary for the
proper administration of this act. At the same time, each person
shall pay to the department the amount of tax imposed by this act
with respect to the services covered by the return.
(2) If considered necessary to ensure payment of the tax
levied under this act or to provide a more efficient
administration, the department may require and prescribe the filing
of returns and payment of the tax for other than monthly periods.
(3) The tax levied under this act shall accrue to this state
on the last day of each calendar month.
(4) If a due date falls on a Saturday, Sunday, state holiday,
or legal banking holiday, the tax levied under this act is due on
the next succeeding business day.
Sec. 17. (1) Except as otherwise provided in subsection (2),
in computing the amount of tax levied under this act for any month,
a taxpayer may deduct the amount provided by subdivision (a) or
(b), whichever is greater:
(a) If the tax that accrued to this state under this act
during the preceding month is remitted to the department on or
before the twelfth day of the month in which remittance is due,
0.75% of the tax due for the preceding month, but not more than
$20,000.00. If the tax that accrued to this state under this act
during the preceding month is remitted to the department after the
twelfth day and on or before the twentieth day of the month in
which remittance is due, 0.50% of the tax due, but not more than
$15,000.00.
(b) The tax due when levied at the rate of 2% on $600.00 of
taxable gross receipts for the preceding monthly period, or a
prorated portion of the tax due when levied at the rate of 2% on
$600.00 of the taxable gross receipts for the preceding month if
the taxpayer engaged in business for less than a month.
(2) A deduction is not allowed under subsection (1) for
payment of taxes made to the department after the day the taxpayer
is required to pay the tax levied under this act as provided in
section 15.
(3) If the department prescribes the filing of returns and the
payment of the tax for a period greater than 1 month under section
15(2), a taxpayer may claim a deduction from the tax remitted to
the department for the payment period that is equivalent to the
deduction allowed under subsection (1) for monthly payment periods.
(4) The department may prescribe the filing of estimated
returns and annual periodic reconciliations as necessary to carry
out the purposes of this section.
Sec. 19. (1) For purposes of the tax levied under this act, a
taxpayer shall source a transaction for a service as follows:
(a) If the service is received by the purchaser or the
purchaser’s designee at a business location of the service
provider, the transaction is sourced to that business location.
(b) If the service is not received by the purchaser or the
purchaser’s designee at a business location of the service
provider, the transaction is sourced to the location where the
service is received by the purchaser or the purchaser’s designee,
if known to the service provider.
(c) If a transaction for a service is not sourced under
subdivision (a) or (b), the transaction is sourced to the location
indicated by the purchaser's address available from the service
provider’s business records maintained in the ordinary course of
the service provider’s business, provided use of the address does
not constitute bad faith.
(d) If a transaction for a service is not sourced under
subdivision (a), (b), or (c), the transaction is sourced to the
location indicated by the purchaser's address obtained at the
completion of the transaction, including the address of the
purchaser’s payment instrument if no other address is available,
provided use of the address does not constitute bad faith.
(e) If a transaction for a service is not sourced under
subdivision (a), (b), (c), or (d) or if the service provider has
insufficient information to source the transaction under
subdivision (a), (b), (c), or (d), the sale shall be sourced to the
location where the service provider performed the service.
(2) As used in this section, "receive" means making first use
of a service.
Sec. 21. (1) A person engaged in the business of performing or
delivering a service shall not advertise or hold out to the public
in any manner, directly or indirectly, that the tax levied under
this act is not considered an element in the price to the purchaser
of the service.
(2) A taxpayer may reimburse himself or herself by adding to
the price of a service any tax levied under this act. A taxpayer
shall separately state the tax levied under this act on any
invoice, bill of sale, or similar document given to the purchaser.
The taxpayer shall compute the tax to the third decimal place and
round up to a whole cent when the third decimal place is greater
than 4 or round down to a whole cent when the third decimal place
is 4 or less.
(3) Any tax collected by the taxpayer from the purchaser under
this act is for the benefit of this state and a person other than
this state shall not derive a benefit from the collection or
payment of the tax levied under this act, except as provided in
section 17(1)(b).
Sec. 23. (1) This act shall be administered by the department
under 1941 PA 122, MCL 205.1 to 205.31, and this act. If the
provisions of 1941 PA 122, MCL 205.1 to 205.31, and this act
conflict, the provisions of this act shall apply.
(2) The department may promulgate rules to implement this act
under the administrative procedures act of 1969, 1969 PA 306, MCL
24.201 to 24.328.
Sec. 25. (1) If a taxpayer refunds or provides a credit for
all or a portion of an amount paid for a service the gross receipts
for which are subject to the tax levied under this act within the
time period stated in that taxpayer's refund policy or 180 days
after the initial billing for the service, whichever is sooner,
that taxpayer shall also refund or provide a credit for the tax
paid under this act on all or that portion of the amount paid for
services that is refunded or credited.
(2) A cause of action against a service provider for
collecting an amount greater than the tax levied under this act
does not accrue until 60 days after a purchaser has provided
written notice of that claim to that service provider. The
purchaser shall provide sufficient information to determine the
validity of the request in the notice provided to the service
provider.
Sec. 27. A taxpayer shall make a final return under this act
within 20 days after the date that taxpayer sells that taxpayer's
business or a stock of goods or quits the business.
Sec. 29. (1) A taxpayer shall keep accurate and complete daily
records of services provided, receipts, invoices, and all pertinent
documents in a form the department requires. These records shall be
retained for a period of 4 years after the tax levied under this
act to which the records apply is due or as otherwise provided by
law.
(2) A taxpayer who is also engaged in a business, occupation,
or profession not subject to the tax levied under this act shall
maintain books and records to show separately the transactions for
services used to determine the amount of the tax levied under this
act. If the taxpayer fails to maintain separate books and records
as required under this subsection, the tax under this act is levied
on the entire gross receipts of all the taxpayer's businesses. The
taxes levied under this act are a personal obligation of the
taxpayer.
(3) If the department considers it necessary, the department
may require a taxpayer, by notice served upon that taxpayer, to
make a return, render under oath certain statements, or maintain
certain records the department considers sufficient to show whether
or not that person is liable for the tax under this act.
(4) A purchaser may provide a blanket exemption certificate in
a form prescribed by the department that covers all exempt
transactions for services between a taxpayer and that purchaser for
not more than 4 years as stated on the blanket exemption
certificate, if that period is agreed to by the taxpayer and the
purchaser.
Sec. 31. (1) If a taxpayer claims an exemption from the tax
levied under this act, the taxpayer shall obtain information
identifying the purchaser and the basis for the claim of exemption
at the time the services are provided or at a later date.
(2) A taxpayer shall maintain a record of all exempt
transactions and shall provide that record to the department upon
request.
Sec. 33. A taxpayer that fails to comply with the provisions
of this act is guilty of a misdemeanor punishable by a fine of not
less than $1,000.00 or more than $5,000.00, and upon a second or
subsequent offense by imprisonment for not more than 1 year or a
fine of not less than $5,000.00 or more than $50,000.00, or both.
Sec. 35. All of the following apply to a purchaser who makes a
statement to a service provider or provides a certificate to a
service provider, incorrectly indicating that the provision of a
service is not subject to the tax levied under this act:
(a) Is personally liable for the tax levied under this act,
together with penalty and interest on the tax. The purchaser shall
file a return and pay the tax in the same manner as provided in
section 15.
(b) Is subject, at the department's discretion, to an
additional penalty of 100% of the tax due or $1,000.00, whichever
is greater.
Sec. 37. The department shall deposit all money collected
under this act as follows:
(a) For the fiscal year ending September 30, 2007, 64.3% in
the state treasury to the credit of the general fund and 35.7% in
the school aid fund established in section 11 of article IX of the
state constitution of 1963.
(b) For the fiscal year ending September 30, 2008, 50.9% in
the state treasury to the credit of the general fund, 39.4% in the
school aid fund established in section 11 of article IX of the
state constitution of 1963, and 9.7% in the Michigan medicaid
benefits trust fund created in the Michigan trust fund act, 2000 PA
489, MCL 12.251 to 12.260.
(c) For the fiscal year ending September 30, 2009 and each
fiscal year thereafter, 64.3% in the state treasury to the credit
of the general fund and 35.7% in the school aid fund established in
section 11 of article IX of the state constitution of 1963.
Sec. 39. There is appropriated from the general fund to the
department for the fiscal year ending September 30, 2007 the sum of
$3,000,000.00 for the purpose of administering and enforcing the
requirements of this act.
Sec. 41. This act takes effect June 1, 2007.