December 6, 2007, Introduced by Senators BROWN, RICHARDVILLE, ALLEN, BIRKHOLZ, HUNTER, STAMAS, HARDIMAN, KAHN, CLARK-COLEMAN, CLARKE, GEORGE, BARCIA, PAPPAGEORGE, ANDERSON, THOMAS and SCOTT and referred to the Committee on Commerce and Tourism.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 435 (MCL 208.1435).
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 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
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) 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 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.
(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.
(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.
For projects for which a
certificate of completed
rehabilitation is issued on or after January 1, 2008, a qualified
taxpayer may assign all or a portion of a credit allowed under this
section. 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. If the
qualified taxpayer both claims and assigns portions of the credit,
the qualified taxpayer shall claim the portion it claims in the tax
year in which a certificate of completed rehabilitation is issued.
An assignee may subsequently assign a credit or any portion of a
credit assigned under this section to 1 or more assignees. A credit
amount assigned under this subsection may be claimed against the
partner's,
member's, or shareholder's assignees'
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 or subsequent
reassignment
under this subsection section 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.
(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.
(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.
(9) (10)
If a certification of completed
rehabilitation is
revoked under subsection (5) 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 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 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.
(10) (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.
(11) (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.
(12) (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.
(13) (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.
(14) (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.
(15) (16)
For purposes of this section,
taxpayer includes a
person subject to the tax imposed under chapter 2B.
(16) (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) 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 takes effect January
1, 2008.