June 12, 2008, Introduced by Senator ALLEN and referred to the Committee on Finance.
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.
(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
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.
(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. 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. 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 assignees' tax liability under this act or under the Michigan
business tax act, 2007 PA 36, MCL 208.1101 to 208.1601. A credit
assignment or subsequent reassignment under this 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.
(9)
If the 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.
(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, 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. Not later than March 1, 2008, the department of history,
arts, and libraries through the Michigan historical center shall
establish an expedited review process for applications for
certification under this section. To be eligible for expedited
review, the applicant shall, at least 10 business days prior to
submitting an application for expedited review, notify the
department of his or her intent to request an expedited review and
then submit a completed application with the request for an
expedited review along with the appropriate fee for expedited
review of $1,000.00. The center shall review and make a decision on
complete applications submitted with a request for expedited review
within 14 business days of receipt by the department of the
completed application. If the center fails to meet the deadline,
the center shall continue to expedite the application review
process for an application submitted under this subsection.
However, the fee for an expedited review required under this
section shall be refunded if the center fails to meet the deadline.
As used in this subsection, "completed application" means that a
center-provided application form is completed, all requested
information has been provided, and the application can be processed
without additional information.
(11) (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 has
assigned any portion of a credit allowed under this section or if
the qualified taxpayer is an assignee under this section, 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
those sections.
(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 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.
(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)
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 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.