May 4, 2010, Introduced by Reps. Meekhof, Amash, McMillin, Agema, DeShazor, Haveman, Paul Scott, Green, Meltzer, Walsh, Daley, Crawford, Lund, Rogers, Kowall and Booher and referred to the Committee on Tax Policy.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 415 (MCL 208.1415).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
415. (1) A For the 2008,
2009, and 2010 tax years, a
taxpayer that meets the criteria under subsection (4) and that is a
qualified start-up business that does not have business income for
2 consecutive tax years may claim a credit against the tax imposed
under this act for the second of those 2 consecutive tax years and
each
the immediately following consecutive tax year in which
the
taxpayer does not have business income equal to the taxpayer's tax
liability for the tax year in which the taxpayer has no business
income. If the taxpayer has business income in any tax year after
the credit under this section is claimed, the taxpayer shall claim
the
credit under this section for any the following tax year only
if the taxpayer subsequently has no business income for 2
consecutive tax years. The taxpayer may claim the credit for the
second
of those 2 consecutive tax years and each the immediately
following consecutive tax year in which the taxpayer does not have
business income.
(2) A credit under this section shall not be claimed for more
than
a total of 5 3 tax years.
(3) A taxpayer that qualified to claim the credit under
section 31a of former 1975 PA 228 may claim the credit under this
section for a total of 5 years, reduced by the number of years the
taxpayer was eligible to claim the credit under section 31a of
former 1975 PA 228, or through the 2010 tax year, whichever ends
first.
(4) If a taxpayer that took the credit under this section or
under former 1975 PA 228 has no business activity in this state and
has any business activity outside of this state for any of the
first 3 tax years after the last tax year for which it took the
credit under this section, the taxpayer shall add to its tax
liability the following amounts:
(a) If the taxpayer has no business activity in this state for
the first tax year after the last tax year for which a credit under
this section is claimed, 100% of the total of all credits claimed
under this section.
(b) If the taxpayer has no business activity in this state for
the second tax year after the last tax year for which a credit
under this section is claimed, 67% of the total of all credits
claimed under this section.
(c) If the taxpayer has no business activity for the third tax
year after the last tax year for which a credit under this section
is claimed, 33% of the total of all credits claimed under this
section.
(5) For the tax year for which a credit under this section is
claimed, compensation, directors' fees, or distributive shares paid
by the taxpayer to any 1 of the following shall not exceed
$135,000.00:
(a) A shareholder or officer of a corporation other than an S
corporation.
(b) A partner of a partnership or limited liability
partnership.
(c)
A shareholder of an a
subchapter S corporation.
(d) A member of a limited liability corporation.
(e) An individual who is an owner.
(6) As used in this section:
(a) "Business income" means business income as defined in
section 105 excluding funds received from small business innovation
research grants and small business technology transfer programs
established under the small business innovation development act of
1982, Public Law 97-219, reauthorized under the small business
research and development enhancement act, Public Law 102-564, and
subsequently reauthorized under the small business reauthorization
act of 2000, Public Law 106-554.
(b) "Michigan economic development corporation" means the
public body corporate created under section 28 of article VII of
the state constitution of 1963 and the urban cooperation act of
1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual
interlocal agreement effective April 5, 1999, as amended, between
local participating economic development corporations formed under
the economic development corporations act, 1974 PA 338, MCL
125.1601 to 125.1636, and the Michigan strategic fund.
(c) "Qualified start-up business" means a business that meets
all of the following criteria as certified annually by the Michigan
economic development corporation:
(i) Has fewer than 25 full-time equivalent employees.
(ii) Has sales of less than $1,000,000.00 in the tax year for
which the credit under this section is claimed.
(iii) Research and development expenses make up at least 15% of
its expenses in the tax year for which the credit under this
section is claimed.
(iv) Is not publicly traded.
(v) Met 1 of the following criteria during 1 of the initial 2
consecutive tax years in which the qualified start-up business had
no business income:
(A) During the immediately preceding 7 years was in 1 of the
first 2 years of contribution liability under section 19 of the
Michigan employment security act, 1936 (Ex Sess) PA 1, MCL 421.19.
(B) During the immediately preceding 7 years would have been
in 1 of the first 2 years of contribution liability under section
19 of the Michigan employment security act, 1936 (Ex Sess) PA 1,
MCL 421.19, if the qualified start-up business had employees and
was liable under the Michigan employment security act, 1936 (Ex
Sess) PA 1, MCL 421.1 to 421.75.
(C) During the immediately preceding 7 years would have been
in 1 of the first 2 years of contribution liability under section
19 of the Michigan employment security act, 1936 (Ex Sess) PA 1,
MCL 421.19, if the qualified start-up business had not assumed
successor liability under section 15(g) of the Michigan employment
security act, 1936 (Ex Sess) PA 1, MCL 421.15.
(d) "Research and development" means qualified research as
that term is defined in section 41(d) of the internal revenue code.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 95th Legislature are
enacted into law:
(a) House Bill No. 5249.
(b) Senate Bill No.____ or House Bill No. 6104(request no.
04275'09).
(c) Senate Bill No.____ or House Bill No. 6103(request no.
05669'09).
(d) Senate Bill No.____ or House Bill No. 6105(request no.
05670'09).
(e) Senate Bill No.____ or House Bill No. 6106(request no.
05671'09).
(f) Senate Bill No.____ or House Bill No. 6107(request no.
05672'09).
(g) Senate Bill No.____ or House Bill No. 6112(request no.
05673'09).
(h) Senate Bill No.____ or House Bill No. 6113(request no.
05675'09*).
(i) Senate Bill No.____ or House Bill No. 6110(request no.
05677'09).
(j) Senate Bill No.____ or House Bill No. 6116(request no.
05678'09).
(k) Senate Bill No.____ or House Bill No. 6114(request no.
05679'09).
(l) Senate Bill No.____ or House Bill No. 6117(request no.
05680'09).
(m) Senate Bill No.____ or House Bill No. 6108(request no.
05681'09).
(n) Senate Bill No.____ or House Bill No. 6119(request no.
05930'10).
(o) Senate Bill No.____ or House Bill No. 6111(request no.
05931'10).
(p) Senate Bill No.____ or House Bill No. 6115(request no.
05932'10).
(q) Senate Bill No.____ or House Bill No. 6118(request no.
05933'10).