HOUSE BILL No. 5545

April 13, 2016, Introduced by Rep. Farrington and referred to the Committee on Tax Policy.

 

     A bill to amend 2014 PA 93, entitled

 

"Alternative state essential services assessment act,"

 

by amending sections 3, 7, and 9 (MCL 211.1073, 211.1077, and

 

211.1079), sections 3 and 7 as amended by 2015 PA 121.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3. As used in this act:

 

     (a) "Acquired by" means, for property that is construction in

 

progress only, the year the property is first reported on the

 

combined document filed pursuant to section 7(8) in the report of

 

the fair market value and year of acquisition by the first owner of

 

qualified new personal property or qualified previously existing

 

personal property.

 

     (b) (a) "Acquisition cost" means the fair market value of

 

personal property at the time of acquisition by the first owner,

 


including the cost of freight, sales tax, and installation, and

 

other capitalized costs, except capitalized interest. There is a

 

rebuttable presumption that the acquisition price paid by the first

 

owner for personal property, and any costs of freight, sales tax,

 

and installation, and other capitalized costs, except capitalized

 

interest, reflect the acquisition cost. For personal property

 

exempt under section 9m or 9n of the general property tax act, 1893

 

PA 206, MCL 211.9m and 211.9n, that would otherwise be prior to the

 

current tax year was exempt under section 7k of the general

 

property tax act, 1893 PA 206, MCL 211.7k, under an industrial

 

facilities exemption certificate issued under 1974 PA 198, MCL

 

207.551 to 207.572, and effective before January 1, 2013, and which

 

has been extended for property not yet exempt under section 9m or

 

9n of the general property tax act, 1893 PA 206, MCL 211.9m and

 

211.9n, for personal property subject to an extended industrial

 

facilities exemption certificate under section 11a of 1974 PA 198,

 

MCL 207.561a, that is exempt under an industrial facilities

 

exemption certificate issued under 1974 PA 198, MCL 207.551 to

 

207.572, and effective before January 1, 2013, and beginning in

 

2017 for construction in progress, acquisition cost means 1/2 of

 

the fair market value of that personal property at the time of

 

acquisition by the first owner, including the cost of freight,

 

sales tax, and installation, and other capitalized costs, except

 

capitalized interest. The acquisition cost for personal property

 

exempt under the Michigan renaissance zone act, 1996 PA 376, MCL

 

125.2681 to 125.2696, is $0.00 except for the 3 years immediately

 

preceding the expiration of the exemption of that personal property


under the Michigan renaissance zone act, 1996 PA 376, MCL 125.2681

 

to 125.2696, during which period of time the acquisition cost for

 

that personal property means the fair market value of that personal

 

property at the time of acquisition by the first owner, including

 

the cost of freight, sales tax, and installation, and other

 

capitalized costs, except capitalized interest, multiplied by the

 

percentage reduction in the exemption as provided in section 9(3)

 

of the Michigan renaissance zone act, 1996 PA 376, MCL 125.2689.

 

The state tax commission department may provide guidelines for

 

circumstances in which the actual acquisition price is not

 

determinative of acquisition cost and the basis of determining

 

acquisition cost in those circumstances. When the acquisition cost,

 

year of acquisition by the first owner, or both are unknown, the

 

state tax commission department may provide guidelines for

 

estimating the acquisition cost and year of acquisition by the

 

first owner. The state tax commission department may issue

 

guidelines that allow for the reduction of acquisition cost for

 

property that is idle, is obsolete or has material obsolescence, or

 

is surplus.

 

     (c) (b) "Assessment" means the alternative state essential

 

services assessment levied under section 5.

 

     (d) (c) "Assessment year" means the year in which the

 

alternative state essential services assessment levied under

 

section 5 is due.

 

     (e) (d) "Eligible claimant" means a person that owns, leases,

 

or is in the possession of eligible personal property.

 

     (f) (e) "Eligible personal property" means personal property


exempt from the tax levied under the state essential services

 

assessment act, 2014 PA 92, MCL 211.1051 to 211.1061, and

 

determined to be subject to the alternative state essential

 

services assessment as provided in section 9 of the state essential

 

services assessment act, 2014 PA 92, MCL 211.1059.

 

     (g) "Department" means the department of treasury.

 

     Sec. 7. (1) The department of treasury shall collect and

 

administer the alternative state essential services assessment as

 

provided in this section.

 

     (2) Not later than May 1 in each assessment year, the

 

department of treasury shall make available in electronic form to

 

each eligible claimant a statement for calculation of the

 

assessment as provided in section 5. That statement shall be

 

developed from the information submitted by the eligible claimant

 

on the combined document as required by sections 9m and 9n of the

 

general property tax act, 1893 PA 206, MCL 211.9m and 211.9n.

 

     (3) Not later than August 15 in each assessment year, each

 

eligible claimant shall submit electronically to the department of

 

treasury revise as necessary and certify the completed statement ,

 

in a form and manner prescribed by the department of treasury, and

 

make full payment of the assessment levied under section 5 for that

 

assessment year as calculated in section 5(2). The department of

 

treasury may waive or delay the electronic filing certification

 

requirement at its discretion. The department of treasury may

 

accept a timely filed statement that calculates the tax under this

 

act that is transmitted and certified using reporting software

 

approved by the department, of treasury, subject to audit under


subsection (6). A statement submitted certified by an eligible

 

claimant shall include all of the eligible claimant's eligible

 

personal property located in this state subject to the assessment

 

levied under section 5. The completed statement required under this

 

subsection shall not be subject to disclosure under the freedom of

 

information act, 1976 PA 442, MCL 15.231 to 15.246.

 

     (4) If an eligible claimant does not submit certify the

 

statement and full payment of the assessment levied under section 5

 

by August 15, the department of treasury shall issue a notice to

 

the eligible claimant not later than September 15. The notice shall

 

include a statement explaining the consequences of nonpayment as

 

set forth in subsection (5) and instructing the eligible claimant

 

of its potential responsibility under subsection (5)(e). An

 

eligible claimant shall submit payment in full by October 15 of the

 

assessment year along with a penalty of 1% per week on the unpaid

 

balance for each week payment is not made in full up to a maximum

 

of 5% of the total amount due and unpaid. For the eligible

 

claimant's first assessment year, the penalty shall be waived if

 

the eligible claimant submits certifies the statement and makes

 

full payment of the assessment levied under section 5 by September

 

15. An eligible claimant may amend a filed certified statement for

 

the current year up to September 15. Payments made due to an

 

amended statement are subject to the penalties as described in this

 

subsection. The department of treasury shall issue refunds for

 

overpayments due to an amended statement. All refunds due to

 

overpayment shall be remitted without interest except as provided

 

by section 37 of the tax tribunal act, 1973 PA 186, MCL 205.737.


     (5) For any assessment year in which an eligible claimant does

 

not submit payment in full and any penalty due under subsection (4)

 

or (6) by October 15, or if the state tax commission department

 

discovers that the property is not eligible under section 9m or 9n

 

of the general property tax act, 1893 PA 206, MCL 211.9m and

 

211.9n, all of the following shall apply:

 

     (a) The state tax commission department shall issue an order

 

to rescind no later than the first Monday in December for the

 

assessment year any exemption described in section 9m or 9n of the

 

general property tax act, 1893 PA 206, MCL 211.9m and 211.9n,

 

granted for any parcel for which payment in full and any penalty

 

due have not been received or for which the state tax commission

 

department discovers that the property is not eligible under

 

section 9m or 9n of the general property tax act, 1893 PA 206, MCL

 

211.9m and 211.9n.

 

     (b) The Upon the request of the department, the state tax

 

commission shall issue an order to rescind no later than the first

 

Monday in December for the assessment year any exemption under

 

section 9f of the general property tax act, 1893 PA 206, MCL

 

211.9f, which exemption was approved under section 9f of the

 

general property tax act, 1893 PA 206, MCL 211.9f, after 2013 for

 

any parcel for which payment in full and any penalty due have not

 

been received or for which the state tax commission discovers that

 

the property is not eligible under section 9m or 9n of the general

 

property tax act, 1893 PA 206, MCL 211.9m and 211.9n.personal

 

property.

 

     (c) The Upon the request of the department, the state tax


commission shall issue an order to rescind no later than the first

 

Monday in December for the assessment year any exemption for

 

eligible personal property subject to an extended industrial

 

facilities exemption certificate under section 11a of 1974 PA 198,

 

MCL 207.561a, for any parcel for which payment in full and any

 

penalty due have not been received or for which the state tax

 

commission department discovers that the property is not eligible

 

under section 9m or 9n of the general property tax act, 1893 PA

 

206, MCL 211.9m and 211.9n.personal property.

 

     (d) The Upon the request of the department, the state tax

 

commission shall issue an order to rescind no later than the first

 

Monday in December for the assessment year any extended exemption

 

for eligible personal property under section 9f(8)(a) of the

 

general property tax act, 1893 PA 206, MCL 211.9f, for any parcel

 

for which payment in full and any penalty due have not been

 

received or for which the state tax commission department discovers

 

that the property is not eligible under section 9m or 9n of the

 

general property tax act, 1893 PA 206, MCL 211.9m and

 

211.9n.personal property.

 

     (e) The eligible claimant shall file with the assessor of the

 

township or city within 30 days of the date of the state tax

 

commission order to rescind rescission issued under subdivisions

 

(a) to (d) a statement under section 19 of the general property tax

 

act, 1893 PA 206, MCL 211.19, for all property for which the

 

exemption has been rescinded under this section.

 

     (f) Within 60 days of an order of rescission by the state tax

 

commission a rescission under subdivisions (a) to (d), the


treasurer of the local tax collecting unit shall issue amended tax

 

bills for any taxes, including penalty and interest, that were not

 

billed under the general property tax act, 1893 PA 206, MCL 211.1

 

to 211.155, or under 1974 PA 198, MCL 207.551 to 207.572, and that

 

are owed as a result of the order of rescission.

 

     (6) An eligible claimant shall provide access to the books and

 

records, for audit purposes, relating to the location and

 

description; the date of purchase, lease, or acquisition; and the

 

purchase price, lease amount, or value of all personal property

 

owned by, leased by, or in the possession of that person or a

 

related entity if requested by the assessor of the township or

 

city, county equalization department, or department of treasury for

 

the year in which the statement is filed and the immediately

 

preceding 3 years. The department of treasury shall develop and

 

implement an audit program which includes, but is not limited to,

 

the audit of statements submitted under subsection (3) and amended

 

statements submitted under subsection (4) for the current calendar

 

year and the 3 calendar years immediately preceding the

 

commencement of an audit. An assessment as a result of an audit

 

shall be paid in full within 35 days of issuance and shall include

 

penalties and interest as described in section 154(3) of the

 

general property tax act, 1893 PA 206, MCL 211.154. Refunds as a

 

result of an audit under this subsection shall be without interest.

 

The exemption for personal property for which an assessment has

 

been issued as a result of an audit under this subsection shall be

 

subject to the rescission provisions of subsection (5) for the

 

years of the assessment if full payment is not timely made as


required by this subsection.

 

     (7) An eligible claimant may appeal an assessment levied under

 

section 5 or a penalty or rescission under this section to the

 

state tax commission Michigan tax tribunal by filing a petition not

 

later than December 31 in that tax year. An eligible claimant may

 

appeal an assessment issued, including penalties, interest, or

 

rescission, as a result of an audit conducted under subsection (6)

 

by filing a petition with the state tax commission Michigan tax

 

tribunal within 30 35 days of the date of that assessment's

 

issuance. The department of treasury may appeal to the state tax

 

commission Michigan tax tribunal by filing a petition for the

 

current calendar year and 3 immediately preceding calendar years.

 

The state tax commission shall decide any appeal based on the

 

written petition and the written recommendation of state tax

 

commission staff and any other relevant information. The department

 

of treasury or any eligible claimant may appeal the determination

 

of the state tax commission to the Michigan tax tribunal within 35

 

days of the date of the determination.

 

     (8) For any year before 2023, the The department of treasury

 

may require eligible claimants to annually file by February 20 of

 

the each year a combined document that includes the affidavit form

 

to claim the exemption under sections 9f(9), 9m, and 9n of the

 

general property tax act, 1893 PA 206, MCL 211.9f, 211.9m, and

 

211.9n, the affidavit and under section 11a of 1974 PA 198, MCL

 

207.561a, a report of the fair market value and year of acquisition

 

by the first owner of eligible personal property, and for any year

 

before 2023, a statement under section 19 of the general property


tax act, 1893 PA 206, MCL 211.19. , and a report of the acquisition

 

cost and year of acquisition by the first owner of eligible

 

personal property. All of the following apply to the filing of a

 

combined document under this subsection:

 

     (a) The combined document shall be in a form prescribed by the

 

state tax commission. department.

 

     (b) Leasing companies are not eligible to receive the

 

exemption under this section and may not use the combined document

 

prescribed in this section. With respect to personal property that

 

is the subject of a lease agreement, regardless of whether the

 

agreement constitutes a lease for financial or tax purposes, all of

 

the following apply:

 

     (i) If the personal property is eligible manufacturing

 

personal property, the lessee and lessor may elect that the lessee

 

report the leased personal property on the combined document.

 

     (ii) An election made by the lessor and the lessee under this

 

subdivision shall be made in a form and manner approved by the

 

department.

 

     (iii) Absent an election, the personal property shall be

 

reported by the lessor on the personal property statement unless

 

the exemption for eligible manufacturing personal property is

 

claimed by the lessee on the combined document.

 

     (c) For eligible personal property exempt under the Michigan

 

renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696, an

 

eligible claimant shall report the fair market value of that

 

personal property at the time of acquisition by the first owner,

 

including the cost of freight, sales tax, installation, and other


capitalized costs, except capitalized interest.

 

     (d) The combined document shall be filed with the assessor of

 

the township or city in which the eligible personal property is

 

located.

 

     (e) The assessor shall transmit the information contained in

 

the combined document filed under this subsection, and other parcel

 

information required by the department, of treasury, to the

 

department of treasury in the form and in the manner prescribed by

 

the department of treasury no later than April 1.

 

     Sec. 9. (1) Proceeds of the assessment collected under section

 

7 shall be credited to the general fund.

 

     (2) Beginning in fiscal year 2014-2015 and each fiscal year

 

thereafter, the legislature shall appropriate funds in an amount

 

equal to the necessary expenses incurred by the department of

 

treasury in implementing this act.