HB-6008, As Passed Senate, December 13, 2012
SENATE SUBSTITUTE FOR
HOUSE BILL NO. 6008
A bill to levy specific taxes on certain nonferrous metallic
minerals on certain taxpayers in this state; to provide for the
levy, collection, and administration of the specific tax; to
provide certain reporting requirements; to provide for certain
penalties; to provide certain exemptions, credits, and refunds; and
to provide for the distribution of the specific tax.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"nonferrous metallic minerals extraction severance tax act".
Sec. 2. As used in this act:
(a) "Beneficiation" means milling, processing, grinding,
separating, concentrating, pelletizing, and other processes
necessary to prepare nonferrous metallic mineral ore for sale or
transfer.
(b) "Department" means the department of treasury.
(c) "Mineral" means a naturally occurring solid substance that
is extracted from the earth in this state primarily for its
nonferrous metallic mineral content for commercial, industrial, or
construction purposes. Mineral does not include gypsum, lime,
limestone, salt, dolomite, basalt, granite, sandstone, shale, clay,
stone, gravel, marl, peat, sand, gemstones, coal, substances
extracted from potable water or brine, substances extracted from
oil or natural gas, low-grade iron ore that is defined and taxed
under 1951 PA 77, MCL 211.621 to 211.626, any property that is
defined and taxed under 1963 PA 68, MCL 207.271 to 207.279, or any
other substance not extracted primarily for its nonferrous metallic
mineral content.
(d) "Mineral-producing property" means real and personal
property in this state that is part of a producing mine or utilized
directly in association with a producing mine on a parcel on which
the shaft, incline, or adit is located, or a parcel contiguous or
appurtenant to a parcel on which the shaft, incline, or adit is
located. As used in this section, contiguity is not broken by a
road, an easement, a right-of-way, or property occupied by power
transmission lines or buffer zones. Mineral-producing property also
includes all the following within this state:
(i) Mineral rights in mineral-producing property.
(ii) Mineral leases, options, and mining rights on or in
mineral-producing property.
(iii) Mineral stockpiles and mineral inventories that are owned,
leased, or controlled by a taxpayer.
(iv) Leach pads, waste rock repositories, and tailings impounds
that are owned, leased, or controlled by a taxpayer.
(v) Buffer lands that are owned, leased, or controlled by a
taxpayer and are appurtenant to mineral-producing property. For
purposes of determining appurtenance to mineral-producing property
for buffer lands owned, leased, or controlled by a taxpayer, there
is a rebuttable presumption that all of the following apply:
(A) Land that is no more than 1/4 mile from nonbuffer land
mineral-producing property, is held by the taxpayer for use as
buffer land.
(B) Land that is more than 1/4 mile from nonbuffer land
mineral-producing property and that a taxpayer is required to own,
lease, or control due to requirements imposed by federal, state, or
local law, is held by the taxpayer for use as buffer land.
(vi) Buildings, improvements, fixtures, and nonmobile equipment
located upon, beneath, or appurtenant to a mine, including
administrative and support facilities appurtenant to a mine
provided that such property is located upon, beneath, or on a
parcel that is a mineral-producing property.
(vii) Property owned and primarily used by the taxpayer in the
transportation of minerals from a producing mine to the point where
beneficiation activities begin.
(viii) Property used for beneficiation of extracted minerals if
the person that owns or controls the property is a taxpayer.
(e) "Mineral-producing property" does not include real and
personal property that is used for transportation of minerals
between any locations, unless it is specifically described in
subdivision (d). Also, mineral-producing property does not include
real property owned, leased, or controlled by a taxpayer that is
used as residential real property.
(f) "Minerals severance tax" or "severance tax" means the
specific tax levied under section 4.
(g) "Open mine" means a mine at which a shaft, incline, or
adit has been started or overburden has been stripped.
(h) "Person" means an individual, firm, limited partnership,
limited liability partnership, copartnership, partnership, joint
venture, corporation, association, subchapter S corporation,
limited liability company, receiver, estate, trust, or any other
legal entity or combination of legal entities acting as a unit.
(i) "Producing mine" means a mineral mine in this state at
which a taxpayer is producing 1 or more minerals. Producing mine
does not include a mine operated primarily for tourism purposes or
a mine in which the minerals produced are used for artistic
purposes and are incidental to the business operation of the owner.
(j) "Rural development fund" means the rural development fund
created in section 5 of the rural development fund act.
(k) "Taxable mineral" means the first marketable mineral or
mineral product sold or transferred by the taxpayer that is taxable
under this act. Taxable mineral also includes a mineral which has
been sold or transferred by a taxpayer following beneficiation in
this state and a mineral which is otherwise taxable under this act.
(l) "Taxable mineral value" means the total value received by a
taxpayer for the sale or transfer of taxable minerals, whether or
not in a beneficiated state, including premiums, bonuses,
subsidies, or noncash consideration, with no deductions. There is a
rebuttable presumption that the purchase price of a taxable mineral
under a bona fide arm's-length contract of sale or transfer between
unrelated persons reflects the taxable mineral value. In
determining the taxable mineral value of a taxable mineral for
contracts of sale or transfer between related persons, there is a
rebuttable presumption that taxable mineral value for related party
sales or transfers shall be based on the average daily price of the
mineral as quoted on published market indices as of the date of
sale or transfer. The taxable mineral value of taxable minerals
sold or transferred by a taxpayer following beneficiation shall
reflect the total value of the taxable mineral in its beneficiated
state. For taxable minerals which are to be shipped or transported
outside this state for beneficiation outside this state or
otherwise removed by a taxpayer from this state and which are
considered to have been sold as provided in section 4(1), the
taxable mineral value shall reflect the total value of the minerals
immediately prior to the shipment or removal based on the average
daily price of the mineral as quoted on published market indices as
determined by the department.
(m) "Taxpayer" means a person subject to a specific tax levied
under this act.
(n) "Transfer" means an in-kind exchange or other disposition
of an interest in minerals, whether or not beneficiated, other than
through a sale.
Sec. 3. Beginning December 31, 2012, any mineral and any
right, claim, lease, or option in or of any mineral is exempt and
any shaft, incline, adit, or value of overburden stripping located
at an open mine is exempt under section 7pp of the general property
tax act, 1893 PA 206, MCL 211.7pp.
Sec. 4. (1) The minerals severance tax is levied on taxable
minerals that a taxpayer extracts from the earth in this state or
that a taxpayer beneficiates in this state. A mineral extracted
from the earth in this state by a taxpayer which is shipped outside
this state for beneficiation outside this state or otherwise
removed from this state prior to actual sale or transfer is
considered to have been sold by the taxpayer immediately prior to
the shipment or removal and is subject to the minerals severance
tax levied under this section. A taxpayer subject to the minerals
severance tax is exempt from all of the following as provided in
this act:
(a) The collection of taxes under the general property tax
act, 1893 PA 206, MCL 211.1 to 211.155, as provided in section 7qq
of the general property tax act, 1893 PA 206, MCL 211.7qq.
(b) The tax levied under part 2 of the income tax act of 1967,
1967 PA 281, MCL 206.601 to 206.699, as provided in sections 31b
and 623 of the income tax act of 1967, 1967 PA 281, MCL 206.31b and
206.623.
(c) The tax levied under the general sales tax act, 1933 PA
167, MCL 205.51 to 205.78, as provided in section 4dd of the
general sales tax act, 1933 PA 167, MCL 205.54dd.
(d) The tax levied under the use tax act, 1937 PA 94, MCL
205.91 to 205.111, as provided in section 4aa of the use tax act,
1937 PA 94, MCL 205.94aa.
(2) The minerals severance tax required to be paid by each
taxpayer each year shall be 2.75% of the taxable mineral value.
(3) The taxable mineral value of all minerals shall be
computed as of the time of sale or transfer. Each taxpayer shall
pay the minerals severance tax to the local tax collecting unit on
or before February 15 beginning on February 15 in the calendar year
immediately following the year in which the department declares the
property to be mineral-producing property under section 6.
(4) If a taxpayer sells or transfers the minerals to another
taxpayer, the seller or transferor shall add to the sales price, or
to the value of the consideration with respect to a transfer, any
minerals severance tax the seller or transferor paid under this act
for those minerals and itemize the minerals severance tax paid
under this act on the invoice.
(5) A taxpayer that purchases taxable minerals from another
taxpayer may claim a credit against the minerals severance tax
imposed under this act for the minerals severance tax paid under
this act by the seller or transferor for those minerals that is
itemized on the invoice.
(6) For open mines opened at any time between January 1, 2011
and June 30, 2013, for the first 5 years in which that open mine is
a producing mine and is subject to the minerals severance tax, the
taxpayer may claim a credit of not more than 20% of the amount of
the ad valorem property tax levied on that open mine in 2012
attributable to those minerals valued by the state geologist under
section 24(2) of the general property tax act, 1893 PA 206, MCL
211.24, in 2012.
(7) In the first year that a minerals severance tax is levied
on a taxpayer under this act, the minerals severance tax for that
year is equal to the greater of the following:
(a) The minerals severance tax calculated under subsection
(2).
(b) The amount of general ad valorem property tax that was
paid on the mineral-producing property for that year.
Sec. 5. Each year, a taxpayer shall prepare and submit to the
department and to the local tax collecting unit a report in the
time, form, and manner required by the department, showing the
total amount of minerals sold, transferred, or beneficiated during
the preceding year, the taxable mineral value of the minerals sold,
transferred, or beneficiated, and any other information required by
the department for valuation purposes.
Sec. 6. (1) The department shall determine when property is
classified under this act as mineral-producing property. A taxpayer
shall notify the department within 30 days of beginning operation
of a producing mine. Upon making this determination, the department
shall notify all local assessing authorities of those properties
that are classified as a mineral-producing property and are subject
to the minerals severance tax under this act. Beginning on December
31 in the calendar year in which property is determined by the
department to be mineral-producing property, that property is
exempt from taxes collected under the general property tax act,
1893 PA 206, MCL 211.1 to 211.155. The property shall be subject to
the minerals severance tax when the property is determined to be
mineral-producing property by the department. Beginning on the date
an open mine becomes a producing mine, the mineral-producing
property is exempt from the taxes set forth in section 4(1)(b),
(c), and (d) as provided in this act.
(2) If the department determines that property previously
determined to be a mineral-producing property is no longer mineral-
producing property, the department shall notify the taxpayer and
the local assessing authorities that the property is no longer
subject to the minerals severance tax under this act beginning
December 31 in the year that determination is made and that
property shall be subject to the collection of taxes under the
general property tax act, 1893 PA 206, MCL 211.1 to 211.155. The
local tax collecting unit in which the property is located is
responsible for assessment of that property as of the date of the
department's notification to the local assessing authority. Ten
days after the date of the department's notification to the
taxpayer shall be the date on which the minerals severance tax
shall cease and all related tax exemptions described in section
4(1)(b), (c), and (d) shall cease.
(3) On or before February 10 of each year, the state geologist
shall provide a list of all mineral-producing properties as of the
end of the previous calendar year to the department.
(4) If a taxpayer ceases operation of a producing mine for 30
or more consecutive days, the taxpayer shall notify the department,
in writing, that it has ceased operations within 7 business days.
Sec. 7. (1) Each taxpayer shall prepare, keep, and preserve a
full and complete record for each tax year of all minerals
extracted from the earth in this state or beneficiated in this
state, and that record shall be open at all times to the inspection
of the department.
(2) Annually, the department shall publish the value of all
minerals reported under this act.
Sec. 8. The department may promulgate rules to implement this
act pursuant to the administrative procedures act of 1969, 1969 PA
306, MCL 24.201 to 24.328.
Sec. 9. (1) The department shall allocate the minerals
severance tax and the local tax collecting unit shall collect the
minerals severance tax as provided in this act and collect the same
collection charges as general property taxes under the general
property tax act, 1893 PA 206, MCL 211.1 to 211.155. Property
listed and taxed under this act shall be subject to return and sale
for nonpayment of taxes in the same manner, at the same time, and
under the same penalties as property returned and sold for
nonpayment of taxes levied under the general property tax act, 1893
PA 206, MCL 211.1 to 211.155.
(2) If mineral-producing property is located in more than 1
local tax collecting unit, the department, or a person designated
by the department, shall determine the portion attributable to each
local tax collecting unit.
(3) Except as provided in subsection (5), the minerals
severance tax collected under this act shall be distributed as
follows:
(a) 65% by the local tax collecting unit to school districts,
this state, and local governmental units in the same proportion as
the general ad valorem property taxes are distributed. The amounts
distributed may be used by the receiving entities for any use for
which such entity is permitted to use general ad valorem property
tax revenues.
(b) 35% to the department for deposit into the rural
development fund.
(4) The local tax collecting unit shall report all collections
and distributions under this act to and remit the portion of the
minerals severance tax described in subsection (3)(b) to the
department for deposit in the rural development fund no later than
30 days after a payment is received from the taxpayer. If a local
tax collecting unit fails to make any distribution or remittance
required under this act to another entity, the department shall
deduct an equivalent amount from any revenues the local tax
collecting unit would otherwise be entitled to receive under the
Glenn Steil state revenue sharing act of 1971, 1971 PA 140, MCL
141.901 to 141.921, and distribute the amount deducted to those
entities entitled to receive that distribution under this act.
(5) In determining the distribution under subsection (3), the
department shall modify the distributions so all minerals severance
tax revenue lost due to the credit described in section 4(6) does
not reduce the distributions to school districts, this state, and
local governmental units under subsection (3)(a).
(6) For open mines opened at any time between January 1, 2011
and June 30, 2013, all of the following apply:
(a) For the first 5 years in which that open mine is a
producing mine and is subject to the minerals severance tax, if the
amount distributed under subsection (3)(a) is less than
$3,500,000.00, the taxpayer shall, in addition to the amount
distributed under subsection (3)(a), pay the difference between
$3,500,00.00 and the amount distributed under subsection (3)(a),
which additional amount shall be distributed to the school
districts, this state, and local governmental units in the
proportion provided in subsection (3)(a).
(b) For the sixth and seventh years in which that open mine is
a producing mine and is subject to the minerals severance tax, if
the amount distributed under subsection (3)(a) is less than
$1,600,000.00, the taxpayer shall, in addition to the amount
distributed under subsection (3)(a), pay the difference between
$1,600,000.00 and the amount distributed under subsection (3)(a),
which additional amount shall be distributed to the school
districts, this state, and local governmental units in the manner
provided in subsection (3)(a).
(c) If the taxpayer makes any additional payments as provided
under this subsection in addition to the amount distributed under
subsection (3)(a), the amount of that additional payment shall be
recovered as a credit, without interest, by the taxpayer against
subsequent payments made under this act and distributed under
subsection (3)(a) until the taxpayer has been reimbursed in full,
provided that in no case shall this credit cause the distribution
made under subsection (3)(a) in that year to fall below the minimum
amounts provided in subdivision (a) or (b) for that year. The
credit shall be cumulative and shall not expire until the taxpayer
has been fully reimbursed under this act.
Sec. 10. Unless the minerals severance tax is being contested
as provided by law, upon an action being filed under the direction
of the attorney general in the circuit court for the county of
Ingham, that court shall have power to restrain by injunction any
taxpayer or person that has failed to comply with this act and in
the same manner to restrain any taxpayer or person from continuing
to extract minerals while delinquent in the filing of any report or
the paying of any tax, penalty, or cost required under this act.
Sec. 11. The minerals severance tax levied under this act
shall be administered by the department.
Enacting section 1. This act does not take effect unless House
Bill No. 6007 of the 96th Legislature is enacted into law.