SB-0670, As Passed Senate, September 28, 2011
September 15, 2011, Introduced by Senator ROBERTSON and referred to the Committee on Finance.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 703 (MCL 206.703), as added by 2011 PA 38.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 703. (1) A person who disburses pension or annuity
payments, is
subject to income tax withholding except
as otherwise
provided under this section, shall withhold a tax in an amount
computed by applying the rate prescribed in section 51 on the
taxable part of payments from an employer pension, annuity, profit-
sharing, stock bonus, or other deferred compensation plan as well
as from an individual retirement arrangement, an annuity, an
endowment, or a life insurance contract issued by a life insurance
company. Withholding shall be calculated on the taxable
disbursement after deducting from the taxable portion the same
proportion of the total amount of personal and dependency
exemptions of the individual allowed under this act. Withholding is
not required on any part of a distribution that is not expected to
be includable in the recipient's gross income or that is deductible
from adjusted gross income under section 30(1)(e) or (f).
(2) Every employer in this state required under the provisions
of the internal revenue code to withhold a tax on the compensation
of an individual, except as otherwise provided, shall deduct and
withhold a tax in an amount computed by applying, except as
provided
by subsection (13), (14), the rate prescribed in section
51 to the remainder of the compensation after deducting from
compensation the same proportion of the total amount of personal
and dependency exemptions of the individual allowed under this act
that the period of time covered by the compensation is of 1 year.
The department may prescribe withholding tables that may be used by
employers to compute the amount of tax required to be withheld.
(3) Every flow-through entity in this state shall withhold a
tax in an amount computed by applying the rate prescribed in
section 51 to the distributive share of taxable income reasonably
expected to accrue after allocation and apportionment under chapter
3 of each nonresident member who is an individual after deducting
from that distributive income the same proportion of the total
amount of personal and dependency exemptions of the individual
allowed under this act. All of the taxes withheld under this
section shall accrue to the state on April 15, June 15, and
September 15 of the flow-through entity's tax year and January 15
of the following year, except a flow-through entity that is not on
a calendar year basis shall substitute the appropriate due dates in
the flow-through entity's fiscal year that correspond to those in a
calendar year. Withholding for each period shall be equal to 1/4 of
the total withholding calculated on the distributive share that is
reasonable expected to accrue during the tax year of the flow-
through entity.
(4) Every flow-through entity with business activity in this
state that has more than $200,000.00 of business income reasonably
expected to accrue in the tax year after allocation or
apportionment under chapter 14 shall withhold a tax in an amount
computed by applying the rate prescribed in section 623 to the
distributive share of the business income of each member that is a
corporation or that is a flow-through entity. As used in this
subsection, "business income" means that term as defined in section
603(2). For a partnership or S corporation, business income
includes payments and items of income and expense that are
attributable to business activity of the partnership or S
corporation and separately reported to the members. All of the
taxes withheld under this section shall accrue to the state on
April 15, June 15, and September 15 of the flow-through entity's
tax year and January 15 of the following year, except a flow-
through entity that is not on a calendar year basis shall
substitute the appropriate due dates in the flow-through entity's
fiscal year that correspond to those in a calendar year.
Withholding for each period shall be equal to 1/4 of the total
withholding calculated on the distributive share of business income
that is reasonably expected to accrue during the tax year of the
flow-through entity.
(5) If a flow-through entity is subject to the withholding
requirements of subsection (4), then a member of that flow-through
entity that is itself a flow-through entity shall withhold a tax on
the distributive share of business income as described in
subsection (4) of each of its members. The department shall apply
tax withheld by a flow-through entity on the distributive share of
business income of a member flow-through entity to the withholding
required of that member flow-through entity. All of the taxes
withheld under this section shall accrue to the state on April 15,
June 15, and September 15 of the flow-through entity's tax year and
January 15 of the following year, except a flow-through entity that
is not on a calendar year basis shall substitute the appropriate
due dates in the flow-through entity's fiscal year that correspond
to those in a calendar year. Withholding for each period shall be
equal to 1/4 of the total withholding calculated on the
distributive share of business income that is reasonably expected
to accrue during the tax year of the flow-through entity.
(6) Every casino licensee shall withhold a tax in an amount
computed by applying the rate prescribed in section 51 to the
winnings of a nonresident reportable by the casino licensee under
the internal revenue code.
(7) Every race meeting licensee or track licensee shall
withhold a tax in an amount computed by applying the rate
prescribed in section 51 to a payoff price on a winning ticket of a
nonresident reportable by the race meeting licensee or track
licensee under the internal revenue code that is the result of
pari-mutuel wagering at a licensed race meeting.
(8) Every casino licensee or race meeting licensee or track
licensee shall report winnings of a resident reportable by the
casino licensee or race meeting licensee or track licensee under
the internal revenue code to the department in the same manner and
format as required under the internal revenue code.
(9) Every eligible production company shall, to the extent not
withheld by a professional services corporation or professional
employer organization, deduct and withhold a tax in an amount
computed by applying the rate prescribed in section 51 to the
remainder of the payments made to the professional services
corporation or professional employer organization for the services
of a performing artist or crew member after deducting from those
payments the same proportion of the total amount of personal and
dependency exemptions of the individuals allowed under this part.
(10) Every publicly traded partnership that has equity
securities registered with the securities and exchange commission
under section 12 of title I of the securities and exchange act of
1934, 15 USC 78l, shall not be subject to withholding.
(11) (10)
Except as otherwise provided under
this subsection,
all of the taxes withheld under this section shall accrue to the
state on the last day of the month in which the taxes are withheld
but shall be returned and paid to the department by the employer,
flow-through
entity, eligible production
company, casino licensee,
or race meeting licensee or track licensee within 15 days after the
end
of any month or as provided in section 355. 705. For
an
employer or flow-through entity that has entered into an agreement
with a community college pursuant to chapter 13 of the community
college act of 1966, 1966 PA 331, MCL 389.161 to 389.166, a portion
of the taxes withheld under this section that are attributable to
each employee in a new job created pursuant to the agreement shall
accrue to the community college on the last day of the month in
which the taxes are withheld but shall be returned and paid to the
community college by the employer or flow-through entity within 15
days
after the end of any month or as provided in section 355 705
for as long as the agreement remains in effect. For purposes of
this act and 1941 PA 122, MCL 205.1 to 205.31, payments made by an
employer or flow-through entity to a community college under this
subsection shall be considered income taxes paid to this state.
(12) (11)
An employer, flow-through entity, eligible
production
company, casino licensee, or race meeting licensee or
track
licensee A person required by this section to deduct and
withhold taxes on compensation, a share of income available for
distribution on which withholding is required under subsection (3),
(4), or (5), winnings on which withholding is required under
subsection (6), or a payoff price on which withholding is required
under subsection (7) holds the amount of tax withheld as a trustee
for this state and is liable for the payment of the tax to this
state or, if applicable, to the community college and is not liable
to any individual for the amount of the payment.
(13) (12)
An employer in this state is not
required to deduct
and withhold a tax on the compensation paid to a nonresident
individual employee, who, under section 256, may claim a tax credit
equal to or in excess of the tax estimated to be due for the tax
year or is exempted from liability for the tax imposed by this act.
In each tax year, the nonresident individual shall furnish to the
employer, on a form approved by the department, a verified
statement of nonresidence.
(14) (13)
An employer, flow-through entity, eligible
production
company, casino licensee, or race meeting licensee or
track
licensee A person required to withhold a tax under this act,
by the fifteenth day of the following month, shall provide the
department with a copy of any exemption certificate on which the
employee, member, or person subject to withholding under subsection
(6) or (7) claims more than 9 personal or dependency exemptions,
claims a status that exempts the employee, member, or person
subject to withholding under subsection (6) or (7) from withholding
under
this section. , or elects to pay the tax imposed by this part
calculated
under section 51a.
(14)
An employer shall deduct and withhold the tax imposed by
this
act calculated under section 51a for a resident who files an
exemption
certificate under subsection (13) to elect to pay the tax
calculated
under section 51a.
(15)
The exemption certificate required by this section shall
include
the following statement, "Electing to file using the no-
form
option may not be for everyone who is eligible. If a taxpayer
chooses
the no-form option, he or she may not be eligible for some
of
the credits allowed under this act including the property tax
credit
allowed under sections 520 and 522.".
Enacting section 1. This amendatory act takes effect January
1, 2012.