HOUSE BILL No. 6012

 

November 8, 2012, Introduced by Rep. Huuki and referred to the Committee on Tax Policy.

 

     A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 623 (MCL 206.623), as amended by 2011 PA 312,

 

and by adding section 31b.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 31b. (1) Notwithstanding any other provision of this

 

part, for the 2013 tax year and each tax year after 2013, taxable

 

income for purposes of this part means taxable income as determined

 

under section 30 with the following adjustment. For the 2013 tax

 

year and each tax year after 2013, to determine taxable income, a

 

qualified taxpayer may deduct, to the extent included in adjusted

 

gross income, any income derived from a producing mine or mineral-

 

producing property, or both.

 


     (2) As used in this section:

 

     (a) "Mineral-producing property" and "producing mine" mean

 

those terms as defined in section 2 of the nonferrous metallic

 

minerals extraction severance tax act.

 

     (b) "Qualified taxpayer" means a taxpayer subject to the

 

minerals severance tax levied under the nonferrous metallic

 

minerals extraction severance tax act.

 

     Sec. 623. (1) Except as otherwise provided in this part, there

 

is levied and imposed a corporate income tax on every taxpayer with

 

business activity within this state or ownership interest or

 

beneficial interest in a flow-through entity that has business

 

activity in this state unless prohibited by 15 USC 381 to 384. The

 

corporate income tax is imposed on the corporate income tax base,

 

after allocation or apportionment to this state, at the rate of

 

6.0%.

 

     (2) The corporate income tax base means a taxpayer's business

 

income subject to the following adjustments, before allocation or

 

apportionment, and the adjustment in subsection (4) after

 

allocation or apportionment:

 

     (a) Add interest income and dividends derived from obligations

 

or securities of states other than this state, in the same amount

 

that was excluded from federal taxable income, less the related

 

portion of expenses not deducted in computing federal taxable

 

income because of sections 265 and 291 of the internal revenue

 

code.

 

     (b) Add all taxes on or measured by net income including the

 

tax imposed under this part to the extent that the taxes were

 


deducted in arriving at federal taxable income.

 

     (c) Add any carryback or carryover of a net operating loss to

 

the extent deducted in arriving at federal taxable income.

 

     (d) To the extent included in federal taxable income, deduct

 

dividends and royalties received from persons other than United

 

States persons and foreign operating entities, including, but not

 

limited to, amounts determined under section 78 of the internal

 

revenue code or sections 951 to 964 of the internal revenue code.

 

     (e) Except as otherwise provided under this subdivision, to

 

the extent deducted in arriving at federal taxable income, add any

 

royalty, interest, or other expense paid to a person related to the

 

taxpayer by ownership or control for the use of an intangible asset

 

if the person is not included in the taxpayer's unitary business

 

group. The addition of any royalty, interest, or other expense

 

described under this subdivision is not required to be added if the

 

taxpayer can demonstrate that the transaction has a nontax business

 

purpose, is conducted with arm's-length pricing and rates and terms

 

as applied in accordance with sections 482 and 1274(d) of the

 

internal revenue code, and 1 of the following is true:

 

     (i) The transaction is a pass through of another transaction

 

between a third party and the related person with comparable rates

 

and terms.

 

     (ii) An addition would result in double taxation. For purposes

 

of this subparagraph, double taxation exists if the transaction is

 

subject to tax in another jurisdiction.

 

     (iii) An addition would be unreasonable as determined by the

 

state treasurer.

 


     (iv) The related person recipient of the transaction is

 

organized under the laws of a foreign nation which has in force a

 

comprehensive income tax treaty with the United States.

 

     (f) To the extent included in federal taxable income, deduct

 

interest income derived from United States obligations.

 

     (g) For tax years beginning after December 31, 2011, eliminate

 

all of the following:

 

     (i) Income from producing oil and gas to the extent included in

 

federal taxable income.

 

     (ii) Expenses of producing oil and gas to the extent deducted

 

in arriving at federal taxable income.

 

     (h) For tax years beginning after December 31, 2012, for a

 

qualified taxpayer, to the extent included in federal taxable

 

income, deduct any income derived from a producing mine or mineral-

 

producing property, or both.

 

     (3) For purposes of subsection (2), the business income of a

 

unitary business group is the sum of the business income of each

 

person included in the unitary business group less any items of

 

income and related deductions arising from transactions including

 

dividends between persons included in the unitary business group.

 

     (4) Deduct any available business loss incurred after December

 

31, 2011. As used in this subsection, "business loss" means a

 

negative business income taxable amount after allocation or

 

apportionment. The business loss shall be carried forward to the

 

year immediately succeeding the loss year as an offset to the

 

allocated or apportioned corporate income tax base, then

 

successively to the next 9 taxable years following the loss year or

 


until the loss is used up, whichever occurs first.

 

     (5) As used in this section: , "oil

 

     (a) "Mineral-producing property" and "producing mine" mean

 

those terms as defined in section 2 of the nonferrous metallic

 

minerals extraction severance tax act.

 

     (b) "Oil and gas" means oil and gas that is subject to

 

severance tax under 1929 PA 48, MCL 205.301 to 205.317.

 

     (c) "Qualified taxpayer" means a taxpayer subject to the

 

minerals severance tax levied under the nonferrous metallic

 

minerals extraction severance tax act.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Bill No.____ or House Bill No. 6008(request no.

 

02659'11 ***) of the 96th Legislature is enacted into law.