September 26, 2013, Introduced by Rep. Nesbitt and referred to the Committee on Tax Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 623, 665, and 671 (MCL 206.623, 206.665, and
206.671), section 623 as amended by 2012 PA 414, section 665 as
added by 2011 PA 38, and section 671 as amended by 2011 PA 313.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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, eliminate all of the following:
(i) Income derived from a mineral to the extent included in
federal taxable income.
(ii) Expenses related to the income deductible under
subparagraph (i) to the extent deducted in arriving at federal
taxable income.
(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. For purposes of this subsection, a taxpayer that
acquires the assets of another corporation in a transaction
described under section 381(a)(1) or (2) of the internal revenue
code may deduct any business loss attributable to that distributor
or transferor corporation. 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 and gas" means oil and gas
that is subject to severance tax under 1929 PA 48, MCL 205.301 to
205.317.
Sec. 665. (1) Sales of the taxpayer in this state are
determined as follows:
(a) Sales of tangible personal property are in this state if
the property is shipped or delivered, or, in the case of
electricity and gas, the contract requires the property to be
shipped or delivered, to any purchaser within this state based on
the ultimate destination at the point that the property comes to
rest regardless of the free on board point or other conditions of
the sales. Property stored in transit for 60 days or more prior to
receipt by the purchaser or the purchaser's designee, or in the
case of a dock sale not picked up for 60 days or more, shall be
deemed to have come to rest at this ultimate destination. Property
stored in transit for fewer than 60 days prior to receipt by the
purchaser or the purchaser's designee, or in the case of a dock
sale picked up before 60 days, is not deemed to have come to rest
at this ultimate destination. For purposes of this subdivision:
(i) "Dock sale" means a sale in which the purchaser uses its
own or rented vehicles, or makes arrangements with a carrier, to
pick up the property at the seller's location.
(ii) "Stored in transit" means storing, staging, forwarding, or
consolidating activities undertaken for further shipment or
transfer of the property to the purchaser or purchaser's designee.
(b) Receipts from the sale, lease, rental, or licensing of
real property are in this state if that property is located in this
state.
(c) Receipts from the lease or rental of tangible personal
property are sales in this state to the extent that the property is
utilized in this state. The extent of utilization of tangible
personal property in this state is determined by multiplying the
receipts by a fraction, the numerator of which is the number of
days of physical location of the property in this state during the
lease or rental period in the tax year and the denominator of which
is the number of days of physical location of the property
everywhere during all lease or rental periods in the tax year. If
the physical location of the property during the lease or rental
period is unknown or cannot be determined, the tangible personal
property is utilized in the state in which the property was located
at the time the lease or rental payer obtained possession.
(d) Receipts from the lease or rental of mobile transportation
property owned by the taxpayer are in this state to the extent that
the property is used in this state. The extent to which an aircraft
will be deemed to be used in this state and the amount of receipts
that is to be included in the numerator of this state's sales
factor are determined by multiplying all the receipts from the
lease or rental of the aircraft by a fraction, the numerator of
which is the number of landings of the aircraft in this state and
the denominator of which is the total number of landings of the
aircraft. If the extent of the use of any transportation property
within this state cannot be determined, then the receipts are in
this state if the property has its principal base of operations in
this state.
(e) Royalties and other income received for the use of or for
the privilege of using intangible property, including patents,
know-how, formulas, designs, processes, patterns, copyrights, trade
names, service names, franchises, licenses, contracts, customer
lists, custom computer software, or similar items, are attributed
to the state in which the property is used by the purchaser. If the
property is used in more than 1 state, the royalties or other
income shall be apportioned to this state pro rata according to the
portion of use in this state. If the portion of use in this state
cannot be determined, the royalties or other income shall be
excluded from both the numerator and the denominator. Intangible
property is used in this state if the purchaser uses the intangible
property or the rights to the intangible property in the regular
course of its business operations in this state, regardless of the
location of the purchaser's customers.
(2) Sales from the performance of services are in this state
and attributable to this state as follows:
(a) Except as otherwise provided in this section, all receipts
from the performance of services are included in the numerator of
the apportionment factor if the recipient of the services receives
all of the benefit of the services in this state. If the recipient
of the services receives some of the benefit of the services in
this state, the receipts are included in the numerator of the
apportionment factor in proportion to the extent that the recipient
receives benefit of the services in this state.
(b) Sales derived from securities brokerage services
attributable to this state are determined by multiplying the total
dollar amount of receipts from securities brokerage services by a
fraction, the numerator of which is the sales of securities
brokerage services to customers within this state, and the
denominator of which is the sales of securities brokerage services
to all customers. Receipts from securities brokerage services
include commissions on transactions, the spread earned on principal
transactions in which the broker buys or sells from its account,
total margin interest paid on behalf of brokerage accounts owned by
the broker's customers, and fees and receipts of all kinds from the
underwriting of securities. If receipts from brokerage services can
be associated with a particular customer, but it is impractical to
associate the receipts with the address of the customer, then the
address of the customer shall be presumed to be the address of the
branch office that generates the transactions for the customer.
(c) Sales of services that are derived directly or indirectly
from the sale of management, distribution, administration, or
securities brokerage services to, or on behalf of, a regulated
investment company or its beneficial owners, including receipts
derived directly or indirectly from trustees, sponsors, or
participants of employee benefit plans that have accounts in a
regulated investment company, shall be attributable to this state
to the extent that the shareholders of the regulated investment
company are domiciled within this state. For purposes of this
subdivision, "domicile" means the shareholder's mailing address on
the records of the regulated investment company. If the regulated
investment company or the person providing management services to
the regulated investment company has actual knowledge that the
shareholder's primary residence or principal place of business is
different than the shareholder's mailing address, then the
shareholder's primary residence or principal place of business is
the shareholder's domicile. A separate computation shall be made
with respect to the receipts derived from each regulated investment
company. The total amount of sales attributable to this state shall
be equal to the total receipts received by each regulated
investment company multiplied by a fraction determined as follows:
(i) The numerator of the fraction is the average of the sum of
the beginning-of-year and end-of-year number of shares owned by the
regulated investment company shareholders who have their domicile
in this state.
(ii) The denominator of the fraction is the average of the sum
of the beginning-of-year and end-of-year number of shares owned by
all shareholders.
(iii) For purposes of the fraction, the year shall be the tax
year of the regulated investment company that ends with or within
the tax year of the taxpayer.
(3) Receipts from the origination of a loan or gains from the
sale of a loan secured by residential real property are deemed a
sale in this state only if 1 or more of the following apply:
(a) The real property is located in this state.
(b) The real property is located both within this state and 1
or more other states and more than 50% of the fair market value of
the real property is located within this state.
(c) More than 50% of the real property is not located in any 1
state and the borrower is located in this state.
(4) Interest from loans secured by real property is in this
state if the property is located within this state, if the property
is located both within this state and 1 or more other states and if
more than 50% of the fair market value of the real property is
located within this state, or if more than 50% of the fair market
value of the real property is not located within any 1 state but
the borrower is located in this state. The determination of whether
the real property securing a loan is located within this state
shall be made as of the time the original agreement was made and
any and all subsequent substitutions of collateral shall be
disregarded.
(5) Interest from a loan not secured by real property is in
this state if the borrower is located in this state.
(6) Gains from the sale of a loan not secured by real
property, including income recorded under the coupon stripping
rules of section 1286 of the internal revenue code, are in this
state if the borrower is in this state.
(7) Receipts from credit card receivables, including interest,
fees, and penalties from credit card receivables and receipts from
fees charged to cardholders, such as annual fees, are in this state
if the billing address of the cardholder is in this state.
(8) Receipts from the sale of credit card or other receivables
are in this state if the billing address of the customer is in this
state. Credit card issuer's reimbursements fees are in this state
if the billing address of the cardholder is in this state. Receipts
from merchant discounts, computed net of any cardholder
chargebacks, but not reduced by any interchange transaction fees or
by any issuer's reimbursement fees paid to another for charges made
by its cardholders, are in this state if the commercial domicile of
the merchant is in this state.
(9) Loan servicing fees derived from loans of another secured
by real property are in this state if the real property is located
in this state, if the real property is located both within and
outside of this state and 1 or more states if more than 50% of the
fair market value of the real property is located in this state, or
if more than 50% of the fair market value of the real property is
not located in any 1 state but the borrower is located in this
state. Loan servicing fees derived from loans of another not
secured by real property are in this state if the borrower is
located in this state. If the location of the security cannot be
determined, then loan servicing fees for servicing either the
secured or the unsecured loans of another are in this state if the
lender to whom the loan servicing service is provided is located in
this state.
(10) Receipts from the sale of securities and other assets
from investment and trading activities, including, but not limited
to, interest, dividends, and gains are in this state in either of
the following circumstances:
(a) The person's customer is in this state.
(b) If the location of the person's customer cannot be
determined, both of the following apply:
(i) Interest, dividends, and other income from investment
assets and activities and from trading assets and activities,
including, but not limited to, investment securities; trading
account assets; federal funds; securities purchased and sold under
agreements to resell or repurchase; options; futures contracts;
forward contracts; notional principal contracts such as swaps;
equities; and foreign currency transactions are in this state if
the average value of the assets is assigned to a regular place of
business of the taxpayer within this state. Interest from federal
funds sold and purchased and from securities purchased under resale
agreements and securities sold under repurchase agreements is in
this state if the average value of the assets is assigned to a
regular place of business of the taxpayer within this state. The
amount of receipts and other income from investment assets and
activities is in this state if assets are assigned to a regular
place of business of the taxpayer within this state.
(ii) The amount of receipts from trading assets and activities,
including, but not limited to, assets and activities in the matched
book, in the arbitrage book, and foreign currency transactions, but
excluding amounts otherwise sourced in this section, is in this
state if the assets are assigned to a regular place of business of
the taxpayer within this state.
(11) Receipts from transportation services rendered by a
person subject to tax in another state are in this state and shall
be attributable to this state as follows:
(a) Except as otherwise provided in subdivisions (b) through
(e), receipts shall be proportioned based on the ratio of revenue
miles of the person in this state to the revenue miles of the
person everywhere.
(b) Receipts from maritime transportation services shall be
attributable to this state as follows:
(i) 50% of those receipts that either originate or terminate in
this state.
(ii) 100% of those receipts that both originate and terminate
in this state.
(c) Receipts attributable to this state of a person whose
business activity consists of the transportation both of property
and of individuals shall be proportioned based on the total
receipts for passenger miles and ton mile fractions, separately
computed and individually weighted by the ratio of receipts from
passenger transportation to total receipts from all transportation,
and by the ratio of receipts from freight transportation to total
receipts from all transportation, respectively.
(d) Receipts attributable to this state of a person whose
business activity consists of the transportation of oil by pipeline
shall be proportioned based on the ratio of the receipts for the
barrel miles transported in this state to the receipts for the
barrel miles transported by the person everywhere.
(e) Receipts attributable to this state of a person whose
business activities consist of the transportation of gas by
pipeline shall be proportioned based on the ratio of the receipts
for the 1,000 cubic feet miles transported in this state to the
receipts for the 1,000 cubic feet miles transported by the person
everywhere.
(12) For purposes of subsection (11), if a taxpayer can show
that revenue mile information is not available or cannot be
obtained without unreasonable expense to the taxpayer, receipts
attributable to this state shall be that portion of the revenue
derived from transportation services performed everywhere that the
miles of transportation services performed in this state bear to
the miles of transportation services performed everywhere. If the
department determines that the information required for the
calculations under subsection (11) are not available or cannot be
obtained without unreasonable expense to the taxpayer, the
department may use other available information that in the opinion
of the department will result in an equitable allocation of the
taxpayer's receipts to this state.
(13) Except as provided in subsections (14) through (19),
receipts from the sale of telecommunications service or mobile
telecommunications service are in this state if the customer's
place of primary use of the service is in this state. As used in
this subsection, "place of primary use" means the customer's
residential street address or primary business street address where
the customer's use of the telecommunications service primarily
occurs. For mobile telecommunications service, the customer's
residential street address or primary business street address is
the place of primary use only if it is within the licensed service
area of the customer's home service provider.
(14) Receipts from the sale of telecommunications service sold
on an individual call-by-call basis are in this state if either of
the following applies:
(a) The call both originates and terminates in this state.
(b) The call either originates or terminates in this state and
the service address is located in this state.
(15) Receipts from the sale of postpaid telecommunications
service are in this state if the origination point of the
telecommunication signal, as first identified by the service
provider's telecommunication system or as identified by information
received by the seller from its service provider if the system used
to transport telecommunication signals is not the seller's, is
located in this state.
(16) Receipts from the sale of prepaid telecommunications
service or prepaid mobile telecommunications service are in this
state if the purchaser obtains the prepaid card or similar means of
conveyance at a location in this state. Receipts from recharging a
prepaid telecommunications service or mobile telecommunications
service are in this state if the purchaser's billing information
indicates a location in this state.
(17) Receipts from the sale of private communication services
are in this state as follows:
(a) 100% of the receipts from the sale of each channel
termination point within this state.
(b) 100% of the receipts from the sale of the total channel
mileage between each termination point within this state.
(c) 50% of the receipts from the sale of service segments for
a channel between 2 customer channel termination points, 1 of which
is located in this state and the other is located outside of this
state, which segments are separately charged.
(d) The receipts from the sale of service for segments with a
channel termination point located in this state and in 2 or more
other states or equivalent jurisdictions, and which segments are
not separately billed, are in this state based on a percentage
determined by dividing the number of customer channel termination
points in this state by the total number of customer channel
termination points.
(18) Receipts from the sale of billing services and ancillary
services for telecommunications service are in this state based on
the location of the purchaser's customers. If the location of the
purchaser's customers is not known or cannot be determined, the
sale of billing services and ancillary services for
telecommunications service is in this state based on the location
of the purchaser.
(19) Receipts to access a carrier's network or from the sale
of telecommunications services for resale are in this state as
follows:
(a) 100% of the receipts from access fees attributable to
intrastate telecommunications service that both originates and
terminates in this state.
(b) 50% of the receipts from access fees attributable to
interstate telecommunications service if the interstate call either
originates or terminates in this state.
(c) 100% of the receipts from interstate end user access line
charges, if the customer's service address is in this state. As
used in this subdivision, "interstate end user access line charges"
includes, but is not limited to, the surcharge approved by the
federal communications commission and levied pursuant to 47 CFR 69.
(d) Gross receipts from sales of telecommunications services
to other telecommunication service providers for resale shall be
sourced to this state using the apportionment concepts used for
non-resale receipts of telecommunications services if the
information is readily available to make that determination. If the
information is not readily available, then the taxpayer may use any
other reasonable and consistent method.
(20) Except as otherwise provided under this subsection, for a
taxpayer whose business activities include live radio or television
programming as described in subsector code 7922 of industry group
792 under the standard industrial classification code as compiled
by the United States department of labor or are included in
industry groups 483, 484, 781, or 782 under the standard industrial
classification code as compiled by the United States department of
labor, or any combination of the business activities included in
those groups, media receipts are in this state and attributable to
this state only if the commercial domicile of the customer is in
this state and the customer has a direct connection or relationship
with the taxpayer pursuant to a contract under which the media
receipts are derived. For media receipts from the sale of
advertising, if the customer of that advertising is commercially
domiciled in this state and receives some of the benefit of the
sale of that advertising in this state, the media receipts from the
advertising to that customer are included in the numerator of the
apportionment factor in proportion to the extent that the customer
receives the benefit of the advertising in this state. For purposes
of this subsection, if the taxpayer is a broadcaster and if the
customer receives some of the benefit of the advertising in this
state, the media receipts for that sale of advertising from that
customer shall be proportioned based on the ratio that the
broadcaster's viewing or listening audience in this state bears to
its total viewing or listening audience everywhere. As used in this
subsection:
(a) "Media property" means motion pictures, television
programs, internet programs and websites, other audiovisual works,
and any other similar property embodying words, ideas, concepts,
images, or sound without regard to the means or methods of
distribution or the medium in which the property is embodied.
(b) "Media receipts" means receipts from the sale, license,
broadcast, transmission, distribution, exhibition, or other use of
media property and receipts from the sale of media services. Media
receipts do not include receipts from the sale of media property
that is a consumer product that is ultimately sold at retail.
(c) "Media services" means services in which the use of the
media property is integral to the performance of those services.
(21) Terms used in subsections (13) through (20) have the same
meaning as those terms defined in the streamlined sales and use tax
agreement administered under the streamlined sales and use tax
administration act, 2004 PA 174, MCL 205.801 to 205.833.
(22) For purposes of this section, a borrower is considered
located in this state if the borrower's billing address is in this
state.
Sec. 671. (1) The credit provided in this section shall be
taken before any other credit under this part and is available to
any taxpayer, other than those taxpayers subject to the tax imposed
under chapter 12 or 13, with gross receipts that do not exceed
$20,000,000.00 and with adjusted business income minus the loss
adjustment that does not exceed $1,300,000.00 as adjusted annually
for inflation using the Detroit consumer price index, and subject
to the following:
(a) A corporation or unitary business group is disqualified if
either of the following occurs for the respective tax year:
(i) Compensation and directors' fees of a shareholder or
officer exceed $180,000.00.
(ii) The sum of the following amounts exceeds $180,000.00:
(A) Compensation and directors' fees of a shareholder.
(B) The product of the percentage of outstanding ownership or
of outstanding stock owned by that shareholder multiplied by the
difference between the following:
(I) The sum of business income and, to the extent deducted in
determining federal taxable income, a carryback or a carryover of a
net operating loss or capital loss.
(II) The loss adjustment.
(b) Subject to the reduction percentage determined under
subsection (3), the credit determined under this subsection shall
be reduced by the following percentages in the following
circumstances:
(i) If compensation and directors' fees of a shareholder or
officer are, or if the sum of the amounts in subdivision (a)(ii)(A)
and (B) is, more than $160,000.00 but less than $165,000.00, the
credit is reduced by 20%.
(ii) If compensation and directors' fees of a shareholder or
officer are, or if the sum of the amounts in subdivision (a)(ii)(A)
and (B) is, $165,000.00 or more but less than $170,000.00, the
credit is reduced by 40%.
(iii) If compensation and directors' fees of a shareholder or
officer are, or if the sum of the amounts in subdivision (a)(ii)(A)
and (B) is, $170,000.00 or more but less than $175,000.00, the
credit is reduced by 60%.
(iv) If compensation and directors' fees of a shareholder or
officer are, or if the sum of the amounts in subdivision (a)(ii)(A)
and (B) is, $175,000.00 or more but not in excess of $180,000.00,
the credit is reduced by 80%.
(2) For the purposes of determining disqualification under
subsection (1), both of the following apply:
(a) An active shareholder's share of business income shall not
be attributed to another active shareholder.
(b) If the taxpayer is a unitary business group, the amount of
all items paid or allocable by all persons included in the unitary
business group to any 1 individual who is a shareholder or officer
of a single person included in the unitary business group shall be
combined.
(3) The reduction percentage is the greater of the following:
(a) The reduction percentage based on the compensation and
directors' fees of the shareholder or officer with the greatest
amount of compensation and directors' fees.
(b) The reduction percentage based on the sum of the amounts
in subsection (1)(a)(ii)(A) and (B) for the shareholder or officer
with the greatest sum of the amounts in subsection (1)(a)(ii)(A) and
(B).
(4) A taxpayer that qualifies under subsection (1) is allowed
a credit against the tax imposed under this part. The credit under
this subsection is the amount by which the tax imposed under this
part exceeds 1.8% of adjusted business income.
(5) If gross receipts exceed $19,000,000.00, the credit shall
be reduced by a fraction, the numerator of which is the amount of
gross receipts over $19,000,000.00 and the denominator of which is
$1,000,000.00. The credit shall not exceed 100% of the tax
liability imposed under this part.
(6) For a taxpayer that reports for a tax year less than 12
months, the amounts specified in this section for gross receipts,
adjusted business income, and share of business income shall be
multiplied by a fraction, the numerator of which is the number of
months in the tax year and the denominator of which is 12.
(7) Compensation paid by a professional employer organization
to the officers of the client and to employees of the professional
employer organization who are assigned or leased to and perform
services for the client shall be included in determining
eligibility of the client under this section.
(8) A disqualifier or reduction under subsection (1) applies
to a taxpayer that is a unitary business group if a disqualifier or
reduction applies to any member of a unitary business group.
(9) As used in this section:
(a) "Active shareholder" means a shareholder who receives at
least $10,000.00 in compensation, directors' fees, or dividends
from the business, and who owns at least 5% of the outstanding
stock or other ownership interest.
(b) "Adjusted business income" means business income as
defined in section 603 with all of the following adjustments:
(i) Add compensation and directors' fees of active shareholders
of a corporation.
(ii) Add, to the extent deducted in determining federal taxable
income, a carryback or carryover of a net operating loss.
(iii) Add, to the extent deducted in determining federal taxable
income, a carryback or carryover capital loss.
(iv) Add compensation and directors' fees of officers of a
corporation.
(c) "Client" means an entity whose employment operations are
managed by a professional employer organization.
(d) "Compensation" means all wages, salaries, fees, bonuses,
commissions, and other payments made in the tax year on behalf of
or for the benefit of employees, officers, or directors of the
taxpayers. Compensation includes, but is not limited to, payments
that are subject to or specifically exempt or excepted from
withholding under sections 3401 to 3406 of the internal revenue
code. Compensation also includes, on a cash or accrual basis
consistent with the taxpayer's method of accounting for federal
income tax purposes, payments to a pension, retirement, or profit
sharing plan other than those payments attributable to unfunded
accrued actuarial liabilities, and payments for insurance for which
employees are the beneficiaries, including payments under health
and welfare and noninsured benefit plans and payment of fees for
the administration of health and welfare and noninsured benefit
plans. Compensation does not include any of the following:
(i) Discounts on the price of the taxpayer's merchandise or
services sold to the taxpayer's employees, officers, or directors
that are not available to other customers.
(ii) Except as otherwise provided in this subdivision, payments
to an independent contractor.
(iii) Payments to state and federal unemployment compensation
funds.
(iv) The employer's portion of payments under the federal
insurance contributions act, chapter 21 of subtitle C of the
internal revenue code, 26 USC 3101 to 3128, the railroad retirement
tax act, chapter 22 of subtitle C of the internal revenue code, 26
USC 3201 to 3233, and similar social insurance programs.
(v) Payments, including self-insurance payments, for worker's
compensation insurance or federal employers' liability act
insurance pursuant to 45 USC 51 to 60.
(e) "Detroit consumer price index" means the most
comprehensive index of consumer prices available for the Detroit
area from the United States department of labor, bureau of labor
statistics.
(f) "Loss adjustment" means the amount by which adjusted
business income was less than zero in any of the 5 tax years
immediately preceding the tax year for which eligibility for the
credit under this section is being determined. In determining the
loss adjustment for a tax year, a corporation is not required to
use more of the taxpayer's total negative adjusted business income
than the amount needed to qualify the corporation for the credit
under this section. A corporation shall not be considered to have
used any portion of the taxpayer's negative adjusted business
income amount unless the portion used is necessary to qualify for
the credit under this section. A corporation shall not reuse a
negative adjusted business income amount used as a loss adjustment
in a previous tax year or use a negative adjusted business income
amount from a year in which the corporation did not receive the
credit under this section.
(g) "Officer" means an officer of a corporation including all
of the following:
(i) The chairperson of the board.
(ii) The president, vice president, secretary, or treasurer of
the corporation or board.
(iii) Persons performing similar duties and responsibilities to
persons described in subparagraphs (i) and (ii), that include, at a
minimum, major decision making.