March 21, 2017, Introduced by Rep. Kosowski and referred to the Committee on Tax Policy.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 500 (MCL 208.1500), as amended by 2016 PA 426.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 500. (1) Except as otherwise provided in this section, a
taxpayer described under section 117(5)(a) or under section 680 of
the income tax act of 1967, 1967 PA 281, MCL 206.680, that
voluntarily elects for the taxpayer's first tax year ending after
December 31, 2011 to file a return and pay the tax imposed by this
act in order to claim a certificated credit or any unused
carryforward for that tax year shall continue to file a return and
pay the tax imposed under this act for each tax year thereafter
until that certificated credit and any carryforward from that
credit is used up. Except as otherwise provided under subsection
(7), if a person awarded a certificated credit is a member of a
unitary business group, the unitary business group, and not the
member, shall file a return and pay the tax, if any, under this act
and claim the certificated credit. Except as otherwise provided
under subsection (7), if the taxpayer that elects to file a return
and pay the tax imposed by this act in order to claim a
certificated credit or any unused carryforward of that credit for
that tax year is a unitary business group, the return filed by the
unitary business group shall include all persons included in the
unitary business group regardless of whether that person is
incorporated. Notwithstanding any other provision of this act or
part 2 or 3 of the income tax act of 1967, 1967 PA 281, MCL 206.601
to 206.713, in the case of a flow-through entity that has made an
election under this section, each member of the flow-through entity
that does not file as a member of a unitary business group with the
flow-through entity shall disregard all items attributable to that
member's ownership interest in the electing flow-through entity for
all purposes of part 2 of the income tax act of 1967, 1967 PA 281,
MCL 206.601 to 206.699, and the electing flow-through entity shall
not be subject to the tax withholding provisions of section 703(4)
of the income tax act of 1967, 1967 PA 281, MCL 206.703, with
respect to its members that are corporations.
(2) A taxpayer with a certificated credit under section 435 or
437, which certificated credit or any unused carryforward may be
claimed in a tax year ending after December 31, 2011 may elect to
pay the tax imposed by this act in the tax year in which that
certificated credit may be claimed in lieu of the tax imposed under
part 2 of the income tax act of 1967, 1967 PA 281, MCL 206.601 to
206.699. If a person with a certificated credit under section 435
or 437 that elects under this subsection to pay the tax imposed by
this act is a member of a unitary business group, the unitary
business group, and not the member, shall file a return and pay the
tax, if any, under this act and claim that certificated credit.
(3) A taxpayer with a certificated credit under section 435 or
437 that elects under subsection (2) after the taxpayer's first tax
year ending after December 31, 2011 to pay the tax imposed by this
act may claim any other certificated credit that taxpayer would be
eligible for in the year in which the taxpayer claims a
certificated credit under section 435 or 437, but not any
certificated credit that would have accrued in any year before the
election under subsection (2). A taxpayer with a certificated
credit under section 437(10) that elects under subsection (2) after
the taxpayer's first tax year after December 31, 2011 to pay the
tax imposed by this act shall continue to file a return and pay the
tax imposed under this act for each tax year thereafter until the
certificated credit under section 437(10) is complete and that
credit is used up. When the taxpayer's certificated credit under
section 435 or 437 that was the basis for the taxpayer's election
under subsection (2) is extinguished, the taxpayer is no longer
eligible to pay the tax under this act and may no longer claim any
other remaining certificated credits.
(4) For tax years that begin after December 31, 2011, a
taxpayer's tax liability under this act, after application of all
credits, deductions, and exemptions, shall be the greater of the
following:
(a) The amount of the taxpayer's tax liability under this act,
notwithstanding the calculation required under this section, after
application of all credits, deductions, and exemptions and any
carryforward of any unused credit as prescribed in this act.
(b) An amount equal to the taxpayer's tax liability as
computed pursuant to part 2 of the income tax act of 1967, 1967 PA
281, MCL 206.601 to 206.699, after application of all credits,
deductions, and exemptions under part 2 of the income tax act of
1967, 1967 PA 281, MCL 206.601 to 206.699, as if the taxpayer were
subject to the tax imposed under part 2 of the income tax act of
1967, 1967 PA 281, MCL 206.601 to 206.699, less the amount of the
taxpayer's certificated credits, including any unused carryforward
of a certificated credit, that the taxpayer was allowed to claim
for the tax year under this act. However, in calculating the amount
under this subdivision, the following apply:
(i) A taxpayer described under section 117(5)(a) shall not
include a deduction for any business loss under section 623(4) of
the income tax act of 1967, 1967 PA 281, MCL 206.623, for any prior
year in which the taxpayer was not subject to the tax levied under
this act.
(ii) A taxpayer shall not include any nonrefundable
certificated credit to the extent that credit exceeds the
taxpayer's tax liability. Any nonrefundable credit remaining after
application of the limitation in this subparagraph may be carried
forward.
(iii) For a taxpayer that is 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.
(5) If the result of the calculation under subsection (4) is
negative, the taxpayer shall be refunded that amount.
(6) A taxpayer with a certificated credit under subsection (7)
or section 435 or 437 that elects to pay the tax under this act may
elect to claim a refundable credit as provided under section 510.
If a refundable credit is claimed under section 510, that credit
shall not be used to calculate a taxpayer's tax liability under
subsection (4).
(7) Subject to the limitations provided under this subsection,
a taxpayer that is a member of a unitary business group and that
has a certificated credit under sections 431 and 434(2) and (5) is
not required to file a combined return as a unitary business group
and may elect to file a separate return and pay the tax, if any,
under this act and claim the certificated credit under section
434(5) as provided under this subsection. A taxpayer that elects to
file a separate return as provided under this subsection and redeem
a voucher certificate under a voucher agreement entered pursuant to
this subsection and proceeding from an agreement entered pursuant
to section 434(5) for an amount equal to the employment expenses
and related engineering product development and administrative
costs for the support of integrated battery cells, anodes and
cathodes, and cell assembly shall create an additional 100 new jobs
in this state, for a total of 400 new jobs, and the maximum
allowable amount redeemed under this subsection or under section
510 shall not exceed $25,000,000.00 per year for no more than 3
years. A taxpayer that elects to file as provided under this
subsection and redeem a voucher certificate under a voucher
agreement entered pursuant to this subsection and proceeding from
an agreement entered pursuant to section 434(5) shall not claim a
credit for any agreement entered pursuant to section 431 or 434(2).
(8) A taxpayer with a certificated credit granted under
section 36109 of the natural resources and environmental protection
act, 1994 PA 451, MCL 324.36109, which certificated credit had been
claimed in a previous tax year under part 1 of the income tax act
of 1967, 1967 PA 281, MCL 206.1 to 206.532, but that certificated
credit is no longer eligible to be claimed under part 1 of the
income tax act of 1967, 1967 PA 281, MCL 206.1 to 206.532, as a
result of the death occurring after December 31, 2011 of an
individual farmland owner, or an individual considered the farmland
owner under section 36109(1)(d) of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.36109, and the
transfer of the ownership of the farmland property subject to the
farmland development rights agreement upon which that certificated
credit is based into an estate or trust, may elect to pay the tax
imposed by this act in the first tax year in which that
certificated credit may be claimed under this act. A taxpayer that
elects under this subsection to pay the tax imposed by this act
shall continue to file a return and pay the tax imposed under this
act for each tax year thereafter until the certificated credit
granted under section 36109 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.36109, is
complete and that credit is used up, or the taxpayer no longer owns
the property subject to the agreement, whichever occurs first. When
the taxpayer's certificated credit under section 36109 of the
natural resources and environmental protection act, 1994 PA 451,
MCL 324.36109, that was the basis for the taxpayer's election under
this subsection is extinguished, or the taxpayer no longer owns
that property under the agreement, whichever occurs first, the
taxpayer is no longer eligible to pay the tax under this act and
may no longer claim any other remaining certificated credits.
(9) Beginning on and after the effective date of the
amendatory act that added this subsection, a taxpayer shall claim a
certificated credit in the same tax year that the certificated
credit was certified. However, if a taxpayer holds a certificated
credit that was certified before the effective date of the
amendatory act that added this subsection, in order to claim that
certificated credit, the taxpayer shall provide the department with
at least a 90-day notice before submitting that certificated credit
with its annual return filed under this act.