HOUSE BILL NO. 5101

October 05, 2023, Introduced by Reps. Rogers, Hoskins, Hood, Morse, Martus, Grant, Tsernoglou, Rheingans, Pohutsky, O'Neal, Andrews, Byrnes, Conlin and Puri and referred to the Committee on Economic Development and Small Business.

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.847) by adding sections 277a and 677a.

the people of the state of michigan enact:

Sec. 277a. (1) The Michigan strategic fund is authorized to enter into agreements to provide tax credits available under this section to support projects that have the potential for significant technological advancements, job creation, and positive economic impact.

(2) Subject to the limitations under this section, for tax years beginning on and after January 1, 2024, a taxpayer that is an authorized business with less than 250 employees may claim a credit against the tax imposed under this part equal to 15% of the taxpayer's research and development expenses that are in excess of the base amount as certified by the Michigan strategic fund. The credit allowed under this section must not exceed $250,000.00 per tax year per taxpayer or $1,000,000.00 over 7 tax years per taxpayer as agreed to and certified by the Michigan strategic fund. A taxpayer shall not claim a credit under this section for more than 7 tax years under the same written agreement.

(3) The Michigan strategic fund shall not authorize more than $100,000,000.00 in total research and development tax credits for a single calendar year. To the extent the Michigan strategic fund receives applications from eligible businesses with less than 250 employees, not less than $25,000,000.00 of the $100,000,000.00 each calendar year must be approved for those eligible businesses.

(4) For a taxpayer who is a member of a flow-through entity that qualifies for the credit under this section, that taxpayer may claim a credit against the member's tax liability under this part based on the member's distributive share of business income reported from that flow-through entity or an alternative method approved by the department.

(5) A taxpayer shall not claim a credit under this section unless the Michigan strategic fund has issued a certificate to the taxpayer. The taxpayer shall attach the certificate to the annual return filed under this part on which a credit under this section is claimed. The certificate required by this subsection shall state all of the following:

(a) The taxpayer is an authorized business.

(b) The amount of the credit under this section for the authorized business for the designated tax year.

(c) The taxpayer's federal employer identification number or the Michigan department of treasury number assigned to the taxpayer.

(6) The credit allowed under this section must be claimed after all allowable nonrefundable credits under this part. If the amount of the credit allowed under this section exceeds the tax liability of the taxpayer for the tax year, that portion of the credit that exceeds the tax liability of the taxpayer for the tax year must be refunded.

(7) As used in this section:

(a) "Authorized business", "base amount", "eligible business", "research and development expenses", "research and development tax credits", and "written agreement" mean those terms as defined in section 90u of the Michigan strategic fund act, 1984 PA 270, MCL 125.2090u.

(b) "Michigan strategic fund" means the Michigan strategic fund created under the Michigan strategic fund act, 1984 PA 270, MCL 125.2001 to 125.2094.

Sec. 677a. (1) The Michigan strategic fund is authorized to enter into agreements to provide tax credits available under this section to support projects that have the potential for significant technological advancements, job creation, and positive economic impact.

(2) Subject to the limitations under this section, for tax years beginning on and after January 1, 2024, a taxpayer that is an authorized business with less than 250 employees may claim a credit against the tax imposed under this part equal to 15% of the taxpayer's research and development expenses that are in excess of the base amount as certified by the Michigan strategic fund. The credit allowed under this section must not exceed $250,000.00 per tax year per taxpayer or $1,000,000.00 over 7 tax years per taxpayer as agreed to and certified by the Michigan strategic fund. A taxpayer shall not claim a credit under this section for more than 7 tax years under the same written agreement.

(3) The Michigan strategic fund shall not authorize more than $100,000,000.00 in total research and development tax credits for a single calendar year. To the extent the Michigan strategic fund receives applications from eligible businesses with less than 250 employees, not less than $25,000,000.00 of the $100,000,000.00 each calendar year must be approved for those eligible businesses.

(4) A taxpayer shall not claim a credit under this section unless the Michigan strategic fund has issued a certificate to the taxpayer. The taxpayer shall attach the certificate to the annual return filed under this part on which a credit under this section is claimed. The certificate required by this subsection shall state all of the following:

(a) The taxpayer is an authorized business.

(b) The amount of the credit under this section for the authorized business for the designated tax year.

(c) The taxpayer's federal employer identification number or the Michigan department of treasury number assigned to the taxpayer.

(5) The credit allowed under this section must be claimed after all allowable nonrefundable credits under this part. If the amount of the credit allowed under this section exceeds the tax liability of the taxpayer for the tax year, that portion of the credit that exceeds the tax liability of the taxpayer for the tax year must be refunded.

(6) As used in this section:

(a) "Authorized business", "base amount", "eligible business", "research and development expenses", "research and development tax credits", and "written agreement" mean those terms as defined in section 90u of the Michigan strategic fund act, 1984 PA 270, MCL 125.2090u.

(b) "Michigan strategic fund" means the Michigan strategic fund created under the Michigan strategic fund act, 1984 PA 270, MCL 125.2001 to 125.2094.

Enacting section 1. This amendatory act does not take effect unless all of the following bills of the 102nd Legislature are enacted into law:

(a) Senate Bill No.____ or House Bill No. 5100 (request no. 03343'23).

(b) Senate Bill No.____ or House Bill No. 5099 (request no. 04141'23).

(c) Senate Bill No.____ or House Bill No. 5102 (request no. 04159'23).