February 25, 2004, Introduced by Senator THOMAS and referred to the Committee on Finance.
A bill to amend 1975 PA 228, entitled
"Single business tax act,"
by amending section 39e (MCL 208.39e), as amended by 2002 PA
622.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 39e. (1) A taxpayer may claim a credit against the tax
2 imposed by this act for 1 or more of the following as
3 applicable:
4 (a) The credit allowed under subsection (2).
5 (b) The credit allowed under subsection (6).
6 (2) For tax years that begin after December 31, 2002, a
7 taxpayer that is certified under the Michigan next energy
8 authority act, 2002 PA 593, MCL 207.821 to 207.827, as an
9 eligible taxpayer may claim a nonrefundable credit for the tax
10 year equal to the amount determined under subdivision (a) or (b),
1 whichever is less:
2 (a) The amount by which the taxpayer's tax liability
3 attributable to qualified business activity for the tax year
4 exceeds the taxpayer's baseline tax liability attributable to
5 qualified business activity.
6 (b) For tax years that begin after December 31, 2002, 10% of
7 the amount by which the taxpayer's adjusted qualified business
8 activity performed in this state outside of a renaissance zone
9 for the tax year exceeds the taxpayer's adjusted qualified
10 business activity performed in this state outside of a
11 renaissance zone for the 2001 tax year.
12 (3) For any tax year in which the eligible taxpayer's tax
13 liability attributable to qualified business activity for the tax
14 year does not exceed the taxpayer's baseline tax liability
15 attributable to qualified business activity, the eligible
16 taxpayer shall not claim the credit allowed under
17 subsection (2).
18 (4) An affiliated group as defined in this act, a controlled
19 group of corporations as defined in section 1563 of the internal
20 revenue code and further
described in 26 C.F.R. CFR 1.414(b)-1
21 and 1.414(c)-1 to 1.414(c)-5, or an entity under common control
22 as defined by the internal revenue code shall not take the credit
23 allowed under subsection (2) unless the qualified business
24 activity of the group or entities is consolidated.
25 (5) A taxpayer that claims a credit under subsection (2)
26 shall attach a copy of each of the following as issued pursuant
27 to the Michigan next energy authority act, 2002 PA 593,
1 MCL 207.821 to 207.827, to the annual return required under this
2 act for each tax year in which the taxpayer claims the credit
3 allowed under subsection (2):
4 (a) The proof of certification that the taxpayer is an
5 eligible taxpayer for the tax year.
6 (b) The proof of certification of the taxpayer's tax
7 liability attributable to qualified business activity for the tax
8 year.
9 (c) The proof of certification of the taxpayer's baseline tax
10 liability attributable to qualified business activity.
11 (6) For tax years that begin after December 31, 2002, a
12 taxpayer that is a qualified alternative energy entity may claim
13 a credit for the taxpayer's qualified payroll amount. A taxpayer
14 shall claim the credit under this subsection after all allowable
15 nonrefundable credits under this act.
16 (7) If the credit allowed under subsection (6) exceeds the
17 tax liability of the taxpayer for the tax year, that portion of
18 the credit that exceeds the tax liability shall be refunded.
19 (8) Notwithstanding any other provision of this act and
20 except as provided in this subsection, for tax years that begin
21 after December 31, 2002, a person whose apportioned or allocated
22 gross receipts are less than $350,000.00 for the tax year need
23 not file a return or pay the tax as provided under this act.
24 However, for tax years that begin after December 31, 2004, if a
25 person is engaged in the person's first or second year of
26 business activity in this state and the person's apportioned or
27 allocated gross receipts are less than $500,000.00 for the tax
1 year, the person need not file a return or pay the tax as
2 provided under this act.
3 (9) As used in this section:
4 (a) "Adjusted qualified business activity performed in this
5 state outside of a renaissance zone" means either of the
6 following:
7 (i) Except as provided in subparagraph (ii), the taxpayer's
8 payroll for qualified business activity performed in this state
9 outside of a renaissance zone.
10 (ii) For a partnership, limited liability company,
11 S corporation, or individual, the amount determined under
12 subparagraph (i) plus the product of the following as related to
13 the taxpayer:
14 (A) Business income.
15 (B) The apportionment factor as determined under chapter 3.
16 (C) The alternative energy business activity factor.
17 (b) "Alternative energy business activity factor" means a
18 fraction the numerator of which is the ratio of the value of the
19 taxpayer's property used for qualified business activity and
20 located in this state outside of a renaissance zone for the year
21 for which the factor is being calculated to the value of all of
22 the taxpayer's property located in this state for that year plus
23 the ratio of the taxpayer's payroll for qualified business
24 activity performed in this state outside of a renaissance zone
25 for that year to all of the taxpayer's payroll in this state for
26 that year and the denominator of which is 2.
27 (c) "Alternative energy marine propulsion system",
1 "alternative energy system", "alternative energy vehicle", and
2 "alternative energy technology" mean those terms as defined in
3 the Michigan next energy authority act, 2002 PA 593, MCL 207.821
4 to 207.827.
5 (d) "Alternative energy zone" means a renaissance zone
6 designated as an alternative energy zone by the board of the
7 Michigan strategic fund under section 8a of the Michigan
8 renaissance zone act, 1996 PA 376, MCL 125.2688a.
9 (e) "Baseline tax liability attributable to qualified
10 business activity" means the taxpayer's tax liability for the
11 2001 tax year multiplied by the taxpayer's alternative energy
12 business activity factor for the 2001 tax year. A taxpayer with
13 a 2001 tax year of less than 12 months shall annualize the amount
14 calculated under this subdivision as necessary to determine
15 baseline tax liability attributable to qualified business
16 activity that reflects a 12-month period.
17 (f) "Eligible taxpayer" means a taxpayer that has proof of
18 certification of qualified business activity under the Michigan
19 next energy authority act, 2002 PA 593, MCL 207.821 to 207.827.
20 (g) "Payroll" means total salaries and wages before deducting
21 any personal or dependency exemptions.
22 (h) "Qualified alternative energy entity" means a taxpayer
23 located in an alternative energy zone.
24 (i) "Qualified business activity" means research,
25 development, or manufacturing of an alternative energy marine
26 propulsion system, an alternative energy system, an alternative
27 energy vehicle, alternative energy technology, or renewable
1 fuel.
2 (j) "Qualified employee" means an individual who is employed
3 by a qualified alternative energy entity, whose job
4 responsibilities are related to the research, development, or
5 manufacturing activities of the qualified alternative energy
6 entity, and whose regular place of employment is within an
7 alternative energy zone.
8 (k) "Qualified payroll amount" means an amount equal to
9 payroll of the qualified alternative energy entity attributable
10 to all qualified employees in the tax year of the qualified
11 alternative energy entity for which the credit under
12 subsection (6) is being claimed, multiplied by the tax rate for
13 that tax year.
14 (l) "Renaissance zone" means a renaissance zone designated
15 under the Michigan renaissance zone act, 1996 PA 376,
16 MCL 125.2681 to 125.2696.
17 (m) "Renewable fuel" means 1 or more of the following:
18 (i) Biodiesel or biodiesel blends containing at least
19 20% biodiesel. As used in this subparagraph, "biodiesel" means a
20 diesel fuel substitute consisting of methyl or ethyl esters
21 produced from the transesterification of animal or vegetable fats
22 with methanol or ethanol.
23 (ii) Biomass. As used in this subparagraph, "biomass" means
24 residues from the wood and paper products industries, residues
25 from food production and processing, trees and grasses grown
26 specifically to be used as energy crops, and gaseous fuels
27 produced from solid biomass, animal wastes, municipal waste, or
1 landfills.
2 (n) "Tax liability attributable to qualified business
3 activity" means the taxpayer's tax liability multiplied by the
4 taxpayer's alternative energy business activity factor for the
5 tax year.
6 (o) "Tax rate" means the rate imposed under sections 51, 51d,
7 and 51e of the income tax act of 1967, 1967 PA 281, MCL 206.51,
8 206.51d, and 206.51e, annualized as necessary, for the tax year
9 in which the qualified alternative energy entity claims a credit
10 under subsection (6).