HB 5991

HOUSE BILL NO. 5991
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 701, 703, and 843 (MCL 206.701,
206.703, and 206.843), section 701 as amended by 2024 PA 177, section 703 as
amended by 2016 PA 158, and section 843 as added by 2021 PA 135, and by adding
sections 285 and 678.
the people of the state of michigan enact:
Sec. 285. (1) As
used in this section and section 678:
(a)
"Accredited production certificate" or "APC" means the
approval certificate issued by the office certifying that the production
proposed in the application is a qualified production.
(b)
"Agreed-upon procedures" means the instructions and procedures
provided by the office to be performed by a certified public accountant for the
determination and attestation of the amount of qualified production
expenditures, qualified probationary Michigan vendor expenditures, and
qualified personnel expenditures of a qualified production.
(c) "Applicant"
means a taxpayer that is engaged in the business of producing qualified
productions and owns the copyright to the qualified production during the
production period or that is authorized by, or has a contract with, the copyright
holder. Applicant does not include an entity that is more than 30% owned,
affiliated, or controlled by an entity or individual who is in default on a
loan made by this state, a loan guaranteed by this state, or a loan made or
guaranteed by any other state.
(d) "Approved
logos" means "Filmed in Michigan", "Pure Michigan",
"Michigan Film Industry Association", and "Michigan Film &
Digital Media Office" logos approved by the office.
(e) "Certified
public accountant" means an individual licensed as a certified public
accountant under article 7 of the occupational code, 1980 PA 299, MCL 339.720
to 339.736.
(f) "Commence
work" means the date on which filming, taping, photographing, sound
recording, or any other form of digital capturing for the qualified production
begins in this state, including any preparation activity necessary to start
filming, taping, photographing, sound recording, or capturing digitally. For
purposes of an animated or computer-generated production, the commence work
date is the date the creation of the artwork to be used in actual frames or
images of the qualified production begins in this state.
(g)
"Commercial domicile" means a physical place from which the trade or
business of the person is directed or managed.
(h)
"Completion" means the point at which all postproduction activities
are done, but prior to the actual distribution, display, or presentation of the
qualified production.
(i)
"Digital interactive media" means, except as provided under
subdivision (j), products or platforms that satisfy each of the following:
(i) Are intended for commercial production, use, or
distribution.
(ii) Contain at least 2 of the following types of data:
(A) Text.
(B) Sound.
(C) Fixed
or animated images.
(D) Video.
(E) 3-D
geometry.
(iii) Are digital and interactive. As used in this
subparagraph:
(A)
"Digital" means a system that uses discrete and discontinuous values
ordinarily symbolized numerically to represent information for input,
processing, transmission, and storage. Digital includes, but is not limited to,
information input, processed, transmitted, and stored via the internet.
(B)
"Digital media system" means communications delivered via electronic
energy that stores, transmits, or receives the information in digital form.
(C)
"Interactive" means a digital media system for inputting, processing,
transmitting, or storing information or data in which users of the system are
able to respond to the digital media system by inputting, transmitting,
processing, or storing information or data in response to the information or
data provided to the users through the digital media system.
(D)
"Interactive media" means communication tools used to store,
transmit, distribute, and deliver information and data. Interactive media
includes, but is not limited to, methods and mechanisms for information
distribution through distributed networks, such as the internet, and through
compact disc, CD-ROM, various types of DVD, and other removable storage drives
and devices. Digital interactive media includes, but is not limited to, video
or interactive games, simulation software, interactive educational or training
products, software applications that provide connectivity and communications
between mobile devices and digital interactive media web platforms, and other
technology designed to stream live or prerecorded video content over the
internet to large simultaneous audiences.
(j) Digital
interactive media does not include any of the following:
(i) Software designed and developed primarily for internal or
operational purposes of the company.
(ii) Internet sites designed to provide information about an
individual, business, company, firm, organization, or other entity.
(iii) Gambling games regulated under the Michigan Gaming
Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.
(k) "Economic impact data"
means data related to the types of jobs created and retained in this state by
the applicant during the qualified production and the amount spent to produce
the qualified production in this state during the production period. The
economic impact data must be broken down as follows:
(i) Number of entry-level positions.
(ii) Number of management-related positions.
(iii) Number of talent positions.
(iv) Number of production staff and crew.
(v) Number of qualified Michigan vendor-related positions.
(vi) Number of workday hires.
(vii) Number of postproduction, including visual effects,
vendor-related positions.
(viii) The amount of qualified production expenditures,
qualified probationary Michigan vendor expenditures, and qualified personnel
expenditures attributable to labor and vendors, respectively.
(ix) The amount of any other expenditures incurred for the
qualified production.
(l) "Entry-level position" means the lowest level
of a hierarchy in a production, including untrained or unskilled employees.
(m) "Full-time
employee" means a job performed for 35 hours or more each week by an
individual.
(n) "Independent
contractor" means an individual who is self-employed and whose earnings
for services are subject to self-employment tax and the payer of the services
has the right only to control or direct the result of the work, not what will
be done or how it will be done.
(o) "Inventory"
means the stock of goods held for resale in the ordinary course of trade of a
business. Inventory includes personal property under lease or principally
intended for lease rather than sale or property allowed a deduction or
allowance for depreciation or depletion under the internal revenue code.
(p) "Loan
out company" means a personal service corporation or other legal entity
that is contracted to provide specified individual personnel, including, but
not limited to, artists, crew, actors, producers, or directors, for the
performance of services directly in a qualified production. Loan out company
does not include an entity hired on the production to provide goods or
ancillary services for a qualified production such as catering, construction,
trailers, equipment, or transportation.
(q) "Location
fees" means a payment made to an individual or entity for the use of
property that is located in this state and subject to the levy of tax under the
general property tax act, 1893 PA 206, MCL 211.1 to 211.155.
(r) "Michigan
film and digital media office" or "office" means the office
created under section 29a of the Michigan strategic fund act, 1984 PA 270, MCL
125.2029a.
(s) "Michigan
film promotion fund" means the fund created under section 29d of the
Michigan strategic fund act, 1984 PA 270, MCL 125.2029d.
(t) "Obscene
matter or an obscene performance" means matter described in 1984 PA 343,
MCL 752.361 to 752.374.
(u) "Personal
service corporation" means that term as defined under section 269A of the
internal revenue code and includes any other entity, including a sole
proprietorship or independent contractor, that meets the principal activity and
ownership requirements established for a personal service corporation under
section 269A(b) of the internal revenue code.
(v) "Production
period" means the time period between the greenlighting of a qualified
production and the completion of the qualified production. Production period
includes the preproduction, production, and postproduction time frames, but
does not include the time to develop or acquire rights to produce the qualified
production or the time to market, promote, or distribute the qualified
production. As used in this subdivision:
(i) "Greenlighting" means the moment at which a studio
or producer approves a project to move forward into preproduction and commits
to the budgeting process.
(ii) "Postproduction" means the phase of production
that follows production and occurs before completion.
(iii) "Preproduction" means the phase of production after
greenlighting and before production begins.
(iv) "Production" means the phase of production that
follows preproduction and is the phase in which the bulk of the physical
activities associated with the filming, recording, image capturing, or computer
generating of an image or images of the qualified production takes place and
occurs before postproduction.
(w) "Production
staff and crew" means the individuals who perform activities and services
attributable to the qualified production during the preproduction, production,
and postproduction phases. Production staff and crew includes any individual
who is an employee of the applicant, an independent contractor, a vendor, or a
contracted individual from a loan out company that performs activities or
services attributable to the qualified production.
(x) "Qualified
Michigan vendor" means a business that satisfies each of the following:
(i) Has commercial domicile in this state or is incorporated
or registered to do business in this state, prior to commencing work on the
qualified production.
(ii) Has at least 1 physical location in this state and has
been doing business for at least 6 months before the date of the APC.
(iii) For a vendor engaged in the
business of selling or renting equipment, maintains like-kind inventory in
this state on a continuous basis and has at least 1 full-time employee in this
state.
(iv) Is subject to the levy of taxes under this act, the
general property tax act, 1893 PA 206, MCL 211.1 to 211.155, and the general
sales tax act, 1933 PA 167, MCL 205.51 to 205.78.
(y) "Qualified
personnel expenditure" means any payments and wages paid or incurred by
the applicant or a loan out company on behalf of the applicant, or both, up to
$500,000.00 per individual, for each resident and nonresident individual who
performs services in this state directly attributable to the qualified
production, including both of the following:
(i) Payment of wages subject to withholding under this act.
(ii) Payments to a loan out company by an applicant or an
applicant's authorized payroll service company that have met the withholding
tax obligations of this act and as required under this subparagraph. The
applicant, or its authorized payroll service company, shall withhold a personal
income tax at the rate prescribed under section 51 on all payments to loan out
companies for services performed in this state. Any amounts withheld under this
subparagraph are deemed to have been withheld by the loan out company on wages
paid to its employees for services performed in this state. The amounts so
withheld must be allocated to the loan out company's employees based on the
payments made to the loan out company's employees for services performed in
this state. For purposes of this subdivision and notwithstanding any other
provision of this act, loan out company nonresident employees performing
services in this state are taxable nonresidents and the loan out company is
subject to taxation under this act in the taxable year in which the loan-out
company's employees perform services in this state.
(z) "Qualified
probationary Michigan vendor" means a Michigan vendor that satisfies each
of the requirements to be a qualified Michigan vendor except that the vendor has
only been doing business in this state for less than 6 months before the date
of the APC and if that vendor is engaged in the business of selling or renting
equipment does not have at least 1 full-time employee in this state.
(aa) "Qualified
probationary Michigan vendor expenditure" means a production expenditure
made in this state to a qualified probationary Michigan vendor that would have
been a qualified production expenditure if the qualified probationary Michigan
vendor was a qualified Michigan vendor.
(bb) "Qualified
production" means single media or multimedia content created in whole or
in part in this state for distribution or exhibition by any means and media in
any digital interactive media, film, sound recording platform, still images,
streaming platform, or videotape, including, but not limited to, a motion
picture, a documentary, a television series, a television miniseries, a
television special, interstitial television programming, long-form television,
interactive television, pay-per-view television, music videos, advertising commercials,
commercial photography, industrials, short films, web-based content, an
internet video, a video, motion capture, animation, a video game, a reality production,
a travel documentary, and sound recordings for release as a single or in an album,
or for use in film, commercials, streaming, music videos, television,
documentaries, short films, travel documentaries, sound designs, digital
interactive media, or reality productions. Qualified production also includes
any trailer, pilot, video teaser, or demo created primarily to stimulate the
sale, marketing, promotion, or exploitation of future investment in a
production. Qualified production does not include any of the following:
(i) A production for which records are required to be
maintained with respect to any performer in the production under 18 USC 2257.
(ii) A production that includes obscene matter or an obscene
performance.
(iii) A production that primarily consists of televised news or
current events.
(iv) A production that primarily consists of a live sporting
event.
(v) A production that primarily consists of political
advertising.
(vi) A radio program.
(vii) A weather show.
(viii) A financial market report.
(ix) A talk show.
(x) A game show.
(xi) An awards show or other gala event production.
(xii) A production with the primary purpose of fund-raising.
(cc) "Qualified
production expenditure" means an expenditure made during the production
period in this state to a qualified Michigan vendor that is directly
attributable to the qualified production and that is a transaction subject to
taxation under the general sales tax act, 1933 PA 167, MCL 205.51 to 205.78. Qualified
production expenditure does not include any pass-through transactions or
purchases made from a qualified Michigan vendor for any goods or services that
are not within the ordinary course of business of that qualified Michigan
vendor. Qualified production expenditures paid to a qualified Michigan vendor
include, but are not limited to, the purchase, lease, or use of tangible
personal property in this state during the production period of the qualified
production or to acquire services performed in this state that are directly
attributable to the qualified production. Qualified production expenditure does
not include the purchase of tangible assets if those assets retain residual
value or are not fully consumed by the qualified production during the
production period. Except as specifically provided under subparagraph (vi), qualified production expenditure does not include an
expenditure related to the acquisition or licensing of content used in the
qualified production. Qualified production expenditure includes, but is not
limited to, all of the following:
(i) Rental or use of facilities or equipment, use of
soundstages or studios, location fees, and related services and materials to
the extent those tangible assets are used in this state for the qualified
production.
(ii) Use of vehicles for transportation in this state directly
attributable to production of a qualified production, but does not include the
chartering of aircraft for transportation. For purposes of this subparagraph,
use of vehicles includes fuel costs incurred in this state.
(iii) Commercial airfare for domestic travel to and from this
state or within this state directly attributable to production or distribution
of a qualified production. In calculating expenditures under this subparagraph,
commercial airfare expenditures are limited to 2 roundtrip economy class fares
per individual, per qualified production. For purposes of this subparagraph and
subparagraph (ii), in determining qualified
production expenditures, if an individual booked first class or business class
airfare, the amount allowed to be included as a qualified production
expenditure must not exceed the amount charged for economy class on that same
roundtrip.
(iv) Insurance coverage or bonding if purchased from an
insurance agent based in this state.
(v) Postproduction costs directly related to the qualified
production during the production period for, but not limited to, animation,
dailies, digital intermediate color grading, editing, Foley recording,
automatic dialogue replacement, sound recording, sound editing, mixing, or
mastering, special or visual effects including computer-generated imagery or
other effects, scoring and music editing, beginning and end credits, negative
processing and cutting, soundtrack production, dubbing, subtitling, or addition
of sound or visual effects.
(vi) Up to $100,000.00 paid for licensed footage or music in
this state per qualified production.
(vii) Video games.
(viii) Sound recordings, music sound designs, or music scores.
(ix) Digital interactive media.
(dd) "Resident"
means an individual who is domiciled in this state and can demonstrate
residency with at least 1 piece of valid identification issued by this state
that includes the individual's name and address and the date of issuance and
expiration. As used in this subdivision, "domicile" means a place
where an individual has the individual's true, fixed, and permanent home and
principal establishment, to which, whenever absent therefrom, the individual intends
to return, and domicile continues until another permanent establishment is
established.
(ee) "State-certified
qualified production" means a qualified production for which a tax credit
certificate has been issued by the office under this section or section 678.
(ff) "Talent-related
positions" means individuals with any speaking, background, or extra roles
that appear on-screen or off-screen.
(gg) "Tax
credit certificate" or "TCC" means the certificate issued by the
office under subsection (8) or section 678(7) upon completion of a qualified
production.
(hh)
"Tier A qualified production" means a qualified production that is 1
of the following:
(i) A documentary of any length and includes a travel
documentary.
(ii) A nondocumentary production that is less than 20 minutes
in duration.
(iii) A sound recording.
(iv) A music sound design.
(v) A music score.
(vi) A commercial still image.
(ii)
"Tier B qualified production" means a qualified production that is 1
of the following:
(i) A nondocumentary production that is 20 minutes or more in
duration.
(ii) A reality production.
(iii) A digital interactive media.
(jj) "Wages"
means all compensation paid for services rendered by an employee that are
attributable to a qualified production. Compensation includes health, life, and
disability insurance premiums, state and federal unemployment insurance payments,
retirement or pension contributions, vacation and sick leave pay, and any per
diem amounts paid to an employee for meals or lodging if those payments are
subject to withholding under section 703.
(kk) "Workday
hire" means an individual hired to work a single day.
(2) Subject
to the limitations under this section, beginning after the effective date of
the amendatory act that added this section and for the next consecutive 10
years, the Michigan film and digital media office may approve an application
for a credit against the tax imposed by this part for a state-certified
qualified production in an amount equal to the sum of the following:
(a) 25% of
the qualified production expenditures or, if the office determines that the proposed
qualified production includes the approved logos or, if approved logos are
prohibited, includes an alternative marketing mechanism approved by the office,
30% of qualified production expenditures.
(b) 10% of
the qualified probationary Michigan vendor expenditures.
(c) 30% of
the qualified personnel expenditures attributable to individuals who are
residents of this state when the applicant commences work on the qualified
production.
(d) 20% of
the qualified personnel expenditures attributable to individuals who are not
residents of this state.
(e) If the
office determines that the applicant satisfies either of the following, the
office may approve an additional 5% under subdivisions (a), (b), (c), and (d),
as applicable:
(i) Has qualified production expenditures or qualified
probationary Michigan vendor expenditures that are attributable to a qualified
Michigan vendor that is a minority owned business or woman owned business that
is certified under section 4 of 1980 PA 428, MCL 450.774, a business owned by
persons with disabilities that is certified under section 4 of the business
opportunity act for persons with disabilities, 1988 PA 112, MCL 450.794, or a
veteran owned business.
(ii) Has qualified personnel expenditures attributable to
employees who are members of a minority, persons with disabilities, or veterans.
As used in this subdivision:
(A)
"Business owned by persons with disabilities" and "persons with
disabilities" mean those terms as defined in section 2 of the business
opportunity act for persons with disabilities, 1988 PA 112, MCL 450.792.
(B) "Minority", "minority owned
business", and "woman owned business" mean those terms as
defined in section 1 of 1980 PA 428, MCL 450.771.
(C) "Veteran"
means that term as defined in section 1 of 1965 PA 190, MCL 35.61.
(D) "Veteran
owned business" means a business enterprise of which more than 50% of the
voting shares or interest in the business is owned, controlled, and operated by
individuals who are veterans and with respect to which more than 50% of the net
profit or loss attributable to the business accrues to shareholders who are
veterans.
(3) An
applicant proposing to produce a qualified production in this state and seeking
a credit for that qualified production shall submit an application to the
office. The application must be submitted in a form prescribed by the office
and must be accompanied by a nonrefundable application fee of $1,000.00 for a
tier A qualified production or $2,000.00 for a tier B qualified production. The
application must include all of the information and records requested by the
office. An application fee received by the office under this subsection must be
deposited in the Michigan film promotion fund. As part of the application, an
applicant shall provide a detailed description of the proposed qualified
production and an estimate of the qualified production expenditures, qualified
probationary Michigan vendor expenditures, and qualified personnel expenditures
for that proposed qualified production. The office shall not process or approve
an application until it is complete. If an application is considered
incomplete, the office shall notify the applicant, within 2 days after receipt
of the incomplete application, describing the deficiency and requesting the
additional information be submitted within 30 days. The office shall consider
completed applications in the order that the completed applications are
received. The office
shall not consider an application that is received less than 7 days before work
commences for a proposed tier B qualified production or less than 2 days before
work commences for a proposed tier A qualified production. Upon receipt of a
completed application, the office shall approve or deny an application that is
received for a proposed tier B qualified production within 7 days and for a
proposed tier A qualified production within 2 days.
(4) In determining
whether to approve an application under this section, the office shall consider
all of the following:
(a) If the applicant
can provide evidence of financing for the qualified production.
(b) If the
applicant expects to spend at least $100,000.00 in this state during the
production period of a tier B qualified production or at least $50,000.00 in
this state during the production period of a tier A qualified production.
(c) If the
applicant is delinquent in a tax or other obligation owed to this state or is owned
or under common control of an entity that is delinquent in a tax or other
obligation owed to this state.
(d) If the
applicant intends to commence work on the qualified production within 180 days
after approval of the application and the date of the accredited production
certificate.
(5) Unless
the office determines that a credit in excess of the 20% cap imposed under this
subsection is in the best economic interest of this state, the office shall not
approve and issue an APC for a credit under this section of more 20% of the
annual amount allowed to be approved under subdivisions (a) and (b), for tier A
qualified productions and tier B qualified productions, respectively, for that
calendar year for a single applicant. The total of all applications approved
and APCs issued under this section and section 678 by the office each calendar
year must not exceed the following, plus any carryforward as applicable under
subsection (6) and section 678(5), in the following circumstances:
(a) For
tier A qualified productions:
(i) $50,000,000.00 each calendar year for the first 3
calendar years of the credit.
(ii) $75,000,000.00 each calendar year for the second 3
calendar years of the credit.
(iii) $100,000,000.00 each calendar year for the final 4
calendar years of the credit.
(b) For
tier B qualified productions:
(i) $150,000,000.00 each calendar year for the first 3
calendar years of the credit.
(ii) $225,000,000.00 each calendar year for the second 3
calendar years of the credit.
(iii) $300,000,000.00 each calendar year for the final 4
calendar years of the credit.
(6) If the
office does not receive enough applications under this section or section 678
to award the entire amount allowed during any calendar year for tier A
qualified productions or tier B qualified productions, or both, that remaining
amount may be carried forward, respectively, to the next calendar year.
(7) If the
office approves an application, the office shall provide
the applicant with an accredited production certificate, and the APC must
include all of the following:
(a) A
requirement that the applicant commence work in this state on the identified
qualified production within 180 days of the date of the APC or else the application
is denied. However, upon request submitted by the applicant based on good
cause, the office may extend the period to commence work in this state for up
to an additional 90 days. For purposes of this subdivision, good cause
includes, but is not limited to, force majeure or delays in securing key
actors. The office shall not unreasonably deny a request under this
subdivision.
(b) A
statement identifying the applicant and the qualified production that the applicant
intends to produce in whole or in part in this state.
(c) A
unique number assigned to the qualified production by the office.
(d) A
requirement that the qualified production not depict obscene matter or an
obscene performance.
(e) A
requirement that the applicant agrees to make reasonable efforts to give
preference to qualified Michigan vendors and residents of this state.
(f) A
requirement that the applicant provide the office with the information and
independent certification the office and the department determine are necessary
to verify qualified production expenditures, qualified probationary Michigan
vendor expenditures, qualified personnel expenditures, and eligibility for the
credit under this section.
(8) Within
2 years of completion of the qualified production, the applicant shall provide
the office with an independent certified public accountant's report on applying
the agreed-upon procedures for the qualified production and submit a request to
the office for a tax credit certificate, along with any information or
independent certification the office considers necessary to verify expenditures
and calculate the amount of the credit. The office may request copies of the
applicant's books and records for the qualified production and any other
additional information it determines is necessary before issuing a TCC and need
not issue the TCC until satisfied that qualified production expenditures, qualified
probationary Michigan vendor expenditures, qualified personnel expenditures,
and eligibility are adequately established. The additional information
requested must include an itemized statement of qualified production
expenditures, qualified probationary Michigan vendor expenditures, and
qualified personnel expenditures for the qualified production. The office shall
verify the independent certified public accountant's report on applying the
agreed-upon procedures for the qualified production and notify the department
of the amount of the credit verified and to be awarded to the applicant. After
verifying the amount of the credit to be awarded, if the office determines that
an applicant has complied with the terms of the APC, the office shall issue a TCC
to the applicant. Each TCC shall be signed by the Michigan film commissioner
and shall include the following information:
(a) The
name of the applicant.
(b) The
name of the state-certified qualified production produced in whole or in part
in this state.
(c) The applicant's
qualified production expenditures, qualified probationary Michigan vendor
expenditures, and qualified personnel expenditures for the qualified
production.
(d) The
amount of the applicant's credit awarded under this section and the designated
tax year.
(e) The
date of completion for the state-certified qualified production in this state.
(f) The
unique number assigned to the qualified production by the office under this
section.
(g) The applicant's
federal employer identification number and Michigan treasury number.
(h) Any
independent certification required by the office.
(9) Information,
records, or other data received, prepared, used, or retained by the office
under this section that are submitted by an applicant and considered by the applicant
and acknowledged by the office as confidential are not subject to the
disclosure requirements of the freedom of information act, 1976 PA 442, MCL
15.231 to 15.246. Information, records, or other data must only be considered
confidential to the extent that the information or records describe the
commercial and financial operations or intellectual property of the applicant, the
information or records have not been publicly disseminated at any time, and
disclosure of the information or records may put the applicant at a competitive
disadvantage. For purposes of this subsection, information or records that
describe commercial and financial operations include that portion of
information or records that include any expenses that qualify under this
section as qualified personnel expenditures, qualified production expenditures,
or qualified probationary Michigan vendor expenditures and for which a credit
may be claimed.
(10) The
office shall forward a copy of each TCC issued under this section to the
governor, the state treasurer, the president of the Michigan strategic fund,
the chairpersons of the senate and house of representatives standing committees
that have jurisdiction over matters relating to taxation and finance, the
director of the senate fiscal agency, and the director of the house fiscal
agency. An applicant or assignee that claims a credit under this section shall
submit with the annual return filed under this part on which the credit under
this section is claimed a copy of the TCC and, if the credit was assigned, a
copy of the assignment form provided for under this section to the department
within the same tax year in which the TCC was issued. A credit amount assigned
under this subsection may be claimed against the assignee's tax under this part
or part 2. A credit amount authorized or assigned to a partnership, limited
liability company, or subchapter S corporation under this section or section 678
may be claimed against the partner's, member's, or shareholder's tax liability
under this part based on the partner's, member's, or shareholder's
proportionate share of ownership or an alternative method approved by the department.
If the credit allowed under this section exceeds the tax liability of the applicant
or assignee for the tax year or if the taxpayer claiming the credit does not
have a tax liability under this part for the tax year, that portion that
exceeds the tax liability for the tax year must not be refunded but may be
carried forward to offset tax liability in subsequent tax years for 5 years or
until used up, whichever occurs first. The department shall, as soon as the
information is available, annually report to the governor, the president of the
Michigan strategic fund, the chairpersons of the senate and house of
representatives standing committees that have jurisdiction over matters
relating to taxation and finance, the director of the senate fiscal agency, and
the director of the house fiscal agency the total amount of the credits claimed
under this section that exceed the taxpayer's tax liability for the most recent
year that tax information is available and for which returns have cleared and
been processed.
(11) The
credit under this section must be claimed after all other credits under this
part.
(12) An applicant
may transfer and assign all or a portion of a credit awarded under this section
to up to 10 assignees. An applicant may claim a portion of a credit and assign
the remaining credit amount. A credit assignment can only be made once within
the first year after the TCC is issued, and a credit assignment under this section
is irrevocable. The credit assignment under this subsection must be made on a
form prescribed by the department.
(13) The
amount of the credit awarded under this section must be reduced by a redemption
fee equal to the greater of $500.00 or 1% of the credit claimed. The redemption
fee must be deducted from the credit otherwise payable to the applicant claiming
the credit and be deposited by the department in the Michigan film promotion
fund.
(14) An
applicant that willfully submits information under this section that the applicant
knows to be fraudulent or false, in addition to any other penalties provided by
law, is liable for a civil penalty of not more than the amount of the applicant's
credit under this section. A penalty collected under this section must be
deposited in the Michigan film promotion fund.
Sec. 678. (1) Subject to the
limitations under this section, beginning after the effective date of the
amendatory act that added this section and for the next 10 consecutive years, the
Michigan film and digital media office may approve an application for a credit
against the tax imposed by this part for a state-certified qualified production
in an amount equal to the sum of the following:
(a) 25% of
the qualified production expenditures or, if the office determines that the proposed
qualified production includes the approved logos or, if approved logos are
prohibited, includes an alternative marketing mechanism approved by the office,
30% of qualified production expenditures.
(b) 10% of
the qualified probationary Michigan vendor expenditures.
(c) 30% of
the qualified personnel expenditures attributable to employees who are
residents of this state when the applicant commences work on the qualified
production.
(d) 20% of
the qualified personnel expenditures attributable to employees who are not
residents of this state.
(e) If the
office determines that the applicant satisfies either of the following, the
office may approve an additional 5% under subdivisions (a), (b), (c), and (d),
as applicable:
(i) Has qualified production expenditures or qualified
probationary Michigan vendor expenditures that are attributable to a qualified
Michigan vendor that is a minority owned business or woman owned business that
is certified under section 4 of 1980 PA 428, MCL 450.774, a business owned by
persons with disabilities that is certified under section 4 of the business
opportunity act for persons with disabilities, 1988 PA 112, MCL 450.794, or a
veteran owned business.
(ii) Has qualified personnel expenditures attributable to
employees who are members of a minority, persons with disabilities, or veterans.
As used in this subdivision:
(A)
"Business owned by persons with disabilities" and "persons with
disabilities" mean those terms as defined in section 2 of the business
opportunity act for persons with disabilities, 1988 PA 112, MCL 450.792.
(B) "Minority",
"minority owned business", and "woman owned business" mean
those terms as defined in section 1 of 1980 PA 428, MCL 450.771.
(C) "Veteran"
means that term as defined in section 1 of 1965 PA 190, MCL 35.61.
(D) "Veteran
owned business" means a business enterprise of which more than 50% of the
voting shares or interest in the business is owned, controlled, and operated by
individuals who are veterans and with respect to which more than 50% of the net
profit or loss attributable to the business accrues to shareholders who are
veterans.
(2) An
applicant proposing to produce a qualified production in this state and seeking
a credit for that qualified production shall submit an application to the
office. The application must be submitted in a form prescribed by the office
and must be accompanied by a nonrefundable application fee of $1,000.00 for a tier
A qualified production or $2,000.00 for a tier B qualified production. The
application must include all of the information and records requested by the
office. An application fee received by the office under this subsection must be
deposited in the Michigan film promotion fund. As part of the application, an
applicant shall provide a detailed description of the proposed qualified
production and an estimate of the qualified production expenditures, qualified
probationary Michigan vendor expenditures, and qualified personnel expenditures
for the proposed qualified production. The office shall not process or approve
an application until it is complete. If an application is considered
incomplete, the office shall notify the applicant, within 2 days after receipt
of the incomplete application, describing the deficiency and requesting the
additional information be submitted within 30 days. The office shall consider
completed applications in the order that the completed applications are
received. The office shall not consider an application that is received less
than 7 days before work commences for a proposed tier B qualified production or
less than 2 days before work commences for a proposed tier A qualified
production. Upon receipt of a completed application, the office shall approve
or deny an application that is received for a proposed tier B qualified
production within 7 days and for a proposed tier A qualified production within
2 days.
(3) In
determining whether to approve an application, the office shall consider all of
the following:
(a) If the applicant
can provide evidence of financing for the qualified production.
(b) If the
applicant expects to spend at least $100,000.00 in this state during the
production period of a tier B qualified production or spend at least $50,000.00
in this state during the production period of a tier A qualified production.
(c) If the
applicant is delinquent in a tax or other obligation owed to this state or is owned
or under common control of an entity that is delinquent in a tax or other
obligation owed to this state.
(d) If the applicant
intends to commence work on the qualified production within 180 days after
approval of the application and the date of the accredited production
certificate.
(4) Unless
the office determines that a credit in excess of the 20% cap imposed under this
subsection is in the best economic interest of this state, the office shall not
approve and issue an APC for a credit under this section of more 20% of the
annual amount allowed to be approved under subdivisions (a) and (b), for tier A
qualified productions and tier B qualified productions, respectively, for that
calendar year for a single applicant. The total of all applications approved
and APCs issued under this section and section 285 by the office each calendar
year must not exceed the following, plus any carryforward as provided
applicable under subsection (5) and section 285(6), in the following
circumstances:
(a) For
tier A qualified productions:
(i) $50,000,000.00 each calendar year for the first 3
calendar years of the credit.
(ii) $75,000,000.00 each calendar year for the second 3
calendar years of the credit.
(iii) $100,000,000.00 each calendar year for the final 4
calendar years of the credit.
(b) For tier
B qualified productions:
(i) $150,000,000.00 each calendar year for the first 3
calendar years of the credit.
(ii) $225,000,000.00 each calendar year for the second 3
calendar years of the credit.
(iii) $300,000,000.00 each calendar year for the final 4
calendar years of the credit.
(5) If the
office does not receive enough applications under this section and section 285
to award the entire amount allowed during any calendar year for tier A
qualified productions or tier B qualified productions, or both, that remaining
amount may be carried forward, respectively, to the next calendar year.
(6) If the
office approves an application, the office shall provide the applicant with an
accredited production certificate and the APC must include all of the
following:
(a) A
requirement that the applicant commence work in this state on the identified
qualified production within 180 days of the date of the APC or else the application
is denied. However, upon request submitted by the applicant based on good
cause, the office may extend the period to commence work in this state for up
to an additional 90 days. For purposes of this subdivision, good cause
includes, but is not limited to, force majeure or delays in securing key
actors. The office shall not unreasonably deny a request under this
subdivision.
(b) A
statement identifying the applicant and the qualified production that the applicant
intends to produce in whole or in part in this state.
(c) A
unique number assigned to the qualified production by the office.
(d) A
requirement that the qualified production not depict obscene matter or an
obscene performance.
(e) A
requirement that the applicant agrees to make reasonable efforts to give
preference to qualified Michigan vendors and residents of this state.
(f) A
requirement that the applicant provide the office with the information and
independent certification the office and the department determine is necessary
to verify qualified production expenditures, qualified probationary Michigan
vendor expenditures, qualified personnel expenditures, and eligibility for the
credit under this section.
(7) Within
2 years of completion of the qualified production, the applicant shall provide
the office with an independent certified public accountant's report on applying
the agreed-upon procedures for the qualified production and submit a request to
the office for a tax credit certificate, along with any information or
independent certification the office considers necessary to verify expenditures
and calculate the amount of the credit. The office may request copies of the
applicant's books and records for the qualified production and any other
additional information it determines is necessary before issuing a TCC and need
not issue the TCC until satisfied that qualified production expenditures, qualified
probationary Michigan vendor expenditures, qualified personnel expenditures,
and eligibility are adequately established. The additional information
requested must include an itemized statement of qualified production
expenditures, qualified probationary Michigan vendor expenditures, and
qualified personnel expenditures for the qualified production. The office shall
verify the independent certified public accountant's report on applying the
agreed-upon procedures for the qualified production and notify the department of
the amount of the credit verified and to be awarded to the applicant. After
verifying the amount of the credit to be awarded, if the office determines that
an applicant has complied with the terms of the APC, the office shall issue a TCC
to the applicant. Each TCC shall be signed by the Michigan film commissioner
and shall include the following information:
(a) The
name of the applicant.
(b) The
name of the state-certified qualified production produced in whole or in part
in this state.
(c) The applicant's
qualified production expenditures, qualified probationary Michigan vendor
expenditures, and qualified personnel expenditures for the qualified
production.
(d) The
amount of the applicant's credit allowed under this section and the designated
tax year.
(e) The
date of completion for the state-certified qualified production in this state.
(f) The
unique number assigned to the qualified production by the office under this
section.
(g) The applicant's
federal employer identification number or Michigan treasury number.
(h) Any
independent certification required by the office.
(8) Information,
records, or other data received, prepared, used, or retained by the office
under this section that are submitted by an applicant and considered by the applicant
and acknowledged by the office as confidential are not subject to the
disclosure requirements of the freedom of information act, 1976 PA 442, MCL
15.231 to 15.246. Information, records, or other data must only be considered
confidential to the extent that the information or records describe the
commercial and financial operations or intellectual property of the applicant, the
information or records have not been publicly disseminated at any time, and
disclosure of the information or records may put the applicant at a competitive
disadvantage. For purposes of this subsection, information or records that
describe commercial and financial operations include that portion of
information or records that include any expenses that qualify under this
section as qualified personnel expenditures, qualified production expenditures,
or qualified probationary Michigan vendor expenditures and for which a credit
may be claimed.
(9) The
office shall forward a copy of each TCC issued under this section to the
governor, the state treasurer, the president of the Michigan strategic fund,
the chairpersons of the senate and house of representatives standing committees
that have jurisdiction over matters relating to taxation and finance, the
director of the senate fiscal agency, and the director of the house fiscal
agency. An applicant or assignee that claims a credit under this section shall
submit with the annual return filed under this part on which the credit under
this section is claimed a copy of the TCC and, if the credit was assigned, a
copy of the assignment form provided for under this section to the department
within the same tax year in which the TCC was issued. A credit amount assigned
under this subsection may be claimed against the assignee's tax under this part
or part 1. If the credit allowed under this section exceeds the tax liability
of the applicant or assignee for the tax year or if the taxpayer claiming the
credit does not have a tax liability under this part for the tax year, that
portion that exceeds the tax liability for the tax year must not be refunded
but may be carried forward to offset tax liability in subsequent tax years for 5
years or until used up, whichever occurs first. The department shall, as soon
as the information is available, annually report to the governor, the president
of the Michigan strategic fund, the chairpersons of the senate and house of
representatives standing committees that have jurisdiction over matters
relating to taxation and finance, the director of the senate fiscal agency, and
the director of the house fiscal agency the total amount of the credits claimed
under this section that exceed the taxpayer's tax liability for the most recent
year that tax information is available and for which returns have cleared and
been processed.
(10) The
credit under this section must be claimed after all other credits under this
part.
(11) An applicant
may transfer and assign all or a portion of a credit awarded under this section
to up to 10 assignees. An applicant may claim a portion of a credit and assign
the remaining credit amount. A credit assignment can only be made once within
the first year after the TCC is issued, and a credit assignment under this section
is irrevocable. The credit assignment under this subsection must be made on a
form prescribed by the department.
(12) The
amount of the credit awarded under this section must be reduced by a redemption
fee equal to the greater of $500.00 or 1% of the credit claimed. The redemption
fee must be deducted from the credit otherwise payable to the applicant claiming
the credit and be deposited by the department in the Michigan film promotion
fund.
(13) An
applicant that willfully submits information under this section that the applicant
knows to be fraudulent or false, in addition to any other penalties provided by
law, is liable for a civil penalty of not more than the amount of the applicant's
credit under this section. A penalty collected under this section must be
deposited in the Michigan film promotion fund.
(14) Not
later than March 1, 2028 and each March 1 thereafter through March 1, 2037, the
office shall evaluate the credits under this section and section 285 and submit
to the governor, the president of the Michigan strategic fund, the chairpersons
of the senate and house of representatives standing committees that have
jurisdiction over matters relating to taxation and finance, the director of the
senate fiscal agency, and the director of the house fiscal agency an annual
report concerning the operation and effectiveness of the credit under this
section and section 285. The requirements of section 28(1)(f) of 1941 PA 122,
MCL 205.28, do not apply to disclosure of tax information required by this
subsection. The report shall include all of the following:
(a) A brief
assessment of the overall effectiveness of the credit under this section and
section 285 at attracting qualified productions to this state during the
immediately preceding calendar year. The assessment must include the economic
impact data of the credit program, including, but not limited to, all of the
following:
(i) The number of workday hires created and if those workday hires
were entry level, production staff and crew, management, talent-related positions,
or vendor-related positions.
(ii) The number of workday hires who were residents of this
state.
(iii) The total amount of qualified production expenditures in
this state, and of those expenditures, the amount attributable to qualified Michigan
vendors.
(iv) The extent to which the qualified productions had the
effect of promoting this state as a tourist destination.
(v) The extent to which the credit attracted private
investment during the production of qualified productions in this state.
(b) The
number of applications received for a tax credit under this section and section
285 during the immediately preceding calendar year, the names of the applicants
and a brief description of the proposed qualified productions, including the
locations in this state to be used in the production of qualified productions,
and the proposed amount of money to be expended by the applicants to produce
qualified productions in this state in the immediately preceding calendar year.
(c) The
number of applications approved under this section and section 285 during the
immediately preceding calendar year.
(d) The
number of TCCs issued during the immediately preceding calendar year and the
total amount of credits awarded by those TCCs.
(15) For
definitions of terms used in this section, see section 285.
Sec. 701. As used in this chapter:
(a) "Applicant", "loan out
company", and "qualified production" mean those terms as defined
in section 285.
(b) (a) "Casino"
means that term as defined in section 110.
(c) (b) "Casino
licensee" means a person licensed to operate a casino under the Michigan
Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.
(c) "Eligible production company" means that term
as defined under section 455 of the Michigan business tax act, 2007 PA 36, MCL
208.1455.
(d)
"Flow-through entity" means an entity that for the applicable tax
year is treated as an S corporation under section 1362(a) of the internal
revenue code, a general partnership, a limited partnership, a limited liability
partnership, or a limited liability company, that for the applicable tax year
is not taxed as a corporation for federal income tax purposes. Flow-through
entity does not include any entity disregarded or treated as a corporation
under section 699.
(e)
"Member" means a shareholder of an S corporation, a partner in a
general partnership, a limited partnership, or a limited liability partnership,
a member of a limited liability company, or a beneficiary of a trust, that is a
flow-through entity.
(f)
"Nonresident" means an individual who is not a resident of or
domiciled in this state, a business entity that does not have its commercial
domicile in this state, or a trust not organized in this state.
(g)
"Partnership" means a taxpayer that is required to or has elected to
file as a partnership for federal income tax purposes.
(h) "Publicly
traded partnership" means that term as defined under section 7704 of the
internal revenue code.
(i) "Race
meeting licensee" and "track licensee" mean a person to whom a
race meeting license or track license is issued pursuant to section 8 of the
horse racing law of 1995, 1995 PA 279, MCL 431.308.
(j) "S
corporation" means a corporation electing taxation under sections 1361 to
1379 of the internal revenue code.
Sec. 703. (1) A person who that disburses pension or annuity payments, except as
otherwise provided under this section, shall withhold a tax in an amount
computed by applying the rate prescribed in section 51 on the taxable part of
payments from an employer pension, annuity, profit-sharing, stock bonus, or
other deferred compensation plan as well as from an individual retirement
arrangement, an annuity, an endowment, or a life insurance contract issued by a
life insurance company. Withholding The person shall be
calculated calculate the withholding on
the taxable disbursement after deducting from the taxable portion the same
proportion of the total amount of personal and dependency exemptions of the
individual allowed under this act. Withholding A person is not required to
withhold a tax on any part of a distribution that is not expected to be
includable in the recipient's gross income or that is deductible from adjusted
gross income under section 30(1)(e) or (f).
(2) Every employer
in this state required under the provisions of the internal revenue code to
withhold a tax on the compensation of an individual, except as otherwise
provided, shall deduct and withhold a tax in an amount computed by applying,
except as provided by subsection (14), (11), the rate prescribed in section 51 to the
remainder of the compensation after deducting from compensation the same
proportion of the total amount of personal and dependency exemptions of the
individual allowed under this act that the period of time covered by the
compensation is of 1 year. The department may prescribe withholding tables that
may be used by employers to compute the amount of tax required to be withheld.
(3) Except as otherwise provided under this section, for tax
years that begin before July 1, 2016, every flow-through entity in this state
shall withhold a tax in an amount computed by applying the rate prescribed in
section 51 to the distributive share of taxable income reasonably expected to
accrue after allocation and apportionment under chapter 3 of each nonresident
member who is an individual after deducting from that distributive income the
same proportion of the total amount of personal and dependency exemptions of
the individual allowed under this act. All of the taxes withheld under this
section shall accrue to the state on April 15, July 15, and October 15 of the
flow-through entity's tax year and January 15 of the following year, except a
flow-through entity that is not on a calendar year basis shall substitute the
appropriate due dates in the flow-through entity's fiscal year that correspond
to those in a calendar year. Withholding for each period shall be equal to 1/4
of the total withholding calculated on the distributive share that is
reasonably expected to accrue during the tax year of the flow-through entity.
(4) Except as otherwise provided under this section, for tax
years that begin before July 1, 2016, every flow-through entity with business
activity in this state that has more than $200,000.00 of business income
reasonably expected to accrue in the tax year after allocation or apportionment
shall withhold a tax in an amount computed by applying the rate prescribed in
section 623 to the distributive share of the business income of each member
that is a corporation or that is a flow-through entity. For purposes of
calculating the $200,000.00 withholding threshold, the business income of a
flow-through entity shall be apportioned to this state by multiplying the
business income by the sales factor of the flow-through entity. The sales
factor of the flow-through entity is a fraction, the numerator of which is the
total sales of the flow-through entity in this state during the tax year and
the denominator of which is the total sales of the flow-through entity
everywhere during the tax year. As used in this subsection, "business
income" means that term as defined in section 603(2). For 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. As used in this subsection,
"sales" means that term as defined in section 609 and sales in this
state is determined as provided in sections 665 and 669. All of the taxes
withheld under this section shall accrue to the state on April 15, July 15, and
October 15 of the flow-through entity's tax year and January 15 of the
following year, except a flow-through entity that is not on a calendar year
basis shall substitute the appropriate due dates in the flow-through entity's fiscal
year that correspond to those in a calendar year. Withholding for each period
shall be equal to 1/4 of the total withholding calculated on the distributive
share of business income that is reasonably expected to accrue during the tax
year of the flow-through entity.
(5) For tax years that begin before July 1, 2016, if a
flow-through entity is subject to the withholding requirements of subsection
(4), then a member of that flow-through entity that is itself a flow-through
entity shall withhold a tax on the distributive share of business income as
described in subsection (4) of each of its members. The department shall apply
tax withheld by a flow-through entity on the distributive share of business
income of a member flow-through entity to the withholding required of that
member flow-through entity. All of the taxes withheld under this section shall
accrue to the state on April 15, July 15, and October 15 of the flow-through
entity's tax year and January 15 of the following year, except a flow-through
entity that is not on a calendar year basis shall substitute the appropriate
due dates in the flow-through entity's fiscal year that correspond to those in
a calendar year. Withholding for each period shall be equal to 1/4 of the total
withholding calculated on the distributive share of business income that is
reasonably expected to accrue during the tax year of the flow-through entity.
(3) (6) Every
casino licensee shall withhold a tax in an amount computed by applying the rate
prescribed in section 51 to the winnings of a nonresident reportable by the
casino licensee under the internal revenue code.
(4) (7) Every
race meeting licensee or track licensee shall withhold a tax in an amount
computed by applying the rate prescribed in section 51 to a payoff price on a
winning ticket of a nonresident reportable by the race meeting licensee or
track licensee under the internal revenue code that is the result of
pari-mutuel wagering at a licensed race meeting.
(5) (8) Every
casino licensee or race meeting licensee or track licensee shall report
winnings of a resident reportable by the casino licensee or race meeting
licensee or track licensee under the internal revenue code to the department in
the same manner and format as required under the internal revenue code.
(6) (9) Every eligible production company Every applicant shall,
to the extent not withheld by a professional
services corporation or professional employer organization, loan out company on behalf of the applicant, deduct
and withhold a tax in an amount computed by applying the rate prescribed in
section 51 to the remainder of the payments made to the professional services corporation or professional
employer organization loan out company for
the services of a performing artist or crew member resident and nonresident individuals performing services in
this state directly attributable to a qualified production after
deducting from those payments the same proportion of the total amount of
personal and dependency exemptions of the individuals allowed under this act.
(7) (10) Every
publicly traded partnership that has equity securities registered with the securities and exchange commission Securities and Exchange Commission under section 12
of title I of the securities and exchange act of 1934, 15 USC 78l, shall not be subject to withholding.
(8) (11) Except
as otherwise provided under this subsection, all of the taxes withheld under
this section shall accrue to the state on the last day of the month in which
the taxes are withheld but shall be returned and paid to the department by the
employer, eligible production company, applicant, casino licensee, or race meeting licensee
or track licensee within 15 days after the end of any month or as provided in
section 705. For an employer that has entered into an agreement with a
community college pursuant to chapter 13 of the community college act of 1966,
1966 PA 331, MCL 389.161 to 389.166, a portion of the taxes withheld under this
section that are attributable to each employee in a new job created pursuant to
the agreement shall accrue to the community college on the last day of the
month in which the taxes are withheld but shall be returned and paid to the
community college by the employer within 15 days after the end of any month or
as provided in section 705 for as long as the agreement remains in effect. For
purposes of this act and 1941 PA 122, MCL 205.1 to 205.31, payments made by an
employer to a community college under this subsection shall be considered
income taxes paid to this state.
(9) (12) A
person required by this section to deduct and withhold taxes on income under
this section holds the amount of tax withheld as a trustee for this state and
is liable for the payment of the tax to this state or, if applicable, to the
community college and is not liable to any individual for the amount of the
payment.
(10) (13) An
employer in this state is not required to deduct and withhold a tax on the
compensation paid to a nonresident individual employee, who, under section 256,
may claim a tax credit equal to or in excess of the tax estimated to be due for
the tax year or is exempted from liability for the tax imposed by this act. In
each tax year, the nonresident individual shall furnish to the employer, on a
form approved by the department, a verified statement of nonresidence.
(11) (14) A
person required to withhold a tax under this act, by the fifteenth day of the
following month, shall provide the department with a copy of any exemption
certificate on which a person with income subject to withholding under
subsection (6) or (7) (3) or (4) claims more than 9 personal or dependency
exemptions, claims a status that exempts the person subject to withholding
under subsection (6) or (7) (3) or (4) from withholding under this section.
(12) (15) A
person who that disburses
annuity payments pursuant to the terms of a qualified charitable gift annuity
is not required to deduct and withhold a tax on those payments as prescribed
under subsection (1). As used in this subsection, "qualified charitable
gift annuity" means an annuity described under section 501(m)(5) of the
internal revenue code and issued by an organization exempt under section
501(c)(3) of the internal revenue code.
(16) Notwithstanding the requirements of subsections (4) and
(5), if a flow-through entity receives an exemption certificate from a member
other than a nonresident individual, the flow-through entity shall not withhold
a tax on the distributive share of the business income of that member if all of
the following conditions are met:
(a) The exemption certificate is completed by the member in
the form and manner prescribed by the department and certifies that the member
will do all of the following:
(i) File the returns required under this
act.
(ii) Pay or withhold the tax required under
this act on the distributive share of the business income received from any
flow-through entity in which the member has an ownership or beneficial
interest, directly or indirectly through 1 or more other flow-through entities.
(iii) Submit to the taxing jurisdiction of
this state for purposes of collection of the tax under this act together with
related interest and penalties under 1941 PA 122, MCL 205.1 to 205.31, imposed
on the member with respect to the distributive share of the business income of
that member.
(b) The department may require the member to file the
exemption certificate with the department and provide a copy to the
flow-through entity.
(c) The department may require a flow-through entity that
receives an exemption certificate to attach a copy of the exemption certificate
to the annual reconciliation return as required by section 711. A flow-through
entity that is entirely exempt from the withholding requirements of subsection
(4) or (5) by this subsection may be required to furnish a copy of the
exemption certificate in another manner prescribed by the department.
(d) A copy of the exemption certificate shall be retained by
the member and flow-through entity and made available to the department upon
request. Any copy of the exemption certificate shall be maintained in a format
and for the period required by 1941 PA 122, MCL 205.1 to 205.31.
(17) The department may revoke the election provided for in
subsection (16) if it determines that the member or a flow-through entity is
not abiding by the terms of the exemption certificate or the requirements of
subsection (16). If the department does revoke the election option under
subsection (16), the department shall notify the affected flow-through entity
that withholding is required on the member under subsection (4) or (5),
beginning 60 days after notice of revocation is received.
(18) Notwithstanding the requirements of subsections (4) and
(5), a flow-through entity is not required to withhold in accordance with this
section for a member that voluntarily elects to file a return and pay the tax
imposed by the Michigan business tax act under section 680 or section 500 of
the Michigan business tax act, 2007 PA 36, MCL 208.1500.
(19) Notwithstanding the withholding requirements of
subsection (3), (4), or (5), a flow-through entity is not required to comply
with those withholding requirements to the extent that the withholding would
violate any of the following:
(a) Housing assistance payment programs distribution
restrictions under 24 CFR part 880, 881, 883, or 891.
(b) Rural housing service return on investment restrictions
under 7 CFR 3560.68 or 3560.305.(c) Articles of incorporation or other document
of organization adopted pursuant to section 83 or 93 of the state housing
development authority act of 1966, 1966 PA 346, MCL 125.1483 and 125.1493.
Sec. 843. (1) From the tax levied revenue
collected under this part, that percentage of the gross collections
before refunds that is equal to 1.012% divided by the tax rate levied under
this part shall must
be deposited in the state school aid fund created
in section 11 of article IX of the state constitution of 1963 and the
balance of the revenue collected under this part after the distribution to the
school aid fund shall under this subsection and subsection (2) must be
deposited into the general fund.
(2) Beginning with the 2027-2028 state fiscal year, in addition to the
money deposited in the state school aid fund under subsection (1), an amount
equal to all revenue lost to the state school aid fund as a result of the
credits under sections 285 and 678 as determined by the department must be
deposited into the state school aid fund.
(3) As used
in this section, "state school aid fund" means the state school aid
fund created in section 11 of article IX of the state constitution of 1963.
Enacting section 1.
This amendatory act does not take effect unless Senate Bill No. ____ (request
no. S00771'25) or House Bill No. 5992 (request no. H00771'25) of the 103rd
Legislature is enacted into law.