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  Changes in Michigan Tax Laws, 1997 Through June 2007
   
Business Privilege Taxes

Michigan Business Tax
2007 PA 36: Creates the Michigan Business Tax, as a replacement to the Single Business Tax, which was scheduled to expire on January 1, 2008. The new tax is a combination of a business income tax (rate of 4.95%) and a modified gross receipts tax (rate of 0.8%) and contains a number of credits (new and existing). Raises the tax rate on insurance companies from 1.0735% of adjusted receipts to 1.25% of gross premiums. Removes the exemption from sales and use taxes provided to insurance companies under the SBT.

  PA 170-195: Various technical changes, non-substantive dealing with references to the new tax in other tax laws.

  PA 205: Specifies the apportionment of media receipts to Michigan for radio and television programming business activity.

  PA 206: Provides a tax credit to private equity funds, equal to the taxpayers' tax liability after other credits are taken.

  PA 207: Provides exceptions to the definition of "gross receipts" for a sales finance company owned by a motor vehicle manufacturer.

  PA 208 and 214: Continues a SBT tax credit under the MBT for certain hybrid vehicle research and development.

  PA 215 and 216: Continues two SBT tax credits (historic preservation and renaissance zone) under the MBT for insurance companies and banks.

2008 PA 30: Exempts captive insurance companies from the tax imposed on insurance companies (1.25% on gross premiums).
  PA 74: Allows the Michigan Film Office, with the approval of the State Treasurer, to grant a job training credit equal to 50% of the qualified job training expenditures to an eligible motion picture production company. Credit available until September 30, 2015.
  PA 77: Allows the Michigan Film Office, with the approval of the State Treasurer, to grant a refundable production expenditure credit equal to up to 42% of the direct production expenditures to an eligible motion picture production company.
  PA 86: Allows the Michigan Film Office, with the approval of the State Treasurer, to grant a credit equal to 25% of the investment in a film or digital media infrastructure project.
  PA 88 and 92: Creates a new "anchor company" tax credit available to the Michigan Economic Growth Authority to grant to eligible taxpayers.
  PA 89: Modifies the maximum amount of brownfield tax credits issued each year; increases the size of the credits; allows for partial refund of unused credits.
  PA 109: Creates a new tax credit available to the Michigan Economic Growth Authority to grant to eligible taxpayers based on the number of jobs created as a result of winning procurement contracts with certain agencies of the federal government.
  PA 114 and 115: Modifies the eligibility criteria to claim the stadium credit.
  PA 168: Modifies the business income and modified gross receipts taxes to allow for the reduction in the tax bases for any gain (income tax base) and gross receipts (modified gross receipts tax base) associated with the sale of qualified affordable housing projects.

Single Business Tax
1997 PA 124: Exempts sales of nursery stock (trees, shrubs, plants) grown by the seller and sold to a nursery dealer and exempts from the tax base certain revenues and expenses of farmers' cooperatives not tax-exempt under federal law.
  PA 190: Extends indefinitely the community foundation credit.
  PA 191: Extends indefinitely the credit for contributions to community foundations and the credit for contributions to homeless shelters, food banks, and similar organizations.
1998 PA 225: Eliminates the "throwback rule" as of January 1, 1998. That rule, which under Public Act 225 applies only to tax years beginning before January 1, 1998, required that a sale is considered to be a sale in Michigan (for purposes of taxation) if the property is shipped from an office, store, warehouse, factory, or other place of storage in this state and into a state in which the taxpayer (the company) is not subject to taxation.
  PA 240: Provides that a farmers' cooperative corporation may exclude from its adjusted single business tax base revenue and expenses attributable to business transacted with a farmer or farmer cooperative corporation patrons, to whom net earnings are allocated in the form of patronage dividends as defined in the Internal Revenue Code.
  PA 504: For tax years beginning January 1, 1998, the alternative method of calculating the capital acquisition deduction may be employed by a Michigan-based multi-state retailer deriving more than 20% of its total sales from the retail sales of certain products, rather than more than 50% of total sales.
  PA 534: Allows a qualified taxpayer to claim a tax credit for qualified expenditures made for the rehabilitation of a historic resource. The credit is equal to 25% of the qualified expenditures, and may be claimed for tax years beginning after 1998 and before 2003.
  PA 539: For tax years beginning after 1993, royalties paid by a licensee of application computer software, operating system software, or system software under a licensing agreement do not have to be included in the licensee's tax base. Further, for tax years beginning after 1997, royalties received by a licensor, distributor, developer, marketer, or copyright holder of application computer software or operating system software under a license agreement may not be deducted from the tax base; however royalties received in this manner for system software may be deducted.
1999 PA 115: Phases out the SBT by reducing the rate by one-tenth of a percentage point per year beginning January 1, 1999 until the rate reaches zero on January 1, 2021. Rate reductions would be halted in any year in which the Budget Stabilization Fund (rainy day fund) balance drops below $250 million. Replace apportioned capital acquisition deduction (CAD) with an unapportioned investment tax deduction effective for tax years beginning after December 31, 1999. Applies SBT to certain "foreign persons" with business activity in the United States whether or not the business entity is subject to taxation under the federal Internal Revenue Code. Reduces taxes of "spun off" companies by excluding sales between companies that were members of an affiliated group before restructuring.
  PA 184: Removes the January 1, 2000 sunset date for the apprenticeship training tax credit for the Single Business Tax.
  PA 213: Extends the time period during which taxpayers may claim credits for historic preservation expenditures.
2000 PA 44: Increases the investment tax credit for firms with adjusted gross receipts of $5 million or less.
  PA 143: Requires the Michigan Economic Growth Authority to determine the eligibility of, and issue certificates to, certain qualified taxpayers to claim a credit for investments on eligible property related to brownfield redevelopment.
  PA 144: Allows the Michigan Economic Growth Authority to execute up to 50 new agreements for credits each year for eligible businesses that were qualified high-technology businesses as well as 25 new agreements for other eligible businesses.

  PA 373: Exempts individuals from the tax that meet the following criteria: the person does not have a permanent establishment in the United States; the person's business activity consists of transportation services, apportioned based upon revenue miles of the taxpayer in Michigan versus revenue miles of the taxpayer elsewhere; and the person's business activity in Michigan is limited to transportation and loading or unloading of goods that were delivered by a truck.

2001 PA 224: Exempts from the tax base expenses attributable to a multiple employer welfare arrangement to provide insurance to fund dental benefits only.
  PA 229: Excludes from sales, royalties paid to a franchisor for out of state use of trade names, trademarks, or similar intangible property.

  PA 230: Includes royalties in the tax base of the franchisor rather than the franchisee.
  PA 249: Allows a tax credit equal to $1 per long ton of qualified low-grade hematite (in pellet form) consumed in the industrial or manufacturing process that is the business activity of the taxpayer.
  PA 278: For tax years beginning in calendar year 2000, exempts from the tax base receipts attributable to international operation of aircraft by airlines exempt from federal taxation under section 883 (a) of the IRS code. The act corrects an oversight that left uncorrected would exempt such income before and after 2000.

2002 PA 75: Extends the personal income tax and single business tax credits to property subject to an agricultural conservation easement or purchase of development rights.
  PA 442: Permits a Canadian taxpayer without a permanent establishment in the United States to use amounts properly calculated under the Canadian Income Tax Act that reasonably approximate business income and adjustments related to United States business activity required under Michigan's Single Business Tax act.
  PA 531: Repeals the tax for tax years beginning after 2009, raises the gross receipts threshold for taxation from $250,000 to $350,000, and provides for non-refundable energy-related credits.
  PA 588: Allows certain pharmaceutical companies to take a credit equal to 6.5 percent of the amount by which its qualified research expenses for in-state pharmaceutical-based business activity ("qualified research expenses") paid in a given tax year exceeded the average of the qualified research expenses that it paid during the immediately preceding three years.
  PA 603: For purposes of determining compensation of a "professional employer organization" (PEO), compensation would include payments by the PEO to the officers and employees of an entity whose employment operations were managed by the PEO.
  PA 606: Excludes certain items from the definition of "gross receipts" for the purpose of calculating a taxpayer's tax liability.
2003 PA 240-241: Alters definition of compensation to exclude payments for health and welfare and noninsured benefit plans for the benefit of persons who are residents of Michigan in the following amounts: 5% for payments made in calendar year 2004, 20% in 2005, 40% in 2006, and 50% for years thereafter.
  PA 249: Revises the expiration date for credits under the Michigan economic growth authority program to December 31, 2009.
  PA 273: Increases the credit for apprenticeship training from $2,000 to $4,000.
  PA 297: Allows a credit for the difference between the amount repaid by the Michigan Early Stage Venture Capital Investment Fund and the negotiated repayment amount if the fund could not repay the negotiated return on a person's investment. This credit is available after 2008 and before 2020.
2005 PA 233: Replaces the tax credit associated with certain investments in the Michigan Early Stage Venture Capital Investment Fund with a tax voucher. Allows a taxpayer to use a tax voucher to pay a tax liability for years after 2008.
  PA 289
PA 290
PA 291
PA 292:		 Allows a refundable credit for 15% of the property taxes paid on industrial personal property for tax years 2006 through 2009.
  PA 293
PA 294:		 Allows a credit for 100% of the personal property taxes associated with high-tech or manufacturing jobs transferred to Michigan from outside the state. This credit expires December 31, 2009.
  PA 295: Changes the tax base apportionment formula from a weighted formula based on 5% property, 5% payroll, and 90% sales to one based on 3.75% property, 3.75% payroll, and 92.5% sales. This change is effective for tax years 2006 and 2007. For tax years after 2007, the formula is weighted 2.5% property, 2.5% payroll, and 95% sales.
  PA 296: Extends, for four years, a provision allowing a "spun off" corporation to exclude sales made to its former parent corporation when calculating its sales factor used in apportionment, contingent upon certain conditions being met.
2006 PA 53: Expands the historic preservation credit for the rehabilitation of certain historic buildings, structures, and objects outside of local historic districts.
  PA 111
PA 112
PA 113:		 Creates a category for brownfield property tax credits equal to $200,000 or less and provides a separate approval process for such credits. Allows unused credits to be carried forward into the next year. Allows a taxpayer to assign all or a portion of a brownfield property tax credit to another taxpayer.
  PA 224: Repeals 2006 PA 113, which allows a taxpayer to assign all or a portion of a brownfield property tax credit to another taxpayer. PA 113 was not given immediate effect and therefore would not take effect until 2007. PA 224 is identical to PA 113; however, it was granted immediate effect with a retroactive effective date of January 2006.
  PA 323: Refundable credit equal to 3.9% of the compensation paid to employees at a facility in Troy engaged in research and development of a two-mode hybrid car engine.

Horse Race Wagering Tax
1997 PA 73: Requires that one-tenth of 1% of the gross horse race wagers be deposited in the Compulsive Gaming Prevention Fund.
1998 PA 408: Increases the amount of commission on multiple wagering that may be retained by race meeting licensees and eliminates certain restrictions on race meetings, among other things.

State Casino Gaming Tax
1997 PA 69: Increases certain taxes on casinos to defray the costs of municipal services provided as a result of a casino operating.
2004 PA 306: Beginning September 1, 2004 an additional 6% wagering tax (on top of 18%) was imposed on casinos in the City of Detroit subject to several provisions that may cause the rate to increase or decrease in the future. The additional revenues are allocated 1/3 to the city, 7/12 to the General Fund, and 1/12 to the Agriculture Equine Industry Development Fund. Provisions are made for payments to be made directly to the city with offsetting reductions in the amounts paid to the State. Casinos failing to become fully operational ("permanent") until after July 1, 2009, would pay higher additional tax rates: 7% in 2009, 8% in 2010, and 9% in 2011. Once a casino is certified to be fully operational, the additional tax rate is reduced from 6% or higher to 1%, entirely payable to the city.

Commercial Mobile Radio Service Tax
2003 PA 244: Extends the sunset from January 1, 2004, to December 31, 2006. Reduces the fee from $.52 per month to $.29 per month for each Commercial Mobile Radio Service (CMRS), i.e., cellular phone, connection, after December 31, 2005. Changes the distribution of the CMRS Fund.
2004 PA 89: Provides a payment of $12 million from the CMRS Fund to the State Building Authority to cover debt service in FY04.
2006 PA 74: Provides a payment of $15 million from the CMRS Fund to the State Building Authority to cover debt service in FY06.
  PA 249: Extends the sunset from December 31, 2006, to December 31, 2007.
2007 PA 164 and 165: Eliminates the existing 29-cent Commercial Mobile Radio Service Tax (cell phones) and replaces it with a new 19-cent State 9-1-1 Tax effective January 1, 2008, on all 9-1-1 service users (cell phones and land lines) and provides for the disposition of the revenue collected. The state tax and the distribution of the proceeds can be adjusted on January 1, 2009, and January 1, 2010 by the Michigan Public Service Commission. The tax sunsets December 31, 2011. Allows a county board of commissioners, subject to voter approval, to assess a county 9-1-1 tax in an amount sufficient to implement, maintain, and operate the 9-1-1 system in a county.


Airport Parking Excise Tax
2002 PA 680: Reduces the tax rate from 30% to 27% of the amount charged for the transaction and alters the distribution of revenues to send $6 million to the State Aeronautics Fund to be used for safety and security projects at state airports throughout the state; $1.5 million to the City of Romulus; and the balance to Wayne County for indigent health care.

Quality Assurance Assessment Fees
2002 PA 303: Authorizes the quality assurance assessment fee for nursing homes and hospital long-term care.
  PA 304: Authorizes the quality assurance assessment fee for health maintenance organizations.
  PA 562: Authorizes the quality assurance assessment fee for hospitals.
2003 PA 113: Further specifies the fee amount limits and change effective date of implementation.
2004 PA 393: Extends sunset date from September 30, 2004 to October 1, 2007.
2005 PA 83: Authorizes the quality assurance assessment fee for community mental health plans as specialty prepaid health plans.
  PA 84: Defines specialty prepaid health plans as an additional provider type covered under health maintenance organizations.
  PA 187: Includes county-owned nursing homes in the nursing home and hospital long-term care facilities and changes the basis of the tax from a bed tax to a tax based on non-Medicare bed days. Extends the sunset date for the hospital quality assurance assessment fee from October 1, 2007 to October 1, 2008.
2007 PA 85: Extends the sunset for the nursing home/hospital long-term care unit assessment fee from October 1, 2007, to October 1, 2011.

  PA 88: Extends the sunset for the Medicaid managed care health maintenance organization assessment fee from October 1, 2007, to October 1, 2008.

2008 PA 29: Creates a new tax for captive insurance companies based on the volume of insurance and reinsurance premiums written.

 

 

 

 

 

 

Last Updated July 22, 2008