Bill Text: MI HB4099 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Sales tax; other; sales tax on services; implement. Amends secs. 1, 2, 4, 4a, 4d, 4h, 4j, 4q, 4t, 4u, 4w, 6, 10, 16a, 19, 23 & 25 of 1933 PA 167 (MCL 205.51 et seq.) & adds sec. 4c. TIE BAR WITH: HB 4100'11, HJR F'11

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2011-01-19 - Printed Bill Filed 01/19/2011 [HB4099 Detail]

Download: Michigan-2011-HB4099-Introduced.html

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HOUSE BILL No. 4099

 

January 18, 2011, Introduced by Rep. Meadows and referred to the Committee on Tax Policy.

 

      A bill to amend 1933 PA 167, entitled

 

"General sales tax act,"

 

by amending sections 1, 2, 4, 4a, 4d, 4h, 4j, 4q, 4t, 4u, 4w, 6,

 

10, 16a, 19, 23, and 25 (MCL 205.51, 205.52, 205.54, 205.54a,

 

205.54d, 205.54h, 205.54j, 205.54q, 205.54t, 205.54u, 205.54w,

 

205.56, 205.60, 205.66a, 205.69, 205.73, and 205.75), section 1

 

as amended by 2008 PA 438, sections 2, 4, 4j, 4q, 6, 10, and 23

 

as amended and sections 4h and 19 as added by 2004 PA 173,

 

section 4a as amended by 2008 PA 415, sections 4d and 4u as

 

amended by 2008 PA 556, section 4t as amended by 2010 PA 116,

 

section 4w as amended by 2006 PA 665, and section 25 as amended

 

by 2010 PA 160, and by adding section 4c.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

 1        Sec. 1. (1) As used in this act:

 

 2        (a) "Person" means an individual, firm, partnership, joint

 

 1  venture, association, social club, fraternal organization,

 

 2  municipal or private corporation whether organized for profit or

 

 3  not, company, estate, trust, receiver, trustee, syndicate, the

 

 4  United States, this state, county, or any other group or

 

 5  combination acting as a unit, and includes the plural as well as

 

 6  the singular number, unless the intention to give a more limited

 

 7  meaning is disclosed by the context.

 

 8        (b) "Sale at retail" or "retail sale" means a 1 or more of

 

 9  the following:

 

10        (i) A sale, lease, or rental of tangible personal property

 

11  for any purpose other than for resale, sublease, or subrent.

 

12        (ii) Beginning January 1, 2011, the sale, lease, or rental of

 

13  services.

 

14        (c) "Gross proceeds" means sales price.

 

15        (d) "Sales price" means the total amount of consideration,

 

16  including cash, credit, property, and services, for which

 

17  tangible personal property or services are sold, leased, or

 

18  rented, valued in money, whether received in money or otherwise,

 

19  and applies to the measure subject to sales tax. Sales price

 

20  includes the following subparagraphs (i) through (vii) and excludes

 

21  subparagraphs (viii) through (x):

 

22        (i) Seller's cost of the property sold.

 

23        (ii) Cost of materials used, labor or service cost, interest,

 

24  losses, costs of transportation to the seller, taxes imposed on

 

25  the seller other than taxes imposed by this act, and any other

 

26  expense of the seller.

 

27        (iii) Charges by the seller for any services provided,

 

 1  including services necessary to complete the sale, other than the

 

 2  following:

 

 3        (A) An an amount received or billed by the taxpayer for

 

 4  remittance to the employee as a gratuity or tip, if the gratuity

 

 5  or tip is separately identified and itemized on the guest check

 

 6  or billed to the customer.

 

 7        (B) Labor or service charges involved in maintenance and

 

 8  repair work on tangible personal property of others if separately

 

 9  itemized.

 

10        (iv) Delivery charges incurred or to be incurred before the

 

11  completion of the transfer of ownership of tangible personal

 

12  property subject to the tax levied under this act from the seller

 

13  to the purchaser. A seller is not liable under this act for

 

14  delivery charges allocated to the delivery of exempt property.

 

15        (v) Installation charges incurred or to be incurred before

 

16  the completion of the transfer of ownership of tangible personal

 

17  property from the seller to the purchaser.

 

18        (vi) Credit for any trade-in.

 

19        (vii) Except as otherwise provided in subparagraph (x),

 

20  consideration received by the seller from third parties if all of

 

21  the following conditions are met:

 

22        (A) The seller actually receives consideration from a party

 

23  other than the purchaser and the consideration is directly

 

24  related to a price reduction or discount on the sale.

 

25        (B) The seller has an obligation to pass the price reduction

 

26  or discount through to the purchaser.

 

27        (C) The amount of the consideration attributable to the sale

 

 1  is fixed and determinable by the seller at the time of the sale

 

 2  of the item to the purchaser.

 

 3        (D) One of the following criteria is met:

 

 4        (I) The purchaser presents a coupon, certificate, or other

 

 5  documentation to the seller to claim a price reduction or

 

 6  discount where the coupon, certificate, or documentation is

 

 7  authorized, distributed, or granted by a third party with the

 

 8  understanding that the third party will reimburse any seller to

 

 9  whom the coupon, certificate, or documentation is presented.

 

10        (II) The purchaser identifies himself or herself to the

 

11  seller as a member of a group or organization entitled to a price

 

12  reduction or discount. A preferred customer card that is

 

13  available to any patron does not constitute membership in a group

 

14  or organization.

 

15        (III) The price reduction or discount is identified as a

 

16  third party price reduction or discount on the invoice received

 

17  by the purchaser or on a coupon, certificate, or other

 

18  documentation presented by the purchaser.

 

19        (viii) Interest, financing, or carrying charges from credit

 

20  extended on the sale of personal property or services, if the

 

21  amount is separately stated on the invoice, bill of sale, or

 

22  similar document given to the purchaser.

 

23        (ix) Any taxes legally imposed directly on the consumer that

 

24  are separately stated on the invoice, bill of sale, or similar

 

25  document given to the purchaser.

 

26        (x) Beginning January 1, 2000, employee discounts that are

 

27  reimbursed by a third party on sales of motor vehicles.

 

 1        (e) "Business" includes an activity engaged in by a person

 

 2  or caused to be engaged in by that person with the object of

 

 3  gain, benefit, or advantage, either direct or indirect.

 

 4        (f) "Tax year" or "taxable year" means the fiscal year of

 

 5  the state or the taxpayer's fiscal year if permission is obtained

 

 6  by the taxpayer from the department to use the taxpayer's fiscal

 

 7  year as the tax period instead.

 

 8        (g) "Department" means the department of treasury.

 

 9        (h) "Taxpayer" means a person subject to a tax under this

 

10  act.

 

11        (i) "Tax" includes a tax, interest, or penalty levied under

 

12  this act.

 

13        (j) "Textiles" means goods that are made of or incorporate

 

14  woven or nonwoven fabric, including, but not limited to,

 

15  clothing, shoes, hats, gloves, handkerchiefs, curtains, towels,

 

16  sheets, pillows, pillow cases, tablecloths, napkins, aprons,

 

17  linens, floor mops, floor mats, and thread. Textiles also include

 

18  materials used to repair or construct textiles, or other goods

 

19  used in the rental, sale, or cleaning of textiles.

 

20        (k) "Seller" means 1 or more of the following:

 

21        (i) A person who sells, leases, or rents tangible personal

 

22  property for any purpose other than for resale, sublease, or

 

23  subrent.

 

24        (ii) Beginning January 1, 2011, a person who sells, leases,

 

25  or rents services.

 

26        (l) "Purchaser" means 1 or more of the following:

 

27        (i) A person who purchases, leases, or rents tangible

 

 1  personal property for any purpose other than for resale,

 

 2  sublease, or subrent.

 

 3        (ii) Beginning January 1, 2011, a person who purchases,

 

 4  leases, or rents services.

 

 5        (2) If the department determines that it is necessary for

 

 6  the efficient administration of this act to regard an unlicensed

 

 7  person, including a salesperson, representative, peddler, or

 

 8  canvasser as the agent of the dealer, distributor, supervisor, or

 

 9  employer under whom the unlicensed person operates or from whom

 

10  the unlicensed person obtains the tangible personal property or

 

11  services sold by the unlicensed person, irrespective of whether

 

12  the unlicensed person is making sales on the unlicensed person's

 

13  own behalf or on behalf of the dealer, distributor, supervisor,

 

14  or employer, the department may so regard the unlicensed person

 

15  and may regard the dealer, distributor, supervisor, or employer

 

16  as making sales at retail at the retail price for the purposes of

 

17  this act.

 

18        Sec. 2. (1) Except as provided in section 2a, there is

 

19  levied upon and there shall be collected from all persons engaged

 

20  in the business of making sales at retail, by which ownership of

 

21  tangible personal property is transferred for consideration, an

 

22  annual tax for the privilege of engaging in that business equal

 

23  to the following:

 

24        (a) Before January 1, 2011, 6% of the gross proceeds of the

 

25  business, plus the penalty and interest if applicable as provided

 

26  by law, less deductions allowed by this act. The 6% rate levied

 

27  under this subdivision is composed of a rate of 4% and an

 

 1  additional rate of 2% under section 8 of article IX of the state

 

 2  constitution of 1963, as approved by the electors on March 15,

 

 3  1994.

 

 4        (b) After December 31, 2010, 5% of the gross proceeds of the

 

 5  business, plus the penalty and interest if applicable as provided

 

 6  by law, less deductions allowed by this act. The 5% rate levied

 

 7  under this subdivision is composed of a rate of 3% and an

 

 8  additional rate of 2% under section 8 of article IX of the state

 

 9  constitution of 1963, as approved by the electors on March 15,

 

10  1994.

 

11        (2) The tax under subsection (1) also applies to the

 

12  following:

 

13        (a) The transmission and distribution of electricity,

 

14  whether the electricity is purchased from the delivering utility

 

15  or from another provider, if the sale is made to the consumer or

 

16  user of the electricity for consumption or use rather than for

 

17  resale.

 

18        (b) The sale of a prepaid telephone calling card or a

 

19  prepaid authorization number for telephone use, rather than for

 

20  resale, including the reauthorization of a prepaid telephone

 

21  calling card or a prepaid authorization number.

 

22        (c) A conditional sale, installment lease sale, or other

 

23  transfer of property, if title is retained as security for the

 

24  purchase but is intended to be transferred later.

 

25        (d) Beginning January 1, 2011, the provision of services for

 

26  consideration.

 

27        (3) Any person engaged in the business of making sales at

 

 1  retail who is at the same time engaged in some other kind of

 

 2  business, occupation, or profession not taxable under this act

 

 3  shall keep books to show separately the transactions used in

 

 4  determining the tax levied by this act. If the person fails to

 

 5  keep separate books, there shall be levied upon him or her the

 

 6  tax provided for in subsection (1) equal to 6% of the rate levied

 

 7  under this act on the entire gross proceeds of both or all of his

 

 8  or her businesses. The taxes levied by this section are a

 

 9  personal obligation of the taxpayer.

 

10        (4) A meal provided free of charge or at a reduced rate to

 

11  an employee during work hours by a food service establishment

 

12  licensed by the Michigan department of agriculture for the

 

13  convenience of the employer is not considered transferred for

 

14  consideration.

 

15        Sec. 4. (1) In computing the amount of tax levied under this

 

16  act for any month, a taxpayer not subject to section 6(2) may

 

17  deduct the amount provided by subdivision (a) or (b), whichever

 

18  is greater:

 

19        (a) If the tax that accrued to this state from the sales at

 

20  retail during the preceding month is remitted to the department

 

21  on or before the twelfth day of the month in which remittance is

 

22  due, 0.75% of the tax due at a rate of 4% before January 1, 2011

 

23  and 3% after December 31, 2010 for the preceding monthly period,

 

24  but not to exceed $20,000.00 of the tax due for that month. If

 

25  the tax that accrued to this state from the sales at retail

 

26  during the preceding month is remitted to the department after

 

27  the twelfth day and on or before the twentieth day of the month

 

 1  in which remittance is due, 0.50% of the tax due at a rate of 4%

 

 2  before January 1, 2011 and 3% after December 31, 2010 for the

 

 3  preceding monthly period, but not to exceed $15,000.00 of the tax

 

 4  due for that month.

 

 5        (b) The tax at a rate of 4% before January 1, 2011 and 3%

 

 6  after December 31, 2010 due on $150.00 of taxable gross proceeds

 

 7  for the preceding monthly period, or a prorated portion of

 

 8  $150.00 of the taxable gross proceeds for the preceding month if

 

 9  the taxpayer engaged in business for less than a month.

 

10        (2) Beginning January 1, 1999, in computing the amount of

 

11  tax levied under this act for any month, a taxpayer who is

 

12  subject to section 6(2) may deduct from the amount of the tax

 

13  paid 0.50% of the tax due at a rate of 4% before January 1, 2011

 

14  and 3% after December 31, 2010.

 

15        (3) A deduction is not allowed under this section for

 

16  payments of taxes made to the department after the day the

 

17  taxpayer is required to pay, pursuant to section 6, the tax

 

18  imposed by this act.

 

19        (4) If, pursuant to section 6(4), the department prescribes

 

20  the filing of returns and the payment of the tax for periods in

 

21  excess of 1 month, a taxpayer is entitled to a deduction from the

 

22  tax collections remitted to the department for the extended

 

23  payment period that is equivalent to the deduction allowed under

 

24  subsection (1) or (2) for monthly periods.

 

25        (5) The department may prescribe the filing of estimated

 

26  returns and annual periodic reconciliations as necessary to carry

 

27  out the purposes of this section.

 

 1        (6) A seller registered under the streamlined sales and use

 

 2  tax agreement may claim a deduction under this section if

 

 3  provided for in the streamlined sales and use tax administration

 

 4  act.

 

 5        Sec. 4a. (1) Subject to subsection (2), the following sales

 

 6  at retail are exempt from the tax under this act:

 

 7        (a) A retail sale of tangible personal property not for

 

 8  resale or services to a nonprofit school, nonprofit hospital, or

 

 9  nonprofit home for the care and maintenance of children or aged

 

10  persons operated by an entity of government, a regularly

 

11  organized church, religious, or fraternal organization, a

 

12  veterans' organization, or a corporation incorporated under the

 

13  laws of this state, if the income or benefit from the operation

 

14  does not inure, in whole or in part, to an individual or private

 

15  shareholder, directly or indirectly, and if the activities of the

 

16  entity or agency are carried on exclusively for the benefit of

 

17  the public at large and are not limited to the advantage,

 

18  interests, and benefits of its members or any restricted group. A

 

19  retail sale of tangible personal property or services to a parent

 

20  cooperative preschool is exempt from taxation under this act. As

 

21  used in this subdivision, "parent cooperative preschool" means a

 

22  nonprofit, nondiscriminatory educational institution, maintained

 

23  as a community service and administered by parents of children

 

24  currently enrolled in the preschool, that provides an educational

 

25  and developmental program for children younger than compulsory

 

26  school age, that provides an educational program for parents,

 

27  including active participation with children in preschool

 

 1  activities, that is directed by qualified preschool personnel,

 

 2  and that is licensed pursuant to 1973 PA 116, MCL 722.111 to

 

 3  722.128.

 

 4        (b) A retail sale of tangible personal property not for

 

 5  resale or services to a regularly organized church or house of

 

 6  religious worship, except the following:

 

 7        (i) Sales Retail sales in activities that are mainly

 

 8  commercial enterprises.

 

 9        (ii) Sales Retail sales of vehicles licensed for use on

 

10  public highways other than a passenger van or bus with a

 

11  manufacturer's rated seating capacity of 10 or more that is used

 

12  primarily for the transportation of persons for religious

 

13  purposes.

 

14        (c) The retail sale of food to bona fide enrolled students

 

15  by a school or other educational institution not operated for

 

16  profit.

 

17        (d) The retail sale of a vessel designated for commercial

 

18  use of registered tonnage of 500 tons or more, if produced upon

 

19  special order of the purchaser, and bunker and galley fuel,

 

20  provisions, supplies, maintenance, and repairs for the exclusive

 

21  use of the vessel engaged in interstate commerce.

 

22        (e) A retail sale of tangible personal property or services

 

23  to persons engaged in a business enterprise and using or

 

24  consuming the tangible personal property in the tilling,

 

25  planting, caring for, or harvesting of the things of the soil; in

 

26  the breeding, raising, or caring for livestock, poultry, or

 

27  horticultural products, including transfers of livestock,

 

 1  poultry, or horticultural products for further growth; or in the

 

 2  direct gathering of fish, by net, line, or otherwise only by an

 

 3  owner-operator of the business enterprise, not including a

 

 4  charter fishing business enterprise. This exemption includes

 

 5  machinery that is capable of simultaneously harvesting grain or

 

 6  other crops and biomass and machinery used for the purpose of

 

 7  harvesting biomass. This exemption includes agricultural land

 

 8  tile, which means fired clay or perforated plastic tubing used as

 

 9  part of a subsurface drainage system for land, and subsurface

 

10  irrigation pipe, if the land tile or irrigation pipe is used in

 

11  the production of agricultural products as a business enterprise.

 

12  This exemption includes a portable grain bin, which means a

 

13  structure that is used or is to be used to shelter grain and that

 

14  is designed to be disassembled without significant damage to its

 

15  component parts. This exemption also includes grain drying

 

16  equipment and natural or propane gas used to fuel that equipment

 

17  for agricultural purposes. This exemption does not include

 

18  transfers of food, fuel, clothing, or any similar tangible

 

19  personal property for personal living or human consumption. This

 

20  exemption does not include tangible personal property permanently

 

21  affixed and becoming a structural part of real estate. As used in

 

22  this subdivision, "biomass" means crop residue used to produce

 

23  energy or agricultural crops grown specifically for the

 

24  production of energy.

 

25        (f) The sale of a copyrighted motion picture film or a

 

26  newspaper or periodical admitted under federal postal laws and

 

27  regulations effective September 1, 1985 as second-class mail

 

 1  matter or as a controlled circulation publication or qualified to

 

 2  accept legal notices for publication in this state, as defined by

 

 3  law, or any other newspaper or periodical of general circulation,

 

 4  established not less than 2 years, and published not less than

 

 5  once a week. Tangible personal property or services used or

 

 6  consumed in producing a copyrighted motion picture film, a

 

 7  newspaper published more than 14 times per year, or a periodical

 

 8  published more than 14 times per year, and not becoming a

 

 9  component part of that film, newspaper, or periodical is subject

 

10  to the tax. Tangible personal property or services used or

 

11  consumed in producing a newspaper published 14 times or less per

 

12  year or a periodical published 14 times or less per year and that

 

13  portion or percentage of tangible personal property used or

 

14  consumed in producing an advertising supplement that becomes a

 

15  component part of a newspaper or periodical is exempt from the

 

16  tax under this subdivision. A claim for a refund for taxes paid

 

17  before January 1, 1999, under this subdivision shall be made

 

18  before June 30, 1999. For purposes of this subdivision, tangible

 

19  personal property that becomes a component part of a newspaper or

 

20  periodical and consequently not subject to tax includes an

 

21  advertising supplement inserted into and circulated with a

 

22  newspaper or periodical that is otherwise exempt from tax under

 

23  this subdivision, if the advertising supplement is delivered

 

24  directly to the newspaper or periodical by a person other than

 

25  the advertiser, or the advertising supplement is printed by the

 

26  newspaper or periodical.

 

27        (g) A retail sale of tangible personal property or services

 

 1  to persons licensed to operate commercial radio or television

 

 2  stations if the property is or services are used in the

 

 3  origination or integration of the various sources of program

 

 4  material for commercial radio or television transmission. This

 

 5  subdivision does not include a vehicle licensed and titled for

 

 6  use on public highways or property used in the transmission to or

 

 7  receiving from an artificial satellite.

 

 8        (h) The retail sale of a prosthetic device, durable medical

 

 9  equipment, or mobility enhancing equipment.

 

10        (i) The retail sale of a vehicle not for resale to a

 

11  Michigan nonprofit corporation organized exclusively to provide a

 

12  community with ambulance or fire department services.

 

13        (j) A retail sale of tangible personal property to inmates

 

14  in a penal or correctional institution purchased with scrip or

 

15  its equivalent issued and redeemed by the institution.

 

16        (k) A retail sale of textbooks sold by a public or nonpublic

 

17  school to or for the use of students enrolled in any part of a

 

18  kindergarten through twelfth grade program.

 

19        (l) A retail sale of services for, or tangible personal

 

20  property installed as a component part of, a water pollution

 

21  control facility for which a tax exemption certificate is issued

 

22  pursuant to part 37 of the natural resources and environmental

 

23  protection act, 1994 PA 451, MCL 324.3701 to 324.3708, or an air

 

24  pollution control facility for which a tax exemption certificate

 

25  is issued pursuant to part 59 of the natural resources and

 

26  environmental protection act, 1994 PA 451, MCL 324.5901 to

 

27  324.5908.

 

 1        (m) The retail sale or lease of the following to an

 

 2  industrial laundry after December 31, 1997:

 

 3        (i) Textiles and disposable products including, but not

 

 4  limited to, soap, paper, chemicals, tissues, deodorizers and

 

 5  dispensers, and all related items such as packaging, supplies,

 

 6  hangers, name tags, and identification tags.

 

 7        (ii) Equipment, whether owned or leased, used to repair and

 

 8  dispense textiles including, but not limited to, roll towel

 

 9  cabinets, slings, hardware, lockers, mop handles and frames, and

 

10  carts.

 

11        (iii) Machinery, equipment, parts, lubricants, and repair

 

12  services used to clean, process, and package textiles and related

 

13  items, whether owned or leased.

 

14        (iv) Utilities such as electric, gas, water, or oil.

 

15        (v) Production washroom equipment and mending and packaging

 

16  supplies and equipment.

 

17        (vi) Material handling equipment including, but not limited

 

18  to, conveyors, racks, and elevators and related control

 

19  equipment.

 

20        (vii) Wastewater pretreatment equipment and supplies and

 

21  related maintenance and repair services.

 

22        (n) A retail sale of tangible personal property to a person

 

23  holding a direct payment permit under section 8 of the use tax

 

24  act, 1937 PA 94, MCL 205.98.

 

25        (o) A retail sale of tangible personal property or services

 

26  subject to the tax levied under the use tax act, 1937 PA 94, MCL

 

27  205.91 to 205.111.

 

 1        (2) The retail sale of tangible personal property or

 

 2  services under subsection (1) is exempt only to the extent that

 

 3  that property is or services are used for the exempt purpose if

 

 4  one is stated in subsection (1). The exemption is limited to the

 

 5  percentage of exempt use to total use determined by a reasonable

 

 6  formula or method approved by the department.

 

 7        Sec. 4c. Beginning January 1, 2011, the sale of the

 

 8  following services may be excluded from the gross proceeds used

 

 9  to calculate the tax under this act:

 

10        (a) Services provided to a business entity.

 

11        (b) Educational services.

 

12        (c) Services provided by a nonprofit organization.

 

13        (d) Services provided by a physician.

 

14        Sec. 4d. The following are exempt from the tax under this

 

15  act:

 

16        (a) The sale of tangible personal property to a person who

 

17  is a lessor licensed under the use tax act, 1937 PA 94, MCL

 

18  205.91 to 205.111, and whose rental receipts are taxed or

 

19  specifically exempt under the use tax act.

 

20        (b) The sale of a vehicle acquired for lending or leasing to

 

21  a public or parochial school for use in a course in driver

 

22  education.

 

23        (c) The sale of a vehicle purchased by a public or parochial

 

24  school if that vehicle is certified for driver education and is

 

25  not reassigned for personal use by the school's administrative

 

26  personnel.

 

27        (d) The sale of water through water mains, the sale of water

 

 1  delivered in bulk tanks in quantities of not less than 500

 

 2  gallons, or the sale of bottled water.

 

 3        (e) The sale of tangible personal property to a person for

 

 4  demonstration purposes. For a dealer selling a new car or truck,

 

 5  the exemption for demonstration purposes shall be determined by

 

 6  the number of new cars and trucks sold during the current

 

 7  calendar year or the immediately preceding year without regard to

 

 8  specific make or style in accordance with the following schedule

 

 9  of 0 to 25, 2 units; 26 to 100, 7 units; 101 to 500, 20 units;

 

10  501 or more, 25 units; but not to exceed 25 cars and trucks in a

 

11  calendar year for demonstration purposes.

 

12        (f) Specific charges for technical support or for adapting

 

13  or modifying prewritten computer software programs to a

 

14  purchaser's needs or equipment if those charges are separately

 

15  stated and identified.

 

16        (f) (g) The sale of computer software originally designed

 

17  for the exclusive use and special needs of the purchaser.

 

18        (g) (h) The sale of a commercial advertising element if the

 

19  commercial advertising element is used to create or develop a

 

20  print, radio, television, or other advertisement, the commercial

 

21  advertising element is discarded or returned to the provider

 

22  after the advertising message is completed, and the commercial

 

23  advertising element is custom developed by the provider for the

 

24  purchaser. As used in this subdivision, "commercial advertising

 

25  element" means a negative or positive photographic image, an

 

26  audiotape or videotape master, a layout, a manuscript, writing of

 

27  copy, a design, artwork, an illustration, retouching, and

 

 1  mechanical or keyline instructions. This exemption does not

 

 2  include black and white or full color process separation

 

 3  elements, an audiotape reproduction, or a videotape reproduction.

 

 4        (h) (i) A sale made outside of the ordinary course of the

 

 5  seller's business.

 

 6        (i) (j) An isolated transaction by a person not licensed or

 

 7  required to be licensed under this act, in which tangible

 

 8  personal property is offered for sale, sold, or transferred and

 

 9  delivered by the owner.

 

10        (j) (k) The sale of oxygen for human use dispensed pursuant

 

11  to a prescription.

 

12        (k) (l) The sale of insulin for human use.

 

13        (l) (m) Before January 1, 2014, the sale of tangible personal

 

14  property for use in construction or renovation of a qualified

 

15  convention facility under the regional convention facility

 

16  authority act.

 

17        Sec. 4h. Sales A sale at retail to the United States, its

 

18  unincorporated agencies and instrumentalities, any incorporated

 

19  agency or instrumentality of the United States wholly owned by

 

20  the United States or by a corporation wholly owned by the United

 

21  States, the American Red Cross and its chapters and branches, and

 

22  this state or its departments and institutions or any of its

 

23  political subdivisions are exempt from the tax under this act.

 

24        Sec. 4j. (1) A sale of tangible personal property at retail

 

25  used in a qualified business activity of the purchaser is exempt

 

26  from the tax under this act.

 

27        (2) As used in this section, "qualified business activity"

 

 1  means that term as defined in the enterprise zone act, 1985 PA

 

 2  224, MCL 125.2101 to 125.2123.

 

 3        Sec. 4q. (1) A sale at retail of tangible personal property

 

 4  or services not for resale to the following, subject to

 

 5  subsection (5), is exempt from the tax under this act:

 

 6        (a) A health, welfare, educational, cultural arts,

 

 7  charitable, or benevolent organization not operated for profit

 

 8  that has been issued an exemption ruling letter to purchase items

 

 9  exempt from tax before July 17, 1998 signed by the administrator

 

10  of the sales, use, and withholding taxes division of the

 

11  department.

 

12        (b) An organization not operated for profit and exempt from

 

13  federal income tax under section 501(c)(3) or 501(c)(4) of the

 

14  internal revenue code, 26 USC 501.

 

15        (2) The exemptions provided for in subsection (1) do not

 

16  apply to sales of tangible personal property at retail and sales

 

17  of vehicles licensed for use on public highways, that are not

 

18  used primarily to carry out the purposes of the organization as

 

19  stated in the bylaws or articles of incorporation of the exempt

 

20  entity.

 

21        (3) At the time of the transfer of the tangible personal

 

22  property or the provision of services exempt under subsection

 

23  (1), the transferee shall do 1 of the following:

 

24        (a) Present the exemption ruling letter signed by the

 

25  administrator of the sales, use, and withholding taxes division

 

26  of the department certifying that the property is to be used or

 

27  consumed or the services shall be utilized in connection with the

 

 1  operation of the organization.

 

 2        (b) Present a signed statement, on a form approved by the

 

 3  department, stating that the property is to be used or consumed

 

 4  or that the services will be utilized in connection with the

 

 5  operation of the organization and that the organization qualifies

 

 6  as an exempt organization under this section. The transferee

 

 7  shall also provide to the transferor a copy of the federal

 

 8  exemption letter.

 

 9        (4) The letter provided under subsection (3)(a) and the

 

10  statement with the accompanying letter provided under subsection

 

11  (3)(b) shall be accepted by all courts as prima facie evidence of

 

12  the exemption and the statement shall provide that if the claim

 

13  for tax exemption is disallowed, the transferee will reimburse

 

14  the transferor for the amount of tax involved.

 

15        (5) The tangible personal property or services under

 

16  subsection (1) is are exempt only to the extent that the property

 

17  is or services are used to carry out the purposes of the

 

18  organization as stated in the organization's bylaws or articles

 

19  of incorporation. The exemption is limited to the percentage of

 

20  exempt use to total use determined by a reasonable formula or

 

21  method approved by the department.

 

22        Sec. 4t. (1) The sale of tangible personal property Retail

 

23  sales to the following after March 30, 1999, subject to

 

24  subsection (2), is are exempt from the tax under this act:

 

25        (a) An industrial processor for use or consumption in

 

26  industrial processing.

 

27        (b) A person, whether or not the person is an industrial

 

 1  processor, if the tangible personal property is or services

 

 2  intended for ultimate use in and is used in industrial processing

 

 3  by an industrial processor.

 

 4        (c) A person, whether or not the person is an industrial

 

 5  processor, if the tangible personal property or service is used

 

 6  by that person to perform an industrial processing activity for

 

 7  or on behalf of an industrial processor.

 

 8        (d) A person, whether or not the person is an industrial

 

 9  processor, if the tangible personal property retail sale is 1 of

 

10  the following:

 

11        (i) A computer used in operating industrial processing

 

12  equipment.

 

13        (ii) Equipment used in a computer assisted manufacturing

 

14  system.

 

15        (iii) Equipment used in a computer assisted design or

 

16  engineering system integral to an industrial process.

 

17        (iv) A subunit or electronic assembly comprising a component

 

18  in a computer integrated industrial processing system.

 

19        (v) Computer equipment used in connection with the computer

 

20  assisted production, storage, and transmission of data if the

 

21  equipment would have been exempt had the data transfer been made

 

22  using tapes, disks, CD-ROMs, or similar media by a company whose

 

23  business includes publishing doctoral dissertations and

 

24  information archiving, and that sells the majority of the

 

25  company's products to nonprofit organizations exempt under

 

26  section 4q.

 

27        (vi) Equipment used in the production of prewritten computer

 

 1  software or software modified or adapted to the user's needs or

 

 2  equipment by the seller, only if the software is available for

 

 3  sale from a seller of software on an as-is basis or as an end

 

 4  product without modification or adaptation.

 

 5        (2) The tangible personal property or services under

 

 6  subsection (1) is are exempt only to the extent that the property

 

 7  is or services are used for the exempt purpose stated in this

 

 8  section. The exemption is limited to the percentage of exempt use

 

 9  to total use determined by a reasonable formula or method

 

10  approved by the department.

 

11        (3) Industrial processing includes the following activities:

 

12        (a) Production or assembly.

 

13        (b) Research or experimental activities.

 

14        (c) Engineering related to industrial processing.

 

15        (d) Inspection, quality control, or testing to determine

 

16  whether particular units of materials or products or processes

 

17  conform to specified parameters at any time before materials or

 

18  products first come to rest in finished goods inventory storage.

 

19        (e) Planning, scheduling, supervision, or control of

 

20  production or other exempt activities.

 

21        (f) Design, construction, or maintenance of production or

 

22  other exempt machinery, equipment, and tooling.

 

23        (g) Remanufacturing.

 

24        (h) Processing of production scrap and waste up to the point

 

25  it is stored for removal from the plant of origin.

 

26        (i) Recycling of used materials for ultimate sale at retail

 

27  or reuse.

 

 1        (j) Production material handling.

 

 2        (k) Storage of in-process materials.

 

 3        (4) Property that is eligible for an industrial processing

 

 4  exemption includes the following:

 

 5        (a) Property that becomes an ingredient or component part of

 

 6  the finished product to be sold ultimately at retail.

 

 7        (b) Machinery, equipment, tools, dies, patterns, foundations

 

 8  for machinery or equipment, or other processing equipment used in

 

 9  an industrial processing activity and in their repair and

 

10  maintenance.

 

11        (c) Property that is consumed or destroyed or that loses its

 

12  identity in an industrial processing activity.

 

13        (d) Tangible personal property, not permanently affixed and

 

14  not becoming a structural part of real estate, that becomes a

 

15  part of, or is used and consumed in installation and maintenance

 

16  of, systems used for an industrial processing activity.

 

17        (e) Fuel or energy used or consumed for an industrial

 

18  processing activity.

 

19        (f) Machinery, equipment, or materials used within a plant

 

20  site or between plant sites operated by the same person for

 

21  movement of tangible personal property in the process of

 

22  production. Property exempt under this subdivision includes front

 

23  end loaders, forklifts, pettibone lifts, skidsters, multipurpose

 

24  loaders, knuckle-boom log loaders, tractors, and log loaders used

 

25  to unload logs from trucks at a saw mill site for the purpose of

 

26  processing at the site and to load lumber onto trucks at a saw

 

27  mill site for purposes of transportation from the site.

 

 1        (g) Office equipment, including data processing equipment,

 

 2  used for an industrial processing activity.

 

 3        (5) Property that is not eligible for an industrial

 

 4  processing exemption includes the following:

 

 5        (a) Tangible personal property permanently affixed and

 

 6  becoming a structural part of real estate including building

 

 7  utility systems such as heating, air conditioning, ventilating,

 

 8  plumbing, lighting, and electrical distribution, to the point of

 

 9  the last transformer, switch, valve, or other device at which

 

10  point usable power, water, gas, steam, or air is diverted from

 

11  distribution circuits for use in industrial processing.

 

12        (b) Office equipment, including data processing equipment

 

13  used for nonindustrial processing purposes.

 

14        (c) Office furniture or office supplies.

 

15        (d) An industrial processor's own product or finished good

 

16  that it uses or consumes for purposes other than industrial

 

17  processing.

 

18        (e) Tangible personal property used for receiving and

 

19  storage of materials, supplies, parts, or components purchased by

 

20  the user or consumer.

 

21        (f) Tangible personal property used for receiving or storage

 

22  of natural resources extracted by the user or consumer.

 

23        (g) Vehicles, including special bodies or attachments,

 

24  required to display a vehicle permit or license plate to operate

 

25  on public highways, except for a vehicle bearing a manufacturer's

 

26  plate or a specially designed vehicle, together with parts, used

 

27  to mix and agitate materials at a plant or job site in the

 

 1  concrete manufacturing process.

 

 2        (h) Tangible personal property used for the preparation of

 

 3  food or beverages by a retailer for ultimate sale at retail

 

 4  through its own locations.

 

 5        (i) Tangible personal property used or consumed for the

 

 6  preservation or maintenance of a finished good once it first

 

 7  comes to rest in finished goods inventory storage.

 

 8        (j) Returnable shipping containers or materials, except as

 

 9  provided in subsection (4)(f).

 

10        (k) Tangible personal property used in the production of

 

11  computer software originally designed for the exclusive use and

 

12  special needs of the purchaser.

 

13        (6) Industrial processing does not include the following

 

14  activities:

 

15        (a) Purchasing, receiving, or storage of raw materials.

 

16        (b) Sales, distribution, warehousing, shipping, or

 

17  advertising activities.

 

18        (c) Administrative, accounting, or personnel services.

 

19        (d) Design, engineering, construction, or maintenance of

 

20  real property and nonprocessing equipment.

 

21        (e) Plant security, fire prevention, or medical or hospital

 

22  services.

 

23        (7) As used in this section:

 

24        (a) "Industrial processing" means the activity of converting

 

25  or conditioning tangible personal property by changing the form,

 

26  composition, quality, combination, or character of the property

 

27  for ultimate sale at retail or for use in the manufacturing of a

 

 1  product to be ultimately sold at retail. Industrial processing

 

 2  begins when tangible personal property begins movement from raw

 

 3  materials storage to begin industrial processing and ends when

 

 4  finished goods first come to rest in finished goods inventory

 

 5  storage.

 

 6        (b) "Industrial processor" means a person who performs the

 

 7  activity of converting or conditioning tangible personal property

 

 8  for ultimate sale at retail or use in the manufacturing of a

 

 9  product to be ultimately sold at retail.

 

10        (c) "Product", as used in subdivision (e), includes, but is

 

11  not limited to, a prototype, pilot model, process, formula,

 

12  invention, technique, patent, or similar property, whether

 

13  intended to be used in a trade or business or to be sold,

 

14  transferred, leased, or licensed.

 

15        (d) "Remanufacturing" means the activity of overhauling,

 

16  retrofitting, fabricating, or repairing a product or its

 

17  component parts for ultimate sale at retail.

 

18        (e) "Research or experimental activity" means activity

 

19  incident to the development, discovery, or modification of a

 

20  product or a product related process. Research or experimental

 

21  activity also includes activity necessary for a product to

 

22  satisfy a government standard or to receive government approval.

 

23  Research or experimental activity does not include the following:

 

24        (i) Ordinary testing or inspection of materials or products

 

25  for quality control purposes.

 

26        (ii) Efficiency surveys.

 

27        (iii) Management surveys.

 

 1        (iv) Market or consumer surveys.

 

 2        (v) Advertising or promotions.

 

 3        (vi) Research in connection with literacy, historical, or

 

 4  similar projects.

 

 5        Sec. 4u. (1) A retail sale of tangible personal property or

 

 6  services to an extractive operator for use or consumption in

 

 7  extractive operations is exempt from the tax under this act.

 

 8        (2) The tangible personal property or services under

 

 9  subsection (1) is are exempt only to the extent that the property

 

10  is or services are used for the exempt purposes stated in this

 

11  section. The exemption is limited to the percentage of exempt use

 

12  to total use determined by a reasonable formula or method

 

13  approved by the department.

 

14        (3) Extractive operations include the actual production of

 

15  oil, gas, brine, or other natural resources. Property eligible

 

16  for the exemption includes the following:

 

17        (a) Casing pipe or drive pipe.

 

18        (b) Tubing.

 

19        (c) Well-pumping equipment.

 

20        (d) Chemicals.

 

21        (e) Explosives or acids used in fracturing, acidizing, or

 

22  shooting wells.

 

23        (f) Christmas trees, derricks, or other wellhead equipment.

 

24        (g) Treatment tanks.

 

25        (h) Piping, valves, or pumps used before movement or

 

26  transportation of the natural resource from the production area.

 

27        (i) Chemicals or acids used in the treatment of crude oil,

 

 1  gas, brine, or other natural resources.

 

 2        (j) Tangible personal property used or consumed in

 

 3  depositing tailings from hard rock mining processing.

 

 4        (k) Tangible personal property used or consumed in

 

 5  extracting the lithologic units necessary to process iron ore.

 

 6        (4) The extractive operation exemption does not include the

 

 7  following:

 

 8        (a) Tangible personal property consumed or used in the

 

 9  construction, alteration, improvement, or repair of buildings,

 

10  storage tanks, and storage and housing facilities.

 

11        (b) Tangible personal property consumed or used in

 

12  transporting the product from the place of extraction, except for

 

13  tangible personal property consumed or used in transporting

 

14  extracted materials from the extraction site to the place where

 

15  the extracted materials first come to rest in finished goods

 

16  inventory storage.

 

17        (c) Tangible personal property that is a product the

 

18  extractive operator produces and that is consumed or used by the

 

19  extractive operator for a purpose other than the manufacturing or

 

20  producing of a product for ultimate sale. The extractor shall

 

21  account for and remit the tax to this state based upon the

 

22  product's fair market value.

 

23        (d) Equipment, materials, and supplies used in exploring,

 

24  prospecting, or drilling for oil, gas, brine, or other natural

 

25  resources.

 

26        (e) Equipment, materials, and supplies used in the storing,

 

27  withdrawing, or distribution of oil, gas, or brine from a storage

 

 1  facility.

 

 2        (f) Vehicles, including special bodies or attachments,

 

 3  required to display a vehicle permit or license plate to operate

 

 4  on public highways.

 

 5        (5) As used in this section:

 

 6        (a) "Extractive operations" means the activity of taking or

 

 7  extracting for resale ore, oil, gas, coal, timber, stone, gravel,

 

 8  clay, minerals, or other natural resource material. An extractive

 

 9  operation begins when contact is made with the actual type of

 

10  natural raw product being recovered. Extractive operation

 

11  includes all necessary processing operations before shipment from

 

12  the place of extraction. Extractive operations include all

 

13  necessary processing operations and movement of the natural

 

14  resource material until the point at which the natural raw

 

15  product being recovered first comes to rest in finished goods

 

16  inventory storage at the extraction site. Extractive operations

 

17  for timber include transporting timber from the point of

 

18  extraction to a place of temporary storage at the extraction site

 

19  and loading or transporting timber from a place of temporary

 

20  storage at the extraction site to a vehicle or other equipment

 

21  located at the extraction site that will remove the timber from

 

22  the extraction site.

 

23        (b) An extractive operator is a person who, either directly

 

24  or by contract, performs extractive operations.

 

25        Sec. 4w. (1) For taxes levied after June 30, 1999, a retail

 

26  sale of tangible personal property or services to a person

 

27  directly engaged in the business of constructing, altering,

 

 1  repairing, or improving real estate for others to the extent that

 

 2  the services are used for, or the property is affixed to and made

 

 3  a structural part of, a nonprofit hospital or a nonprofit housing

 

 4  entity qualified as exempt under section 15a of the state housing

 

 5  development authority act of 1966, 1966 PA 346, MCL 125.1415a, is

 

 6  exempt from the tax under this act. For purposes of a county

 

 7  long-term medical care facility, "affixed to and made a

 

 8  structural part of" means any physical connection to an existing

 

 9  county long-term medical care facility.

 

10        (2) An exemption shall not be granted under this section for

 

11  any portion of property or services otherwise qualifying for

 

12  exemption under this section if income or a benefit inures

 

13  directly or indirectly to an individual, private stockholder, or

 

14  other private person from the independent or nonessential

 

15  operation of that portion of property.

 

16        (3) As used in this section:

 

17        (a) "Nonprofit hospital" means 1 of the following:

 

18        (i) That portion of a building to which 1 of the following

 

19  applies:

 

20        (A) Is owned or operated by an entity exempt under section

 

21  501(c)(3) of the internal revenue code, 26 USC 501, that is

 

22  licensed as a hospital under part 215 of the public health code,

 

23  1978 PA 368, MCL 333.21501 to 333.21571.

 

24        (B) Is owned or operated by a governmental unit in which

 

25  medical attention is provided.

 

26        (C) Is owned or operated by an entity or entities exempt

 

27  under section 501(c)(2) or (3) of the internal revenue code, 26

 

 1  USC 501, in which medical attention is provided.

 

 2        (ii) That portion of real property necessary and related to a

 

 3  building described in subparagraph (i) in which medical attention

 

 4  is provided.

 

 5        (iii) A county long-term medical care facility, including any

 

 6  addition to an existing county long-term medical care facility,

 

 7  if the addition is owned and operated by either the county or the

 

 8  county long-term medical care facility and offers health services

 

 9  provided by the county long-term medical care facility. An

 

10  exemption under this section shall be granted until January 1,

 

11  2008, regardless of whether the addition is licensed as a nursing

 

12  home or skilled nursing facility under part 217 of the public

 

13  health code, 1978 PA 368, MCL 333.21701 to 333.21799e, or whether

 

14  the addition meets the requirements set forth in subsection (1).

 

15        (b) "Nonprofit hospital" does not include the following:

 

16        (i) A freestanding building or other real property of a

 

17  nursing home or skilled nursing facility licensed under part 217

 

18  of the public health code, 1978 PA 368, MCL 333.21701 to

 

19  333.21799e.

 

20        (ii) A hospice licensed under part 214 of the public health

 

21  code, 1978 PA 368, MCL 333.21401 to 333.21420.

 

22        (iii) A home for the aged licensed under part 213 of the

 

23  public health code, 1978 PA 368, MCL 333.21301 to 333.21335.

 

24        (c) "Medical attention" means that level of medical care in

 

25  which a physician provides acute care or active treatment of

 

26  medical, surgical, obstetrical, psychiatric, chronic, or

 

27  rehabilitative conditions, that require the observation,

 

 1  diagnosis, and daily treatment by a physician.

 

 2        Sec. 6. (1) Each taxpayer, unless otherwise provided by law

 

 3  or as required pursuant to subsection (2), (4), or (5), on or

 

 4  before the twentieth day of each month shall make out a return

 

 5  for the preceding month on a form prescribed by the department

 

 6  showing the entire amount of all retail sales and gross proceeds

 

 7  of his or her business, the allowable deductions, and the amount

 

 8  of tax for which he or she is liable. The taxpayer shall also

 

 9  transmit the return, together with a remittance for the amount of

 

10  the tax, to the department on or before the twentieth day of that

 

11  month.

 

12        (2) Beginning January 1, 1999, each taxpayer that had a

 

13  total tax liability after subtracting the tax payments made to

 

14  the secretary of state under this act or the use tax act, 1937 PA

 

15  94, MCL 205.91 to 205.111, or after subtracting the tax credits

 

16  available under section 6a, in the immediately preceding calendar

 

17  year of $720,000.00 or more shall remit to the department, by an

 

18  electronic funds transfer method approved by the department on or

 

19  before the twentieth day of the month, an amount equal to 50% of

 

20  the taxpayer's liability under this act for the same month in the

 

21  immediately preceding calendar year, or 50% of the actual

 

22  liability for the month being reported, whichever is less, plus a

 

23  reconciliation payment equal to the difference between the tax

 

24  liability determined for the immediately preceding month minus

 

25  the amount of tax previously paid for that month. Additionally,

 

26  the seller shall remit to the department, by an electronic funds

 

27  transfer method approved by the department on or before the last

 

 1  day of the month, an amount equal to 50% of the taxpayer's

 

 2  liability under this act for the same month in the immediately

 

 3  preceding calendar year, or 50% of the actual liability for the

 

 4  month being reported, whichever is less.

 

 5        (3) The tax imposed under this act shall accrue to this

 

 6  state on the last day of the month in which the sale is incurred.

 

 7        (4) The department, if necessary to insure payment of the

 

 8  tax or to provide a more efficient administration, may require

 

 9  the filing of returns and payment of the tax for other than

 

10  monthly periods.

 

11        (5) A taxpayer who is a materialperson may at the option of

 

12  the taxpayer include the amount of all taxable retail sales and

 

13  gross proceeds from materials furnished to an owner, contractor,

 

14  subcontractor, repairperson, or consumer on a credit sale basis

 

15  for the purpose of making an improvement to real property in his

 

16  or her return in the first quarterly return due following the

 

17  date in which the materialperson made the credit sale to the

 

18  owner, contractor, subcontractor, repairperson, or consumer.

 

19  Notwithstanding subsections (1) through (3), a materialperson may

 

20  at the option of the taxpayer file quarterly returns for a credit

 

21  sale only as determined by the department. As used in this

 

22  subsection, "credit sale" means an extension of credit for the

 

23  sale of taxable goods by a seller other than a credit card sale;

 

24  and "materialperson" means a person who provides materials for

 

25  the improvement of real property, who has registered with and has

 

26  demonstrated to the department that he or she is primarily

 

27  engaged in the sale of lumber and building material related

 

 1  products to owners, contractors, subcontractors, repairpersons,

 

 2  or consumers, and who is authorized to file a construction lien

 

 3  upon real property and improvements under the construction lien

 

 4  act, 1980 PA 497, MCL 570.1101 to 570.1305.

 

 5        (6) If a due date falls on a Saturday, Sunday, state

 

 6  holiday, or legal banking holiday, the taxes are due on the next

 

 7  succeeding business day.

 

 8        Sec. 10. (1) If a taxpayer refunds or provides a credit for

 

 9  all or a portion of the amount of the purchase price of services

 

10  or returned tangible personal property within the time period for

 

11  returns stated in the taxpayer's refund policy or 180 days after

 

12  the initial retail sale, whichever is sooner, the taxpayer shall

 

13  also refund or provide a credit for the tax levied under this act

 

14  that the taxpayer added to all or that portion of the amount of

 

15  the purchase price that is refunded or credited.

 

16        (2) A cause of action against a seller for overcollected

 

17  sales or use taxes does not accrue until a purchaser has provided

 

18  written notice to a seller and the seller has had 60 days to

 

19  respond. The purchaser shall provide in the notice sufficient

 

20  information to determine the validity of the request. In matters

 

21  relating to the request, a seller is presumed to have a

 

22  reasonable business practice if in the collection of sales and

 

23  use tax, the seller has a certified service provider or a system,

 

24  including a proprietary system, certified by the department and

 

25  has remitted to this state all taxes collected less any

 

26  deductions, credits, or collection allowances.

 

27        (3) If a taxpayer tenders an amount to a buyer under section

 

 1  10a of 1976 PA 449, MCL 445.360a, the taxpayer shall refund the

 

 2  tax levied under this act on the difference between the price

 

 3  stamped or affixed to the item and the price charged.

 

 4        Sec. 16a. (1) It shall be the duty of each The assessing

 

 5  officer of each city, village, or township in preparing the

 

 6  annual property tax roll of personal property to shall show on

 

 7  the assessment roll the sales tax license number of each person

 

 8  engaged in the business of making retail sales of tangible

 

 9  personal property subject to tax under this act. It shall be the

 

10  duty of each said Each assessing officer to shall immediately

 

11  report to the department of revenue the name and address and type

 

12  of business of any person found in the business of making such

 

13  retail sales and not licensed to do so as required by section 3

 

14  of under this act.

 

15        (2) Any city, village, or township clerk, marketmaster, or

 

16  any other state, county, or municipal official whose duty it is

 

17  to issue licenses or permits to engage in a business involving

 

18  the sale at retail of tangible personal property retail sales

 

19  subject to tax under this act shall, before issuing such a

 

20  license or permit, require proof that the person to whom such

 

21  that license or permit is to be issued is the holder of has a

 

22  sales tax license as required by section 3 of under this act or

 

23  has applied to the department of revenue for such for a license.

 

24        (3) Any city, village, township, or state officer who shall

 

25  receive receives information which that leads him or her to

 

26  believe that a person making retail sales subject to tax under

 

27  this act is about to close his that person's business or cease

 

 1  making retail sales shall immediately notify the department of

 

 2  revenue of this fact in order that and the department may make

 

 3  such investigation as may be investigate as necessary to protect

 

 4  the interests of the this state.

 

 5        Sec. 19. (1) For sourcing a sale at retail for taxation

 

 6  under this act, the following apply:

 

 7        (a) If a product or service is received by the purchaser at

 

 8  a business location of the seller, the sale is sourced to that

 

 9  business location.

 

10        (b) If a product or service is not received by the purchaser

 

11  at a business location of the seller, the sale is sourced to the

 

12  location where the product or service is received by the

 

13  purchaser or the purchaser's designee, including the location

 

14  indicated by instructions for delivery to the purchaser, known to

 

15  the seller.

 

16        (c) If subdivision (a) or (b) does not apply, the sale is

 

17  sourced to the location indicated by an address for the purchaser

 

18  available from the seller's business records maintained in the

 

19  ordinary course of the seller's business, provided use of the

 

20  address does not constitute bad faith.

 

21        (d) If subdivisions (a) through (c) do not apply, the sale

 

22  is sourced to the location indicated by an address for the

 

23  purchaser obtained at the completion of the sale, including the

 

24  address of the purchaser's payment instrument if no other address

 

25  is available, provided use of the address does not constitute bad

 

26  faith.

 

27        (e) If subdivisions (a) through (d) do not apply or the

 

 1  seller has insufficient information to apply subdivisions (a)

 

 2  through (d), the sale will be sourced to the location indicated

 

 3  by the address from which the tangible personal property was

 

 4  shipped, from which the services were provided, or from which the

 

 5  computer software delivered electronically was first available

 

 6  for transmission by the seller.

 

 7        (2) For sourcing the lease or rental of tangible personal

 

 8  property, other than property included in subsection (3) or (4),

 

 9  for taxation under this act, the following apply:

 

10        (a) For a lease or rental requiring recurring periodic

 

11  payments, the first payment is sourced in the same manner

 

12  provided for a retail sale in subsection (1). Subsequent payments

 

13  shall be sourced to the primary property location for each period

 

14  covered by the payment as indicated by the address of the

 

15  property provided by the lessee and available to the lessor from

 

16  the lessor's records maintained in the ordinary course of

 

17  business, when use of this address does not constitute bad faith.

 

18  The property location is not considered altered by intermittent

 

19  use at different locations such as business property that

 

20  accompanies employees on business trips or service calls.

 

21        (b) For a lease or rental not requiring recurring periodic

 

22  payments, the payment is sourced in the same manner provided for

 

23  a retail sale in subsection (1).

 

24        (3) For sourcing the lease or rental of motor vehicles,

 

25  trailers, semitrailers, or aircraft that are not transportation

 

26  equipment, the following apply:

 

27        (a) For a lease or rental requiring recurring periodic

 

 1  payments, each payment is sourced to the primary property

 

 2  location as indicated by the address of the property provided by

 

 3  the lessee and available to the lessor from the lessor's records

 

 4  maintained in the ordinary course of business, when use of this

 

 5  address does not constitute bad faith. The property location is

 

 6  not considered altered by intermittent use at a different

 

 7  location.

 

 8        (b) For a lease or rental not requiring recurring periodic

 

 9  payments, the payment is sourced in the same manner provided for

 

10  a retail sale in subsection (1).

 

11        (4) The lease or rental of transportation equipment shall be

 

12  sourced in the same manner provided for a retail sale in

 

13  subsection (1).

 

14        (5) Subsections (2) and (3) do not affect the imposition or

 

15  computation of sales tax on leases or rentals based on a lump-sum

 

16  or accelerated basis or on the acquisition of property for lease.

 

17        (6) As used in this section:

 

18        (a) "Receive" and "receipt" mean 1 or more of the following

 

19  but exclude possession by a shipping company on behalf of the

 

20  purchaser:

 

21        (i) Taking possession of tangible personal property.

 

22        (ii) Making first use of services.

 

23        (b) "Transportation equipment" means 1 or more of the

 

24  following:

 

25        (i) Locomotives and railcars utilized for the carriage of

 

26  persons or property in interstate commerce.

 

27        (ii) Trucks and truck-tractors with a gross vehicle weight

 

 1  rating of 10,001 pounds or greater, trailers, semitrailers, or

 

 2  passenger buses, which are registered through the international

 

 3  registration plan and operated under authority of a carrier

 

 4  authorized and certificated by the United States department of

 

 5  transportation or another federal authority to engage in the

 

 6  carriage of persons or property in interstate commerce.

 

 7        (iii) Aircraft operated by air carriers authorized and

 

 8  certificated by the United States department of transportation or

 

 9  other federal or foreign authority to transport air cargo or

 

10  passengers in interstate or foreign commerce.

 

11        (iv) Containers designed for use on or component parts

 

12  attached or secured to the equipment included in subparagraphs (i)

 

13  to (iii).

 

14        (7) A person may deviate from the sourcing requirements

 

15  under this section as provided in section 20 or 21.

 

16        Sec. 23. (1) A person engaged in the business of selling

 

17  tangible personal property at retail making sales at retail shall

 

18  not advertise or hold out to the public in any manner, directly

 

19  or indirectly, that the tax imposed under this act is not

 

20  considered as an element in the price to the consumer. This act

 

21  does not prohibit any taxpayer from reimbursing himself or

 

22  herself by adding to the sale price any tax levied by this act.

 

23        (2) Subject to subsection (3), in determining amounts to be

 

24  added to the sales prices for reimbursement purposes, the seller

 

25  shall compute the tax to the third decimal place and round up to

 

26  a whole cent when the third decimal place is greater than 4 or

 

27  round down to a whole cent when the third decimal place is 4 or

 

 1  less.

 

 2        (3) The following brackets may be used through December 31,

 

 3  2005 by retailers in determining amounts to be added to sales

 

 4  prices for reimbursement purposes:

 

 

5  Amount of Sale                                               Tax

6  1 cent to 10 cents......................................         0

7  11 cents to 24 cents....................................    1 cent

8  25 cents to 41 cents....................................   2 cents

9  42 cents to 58 cents....................................   3 cents

10 59 cents to 74 cents....................................   4 cents

11 75 cents to 91 cents....................................   5 cents

12 92 cents to 99 cents....................................   6 cents

13 For $1.00 and each multiple of $1.00, 6% of the sale price.

 

 

14        (4) A person other than this state may not enrich himself or

 

15  herself or gain any benefit from the collection or payment of the

 

16  tax.

 

17        (5) A person subject to tax under this act shall not

 

18  separately state on an invoice, bill of sale, or other similar

 

19  document given to the purchaser the tax imposed under the tobacco

 

20  products tax act, 1993 PA 327, MCL 205.421 to 205.436.

 

21        Sec. 25. (1) All money received and collected under this act

 

22  shall be deposited by the department in the state treasury to the

 

23  credit of the general fund, except as otherwise provided in this

 

24  section.

 

25        (2) Fifteen percent Before January 1, 2010, 15% of the

 

26  collections of the tax imposed at a rate of 4% shall be

 

27  distributed to cities, villages, and townships pursuant to the

 

 1  Glenn Steil state revenue sharing act of 1971, 1971 PA 140, MCL

 

 2  141.901 to 141.921.

 

 3        (3) Beginning January 1, 2011, 20% of the collections of the

 

 4  tax imposed at a rate of 5% shall be distributed to cities,

 

 5  villages, and townships pursuant to the Glenn Steil state revenue

 

 6  sharing act of 1971, 1971 PA 140, MCL 141.901 to 141.921.

 

 7        (4) (3) Sixty percent Before January 1, 2011, 60% of the

 

 8  collections of the tax imposed at a rate of 4% shall be deposited

 

 9  in the state school aid fund established in section 11 of article

 

10  IX of the state constitution of 1963 and distributed as provided

 

11  by law. In addition, all of the collections of the tax imposed at

 

12  the additional rate of 2% approved by the electors March 15, 1994

 

13  shall be deposited in the state school aid fund.

 

14        (5) Beginning January 1, 2011, 75% of the collections of the

 

15  tax imposed at a rate of 5% shall be deposited in the state

 

16  school aid fund established in section 11 of article IX of the

 

17  state constitution of 1963 and distributed as provided by law.

 

18        (6) (4) For the fiscal year ending September 30, 1988 and

 

19  each through the fiscal year ending after September 30, 1988

 

20  2011, of the 25% of the collections of the general sales tax

 

21  imposed at a rate of 4% directly or indirectly on fuels sold to

 

22  propel motor vehicles upon highways, on the sale of motor

 

23  vehicles, and on the sale of the parts and accessories of motor

 

24  vehicles by new and used car businesses, used car businesses,

 

25  accessory dealer businesses, and gasoline station businesses as

 

26  classified by the department of treasury remaining after the

 

27  allocations and distributions are made pursuant to subsections

 

 1  (2) and (3) (4), the following amounts shall be deposited each

 

 2  year into the respective funds:

 

 3        (a) For the fiscal year ending September 30, 2003 and for

 

 4  the fiscal year ending September 30, 2006 and each fiscal year

 

 5  ending after September 30, 2006, not less than 27.9% to the

 

 6  comprehensive transportation fund. For the fiscal year ending

 

 7  September 30, 2004 through the fiscal year ending September 30,

 

 8  2005, not less than 24% to the comprehensive transportation fund.

 

 9  For the fiscal year ending September 30, 2006 only, the amount

 

10  deposited to the comprehensive transportation fund under this

 

11  subdivision shall be reduced by $11,100,000.00. For the fiscal

 

12  year ending September 30, 2007 only, the amount deposited to the

 

13  comprehensive transportation fund under this subdivision shall be

 

14  reduced by $10,270,000.00. For the fiscal year ending September

 

15  30, 2008 only, the amount deposited to the comprehensive

 

16  transportation fund under this subdivision shall be reduced by

 

17  $5,000,000.00 and shall be deposited in the state treasury to the

 

18  credit of the general fund. For the fiscal year ending September

 

19  30, 2010 only, the amount deposited to the comprehensive

 

20  transportation fund under this subdivision shall be reduced by

 

21  $5,700,000.00 and shall be deposited in the state treasury to the

 

22  credit of the general fund.

 

23        (b) The balance to the state general fund.

 

24        (7) For the fiscal year ending September 30, 2012 and each

 

25  fiscal year ending after September 30, 2012, of the 25% of the

 

26  collections of the general sales tax imposed at a rate of 5%

 

27  directly or indirectly on fuels sold to propel motor vehicles

 

 1  upon highways, on the sale of motor vehicles, and on the sale of

 

 2  the parts and accessories of motor vehicles by new and used car

 

 3  businesses, used car businesses, accessory dealer businesses, and

 

 4  gasoline station businesses as classified by the department of

 

 5  treasury remaining after the allocations and distributions are

 

 6  made pursuant to subsections (3) and (5), the following amounts

 

 7  shall be deposited each year into the respective funds:

 

 8        (a) For the fiscal year ending September 30, 2012 and each

 

 9  fiscal year ending after September 30, 2012, not less than 27.9%

 

10  to the comprehensive transportation fund.

 

11        (b) The balance to the state general fund.

 

12        (8) (5) After Before January 1, 2011, after the allocations

 

13  and distributions are made pursuant to subsections (2) and (3)

 

14  (4), an amount equal to the collections of the tax imposed at a

 

15  rate of 4% under this act from the sale at retail of computer

 

16  software as defined in section 1a shall be deposited in the

 

17  Michigan health initiative fund created in section 5911 of the

 

18  public health code, 1978 PA 368, MCL 333.5911, and shall be

 

19  considered in addition to, and is not intended as a replacement

 

20  for any other money appropriated to the department of community

 

21  health. The funds deposited in the Michigan health initiative

 

22  fund on an annual basis shall not be less than $9,000,000.00 or

 

23  more than $12,000,000.00.

 

24        (9) Beginning January 1, 2011, after the allocations and

 

25  distributions are made pursuant to subsections (3) and (5), an

 

26  amount equal to the collections of the tax imposed at a rate of

 

27  5% under this act from the sale at retail of computer software as

 

 1  defined in section 1a shall be deposited in the Michigan health

 

 2  initiative fund created in section 5911 of the public health

 

 3  code, 1978 PA 368, MCL 333.5911, and shall be considered in

 

 4  addition to, and is not intended as a replacement for, any other

 

 5  money appropriated to the department of community health. The

 

 6  funds deposited in the Michigan health initiative fund on an

 

 7  annual basis shall not be less than $9,000,000.00 or more than

 

 8  $12,000,000.00.

 

 9        (10) (6) The balance in the state general fund shall be

 

10  disbursed only on an appropriation or appropriations by the

 

11  legislature.

 

12        Enacting section 1. This amendatory act does not take effect

 

13  unless Senate Joint Resolution ___ or House Joint Resolution F

 

14  (request no. 00488'11 a) of the 96th Legislature becomes a part

 

15  of the state constitution of 1963 as provided in section 1 of

 

16  article XII of the state constitution of 1963.

 

17        Enacting section 2. This amendatory act does not take effect

 

18  unless Senate Bill No. ____ or House Bill No. 4100(request no.

 

19  00488'11 b) of the 96th Legislature is enacted into law.