Bill Text: MI HB5100 | 2023-2024 | 102nd Legislature | Engrossed


Bill Title: Corporate income tax: credits; research and development credit for certain large employers; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding secs. 277 & 677.

Spectrum: Partisan Bill (Democrat 10-0)

Status: (Engrossed) 2024-04-10 - Laid Over One Day Under The Rules [HB5100 Detail]

Download: Michigan-2023-HB5100-Engrossed.html

 

 

SENATE Substitute For

HOUSE BILL NO. 5100

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.847) by adding section 677.

the people of the state of michigan enact:

Sec. 677. (1) Subject to the limitations under this section, for tax years beginning on and after January 1, 2024, a taxpayer that is an authorized business may claim a credit against the tax imposed under this part as follows:

(a) For a taxpayer with 250 or more employees, an amount equal to the sum of 3% of the taxpayer's qualifying research and development expenses incurred during the calendar year ending with or within the tax year up to the base amount and 10% of the taxpayer's qualifying research and development expenses incurred during the calendar year ending with or within the tax year in excess of the base amount. The credit amount calculated under this subdivision must not exceed $2,000,000.00 per tax year per taxpayer.

(b) For a taxpayer with less than 250 employees, an amount equal to the sum of 3% of the taxpayer's qualifying research and development expenses incurred during the calendar year ending with or within the tax year up to the base amount and 15% of the taxpayer's qualifying research and development expenses incurred during the calendar year ending with or within the tax year in excess of the base amount. The credit amount calculated under this subdivision must not exceed $250,000.00 per tax year per taxpayer.

(2) Subject to the limitations under this section, a taxpayer claiming a credit under subsection (1) may claim an additional credit equal to 5% of the qualifying research and development expenses incurred during the calendar year ending with or within the tax year that are in excess of the base amount if the taxpayer's qualifying research and development expenses for which the credit is being claimed under subsection (1) are incurred in collaboration with a research university in this state pursuant to a written agreement between the taxpayer and the research university. In order to claim the additional credit under this subsection, if requested by the department, the taxpayer must provide the department with a copy of the written agreement with the research university. The additional credit allowed under this subsection must not exceed $200,000.00 per tax year per taxpayer.

(3) To be eligible for a credit under this section, a taxpayer must submit, in a form and manner as prescribed by the department, a tentative claim for which a credit under this section is sought to the department on or before March 15 after the calendar year ending with or within the tax year for which the taxpayer intends to submit a claim for the credit on the taxpayer's annual return required under this part. The tentative claim required under this subsection must include, at a minimum, all of the following information:

(a) If the credit is to be claimed under subsection (1)(a) or (b).

(b) The amount of qualifying research and development expenses incurred for which a credit is being claimed.

(c) If an additional credit is to be claimed under subsection (2) for collaboration with a research university.

(4) The department shall review all tentative claims submitted under this subsection and if the amount of tentative claims submitted exceeds the amount allowed under subsection (5), the department shall publish a notice on its website notifying taxpayers of the adjustment to the tentative claims for that calendar year as required under subsection (5).

(5) The aggregate amount of credits allowed to be claimed by all taxpayers under this section and all employers under section 717 based on qualifying research and development expenses incurred in a single calendar year must not exceed $100,000,000.00. If the aggregate amount of credits claimed under this section and section 717 exceeds $100,000,000.00, the department shall prorate the amount of credits allowed for each claimant as follows:

(a) If the aggregate amount of credits claimed by all taxpayers qualifying under subsection (1)(b) and all employers qualifying under section 717(1)(b) does not exceed $25,000,000.00, the amount of credits claimed by each of those claimants must not be prorated. However, for taxpayers claiming a credit under subsection (1)(a) or employers claiming a credit under section 717(1)(a), the amount of credits claimed must be prorated so that each claimant's allowed credits equal that claimant's pro rata share of the remaining amount of credits allowed to be claimed under this subsection and section 717(5).

(b) Except as provided in subdivision (c), if the aggregate amount of credits claimed by all taxpayers qualifying under subsection (1)(b) and all employers qualifying under section 717(1)(b) exceeds $25,000,000.00, the amount of credits claimed by each of those claimants must be prorated so that each claimant's allowed credits equal that claimant's pro rata share of $25,000,000.00, and the amount of credits claimed by each taxpayer qualifying under subsection (1)(a) or employer qualifying under section 717(1)(a) must be prorated so that each claimant's allowed credits equal that claimant's pro rata share of $75,000,000.00.

(c) If the aggregate amount of credits claimed by all taxpayers qualifying under subsection (1)(b) and all employers qualifying under section 717(1)(b) exceeds 25% of the aggregate amount of credits claimed by all taxpayers under this section and employers under section 717, then the proration under subdivision (b) does not apply, and the amount of credits claimed by each taxpayer under this section and employer under section 717 shall be prorated so that each claimant's allowed credits equal that claimant's pro rata share of $100,000,000.00.

(6) A taxpayer shall not assign or transfer all or any portion of a credit allowed under this section. A credit or any portion of a credit allowed under this section is not assignable or transferable either by agreement or by operation of law.

(7) A taxpayer shall, in a form and manner as prescribed by the department, file a claim for a credit under this section with the annual return required to be filed under this part for the same tax year for which a credit under this section is claimed. The credits allowed under this section must be claimed after all allowable nonrefundable credits under this part. If the amount of the credits allowed under this section exceeds the tax liability of the taxpayer for the tax year, that portion of the credit that exceeds the tax liability of the taxpayer for the tax year must be refunded.

(8) As used in this section, "authorized business", "base amount", "Michigan strategic fund", "qualifying research and development expenses", and "research university" mean those terms as defined in section 716.

feedback