Bill Text: MI HB5666 | 2015-2016 | 98th Legislature | Introduced

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Bill Title: Corporate income tax; financial institutions; tax base; revise. Amends sec. 655 of 1967 PA 281 (MCL 206.655). TIE BAR WITH: SB 0234'15

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2016-11-30 - Referred To Second Reading [HB5666 Detail]

Download: Michigan-2015-HB5666-Introduced.html

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HOUSE BILL No. 5666

May 17, 2016, Introduced by Rep. Forlini and referred to the Committee on Financial Services.

 

     A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 655 (MCL 206.655), as added by 2011 PA 38.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 655. (1) For a financial institution, tax base means the

 

financial institution's net capital. Net capital means equity

 

capital as computed in accordance with generally accepted

 

accounting principles less the average daily book value of United

 

States obligations and Michigan obligations. If the financial

 

institution does not maintain its books and records in accordance

 

with generally accepted accounting principles, net capital shall be

 

computed in accordance with the books and records used by the

 

financial institution, so long as the method fairly reflects the

 

financial institution's net capital for purposes of the tax levied

by this chapter. Net capital does not include up to 125% of the

 

minimum regulatory capitalization requirements of a person subject

 

to the tax imposed under chapter 12. the tax base is the total

 

equity capital of the financial institution or top-tiered parent

 

entity, in the case of a unitary business group of financial

 

institutions, subject to the following adjustments before

 

allocation or apportionment:

 

     (a) Deduct the average daily book value of United States

 

obligations owned by members of the unitary business group.

 

     (b) Deduct the average daily book value of Michigan

 

obligations owned by members of the unitary business group.

 

     (c) Subject to the limitation provided in this subdivision,

 

deduct the equity capital of a person that is subject to the tax

 

imposed under chapter 12, not to exceed 125% of the minimum

 

regulatory capitalization requirements of the member. For purposes

 

of this subdivision, "equity capital" is the equity capital amount

 

calculated in accordance with generally accepted accounting

 

principles.

 

     (d) Deduct $20,000,000.00.

 

     (2) Net capital The tax base shall be determined by adding the

 

financial institution's net capital as of the close of the current

 

tax year. and preceding 4 tax years and dividing the resulting sum

 

by 5. If a financial institution has not been in existence for a

 

period of 5 tax years, net capital shall be determined by adding

 

together the financial institution's net capital for the number of

 

tax years the financial institution has been in existence and

 

dividing the resulting sum by the number of years the financial

institution has been in existence. For purposes of this section, a

 

partial year shall be treated as a full year.

 

     (3) For a unitary business group of financial institutions,

 

net capital calculated under this section does not include the

 

investment of 1 member of the unitary business group in another

 

member of that unitary business group.

 

     (3) (4) For purposes of this section, each of the following

 

applies:

 

     (a) A change in identity, form, or place of organization of 1

 

financial institution shall be treated as if a single financial

 

institution had been in existence for the entire tax year in which

 

the change occurred and each tax year after the change.

 

     (b) The combination of 2 or more financial institutions into 1

 

shall be treated as if the constituent financial institutions had

 

been a single financial institution in existence for the entire tax

 

year in which the combination occurred and each tax year after the

 

combination, and the book values and deductions adjustments for

 

United States obligations and Michigan obligations of the

 

constituent institutions shall be combined. A combination shall

 

include any acquisition required to be accounted for by the

 

surviving financial institution in accordance with generally

 

accepted accounting principles or a statutory merger or

 

consolidation.

 

     Enacting section 1. This amendatory act is effective for tax

 

years beginning after December 31, 2017.

 

     Enacting section 2. This amendatory act does not take effect

 

unless Senate Bill No. 234 of the 98th Legislature is enacted into

law.