Bill Text: MI HB5183 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Income tax; credit; sunset on venture investment credit; eliminate. Amends sec. 278 of 1967 PA 281 (MCL 206.278). [Track Bill]
Status: 2011-11-30 - Printed Bill Filed 11/30/2011 [HB5183 Detail]
HOUSE BILL No. 5183
November 29, 2011, Introduced by Reps. Lipton, Roy Schmidt, Barnett, Slavens, Kandrevas, Constan, Switalski and Brown and referred to the Committee on Tax Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 278 (MCL 206.278), as amended by 2011 PA 38.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 278. (1) Subject to the limitations provided under this
section, a taxpayer that makes a qualified investment after
and before January 1, 2012 in a qualified
business may claim a credit against the tax imposed by this act
equal to 25% of the qualified investment made during the tax year.
(2) To qualify for the credit under this section, the taxpayer
shall request certification from the Michigan strategic fund within
60 days of making the investment. A taxpayer shall not claim a
credit under this section unless the Michigan strategic fund has
issued a certificate to the taxpayer. The board shall not approve a
credit under this section for a taxpayer who has been convicted of
a felony involving a fiduciary obligation or the conversion or
misappropriation of funds or insurance accounts, theft, deceit,
fraud, misrepresentation, or corruption. The Michigan strategic
fund shall forward a copy of each certificate received pursuant to
this subsection to the governor, the president of the Michigan
strategic fund, the chairperson of the senate finance committee,
the chairperson of the house tax policy committee, the director of
the senate fiscal agency, and the director of the house fiscal
agency. The requirements of section 28(1)(f) of 1941 PA 122, MCL
205.28, do not apply to the disclosure required by this subsection.
The Michigan strategic fund shall not certify more than
$1,000,000.00 in qualified investments in any 1 qualified business.
The taxpayer shall attach the certificate to the annual return
filed under this act on which a credit under this section is
claimed. The certificate required under this subsection shall
specify all of the following:
(a) The total amount of investment made during the tax year by
the taxpayer in each qualified business.
(b) The total amount of qualified investments made in each
qualified business if different from the previous amount.
(c) The total amount of the credit under this section that the
taxpayer is allowed to claim for the designated tax year.
(3) A taxpayer shall not claim a credit of more than
$250,000.00 based on an investment in any 1 qualified business and
shall not claim a credit of more than $250,000.00 for qualified
investments in all qualified businesses in any 1 year. The credit
allowed under this section shall be taken by the taxpayer in equal
installments over 2 years beginning with the tax year in which the
certification was issued.
(4) The total amount of credits that the Michigan strategic
fund may certify under this section shall not exceed $9,000,000.00.
(5) If the amount of the credit 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 shall not be refunded but may be carried
forward to offset tax liability under this act in subsequent tax
years for a period not to exceed 5 tax years or until used up,
whichever occurs first.
(6) The board shall develop an application and approval
process in order to certify investments under this section and
adopt a program describing parameters and criteria to be used for
approving investments. As part of that program adoption, the board
may determine and describe the conditions to be met to be
considered an investment alongside or through an approved angel
group, seed capital firm, or venture capital firm.
(7) A taxpayer who has not paid or entered into an installment
agreement regarding a final assessment of an unpaid liability for a
state tax for which all rights of appeal have been exhausted or who
is currently in a bankruptcy proceeding is not eligible to claim a
credit under this section.
(8) As used in this section:
(a) "Board" means the board of directors of the Michigan
(b) "Michigan strategic fund" means the Michigan strategic
fund as described in the Michigan strategic fund act, 1984 PA 270,
MCL 125.2001 to 125.2094.
(c) "Qualified business" means a business that the board
certifies as in compliance with all of the following at the time of
(i) The business is a seed or early stage business as defined
in section 3 of the Michigan early stage venture investment act of
2003, 2003 PA 296, MCL 125.2233.
(ii) The business has its headquarters in this state, is
domiciled in this state, and has a majority of its employees
working in this state.
(iii) The business has a preinvestment valuation of less than
$10,000,000.00 and has fewer than 100 full-time equivalent
(iv) Except as otherwise provided under this subparagraph, the
business has been in existence less than 5 years; or, for a
business in which the business activity is derived from research at
an institution of higher education located within this state or an
organization exempt from federal taxation under section 501(c)(3)
of the internal revenue code and that is located within this state,
the business has been in existence less than 10 years. As used in
this subparagraph, a public or private college or university that
awards a bachelor's degree or other degrees is an institution of
(v) The business is not a retail establishment as described in
section 44-45 – retail trade, of the North American industry
classification system, United States, 1997, published by the office
of management and budget.
(vi) The business has not claimed a credit under section 431,
455, 457, or 459 of the Michigan business tax act, 2007 PA 36, MCL
208.1431, 208.1455, 208.1457, and 208.1459.
(d) "Qualified investment" means, except as otherwise provided
under this subdivision, an investment of at least $20,000.00
certified by the Michigan strategic fund that is made alongside of,
or through, a seed venture capital or angel investor group that is
registered with the Michigan strategic fund and is not in a
business in which any member of the investor's family is an
employee or owner of the business or in which the investor or any
member of the investor's family has a preexisting fiduciary
relationship with the business. Qualified investment does not
include an investment in a business that engages in life sciences
technology unless those activities are included in the definition
of life sciences as that term is defined under section 88a of the
Michigan strategic fund act, 1984 PA 270, MCL 125.2088a.