Bill Text: MI HB4364 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Use tax: collections; use tax on higher education books; exempt. Amends sec. 4 of 1937 PA 94 (MCL 205.94).

Spectrum: Slight Partisan Bill (Democrat 7-4)

Status: (Introduced - Dead) 2019-03-19 - Bill Electronically Reproduced 03/14/2019 [HB4364 Detail]

Download: Michigan-2019-HB4364-Introduced.html

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HOUSE BILL No. 4364

 

 

March 14, 2019, Introduced by Reps. O'Malley, Love, Paquette, Kennedy, Webber, Wozniak, Garza, Tyrone Carter, Brenda Carter, Kuppa and Neeley and referred to the Committee on Tax Policy.

 

     A bill to amend 1937 PA 94, entitled

 

"Use tax act,"

 

by amending section 4 (MCL 205.94), as amended by 2018 PA 679.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 4. (1) The following are exempt from the tax levied under

 

this act, subject to subsection (2):

 

     (a) Property sold in this state on which transaction a tax is

 

paid under the general sales tax act, 1933 PA 167, MCL 205.51 to

 

205.78, if the tax was due and paid on the retail sale to a

 

consumer.

 

     (b) Property, the storage, use, or other consumption of which

 

this state is prohibited from taxing under the constitution

 

Constitution or laws of the United States, or under the

 

constitution of this state.

 

     (c) All of the following:

 

     (i) Property purchased for resale. Property purchased for

 

resale includes promotional merchandise transferred pursuant to a

 

redemption offer to a person located outside this state or any

 

packaging material, other than promotional merchandise, acquired

 

for use in fulfilling a redemption offer or rebate to a person

 

located outside this state.

 

     (ii) Property purchased for lending or leasing to a public or

 

parochial school offering a course in automobile driving except

 

that a vehicle purchased by the school shall must be certified for

 

driving education and shall must not be reassigned for personal use

 

by the school's administrative personnel.

 

     (iii) Property purchased for demonstration purposes. For a new

 

vehicle dealer selling a new car or truck, exemption for

 

demonstration purposes shall be is determined by the number of new

 

cars and trucks sold during the current calendar year or the

 

immediately preceding calendar year, without regard to specific

 

make or style, according to the following schedule but not to

 

exceed 25 cars and trucks in 1 calendar year for demonstration

 

purposes:

 

     (A) 0 to 25, 2 units.

 

     (B) 26 to 100, 7 units.

 

     (C) 101 to 500, 20 units.

 

     (D) 501 or more, 25 units.

 

     (iv) Motor vehicles purchased for resale purposes by a new

 

vehicle dealer licensed under section 248(8)(a) of the Michigan

 

vehicle code, 1949 PA 300, MCL 257.248.

     (d) Property that is brought into this state by a nonresident

 

person for storage, use, or consumption while temporarily within

 

this state, except if the property is used in this state in a

 

nontransitory business activity for a period exceeding 15 days.

 

     (e) Property the sale or use of which was already subjected to

 

a sales tax or use tax equal to, or in excess of, that imposed by

 

this act under the law of any other state or a local governmental

 

unit within a state if the tax was due and paid on the retail sale

 

to the consumer and the state or local governmental unit within a

 

state in which the tax was imposed accords like or complete

 

exemption on property the sale or use of which was subjected to the

 

sales or use tax of this state. If the sale or use of property was

 

already subjected to a tax under the law of any other state or

 

local governmental unit within a state in an amount less than the

 

tax imposed by this act, this act shall apply, applies, but at a

 

rate measured by the difference between the rate provided in this

 

act and the rate by which the previous tax was computed.

 

     (f) Except as otherwise provided under subsection (3),

 

property sold to a person engaged in a business enterprise that

 

uses or consumes the property, directly or indirectly, for either

 

the tilling, planting, draining, caring for, maintaining, or

 

harvesting of things of the soil or the breeding, raising, or

 

caring for livestock, poultry, or horticultural products, including

 

the transfers of livestock, poultry, or horticultural products for

 

further growth.

 

     (g) Property or services sold to the United States, an

 

unincorporated agency or instrumentality of the United States, an

incorporated agency or instrumentality of the United States wholly

 

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

 

United States, the American Red Cross and its chapters or branches,

 

this state, a department or institution of this state, or a

 

political subdivision of this state.

 

     (h) Property or services sold to a school, hospital, or home

 

for the care and maintenance of children or aged persons,

 

individuals operated by an entity of government, a regularly

 

organized church, religious organization, or fraternal

 

organization, a veterans' organization, or a corporation

 

incorporated under the laws of this state, if not operated for

 

profit, and if the income or benefit from the operation does not

 

inure, in whole or in part, to an individual or private

 

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

 

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

 

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

 

and benefits of its members or a restricted group. The tax levied

 

does not apply to property or services sold to a parent cooperative

 

preschool. As used in this subdivision, "parent cooperative

 

preschool" means a nonprofit, nondiscriminatory educational

 

institution, maintained as a community service and administered by

 

parents of children currently enrolled in the preschool that

 

provides an educational and developmental program for children

 

younger than compulsory school age, that provides an educational

 

program for parents, including active participation with children

 

in preschool activities, that is directed by qualified preschool

 

personnel, and that is licensed pursuant to under 1973 PA 116, MCL

722.111 to 722.128.

 

     (i) Property or services sold to a regularly organized church

 

or house of religious worship except the following:

 

     (i) Sales in which the property is used in activities that are

 

mainly commercial enterprises.

 

     (ii) Sales of vehicles licensed for use on the public highways

 

other than a passenger van or bus with a manufacturer's rated

 

seating capacity of 10 or more that is used primarily for the

 

transportation of persons individuals for religious purposes.

 

     (j) A vessel designed for commercial use of registered tonnage

 

of 500 tons or more, if produced upon special order of the

 

purchaser, and bunker and galley fuel, provisions, supplies,

 

maintenance, and repairs for the exclusive use of a vessel of 500

 

tons or more engaged in interstate commerce.

 

     (k) Property purchased for use in this state where if actual

 

personal possession is obtained outside this state, the purchase

 

price or actual value of which does not exceed $10.00 during 1

 

calendar month.

 

     (l) A newspaper or periodical classified under federal postal

 

laws and regulations effective September 1, 1985 as second-class

 

mail matter or as a controlled circulation publication or qualified

 

to accept legal notices for publication in this state, as defined

 

by law, or any other newspaper or periodical of general

 

circulation, established at least 2 years, and published at least

 

once a week, and a copyrighted motion picture film. Tangible

 

personal property used or consumed in producing a copyrighted

 

motion picture film, a newspaper published more than 14 times per

year, or a periodical published more than 14 times per year, and

 

not becoming a component part of that film, newspaper, or

 

periodical is subject to the tax. Tangible personal property used

 

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

 

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

 

portion or percentage of tangible personal property used or

 

consumed in producing an advertising supplement that becomes a

 

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

 

under this subdivision. For purposes of this subdivision, tangible

 

personal property that becomes a component part of a newspaper or

 

periodical and consequently not subject to tax , includes an

 

advertising supplement inserted into and circulated with a

 

newspaper or periodical that is otherwise exempt from tax under

 

this subdivision, if the advertising supplement is delivered

 

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

 

advertiser, or the advertising supplement is printed by the

 

newspaper or periodical.

 

     (m) Property purchased by persons licensed to operate a

 

commercial radio or television station if the property is used in

 

the origination or integration of the various sources of program

 

material for commercial radio or television transmission. This

 

subdivision does not include a vehicle licensed and titled for use

 

on public highways or property used in the transmitting to or

 

receiving from an artificial satellite.

 

     (n) A person An individual who is a resident of this state who

 

purchases an automobile in another state while in the military

 

service of the United States and who pays a sales tax in the state

where the automobile is purchased.

 

     (o) A vehicle for which a special registration is secured in

 

accordance with section 226(9) of the Michigan vehicle code, 1949

 

PA 300, MCL 257.226.

 

     (p) The sale of a prosthetic device, durable medical

 

equipment, or mobility enhancing equipment.

 

     (q) Water when if delivered through water mains, water sold in

 

bulk tanks in quantities of not less than 500 gallons, or the sale

 

of bottled water.

 

     (r) A vehicle not for resale used by a nonprofit corporation

 

organized exclusively to provide a community with ambulance or fire

 

department services.

 

     (s) Tangible personal property purchased and installed as a

 

component part of a water pollution control facility for which a

 

tax exemption certificate is issued pursuant to under part 37 of

 

the natural resources and environmental protection act, 1994 PA

 

451, MCL 324.3701 to 324.3708, or an air pollution control facility

 

for which a tax exemption certificate is issued pursuant to under

 

part 59 of the natural resources and environmental protection act,

 

1994 PA 451, MCL 324.5901 to 324.5908.

 

     (t) Tangible real or personal property donated by a

 

manufacturer, wholesaler, or retailer to an organization or entity

 

exempt pursuant to under subdivision (h) or (i) or section 4a(1)(a)

 

or (b) of the general sales tax act, 1933 PA 167, MCL 205.54a.

 

     (u) The storage, use, or consumption of an aircraft by a

 

domestic air carrier for use solely in the transport of air cargo,

 

passengers, or a combination of air cargo and passengers, that has

a maximum certificated takeoff weight of at least 6,000 pounds. For

 

purposes of this subdivision, the term "domestic air carrier" is

 

limited to a person engaged primarily in the commercial transport

 

for hire of air cargo, passengers, or a combination of air cargo

 

and passengers as a business activity. The state treasurer shall

 

estimate on January 1 each year the revenue lost by this act from

 

the school aid fund and deposit that amount into the school aid

 

fund from the general fund.

 

     (v) The storage, use, or consumption of an aircraft by a

 

person who purchases the aircraft for subsequent lease to a

 

domestic air carrier operating under a certificate issued by the

 

federal aviation administration Federal Aviation Administration

 

under 14 CFR part 121, for use solely in the regularly scheduled

 

transport of passengers.

 

     (w) Property or services sold to an organization not operated

 

for profit and exempt from federal income tax under section

 

501(c)(3) or 501(c)(4) (4) of the internal revenue code of 1986, 26

 

USC 501; 501(c)(3) or (4); or to a health, welfare, educational,

 

cultural arts, charitable, or benevolent organization not operated

 

for profit that has been issued before June 13, 1994 an exemption

 

ruling letter to purchase items exempt from tax signed by the

 

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

 

the department. The department shall reissue an exemption letter

 

after June 13, 1994 to each of those organizations that had an

 

exemption letter that shall remain remains in effect unless the

 

organization fails to meet the requirements that originally

 

entitled it to this exemption. The exemption does not apply to

sales of tangible personal property and sales of vehicles licensed

 

for use on public highways, that are not used primarily to carry

 

out the purposes of the organization as stated in the bylaws or

 

articles of incorporation of the exempt organization.

 

     (x) The use or consumption of services described in section

 

3a(1)(a) or (b) (c) or 3b by means of a prepaid telephone calling

 

card, a prepaid authorization number for telephone use, or a charge

 

for internet access.

 

     (y) The purchase, lease, use, or consumption of the following

 

by an industrial laundry:

 

     (i) Textiles and disposable products including, but not

 

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

 

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

 

hangers, name tags, and identification tags.

 

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

 

dispense textiles including, but not limited to, roll towel

 

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

 

carts.

 

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

 

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

 

items, whether owned or leased.

 

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

 

     (v) Production washroom equipment and mending and packaging

 

supplies and equipment.

 

     (vi) Material handling equipment including, but not limited

 

to, conveyors, racks, and elevators and related control equipment.

 

     (vii) Wastewater pretreatment equipment and supplies and

related maintenance and repair services.

 

     (z) Property purchased or manufactured by a person engaged in

 

the business of constructing, altering, repairing, or improving

 

real estate for others, to the extent that the property is affixed

 

to and made a structural part of real estate located in another

 

state, regardless of whether sales or use tax was due and paid in

 

the state in which the property is affixed to real estate.

 

     (aa) The sale of a dental prosthesis.

 

     (bb) Except as otherwise provided under subsection (3), a sale

 

of any of the following to a person engaged in a business

 

enterprise that uses or consumes the following for purposes as

 

described in subdivision (f):

 

     (i) Machinery that is capable of simultaneously harvesting

 

grain or other crops and biomass and machinery used for the purpose

 

of harvesting biomass.

 

     (ii) Agricultural land tile and subsurface irrigation pipe.

 

     (iii) Portable grain bins, including tangible personal

 

property affixed or to be affixed to portable grain bins and

 

directly used in the operation of a portable grain bin.

 

     (iv) Grain drying equipment and the fuel or energy source that

 

powers that equipment, including tangible personal property affixed

 

or to be affixed to that equipment and directly used in the

 

operation of grain drying equipment.

 

     (v) Tangible personal property purchased and installed as a

 

component part of a structure such as a barn or shop, including,

 

but not limited to, a water supply system, heating and cooling

 

system, lighting system, milking system, or any other appurtenance

used for purposes described in this subdivision or subdivision (f),

 

including the maintenance or improvement of existing structures, to

 

the extent that it is not permanently affixed to and does not

 

become a structural part of real estate. For purposes of this

 

subparagraph and subsection (3), property installed as a component

 

part of a structure as provided in this subparagraph is not

 

permanently affixed to or a structural part of real estate if it is

 

assembled and installed in a manner that it can be disassembled

 

without affecting the physical structural functionality of the

 

original structure and reassembled and reused for any of the

 

purposes described in this subdivision or subdivision (f).

 

     (vi) Greenhouses, including tangible personal property affixed

 

to or to be affixed to greenhouses and directly used in the

 

operation of a greenhouse. For purposes of subsection (3), a

 

greenhouse is not permanently affixed to or a structural part of

 

real estate if it is assembled and installed in a manner that it

 

can be disassembled and reassembled without affecting the

 

functionality of the greenhouse upon being reassembled.

 

     (cc) The sale of agricultural land tile, subsurface irrigation

 

pipe, portable grain bins, greenhouses, and grain drying equipment

 

to a person in the business of constructing, altering, repairing,

 

or improving real estate for others to the extent that it is

 

affixed to and made a structural part of real estate for others and

 

is used for an exempt purpose described under subdivision (f) or

 

(bb).

 

     (dd) The sale of tangible personal property used in the direct

 

gathering of fish, by net, line, or otherwise, by an owner-operator

of a business enterprise, not including a charter fishing business

 

enterprise.

 

     (ee) A sale of tangible personal property that is specifically

 

designed for, and directly used in, the harvesting of aquatic

 

vegetation from the waters of the state, including parts and

 

materials used for repairs of that tangible personal property, to a

 

person engaged in a business enterprise of harvesting aquatic

 

vegetation and ultimately used for purposes described in

 

subdivision (f) or (bb). This exemption does not include a motor

 

vehicle licensed or required to be licensed for use on the public

 

roads or highways of this state or tangible personal property

 

permanently affixed to and becoming a structural part of real

 

estate.

 

     (ff) The purchase or lease of a school bus or transportation-

 

related services, and parts or adaptive equipment affixed or to be

 

affixed to a school bus which that are used in the repair,

 

maintenance, accommodation, or modification of a school bus, if the

 

school bus or services are primarily used in the performance of a

 

contract entered into with an authorized representative of a school

 

for the transportation of preprimary, primary, or secondary school

 

pupils to or from a school or school-related events authorized by

 

the administration of the school. However, if the school bus is

 

used to provide transportation-related services other than to or

 

from a school or school-related event authorized by the

 

administration of the school to a nonexempt entity, then the amount

 

paid for those services by the nonexempt entity is not exempt under

 

this subdivision. As used in this subdivision:

     (i) "Lease" means any transfer of possession or control for a

 

fixed or indeterminate term for consideration and may include

 

future options to purchase or extend.

 

     (ii) "School" means a public school or public school academy

 

as defined in section 5 of the revised school code, 1976 PA 451,

 

MCL 380.5.

 

     (iii) "School bus" means that term as defined in section 7 of

 

the pupil transportation act, 1990 PA 187, MCL 257.1807.

 

     (gg) The purchase or lease of a textbook by a full- or part-

 

time college student for his or her courses, if, at the time of

 

purchase, the student presents a valid student identification card

 

and the textbook is required for a course being taken by that

 

student at an institution of higher education. As used in this

 

subdivision:

 

     (i) "Institution of higher education" means a degree- or

 

certificate-granting public or private college or university,

 

junior college, or community college in this state.

 

     (ii) "Lease" means any transfer of possession or control for a

 

fixed or indeterminate term for consideration and may include

 

future options to purchase or extend.

 

     (iii) "Textbook" means any book or other written material that

 

an institution of higher education requires for 1 of its courses.

 

     (2) The property or services under subsection (1) are exempt

 

only to the extent that the property or services are used for the

 

exempt purposes if one is stated in subsection (1). The exemption

 

is limited to the percentage of exempt use to total use determined

 

by a reasonable formula or method approved by the department.

     (3) The exemptions under subsection (1)(f), (bb), (cc), and

 

(dd) do not include the transfers of food, fuel, clothing, or any

 

similar tangible personal property for personal living or human

 

consumption or tangible personal property permanently affixed to

 

and becoming a structural part of real estate unless it is

 

agricultural land tile, subsurface irrigation pipe, a portable

 

grain bin, or grain drying equipment.

 

     (4) Subsections Subsection (1)(f), (bb), and (cc) as amended

 

by 2018 PA 114 are is intended to be retroactive and to apply to

 

all periods open under section 27a of 1941 PA 122, MCL 205.27a, but

 

do does not apply to any refund claims filed prior to before April

 

9, 2018.

 

     (5) As used in this section:

 

     (a) "Agricultural land tile" means fired clay or perforated

 

plastic tubing used as part of a subsurface drainage system for

 

land.

 

     (b) "Algae" means any of the group of nonvascular aquatic

 

plants which that do not have stems, flowers, leaves, and roots,

 

and which that are single-celled, colonial, or filamentous forms.

 

     (c) "Aquatic vegetation" means both algae and higher aquatic

 

plants.

 

     (d) "Biomass" means crop residue used to produce energy or

 

agricultural crops grown specifically for the production of energy.

 

     (e) "Greenhouse" means a structure covered with transparent or

 

translucent materials for the purpose of admitting natural light

 

and controlling the atmosphere for growing horticultural products.

 

Greenhouse does not include a structure primarily used to grow

marihuana.

 

     (f) "Higher aquatic plant" means any of the group of

 

vascularized plants which that have true stems, flowers, leaves,

 

and roots, which that live in water, and which that belong to the

 

class Angiospermae.

 

     (g) "Portable grain bin" means a structure that is used or is

 

to be used to shelter grain and that is designed to be disassembled

 

without significant damage to its component parts.

 

     (h) "Waters of the state" means that term as defined in

 

section 3302 of the natural resources and environmental protection

 

act, 1994 PA 451, MCL 324.3302.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.