Bill Text: MI HB4959 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Income tax; collections; deductions and withholdings by persons that disburse pension or annuity payments and flow-through entities; clarify. Amends sec. 703 of 1967 PA 281 (MCL 206.703).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2011-10-19 - Re-referred To Committee On Tax Policy [HB4959 Detail]

Download: Michigan-2011-HB4959-Introduced.html

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HOUSE BILL No. 4959

 

September 13, 2011, Introduced by Rep. Walsh and referred to the Committee on Tax Policy.

 

     A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 703 (MCL 206.703), as added by 2011 PA 38.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 703. (1) A person who disburses pension or annuity

 

payments, is subject to income tax withholding except as otherwise

 

provided under this section, shall withhold a tax in an amount

 

computed by applying the rate prescribed in section 51 on the

 

taxable part of payments from an employer pension, annuity, profit-

 

sharing, stock bonus, or other deferred compensation plan as well

 

as from an individual retirement arrangement, an annuity, an

 

endowment, or a life insurance contract issued by a life insurance

 

company. Withholding shall be calculated on the taxable

 

disbursement after deducting from the taxable portion the same

 

proportion of the total amount of personal and dependency

 

exemptions of the individual allowed under this act. Withholding is

 

not required on any part of a distribution that is not expected to

 

be includable in the recipient's gross income or that is deductible

 

from adjusted gross income under section 30(1)(e) or (f).

 

     (2) Every employer in this state required under the provisions

 

of the internal revenue code to withhold a tax on the compensation

 

of an individual, except as otherwise provided, shall deduct and

 

withhold a tax in an amount computed by applying, except as

 

provided by subsection (13), (14), the rate prescribed in section

 

51 to the remainder of the compensation after deducting from

 

compensation the same proportion of the total amount of personal

 

and dependency exemptions of the individual allowed under this act

 

that the period of time covered by the compensation is of 1 year.

 

The department may prescribe withholding tables that may be used by

 

employers to compute the amount of tax required to be withheld.

 

     (3) Every flow-through entity in this state shall withhold a

 

tax in an amount computed by applying the rate prescribed in

 

section 51 to the distributive share of taxable income reasonably

 

expected to accrue after allocation and apportionment under chapter

 

3 of each nonresident member who is an individual after deducting

 

from that distributive income the same proportion of the total

 

amount of personal and dependency exemptions of the individual

 

allowed under this act. All of the taxes withheld under this

 

section shall accrue to the state on April 15, June 15, and

 

September 15 of the flow-through entity's tax year and January 15

 

of the following year, except a flow-through entity that is not on

 

a calendar year basis shall substitute the appropriate due dates in

 

the flow-through entity's fiscal year that correspond to those in a

 

calendar year. Withholding for each period shall be equal to 1/4 of

 

the total withholding calculated on the distributive share that is

 

reasonable expected to accrue during the tax year of the flow-

 

through entity.

 

     (4) Every flow-through entity with business activity in this

 

state that has more than $200,000.00 of business income reasonably

 

expected to accrue in the tax year after allocation or

 

apportionment under chapter 14 shall withhold a tax in an amount

 

computed by applying the rate prescribed in section 623 to the

 

distributive share of the business income of each member that is a

 

corporation or that is a flow-through entity. As used in this

 

subsection, "business income" means that term as defined in section

 

603(2). For a partnership or S corporation, business income

 

includes payments and items of income and expense that are

 

attributable to business activity of the partnership or S

 

corporation and separately reported to the members. All of the

 

taxes withheld under this section shall accrue to the state on

 

April 15, June 15, and September 15 of the flow-through entity's

 

tax year and January 15 of the following year, except a flow-

 

through entity that is not on a calendar year basis shall

 

substitute the appropriate due dates in the flow-through entity's

 

fiscal year that correspond to those in a calendar year.

 

Withholding for each period shall be equal to 1/4 of the total

 

withholding calculated on the distributive share of business income

 

that is reasonably expected to accrue during the tax year of the

 

flow-through entity.

 

     (5) If a flow-through entity is subject to the withholding

 

requirements of subsection (4), then a member of that flow-through

 

entity that is itself a flow-through entity shall withhold a tax on

 

the distributive share of business income as described in

 

subsection (4) of each of its members. The department shall apply

 

tax withheld by a flow-through entity on the distributive share of

 

business income of a member flow-through entity to the withholding

 

required of that member flow-through entity. All of the taxes

 

withheld under this section shall accrue to the state on April 15,

 

June 15, and September 15 of the flow-through entity's tax year and

 

January 15 of the following year, except a flow-through entity that

 

is not on a calendar year basis shall substitute the appropriate

 

due dates in the flow-through entity's fiscal year that correspond

 

to those in a calendar year. Withholding for each period shall be

 

equal to 1/4 of the total withholding calculated on the

 

distributive share of business income that is reasonably expected

 

to accrue during the tax year of the flow-through entity.

 

     (6) Every casino licensee shall withhold a tax in an amount

 

computed by applying the rate prescribed in section 51 to the

 

winnings of a nonresident reportable by the casino licensee under

 

the internal revenue code.

 

     (7) Every race meeting licensee or track licensee shall

 

withhold a tax in an amount computed by applying the rate

 

prescribed in section 51 to a payoff price on a winning ticket of a

 

nonresident reportable by the race meeting licensee or track

 

licensee under the internal revenue code that is the result of

 

pari-mutuel wagering at a licensed race meeting.

 

     (8) Every casino licensee or race meeting licensee or track

 

licensee shall report winnings of a resident reportable by the

 

casino licensee or race meeting licensee or track licensee under

 

the internal revenue code to the department in the same manner and

 

format as required under the internal revenue code.

 

     (9) Every eligible production company shall, to the extent not

 

withheld by a professional services corporation or professional

 

employer organization, deduct and withhold a tax in an amount

 

computed by applying the rate prescribed in section 51 to the

 

remainder of the payments made to the professional services

 

corporation or professional employer organization for the services

 

of a performing artist or crew member after deducting from those

 

payments the same proportion of the total amount of personal and

 

dependency exemptions of the individuals allowed under this part.

 

     (10) Every publicly traded partnership that has equity

 

securities registered with the securities and exchange commission

 

under section 12 of title I of the securities and exchange act of

 

1934, 15 USC 78l, shall not be subject to withholding.

 

     (11) (10) Except as otherwise provided under this subsection,

 

all of the taxes withheld under this section shall accrue to the

 

state on the last day of the month in which the taxes are withheld

 

but shall be returned and paid to the department by the employer,

 

flow-through entity, eligible production company, casino licensee,

 

or race meeting licensee or track licensee within 15 days after the

 

end of any month or as provided in section 355. 705. For an

 

employer or flow-through entity that has entered into an agreement

 

with a community college pursuant to chapter 13 of the community

 

college act of 1966, 1966 PA 331, MCL 389.161 to 389.166, a portion

 

of the taxes withheld under this section that are attributable to

 

each employee in a new job created pursuant to the agreement shall

 

accrue to the community college on the last day of the month in

 

which the taxes are withheld but shall be returned and paid to the

 

community college by the employer or flow-through entity within 15

 

days after the end of any month or as provided in section 355 705

 

for as long as the agreement remains in effect. For purposes of

 

this act and 1941 PA 122, MCL 205.1 to 205.31, payments made by an

 

employer or flow-through entity to a community college under this

 

subsection shall be considered income taxes paid to this state.

 

     (12) (11) An employer, flow-through entity, eligible

 

production company, casino licensee, or race meeting licensee or

 

track licensee A person required by this section to deduct and

 

withhold taxes on compensation, a share of income available for

 

distribution on which withholding is required under subsection (3),

 

(4), or (5), winnings on which withholding is required under

 

subsection (6), or a payoff price on which withholding is required

 

under subsection (7) holds the amount of tax withheld as a trustee

 

for this state and is liable for the payment of the tax to this

 

state or, if applicable, to the community college and is not liable

 

to any individual for the amount of the payment.

 

     (13) (12) An employer in this state is not required to deduct

 

and withhold a tax on the compensation paid to a nonresident

 

individual employee, who, under section 256, may claim a tax credit

 

equal to or in excess of the tax estimated to be due for the tax

 

year or is exempted from liability for the tax imposed by this act.

 

In each tax year, the nonresident individual shall furnish to the

 

employer, on a form approved by the department, a verified

 

statement of nonresidence.

 

     (14) (13) An employer, flow-through entity, eligible

 

production company, casino licensee, or race meeting licensee or

 

track licensee A person required to withhold a tax under this act,

 

by the fifteenth day of the following month, shall provide the

 

department with a copy of any exemption certificate on which the

 

employee, member, or person subject to withholding under subsection

 

(6) or (7) claims more than 9 personal or dependency exemptions,

 

claims a status that exempts the employee, member, or person

 

subject to withholding under subsection (6) or (7) from withholding

 

under this section. , or elects to pay the tax imposed by this part

 

calculated under section 51a.

 

     (14) An employer shall deduct and withhold the tax imposed by

 

this act calculated under section 51a for a resident who files an

 

exemption certificate under subsection (13) to elect to pay the tax

 

calculated under section 51a.

 

     (15) The exemption certificate required by this section shall

 

include the following statement, "Electing to file using the no-

 

form option may not be for everyone who is eligible. If a taxpayer

 

chooses the no-form option, he or she may not be eligible for some

 

of the credits allowed under this act including the property tax

 

credit allowed under sections 520 and 522.".

 

     Enacting section 1. This amendatory act takes effect January

 

1, 2012.