Bill Text: MI HB6012 | 2011-2012 | 96th Legislature | Chaptered
Bill Title: Income tax; exemptions; tax exemption for certain mining entities; provide for. Amends sec. 623 of 1967 PA 281 (MCL 206.623) & adds sec. 31b. TIE BAR WITH: HB 6008'12
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2012-12-27 - Assigned Pa 414'12 With Immediate Effect [HB6012 Detail]
Download: Michigan-2011-HB6012-Chaptered.html
Act No. 414
Public Acts of 2012
Approved by the Governor
December 20, 2012
Filed with the Secretary of State
December 20, 2012
EFFECTIVE DATE: December 20, 2012
STATE OF MICHIGAN
96TH LEGISLATURE
REGULAR SESSION OF 2012
Introduced by Rep. Huuki
ENROLLED HOUSE BILL No. 6012
AN ACT to amend 1967 PA 281, entitled “An act to meet deficiencies in state funds by providing for the imposition, levy, computation, collection, assessment, reporting, payment, and enforcement by lien and otherwise of taxes on or measured by net income and on certain commercial, business, and financial activities; to prescribe the manner and time of making reports and paying the taxes, and the functions of public officers and others as to the taxes; to permit the inspection of the records of taxpayers; to provide for interest and penalties on unpaid taxes; to provide exemptions, credits and refunds of the taxes; to prescribe penalties for the violation of this act; to provide an appropriation; and to repeal acts and parts of acts,” by amending section 623 (MCL 206.623), as amended by 2011 PA 312, and by adding section 31b.
The People of the State of Michigan enact:
Sec. 31b. (1) Notwithstanding any other provision of this part, for the 2013 tax year and each tax year after 2013, taxable income for purposes of this part means taxable income as determined under section 30 with the following adjustment. For the 2013 tax year and each tax year after 2013, eliminate all of the following:
(a) Income derived from a mineral to the extent included in adjusted gross income.
(b) Expenses related to the income deductible under subdivision (a) to the extent deducted in arriving at adjusted gross income.
(2) As used in this act:
(a) “Mineral” means that term as defined in section 2 of the nonferrous metallic minerals extraction severance tax act.
(b) “Qualified taxpayer” means a taxpayer subject to the minerals severance tax levied under the nonferrous metallic minerals extraction severance tax act.
Sec. 623. (1) Except as otherwise provided in this part, there is levied and imposed a corporate income tax on every taxpayer with business activity within this state or ownership interest or beneficial interest in a flow-through entity that has business activity in this state unless prohibited by 15 USC 381 to 384. The corporate income tax is imposed on the corporate income tax base, after allocation or apportionment to this state, at the rate of 6.0%.
(2) The corporate income tax base means a taxpayer’s business income subject to the following adjustments, before allocation or apportionment, and the adjustment in subsection (4) after allocation or apportionment:
(a) Add interest income and dividends derived from obligations or securities of states other than this state, in the same amount that was excluded from federal taxable income, less the related portion of expenses not deducted in computing federal taxable income because of sections 265 and 291 of the internal revenue code.
(b) Add all taxes on or measured by net income including the tax imposed under this part to the extent that the taxes were deducted in arriving at federal taxable income.
(c) Add any carryback or carryover of a net operating loss to the extent deducted in arriving at federal taxable income.
(d) To the extent included in federal taxable income, deduct dividends and royalties received from persons other than United States persons and foreign operating entities, including, but not limited to, amounts determined under section 78 of the internal revenue code or sections 951 to 964 of the internal revenue code.
(e) Except as otherwise provided under this subdivision, to the extent deducted in arriving at federal taxable income, add any royalty, interest, or other expense paid to a person related to the taxpayer by ownership or control for the use of an intangible asset if the person is not included in the taxpayer’s unitary business group. The addition of any royalty, interest, or other expense described under this subdivision is not required to be added if the taxpayer can demonstrate that the transaction has a nontax business purpose, is conducted with arm’s-length pricing and rates and terms as applied in accordance with sections 482 and 1274(d) of the internal revenue code, and 1 of the following is true:
(i) The transaction is a pass through of another transaction between a third party and the related person with comparable rates and terms.
(ii) An addition would result in double taxation. For purposes of this subparagraph, double taxation exists if the transaction is subject to tax in another jurisdiction.
(iii) An addition would be unreasonable as determined by the state treasurer.
(iv) The related person recipient of the transaction is organized under the laws of a foreign nation which has in force a comprehensive income tax treaty with the United States.
(f) To the extent included in federal taxable income, deduct interest income derived from United States obligations.
(g) For tax years beginning after December 31, 2011, eliminate all of the following:
(i) Income from producing oil and gas to the extent included in federal taxable income.
(ii) Expenses of producing oil and gas to the extent deducted in arriving at federal taxable income.
(h) For tax years beginning after December 31, 2012, for a qualified taxpayer, eliminate all of the following:
(i) Income derived from a mineral to the extent included in federal taxable income.
(ii) Expenses related to the income deductible under subparagraph (i) to the extent deducted in arriving at federal taxable income.
(3) For purposes of subsection (2), the business income of a unitary business group is the sum of the business income of each person included in the unitary business group less any items of income and related deductions arising from transactions including dividends between persons included in the unitary business group.
(4) Deduct any available business loss incurred after December 31, 2011. As used in this subsection, “business loss” means a negative business income taxable amount after allocation or apportionment. The business loss shall be carried forward to the year immediately succeeding the loss year as an offset to the allocated or apportioned corporate income tax base, then successively to the next 9 taxable years following the loss year or until the loss is used up, whichever occurs first.
(5) As used in this section, “oil and gas” means oil and gas that is subject to severance tax under 1929 PA 48, MCL 205.301 to 205.317.
Enacting section 1. This amendatory act does not take effect unless House Bill No. 6008 of the 96th Legislature is enacted into law.
This act is ordered to take immediate effect.
Clerk of the House of Representatives
Secretary of the Senate
Approved
Governor
