Bill Text: MI SB0362 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Corporate income tax; financial institutions; apportionment for unitary business groups; clarify. Amends secs. 653 & 657 of 1967 PA 281 (MCL 206.653 & 206.657). TIE BAR WITH: SB 0361'17
Spectrum: Partisan Bill (Republican 1-0)
Status: (Vetoed) 2018-12-31 - Vetoed By Governor 12/28/2018 12/31/18 Addenda [SB0362 Detail]
Download: Michigan-2017-SB0362-Engrossed.html
SB-0362, As Passed Senate, December 13, 2017
SUBSTITUTE FOR
SENATE BILL NO. 362
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 653 and 657 (MCL 206.653 and 206.657), section
653 as amended by 2011 PA 183 and section 657 as added by 2011 PA
38.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 653. (1) Every financial institution with substantial
nexus in this state is subject to a franchise tax. The franchise
tax is imposed upon the tax base of the financial institution as
determined under section 655 after allocation or apportionment to
this state, at the rate of 0.29%.
(2) For purposes of this section, a financial institution has
substantial nexus in this state if the financial institution
satisfies any of the following:
(a) Has a physical presence in this state for a period of more
than 1 day during the tax year.
(b) Actively solicits sales in this state and has gross
receipts of $350,000.00 or more sourced to this state. As used in
this subdivision, "actively solicits" means that term as defined
under section 621.
(c) Has an ownership interest or a beneficial interest in a
flow-through entity, directly or indirectly through 1 or more other
flow-through entities, that has substantial nexus in this state as
provided under this section or section 621.
(3) The tax under this chapter is in lieu of the tax levied
and
imposed under chapter 11 chapters
11 and 12 of this part.
Sec. 657. (1) Except as otherwise provided under this chapter,
the tax base of a financial institution whose business activities
are confined solely to this state shall be allocated to this state.
The tax base of a financial institution whose business activities
are subject to tax both within and outside of this state shall be
apportioned to this state by multiplying the tax base by the gross
business factor.
(2) A financial institution whose business activities are
subject to tax both within and outside of this state is subject to
tax in another state in either of the following circumstances:
(a) The financial institution is subject to a business
privilege tax, a net income tax, a franchise tax measured by net
income, a franchise tax for the privilege of doing business, or a
corporate stock tax or a tax of the type imposed under this part in
that state.
(b) That state has jurisdiction to subject the financial
institution to 1 or more of the taxes listed in subdivision (a)
regardless of whether that state does or does not subject the
financial institution to that tax.
(3) Except as otherwise provided in this subsection or
subsection (4), the gross business factor is a fraction, the
numerator of which is the total gross business of the financial
institution in this state during the tax year and the denominator
of which is the total gross business of the financial institution
everywhere during the tax year. The denominator shall include any
gross business attributable to the foreign business of a person
that is a foreign operating entity or a foreign person or
attributable to operations outside of the United States.
(4) Except as otherwise provided under this subsection, for a
financial
institution that is included in a unitary
business group
of financial institutions, gross business includes gross business
in this state of every financial institution included in the
unitary business group without regard to whether the financial
institution has nexus in this state. Gross business between
financial institutions included in a unitary business group must be
eliminated in calculating the gross business factor.
(5) For a unitary business group of financial institutions,
the gross business factor shall include the gross business of all
members of the unitary group during the tax year. For those members
that were acquired or disposed of by the unitary business group
during the tax year, the gross business factor shall include the
gross business of the part-year member for that portion of the tax
year during which the member met the control and relationship
parameters under section 611(6), or for the portion of the tax year
for which the member filed as a part of an affiliated group under
section 691(2).
Enacting section 1. (1) This amendatory act is effective for
tax years beginning after December 31, 2017.
(2) The provisions of section 651 of the income tax act of
1967, 1967 PA 281, MCL 206.651, as amended by this amendatory act,
are curative and intended to clarify existing law and accurately
reflect the interpretation and application of those provisions in
accordance with the notice to taxpayers dated November 21, 2016,
regarding 5-year averaging calculation of net equity capital for
financial institutions.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No. 361 of the 99th Legislature is enacted into
law.