Bill Text: MI SB0777 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Michigan business tax; credit; credit for certain facilities that manufacture integrated power management, smart control, and storage systems; provide for. Amends sec. 434 of 2007 PA 36 (MCL 208.1434).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2009-10-07 - Assigned Pa 0110'09 With Immediate Effect [SB0777 Detail]
Download: Michigan-2009-SB0777-Engrossed.html
SB-0777, As Passed House, September 29, 2009
SUBSTITUTE FOR
SENATE BILL NO. 777
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 434 (MCL 208.1434), as amended by 2009 PA 26.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 434. (1) The Michigan economic growth authority is
authorized to enter into agreements to provide tax credits
available under this section to stimulate the domestic
commercialization and affordability of high-power energy batteries,
the lack of which today is limiting hybrid, plug-in hybrid battery-
electric, and fuel cell vehicle applications, and to help insure
that job growth from battery technology and commercial production
develops alongside advanced vehicle technology development and
renewable power generation initiatives both within and outside the
transportation sector.
(2) Subject to the limitations provided under this section,
for tax years that begin on or after January 1, 2010 and end before
January 1, 2015, a taxpayer that has entered into an agreement with
the Michigan economic growth authority that provides that the
taxpayer will manufacture plug-in traction battery packs in this
state may claim a credit against the tax imposed by this act for
the manufacture of those plug-in traction battery packs as provided
in this section. The Michigan economic growth authority may enter
into more than 1 agreement under this section. However, the total
number of plug-in traction battery packs eligible for all credits
under all agreements allowed under this section shall not exceed
the number of plug-in traction battery packs eligible for a credit
as provided in this section and at least 1 agreement shall make
capital investments of not less than $200,000,000.00 not later than
December 31, 2012. A taxpayer shall not claim a credit under this
section for more than 3 years. The total of all credits allowed
under this section shall be as follows:
(a) For tax years beginning after December 31, 2010 and ending
before January 1, 2012, $500.00 for an equivalent of 4 kilowatt
hours of battery capacity plus $125.00 for each kilowatt hour of
battery capacity in excess of 4 kilowatt hours of battery capacity
not to exceed $2,000.00 for each plug-in traction battery pack. The
total number of traction battery packs shall not exceed 20,000
plug-in traction battery pack units under this subdivision, and the
total amount of credits allowed under this subdivision shall not
exceed $40,000,000.00.
(b) For tax years beginning after December 31, 2011 and ending
before January 1, 2013, $375.00 for an equivalent of 4 kilowatt
hours of battery capacity plus $93.75 for each kilowatt hour of
battery capacity in excess of 4 kilowatt hours of battery capacity
not to exceed $1,500.00 for each plug-in traction battery pack. The
total number of traction battery packs shall not exceed 40,000
plug-in traction battery pack units under this subdivision, and the
total amount of credits allowed under this subdivision shall not
exceed $43,000,000.00. A single taxpayer shall not claim a credit
for more than 25,000 plug-in traction battery pack units under this
subdivision. The number of battery pack units not used for credits
under subdivision (a) may be added to the total number of battery
pack units for which a credit is available under this subdivision,
and the credits for those units shall be calculated as described in
subdivision (a) and shall be in addition to the maximums allowed
for any 1 taxpayer under this subdivision or the total limits
allowed under this subdivision.
(c) For tax years beginning after December 31, 2012 and ending
before January 1, 2014, $375.00 for an equivalent of 4 kilowatt
hours of battery capacity plus $93.75 for each kilowatt hour of
battery capacity in excess of 4 kilowatt hours not to exceed
$1,500.00 for each plug-in traction battery pack. The total number
of traction battery packs shall not exceed 40,000 plug-in traction
battery pack units under this subdivision, and the total amount of
credits allowed under this subdivision shall not exceed
$43,000,000.00. A single taxpayer shall not claim a credit for more
than 25,000 plug-in traction battery pack units under this
subdivision.
(d) For tax years beginning after December 31, 2013 and ending
before January 1, 2015, $375.00 for an equivalent of 4 kilowatt
hours of battery capacity plus $93.75 for each kilowatt hour of
battery capacity in excess of 4 kilowatt hours not to exceed
$1,500.00 for each plug-in traction battery pack. The total number
of traction battery packs shall not exceed 25,000 plug-in traction
battery pack units under this subdivision, and the total amount of
credits allowed under this subdivision shall not exceed
$9,000,000.00.
(3) For tax years that begin on or after January 1, 2012 and
subject to the limitations of this subsection, a taxpayer may claim
a credit of up to 75% of the qualified expenses for vehicle
engineering in this state to support battery integration,
prototyping, and launch expenses incurred for tax years that begin
on or after January 1, 2009 and end before January 1, 2014. This
credit shall not exceed $15,000,000.00 per year as agreed to and
certified by the Michigan economic growth authority. Any expenses
for which a credit is claimed under this subsection shall not be
included in costs and expenses used for credits available under
sections 403 and 405. The Michigan economic growth authority may
not authorize more than $135,000,000.00 in total credits to all
taxpayers under this subsection. To claim the credit under this
subsection, a taxpayer must manufacture a cumulative total of at
least 1,000 motor vehicles that would qualify for the credit under
section 30D of the internal revenue code and the credit shall be
available to the taxpayer only for the following percentages of the
total authorized annual expenses:
(a) In a tax year in which the taxpayer has manufactured a
cumulative total of at least 1,000 motor vehicles and fewer than
2,000 motor vehicles that qualify for the credit under section 30D
of the internal revenue code, 20%.
(b) In a tax year in which the taxpayer has manufactured a
cumulative total of at least 2,000 motor vehicles but fewer than
3,000 motor vehicles that qualify for the credit under section 30D
of the internal revenue code, 40%.
(c) In a tax year in which the taxpayer has manufactured a
cumulative total of at least 3,000 motor vehicles but fewer than
4,000 motor vehicles that qualify for the credit under section 30D
of the internal revenue code, 60%.
(d) In a tax year in which the taxpayer has manufactured a
cumulative total of at least 4,000 motor vehicles but fewer than
5,000 motor vehicles that qualify for the credit under section 30D
of the internal revenue code, 80%.
(e) In a tax year in which the taxpayer has manufactured a
cumulative total of at least 5,000 motor vehicles that qualify for
the credit under section 30D of the internal revenue code, 100%.
(4) For tax years that begin on or after January 1, 2012 and
end before January 1, 2015, a taxpayer that has entered into an
agreement with the Michigan economic growth authority that provides
that the taxpayer will increase its engineering activities in this
state for advanced automotive battery technologies may claim a
credit under this subsection. A taxpayer's qualified advanced
battery engineering expenses for advanced automotive battery
technologies shall exceed those expenses for the taxpayer's 2008
fiscal year to qualify for the credit under this subsection. The
Michigan economic growth authority may enter into not more than 1
agreement for advanced battery engineering credits, and the total
value of credits available under this subsection is limited to
$30,000,000.00. The credits under this subsection shall be allowed
as follows:
(a) Up to 75% of the total dollar amount of the qualified
advance battery engineering expenses of an authorized business
incurred during tax years beginning on or after January 1, 2009 and
ending before January 1, 2014. The taxpayer must submit to the
Michigan economic growth authority an affidavit certifying the
amount of qualified advanced battery engineering expenses for each
year.
(b) Notwithstanding any other provision of this section, a
taxpayer may claim no more than $10,000,000.00 in credits under
this subsection in any tax year.
(c) The credits available under this subsection shall not be
allowed if the taxpayer claims credits under subsection (2) for
battery pack assembly for the tax year. Notwithstanding this
limitation, the credits available under this subsection are in
addition to any other incentives which may be authorized under the
Michigan economic growth authority act, 1995 PA 24, MCL 207.801 to
207.810, for other related or unrelated projects including the
vehicle research and development expenses authorized under
subsection (3). Any expenses for which a credit is claimed under
this subsection shall not be included in costs and expenses used
for credits available under sections 403 and 405.
(5) A taxpayer that has entered into an agreement with the
Michigan economic growth authority may claim a credit equal to 50%
of the capital investment expenses for any tax year for the
construction of an integrative cell manufacturing facility that
includes anode and cathode manufacturing and cell assembly if the
taxpayer will create not less than 300 new jobs in this state. Not
more than 4 agreements may be entered into under this section, and
the maximum allowable credit under each agreement shall not exceed
$25,000,000.00 per year for no more than 4 years. No credit shall
be claimed in a tax year beginning before 2012. However, tax
credits may be based on expenses incurred in this state in prior
years. The Michigan economic growth authority shall not adopt a
resolution authorizing an agreement to provide credits under this
subsection after October 1, 2009.
(6) A taxpayer that has entered into an agreement with the
Michigan economic growth authority may claim a credit equal to 25%
of the capital investment expenses for any tax year for the
construction of a facility that will produce large scale batteries
and manufacture integrated power management, smart control, and
storage systems from 500 kilowatts to 100 megawatts if the taxpayer
will create not fewer than 500 new jobs in this state and the
taxpayer has received federal loan guarantees for a project that
employs innovative energy efficiency, renewable energy, and
advanced transmission and distribution technologies from the United
States department of energy under section 1703 of title XVII of the
energy policy act of 2005, 42 USC 16513. Not more than 1 agreement
may be entered into under this subsection, and the maximum
allowable credit under the agreement shall not exceed
$25,000,000.00 per year for no more than 4 years. No credit shall
be claimed in a tax year beginning before 2012. The Michigan
economic growth authority shall not adopt a resolution authorizing
an agreement to provide a credit under this subsection after March
1, 2010.
(7) (6)
The Michigan economic growth
authority shall appoint a
review board to advise it about decisions concerning credits under
subsection (5). The review board shall be composed of not fewer
than 2 independent scientists. Additional experts may be sought on
an ad hoc basis to review business plans and addressable markets.
In making its recommendations, the review board shall give
preference to technologies presenting novel materials,
manufacturing, and performance qualities. The review board shall
also consider all of the following:
(a) Business activities related to advanced battery technology
occurring exclusively in Michigan.
(b) Activities directly related to whole cell production, from
materials to large format cells, in Michigan.
(c) Scalability of manufacturing processes that are
established, are robust, and address strategic global automotive
market requirements.
(8) (7)
Credits under this section shall be
taken after
nonrefundable credits available under this act. If a credit or the
sum of credits allowed under this section exceeds the tax liability
of the taxpayer for the tax year, the taxpayer may elect to have
that portion that exceeds the tax liability of the taxpayer
refunded or to have the excess carried forward to offset tax
liability in subsequent tax years for 10 years or until used up,
whichever occurs first. Amounts carried forward shall not affect
the maximum amount of credits that may be claimed in subsequent
years.
(9) (8)
An agreement entered into for tax
credits under this
section shall specify all of the following:
(a) For credits provided under subsection (2), the number of
plug-in traction battery packs eligible for a credit for each tax
year covered by the period of the agreement and the maximum amount
of the credit that may be claimed by the taxpayer in each tax year.
(b) If the taxpayer claims a credit under subsection (3), the
qualified expenses for vehicle engineering, prototype, and launch
costs and the annual and total dollar amount of the credits that
may be claimed under subsection (3).
(c) If the taxpayer claims a credit under subsection (4), the
total dollar amount of the credits that may be claimed under
subsection (4).
(d) If a taxpayer claims a credit under subsection (5), all of
the following:
(i) The location of the facility.
(ii) The estimated total cost of the facility.
(iii) The capital investment expenses that qualify for the
credit under subsection (5).
(iv) The annual and total dollar amount of the credits that may
be claimed under subsection (5).
(e) If a taxpayer claims a credit under subsection (6), all of
the following:
(i) The location of the facility.
(ii) The estimated total cost of the facility.
(iii) The capital investment expenses that qualify for the
credit under subsection (6).
(iv) The annual and total dollar amount of the credits that may
be claimed under subsection (6).
(v) The minimum number of new jobs to be created in this state
each year to qualify for the credit under subsection (6).
(vi) A repayment provision that if the taxpayer subsequently
fails to meet the requirements of the agreement, the taxpayer may,
as determined by the Michigan economic growth authority, have its
credit reduced or terminated or have a percentage of the amount
previously claimed under subsection (6) added back to the tax
liability of the taxpayer in the year that the taxpayer fails to
comply with the agreement.
(10) (9)
A taxpayer shall not claim a credit
under this
section unless the Michigan economic growth authority has issued a
certificate to the taxpayer. 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 state all of the following:
(a) The taxpayer is located in this state and engaged in
activity that qualifies for the credit under this section.
(b) The taxpayer's federal employer identification number or
the Michigan department of treasury number assigned to the taxpayer
and, for a taxpayer that is a unitary business group, the federal
employer identification number or Michigan department of treasury
number assigned to the member of the group engaged in this state in
the manufacturing of plug-in traction battery packs.
(c) If applicable, the number of plug-in traction battery
packs manufactured by the taxpayer during the designated tax year
and the amount of the credit under this section for which the
taxpayer is allowed to claim for the designated tax year.
(d)
For credits available under subsections (3), (4), and (5),
and (6), the amount of the credit available for the tax year and
such other information as may be required by the department.
(11) (10)
As used in this section:
(a) "Advanced automotive battery technology" means a
rechargeable lithium battery that supports vehicle propulsion or
other advanced technologies as may be further defined by the
Michigan economic growth authority.
(b) "Battery cell" means the basic electrochemical unit that
provides a source of electrical energy by direct conversion of
chemical energy and consists of an assembly of electrodes,
separators, electrolyte, container, and terminals.
(c) "Capital investment" means expenses incurred during the
tax year and included in an agreement under this section that are
associated with facilities, equipment, tooling and engineering, and
manufacturing, including salaries, contract services, taxes,
utilities, raw materials, and supplies.
(d) "Michigan economic growth authority" means the Michigan
economic growth authority created in the Michigan economic growth
authority act, 1995 PA 24, MCL 207.801 to 207.810.
(e) "Plug-in traction battery pack" means an electrochemical
energy storage device that meets the following requirements:
(i) Has a traction battery capacity of not less than 4.0
kilowatt hours.
(ii) Is equipped with an electrical plug by means of which it
can be energized and recharged when plugged into an external source
of power.
(iii) Consists of standardized configuration and is mass-
produced.
(iv) Has been tested and approved by the national highway
transportation safety administration as compliant with applicable
motor vehicle and motor vehicle equipment safety standards when
installed by a mechanic with standardized training in protocols
established by the manufacturer as part of a nationwide
distribution program.
(v) Is installed in a new qualified plug-in electric drive
motor vehicle that qualifies for the credit under section 30D of
the internal revenue code.
(f) "Qualified advanced battery engineering expenses" means
that part of a taxpayer's qualified research expenses as defined
under section 41(b) of the internal revenue code related to
engineering research and development related to advanced automotive
battery technology.
(g) "Qualified expenses for vehicle engineering" means that
part of a taxpayer's expenses for activities within this state
related to integrating batteries into a motor vehicle that would
qualify for the credit under section 30D of the internal revenue
code including such qualified research expenses as defined under
section 41(b) of the internal revenue code.
(h) "Traction battery capacity" is the number of kilowatt
hours measured from a 100% state of charge to a 0% state of charge.
