SB-0906, As Passed Senate, June 12, 2018

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 906

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1933 PA 167, entitled

 

"General sales tax act,"

 

by amending section 4a (MCL 205.54a), as amended by 2018 PA 113.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 4a. (1) Subject to subsection (2), the following are

 

exempt from the tax under this act:

 

     (a) A sale of tangible personal property not for resale to a

 

nonprofit school, nonprofit hospital, or nonprofit home for the

 

care and maintenance of children or aged persons 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 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 any restricted group. A sale of tangible personal

 

property to a parent cooperative preschool is exempt from taxation

 

under this act. 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 1973 PA 116, MCL

 

722.111 to 722.128.

 

     (b) A sale of tangible personal property not for resale to a

 

regularly organized church or house of religious worship, except

 

the following:

 

     (i) Sales in activities that are mainly commercial

 

enterprises.

 

     (ii) Sales of vehicles licensed for use on 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 for religious purposes.

 

     (c) The sale of food to bona fide enrolled students by a

 

school or other educational institution not operated for profit.

 

     (d) The sale of a vessel designated 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 the

 

vessel engaged in interstate commerce.

 

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

 

of tangible personal property to a person engaged in a business

 

enterprise that uses or consumes the tangible personal 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.

 

     (f) 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 (e):

 

     (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 (e),

 

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 (e).

 

     (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.

 

     (g) 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 (e) or

(f).

 

     (h) 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.

 

     (i) The sale of a copyrighted motion picture film or a

 

newspaper or periodical admitted 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 not less than 2 years, and published not less than once

 

a week. 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.

 

     (j) A sale of tangible personal property to persons licensed

 

to operate commercial radio or television stations 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 transmission to or

 

receiving from an artificial satellite.

 

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

 

equipment, or mobility enhancing equipment.

 

     (l) The sale of a vehicle not for resale to a Michigan

 

nonprofit corporation organized exclusively to provide a community

 

with ambulance or fire department services.

 

     (m) Before October 1, 2012, a sale of tangible personal

 

property to inmates in a penal or correctional institution

 

purchased with scrip or its equivalent issued and redeemed by the

 

institution.

 

     (n) A sale of textbooks sold by a public or nonpublic school

 

to or for the use of students enrolled in any part of a

 

kindergarten through twelfth grade program.

 

     (o) A sale of tangible personal property installed as a

 

component part of a water pollution control facility for which a

 

tax exemption certificate is issued pursuant to 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 part 59 of

 

the natural resources and environmental protection act, 1994 PA

 

451, MCL 324.5901 to 324.5908.

 

     (p) The sale or lease of the following to an industrial

 

laundry: after December 31, 1997:

 

     (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.

 

     (q) A sale of tangible personal property to a person holding a

 

direct payment permit under section 8 of the use tax act, 1937 PA

 

94, MCL 205.98.

     (r) The sale of a dental prosthesis.

 

     (s) 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 (e) or (f). 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.

 

     (t) A sale 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 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 those terms are 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.

 

     (2) The tangible personal property under subsection (1) is

 

exempt only to the extent that that property is used for the exempt

 

purpose 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)(e), (f), (g), and (h)

 

do not include 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 (1)(e), (f), and (g) as amended by the

 

amendatory act that added this subsection 2018 PA 113 are intended

 

to be retroactive and to apply to all periods open under section

 

27a of 1941 PA 122, MCL 205.27a, but do not apply to any refund

 

claims filed prior to 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 do not have stems, flowers, leaves, and roots, and

 

which 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 have true stems, flowers, leaves, and

 

roots, which live in water, and which 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.