Bill Text: MI SB1102 | 2019-2020 | 100th Legislature | Engrossed
Bill Title: Corporate income tax: unitary filing; application of federal business interest expense limitations; clarify. Amends sec. 691 of 1967 PA 281 (MCL 206.691).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2020-12-10 - Referred To Committee On Ways And Means [SB1102 Detail]
Download: Michigan-2019-SB1102-Engrossed.html
Substitute For
SENATE BILL NO. 1102
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 691 (MCL 206.691), as amended by 2014 PA 14.
the people of the state of michigan enact:
Sec. 691. (1)
Except as otherwise provided under section 680(3), a unitary business group
shall file a combined return that includes each United States person that is
included in the unitary business group. Each
Subject to subsection (3), each United
States person included in a unitary business group or included in a combined
return shall be treated as a single person, and all transactions between those
persons included in the unitary business group shall be eliminated from the
corporate income tax base, the apportionment formulas, and for purposes of
determining exemptions, credits, and the filing threshold under this part. If a
United States person included in a unitary business group or included in a
combined return is subject to the tax under chapter 12 or 13, any corporate
income attributable to that person shall be eliminated from the corporate
income tax base and any sales attributable to that person shall be eliminated
from the apportionment formula under this part.
(2) A person that is part of an affiliated group may elect
without the consent of the department to have all of the persons that are
included in that affiliated group to be treated as a unitary business group. A
taxpayer that elects to file as a unitary business group pursuant to this subsection
shall compute its tax under this part in accordance with all other provisions
of this part that apply to a unitary business group. The taxpayer shall make
the election under this subsection on a form or in a format as prescribed by
the department that is to be filed in a timely manner with the taxpayer's
annual return. Each person included in the affiliated group is deemed to have
agreed to be bound by the election made under this subsection and any renewal
of that election and to have waived any objection to its inclusion in the
affiliated group and treatment as a unitary business group. Each person that
subsequently enters the affiliated group after the tax year for which the
election is made is deemed to have consented to the application of and is bound
by the election and to have waived any objection to its inclusion in the
affiliated group and treatment as a unitary business group. An election made
pursuant to this subsection is irrevocable and binding for and applicable to
the tax year for which it is made and for the next 9 tax years. The election
shall remain in effect for the time period in which the ownership requirements
under this section are met irrespective of whether a federal consolidated group
to which the unitary business group belongs discontinues the filing of a
federal consolidated return or whether the common parent changes due to a
reverse acquisition or acquisition by a related person. Upon the expiration of
the election after it has been in effect for 10 tax years, an election may be
renewed for another 10 tax years, without the consent of the department;
provided however, that in the case of a nonrenewal a new election under this
subsection is not permitted in any of the immediately following 3 tax years.
The renewal shall be made on a form or in a format as prescribed by the
department that is to be filed in a timely manner with the taxpayer's annual
return after the completion of a 10-year period for which an election under
this subsection was in place.
(3) For purposes
of applying the business interest expense limitation under section 163(j) of
the internal revenue code if a person included in a unitary business group
meets any 1 of the following conditions, that person is not subject to the
limitation under section 163(j)(1) of the internal revenue code for purposes of
reporting federal taxable income under this part:
(a) The person's
or its federal consolidated group's business interest expense is not limited
under section 163(j)(1) of the internal revenue code.
(b) The person is
exempt from the limitation pursuant to section 163(j)(3) of the internal
revenue code.
(c) The person
does not have business interest properly allocable to a trade or business under
section 163(j)(5) and (j)(7) of the internal revenue code and the related
regulations promulgated under the internal revenue code.
(d) The person is included in a federal consolidated group that meets the conditions under subdivision (a), (b), or (c).
