Bill Text: MI SB1102 | 2019-2020 | 100th Legislature | Introduced
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-Introduced.html
SENATE BILL NO. 1102
September 10, 2020, Introduced by Senator
NESBITT and referred to the Committee on Finance.
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 for a unitary business group, all of the following
apply:
(a) If the person
included in the unitary business group does not have, or is part of a federal
consolidated group that does not have, a limitation under section 163(j) of the
internal revenue code, then section 163(j) of the internal revenue code does
not apply under this part.
(b) Any
limitation calculated for purposes of this part shall be calculated in the same
manner as any federal limitation is calculated under the internal revenue code
and any related federal regulations promulgated under the internal revenue code
that provide that the limitation is calculated at the group level, and not
separately for each person included in the federal consolidated return group.
For purposes of this subdivision, when using the federal regulations to
determine any limitation under this part, any reference to a federal
consolidated return group is considered a reference to a unitary business group.
(c) To the extent any person included in a unitary business group has excess business interest expense over that person's separately determined business interest expense limitation under section 163(j) of the internal revenue code, that person's excess business interest expense is allowed to be shared with other persons included in the unitary business group if those other persons have unused current year business interest expense limitations. The unitary business group may decide how to share any excess business interest expense. However, all current tax year unused business interest expense limitations must be used by the unitary business group before any person who is included in the unitary business group has a business interest expense carryforward. A person's separately determined business interest expense that is not allowed to be used in the current tax year by that person or by any other person included in the unitary business group pursuant to this subdivision may be carried forward by that person.
