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HOUSE BILL NO. 6184
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 111 (MCL 208.1111), as amended by 2014 PA 282.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 111. (1) "Gross receipts" means the entire amount 1
received by the taxpayer as determined by using the taxpayer's 2
method of accounting used for federal income tax purposes, less any 3
amount deducted as bad debt for federal income tax purposes that 4
corresponds to items of gross receipts included in the modified 5
July 03, 2026, Introduced by Reps. Alexander, Tisdel, Kuhn and Frisbie and referred to Committee
on Finance.
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gross receipts tax base for the current tax year or a past tax year 1
phased in over a 5-year period starting with 50% of that amount in 2
the 2008 tax year, 60% in the 2009 tax year, 60% in the 2010 tax 3
year, 75% in the 2011 tax year, and 100% in the 2012 tax year and 4
each tax year thereafter, from any activity whether in intrastate, 5
interstate, or foreign commerce carried on for direct or indirect 6
gain, benefit, or advantage to the taxpayer or to others except for 7
the following: 8
(a) Proceeds from sales by a principal that the taxpayer 9
collects in an agency capacity solely on behalf of the principal 10
and delivers to the principal. 11
(b) Amounts received by the taxpayer as an agent solely on 12
behalf of the principal that are expended by the taxpayer for any 13
of the following: 14
(i) The performance of a service by a third party for the 15
benefit of the principal that is required by law to be performed by 16
a licensed person. 17
(ii) The performance of a service by a third party for the 18
benefit of the principal that the taxpayer has not undertaken a 19
contractual duty to perform. 20
(iii) Principal and interest under a mortgage loan or land 21
contract, lease or rental payments, or taxes, utilities, or 22
insurance premiums relating to real or personal property owned or 23
leased by the principal. 24
(iv) A capital asset of a type that is, or under the internal 25
revenue code will become, eligible for depreciation, amortization, 26
or accelerated cost recovery by the principal for federal income 27
tax purposes, or for real property owned or leased by the 28
principal. 29
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(v) Property not described under subparagraph (iv) that is 1
purchased by the taxpayer on behalf of the principal and that the 2
taxpayer does not take title to or use in the course of performing 3
its contractual business activities. 4
(vi) Fees, taxes, assessments, levies, fines, penalties, or 5
other payments established by law that are paid to a governmental 6
entity and that are the legal obligation of the principal. 7
(c) Amounts that are excluded from gross income of a foreign 8
corporation engaged in the international operation of aircraft 9
under section 883(a) of the internal revenue code. 10
(d) Amounts received by an advertising agency used to acquire 11
advertising media time, space, production, or talent on behalf of 12
another person. 13
(e) Amounts received by a newspaper to acquire advertising 14
space not owned by that newspaper in another newspaper on behalf of 15
another person. This subdivision does not apply to any 16
consideration received by the taxpayer for acquiring that 17
advertising space. 18
(f) Notwithstanding any other provision of this section, 19
amounts received by a taxpayer that manages real property owned by 20
a third party that are deposited into a separate account kept in 21
the name of that third party and that are not reimbursements to the 22
taxpayer and are not indirect payments for management services that 23
the taxpayer provides to that third party. 24
(g) Proceeds from the taxpayer's transfer of an account 25
receivable if the sale that generated the account receivable was 26
included in gross receipts for federal income tax purposes. This 27
subdivision does not apply to a taxpayer that during the tax year 28
both buys and sells any receivables. 29
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(h) Proceeds from any of the following: 1
(i) The original issue of stock or equity instruments or equity 2
issued by a regulated investment company as that term is defined 3
under in section 851 of the internal revenue code. 4
(ii) The original issue of debt instruments. 5
(i) Refunds from returned merchandise. 6
(j) Cash and in-kind discounts. 7
(k) Trade discounts. 8
(l) Federal, state, or local tax refunds. 9
(m) Security deposits. 10
(n) Payment of the principal portion of loans. 11
(o) Value of property received in a like-kind exchange. 12
(p) Proceeds from a sale, transaction, exchange, involuntary 13
conversion, maturity, redemption, repurchase, recapitalization, or 14
other disposition or reorganization of tangible, intangible, or 15
real property, less any gain from the disposition or reorganization 16
to the extent that the gain is included in the taxpayer's federal 17
taxable income, if the property satisfies 1 or more of the 18
following: 19
(i) The property is a capital asset as that term is defined in 20
section 1221(a) of the internal revenue code. 21
(ii) The property is land that qualifies as property used in 22
the trade or business as that term is defined in section 1231(b) of 23
the internal revenue code. 24
(iii) The property is used in a hedging transaction entered into 25
by the taxpayer in the normal course of the taxpayer's trade or 26
business primarily to manage the risk of exposure to foreign 27
currency fluctuations that affect assets, liabilities, profits, 28
losses, equity, or investments in foreign operations; interest rate 29
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fluctuations; or commodity price fluctuations. For purposes of this 1
subparagraph, the actual transfer of title of real or tangible 2
personal property to another person is not a hedging transaction. 3
Only the overall net gain from the hedging transactions entered 4
into during the tax year is included in gross receipts. As used in 5
this subparagraph, "hedging transaction" means that term as defined 6
under in section 1221 of the internal revenue code regardless of 7
whether the transaction was identified by the taxpayer as a hedge 8
for federal income tax purposes , provided, however, that if 9
transactions excluded under this subparagraph and not identified as 10
a hedge for federal income tax purposes shall be are identifiable 11
to the department by the taxpayer as a hedge in its books and 12
records. 13
(iv) The property is investment and trading assets managed as 14
part of the person's treasury function. For purposes of this 15
subparagraph, a person principally engaged in the trade or business 16
of purchasing and selling investment and trading assets is not 17
performing a treasury function. Only the overall net gain from the 18
treasury function incurred during the tax year is included in gross 19
receipts. As used in this subparagraph, "treasury function" means 20
the pooling and management of investment and trading assets for the 21
purpose of satisfying the cash flow or liquidity needs of the 22
taxpayer's trade or business. 23
(q) The proceeds from a policy of insurance, a settlement of a 24
claim, or a judgment in a civil action less any proceeds under this 25
subdivision that are included in federal taxable income. 26
(r) For a sales finance company, as that term is defined in 27
section 2 of the motor vehicle sales finance act, 1950 (Ex Sess) PA 28
27, MCL 492.102, and directly or indirectly owned in whole or in 29
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part by a motor vehicle manufacturer as of January 1, 2008, and for 1
a person that is a broker or dealer as those terms are defined 2
under in section 78c(a)(4) or 3(a)(4) and (5) of the securities 3
exchange act of 1934, 15 USC 78c, or a person included in the 4
unitary business group of that broker or dealer that buys and sells 5
for its own account, contracts that are subject to the commodity 6
exchange act, 7 USC 1 to 27f, amounts realized from the repayment, 7
maturity, sale, or redemption of the principal of a loan, bond, or 8
mutual fund, certificate of deposit, or similar marketable 9
instrument provided if such instruments are not held as inventory. 10
(s) For a sales finance company , as that term is defined in 11
section 2 of the motor vehicle sales finance act, 1950 (Ex Sess) PA 12
27, MCL 492.102, and directly or indirectly owned in whole or in 13
part by a motor vehicle manufacturer as of January 1, 2008, and for 14
a person that is a broker or dealer as those terms are defined 15
under in section 78c(a)(4) or 3(a)(4) and (5) of the securities 16
exchange act of 1934, 15 USC 78c, or a person included in the 17
unitary business group of that broker or dealer that buys and sells 18
for its own account, contracts that are subject to the commodity 19
exchange act, 7 USC 1 to 27f, the principal amount received under a 20
repurchase agreement or other transaction properly characterized as 21
a loan. 22
(t) For a mortgage company, proceeds representing the 23
principal balance of loans transferred or sold in the tax year. For 24
purposes of this subdivision, "mortgage company" means a any of the 25
following persons that have greater than 90% of their revenue, in 26
the ordinary course of business, from the origination, sale, or 27
servicing of residential mortgage loans: 28
(i) For 6 months after the effective date of the residential 29
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mortgage licensing and supervision act, a person that is licensed 1
under the mortgage brokers, lenders, and servicers licensing act, 2
1987 PA 173, MCL 445.1651 to 445.1684, or the secondary mortgage 3
loan act, 1981 PA 125, MCL 493.51 to 493.81. , and has greater than 4
90% of its revenues, in the ordinary course of business, from the 5
origination, sale, or servicing of residential mortgage loans. 6
(ii) Beginning on the effective date of the residential 7
mortgage licensing and supervision act, a mortgage broker, mortgage 8
lender, or mortgage servicer that is licensed under the residential 9
mortgage licensing and supervision act. 10
(u) For a professional employer organization, any amount 11
charged by a professional employer organization that represents the 12
actual cost of wages and salaries, benefits, worker's compensation, 13
payroll taxes, withholding, or other assessments paid to or on 14
behalf of a covered employee by the professional employer 15
organization under a professional employer arrangement. 16
(v) Any invoiced items used to provide more favorable floor 17
plan assistance to a person subject to the tax imposed under this 18
act than to a person not subject to this tax and paid by a 19
manufacturer, distributor, or supplier. 20
(w) For an individual, estate, or person organized for estate 21
or gift planning purposes, amounts received other than those from 22
transactions, activities, and sources in the regular course of the 23
person's trade or business. For purposes of this subdivision, all 24
of the following apply: 25
(i) Amounts received from transactions, activities, and sources 26
in the regular course of the person's business include, but are not 27
limited to, the following: 28
(A) Receipts from tangible and intangible property if the 29
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acquisition, rental, lease, management, or disposition of the 1
property constitutes integral parts of the person's regular trade 2
or business operations. 3
(B) Receipts received in the course of the person's trade or 4
business from stock and securities of any foreign or domestic 5
corporation and dividend and interest income. 6
(C) Receipts derived from isolated sales, leases, assignments, 7
licenses, divisions, or other infrequently occurring dispositions, 8
transfers, or transactions involving tangible, intangible, or real 9
property if the property is or was used in the person's trade or 10
business operation. 11
(D) Receipts derived from the sale of an interest in a 12
business that constitutes an integral part of the person's regular 13
trade or business. 14
(E) Receipts derived from the lease or rental of real 15
property. 16
(ii) Receipts excluded from gross receipts include, but are not 17
limited to, the following: 18
(A) Receipts derived from investment activity, including 19
interest, dividends, royalties, and gains from an investment 20
portfolio or retirement account, if the investment activity is not 21
part of the person's trade or business. 22
(B) Receipts derived from the disposition of tangible, 23
intangible, or real property held for personal use and enjoyment, 24
such as a personal residence or personal assets. 25
(x) Receipts derived from investment activity other than 26
receipts from transactions, activities, and sources in the regular 27
course of the person's trade or business by a person that is 28
organized exclusively to conduct investment activity and that does 29
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not conduct investment activity for any person other than an 1
individual or a person related to that individual or by a common 2
trust fund established under the collective investment funds act, 3
1941 PA 174, MCL 555.101 to 555.113. For purposes of this 4
subdivision, a person is related to an individual if that person is 5
a spouse, brother or sister, whether of the whole or half blood or 6
by adoption, ancestor, lineal descendent of that individual or 7
related person, or a trust benefiting that individual or 1 or more 8
persons related to that individual. 9
(y) Interest income and dividends derived from obligations or 10
securities of the United States government, this state, or any 11
governmental unit of this state. As used in this subdivision, 12
"governmental unit" means that term as defined in section 3 of the 13
shared credit rating act, 1985 PA 227, MCL 141.1053. 14
(z) Dividends and royalties received or deemed received from a 15
foreign operating entity or a person other than a United States 16
person, including, but not limited to, the amounts determined under 17
section 78 of the internal revenue code and sections 951 to 964 of 18
the internal revenue code, phased in over a 5-year period starting 19
with 50% of that amount in the 2008 tax year, 60% in the 2009 tax 20
year, 60% in the 2010 tax year, 75% in the 2011 tax year, and 100% 21
in the 2012 tax year and each tax year thereafter. 22
(aa) To the extent not deducted as purchases from other firms 23
under section 203, each of the following: 24
(i) Sales or use taxes collected from or reimbursed by a 25
consumer or other taxes the taxpayer collected directly from or was 26
reimbursed by a purchaser and remitted to a local, state, or 27
federal tax authority, phased in over a 5-year period starting with 28
50% of that amount in the 2008 tax year, 60% in the 2009 tax year, 29
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60% in the 2010 tax year, 75% in the 2011 tax year, and 100% in the 1
2012 tax year and each tax year thereafter. 2
(ii) In the case of receipts from the sale of cigarettes or 3
tobacco products by a wholesale dealer, retail dealer, distributor, 4
manufacturer, or seller, an amount equal to the federal and state 5
excise taxes paid by any person on or for such cigarettes or 6
tobacco products under subtitle E of the internal revenue code or 7
other applicable state law, phased in over a 3-year period starting 8
with 60% of that amount in the 2008 tax year, 75% in the 2009 tax 9
year, and 100% in the 2010 tax year and each tax year thereafter. 10
(iii) In the case of receipts from the sale of motor fuel by a 11
person with a motor fuel tax license or a retail dealer, an amount 12
equal to federal and state excise taxes paid by any person on such 13
motor fuel under section 4081 of the internal revenue code or under 14
other applicable state law, phased in over a 5-year period starting 15
with 50% of that amount in the 2008 tax year, 60% in the 2009 tax 16
year, 60% in the 2010 tax year, 75% in the 2011 tax year, and 100% 17
in the 2012 tax year and each tax year thereafter. 18
(iv) In the case of receipts from the sale of beer, wine, or 19
intoxicating liquor by a person holding a license to sell, 20
distribute, or produce those products, an amount equal to federal 21
and state excise taxes paid by any person on or for such beer, 22
wine, or intoxicating liquor under subtitle E of the internal 23
revenue code or other applicable state law, phased in over a 5-year 24
period starting with 50% of that amount in the 2008 tax year, 60% 25
in the 2009 tax year, 60% in the 2010 tax year, 75% in the 2011 tax 26
year, and 100% in the 2012 tax year and each tax year thereafter. 27
(v) In the case of receipts from the sale of communication, 28
video, internet access and related services and equipment, any 29
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government imposed tax, fee, or other imposition in the nature of a 1
tax or fee required by law, ordinance, regulation, ruling, or other 2
legal authority and authorized to be charged on a customer's bill 3
or invoice, phased in over a 5-year period starting with 50% of 4
that amount in the 2008 tax year, 60% in the 2009 tax year, 60% in 5
the 2010 tax year, 75% in the 2011 tax year, and 100% in the 2012 6
tax year and each tax year thereafter. This subparagraph does not 7
include the recovery of net income taxes, net worth taxes, property 8
taxes, or the tax imposed under this act. 9
(vi) In the case of receipts from the sale of electricity, 10
natural gas, or other energy source, any government imposed tax, 11
fee, or other imposition in the nature of a tax or fee required by 12
law, ordinance, regulation, ruling, or other legal authority and 13
authorized to be charged on a customer's bill or invoice, phased in 14
over a 5-year period starting with 50% of that amount in the 2008 15
tax year, 60% in the 2009 tax year, 60% in the 2010 tax year, 75% 16
in the 2011 tax year, and 100% in the 2012 tax year and each tax 17
year thereafter. This subparagraph does not include the recovery of 18
net income taxes, net worth taxes, property taxes, or the tax 19
imposed under this act. 20
(vii) Any deposit required under any of the following, phased 21
in over a 5-year period starting with 50% of that amount in the 22
2008 tax year, 60% in the 2009 tax year, 60% in the 2010 tax year, 23
75% in the 2011 tax year, and 100% in the 2012 tax year and each 24
tax year thereafter: 25
(A) 1976 IL 1, MCL 445.571 to 445.576. 26
(B) R 436.1629 of the Michigan administrative 27
code.Administrative Code. 28
(C) R 436.1723a of the Michigan administrative 29
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code.Administrative Code. 1
(D) Any substantially similar beverage container deposit law 2
of another state. 3
(viii) An excise tax collected pursuant to under the airport 4
parking tax act, 1987 PA 248, MCL 207.371 to 207.383, collected 5
from or reimbursed by a consumer and remitted as provided in the 6
airport parking tax act, 1987 PA 248, MCL 207.371 to 207.383, 7
phased in over a 5-year period starting with 50% of that amount in 8
the 2008 tax year, 60% in the 2009 tax year, 60% in the 2010 tax 9
year, 75% in the 2011 tax year, and 100% in the 2012 tax year and 10
each tax year thereafter. 11
(bb) Amounts attributable to an ownership interest in a pass-12
through entity, regulated investment company, real estate 13
investment trust, or cooperative corporation whose business 14
activities are taxable under section 203 or would be subject to the 15
tax under section 203 if the business activities were in this 16
state. For purposes of this subdivision: 17
(i) "Cooperative corporation" means those organizations 18
described under subchapter T of the internal revenue code. 19
(ii) "Pass-through" entity means a partnership, subchapter S 20
corporation, or other person, other than an individual, that is not 21
classified for federal income tax purposes as an association taxed 22
as a corporation. 23
(iii) "Real estate investment trust" means that term as defined 24
under in section 856 of the internal revenue code. 25
(iv) "Regulated investment company" means that term as defined 26
under in section 851 of the internal revenue code. 27
(cc) For a regulated investment company as that term is 28
defined under in section 851 of the internal revenue code, receipts 29
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derived from investment activity by that regulated investment 1
company. 2
(dd) For fiscal years that begin after September 30, 2009, 3
unless the state budget director certifies to the state treasurer 4
by January 1 of that fiscal year that the federally certified rates 5
for actuarial soundness required under 42 CFR 438.6 and that are 6
specifically developed for Michigan's health maintenance 7
organizations that hold a contract with this state for medicaid 8
Medicaid services provide explicit adjustment for their obligations 9
required for payment of the tax under this act, amounts received by 10
the taxpayer during that fiscal year for medicaid Medicaid premium 11
or reimbursement of costs associated with service provided to a 12
medicaid Medicaid recipient or beneficiary. 13
(ee) For a taxpayer that provides health care management 14
consulting services, amounts received by the taxpayer as fees from 15
its clients that are expended by the taxpayer to reimburse those 16
clients for labor and nonlabor services that are paid by the client 17
and reimbursed to the client pursuant to a services agreement. 18
(ff) Amounts attributed to the taxpayer pursuant to a 19
discharge of indebtedness as described under section 61(a)(12) 20
61(a)(11) of the internal revenue code, including forgiveness of a 21
nonrecourse debt. 22
(2) "Insurance company" means an authorized insurer as that 23
term is defined in sections 106 and 108 of the insurance code of 24
1956, 1956 PA 218, MCL 500.106 and 500.108. 25
(3) "Internal revenue code" means the United States internal 26
revenue code of 1986 in effect on January 1, 2008 or, at the option 27
of the taxpayer, in effect for the tax year. 28
(4) "Inventory" means, except as provided in subdivision (e), 29
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all of the following as described in subdivisions (a) to (d): 1
(a) The stock of goods held for resale in the regular course 2
of trade of a retail or wholesale business, including electricity 3
or natural gas purchased for resale. 4
(b) Finished goods, goods in process, and raw materials of a 5
manufacturing business purchased from another person. 6
(c) For a person that is a new motor vehicle dealer licensed 7
under the Michigan vehicle code, 1949 PA 300, MCL 257.1 to 257.923, 8
floor plan interest expenses for new motor vehicles. For purposes 9
of this subdivision, "floor plan interest" means interest paid that 10
finances any part of the person's purchase of new motor vehicle 11
inventory from a manufacturer, distributor, or supplier. However, 12
amounts attributable to any invoiced items used to provide more 13
favorable floor plan assistance to a person subject to the tax 14
imposed under this act than to a person not subject to this tax is 15
considered interest paid by a manufacturer, distributor, or 16
supplier. 17
(d) For a person that is a securities trader, broker, or 18
dealer or a person included in the unitary business group of that 19
securities trader, broker, or dealer that buys and sells for its 20
own account, contracts that are subject to the commodity exchange 21
act, 7 USC 1 to 27f, the cost of securities as that term is defined 22
under in section 475(c)(2) of the internal revenue code, and for a 23
securities trader the cost of commodities as that term is defined 24
under in section 475(e)(2) of the internal revenue code, and for a 25
broker or dealer the cost of commodities as that term is defined 26
under in section 475(e)(2)(B), (C), and (D) of the internal revenue 27
code, excluding interest expense other than interest expense 28
related to repurchase agreements. As used in this subdivision: 29
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Final Page
JJB H05171'25 g_HB6184_INTR_1 1nu5vc
(i) "Broker" means that term as defined under in section 1
78c(a)(4) 3(a)(4) of the securities exchange act of 1934, 15 USC 2
78c. 3
(ii) "Dealer" means that term as defined under in section 4
78c(a)(5) 3(a)(4) of the securities exchange act of 1934, 15 USC 5
78c. 6
(iii) "Securities trader" means a person that engages in the 7
trade or business of purchasing and selling investments and trading 8
assets. 9
(e) Inventory does not include either of the following: 10
(i) Personal property under lease or principally intended for 11
lease rather than sale. 12
(ii) Property allowed a deduction or allowance for depreciation 13
or depletion under the internal revenue code. 14
(5) "Officer" means an officer of a corporation other than a 15
subchapter S corporation, including all of the following: 16
(a) The chairperson of the board. 17
(b) The president, vice president, secretary, or treasurer of 18
the corporation or board. 19
(c) Persons performing similar duties and responsibilities to 20
persons described in subdivisions (a) and (b) that include, at a 21
minimum, major decision making. 22
Enacting section 1. This amendatory act does not take effect 23
unless House Bill No. 6177 (request no. H05171'25) of the 103rd 24
Legislature is enacted into law. 25