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Overview of the Michigan Business Tax (MBT)

Replacement for the Single Business Tax (SBT)

If you have questions about the MBT, please contact your Rehmann tax advisor, or:
Mike Bozimowski, JD, MST, CMI
248.579.1100
michael.bozimowski@rehmannn.com 		Cathy Lambert, CPA
248.293.7155
cathy.lambert@rehmann.com


12/20/2007

Subject: Important Year-End Information Concerning Personal Property Taxes

As the end of the year quickly approaches, we would like to ensure you are aware of requirements in order to minimize your 2007 Michigan Single Business Tax. Your business may be entitled to a refundable credit against the SBT for industrial personal property tax paid, but only if certain requirements are met.
Who: Businesses located on industrial parcels
What: Pay the winter personal property tax bill(s)
When: On or before December 31, even though payment is not due until February 2008
Where: Personally deliver payment to the local assessor's office and get a date-stamped receipt (Note: Small township offices may be closed next week, so if your check is not cashed until 2008 you will have no proof of timely payment without receipt.)
Why: The refundable credit against the SBT for industrial personal property tax is allowed only for taxes assessed AND paid during the tax year.

Personal property tax is imposed on all business equipment, furniture and other property that is not related to land or buildings. This tax bill is not to be confused with the real property tax bill, which is tax on land and buildings. Additionally, please make sure to file the Personal Property Tax return by the due date of February 18, 2008. Again, hand delivery with date stamp is recommended. The return must be filed in a timely manner in order to be eligible for the credit.

12/6/2007

Use Tax on Services Repealed
Revisions to the Michigan Business Tax Act

Governor Jennifer M. Granholm signed HB 5408 into law (PA 145 of 2007) on December 1, 2007. The law creates a surcharge on the Michigan Business Tax (MBT), effective beginning January 1, 2008 and replaces the expanded use tax on services enacted earlier in the fall. The tax on select services was repealed on December 1, just hours after it went into effect. The Michigan Department of Treasury is alerting businesses that collected the 6% use tax that they have an option on how to handle any monies collected. Businesses that charged and collected the use tax on services can either refund the money to the customer or remit the revenue to the State.

The revenue replacement comes from a new surcharge on the MBT generally at the rate of 21.99%. The law also reduces the benefits initially granted in the MBT of certain credits including the compensation and investment tax credits. The result for many businesses is a smaller than expected reduction in tax from SBT to MBT and for others, a much greater tax burden.

Frequently Asked Questions

Q: If I did not collect the 6% use tax on taxable services on December 1 before the repeal, am I liable for use tax due to the State?
A: No, it is expected that the Legislature will pass a bill to hold businesses harmless if they did not collect tax on Saturday December 1, 2007.

Q: If I did collect the 6% use tax on taxable services on December 1, 2007, before the repeal, what do I do with the collected tax on services?
A: The Michigan Department of Treasury is giving two options:
• Refund the money to the purchaser/user, or
• Remit the revenue to the State of Michigan along with Form 160 by January 20, 2008.

Q: Who is affected by the surcharge?
A: Any person or business that is subject to the new Michigan Business Tax.

Q: What is the surcharge?
A: The surcharge is an annual tax imposed at 21.99% of the taxpayer's liability under the new Michigan Business Tax. The surcharge is calculated before credits and may not be reduced by some of the credits (A different percent applies to Insurance Companies and Financial Institutions).

Q: What are the significant changes to the new Michigan Business Tax under this public act?
A: The compensation credit is decreased for 2008 to 0.296% of Michigan compensation and then will increase to 0.37% for 2009 and each tax year thereafter. The investment tax credit for 2008 is 2.32% of qualifying Michigan property and will increase to 2.9% for 2009 and each tax year thereafter. The two credits combined can not exceed 50% of the tax before the credits in 2008 and 52% for each tax year thereafter. In addition, the research and development credit decreased for the year 2008 to 1.52% of Michigan research and development expenses and then will increase to 1.9% for 2009 and each tax year thereafter. The total of these three credits together may not exceed 65% of the total tax, as determined before the calculation of the surcharge.

Several other sections were amended in the Michigan Business Tax Act as well.
7/6/07
SEMINAR DATES ANNOUNCED

Rehmann is sponsoring seminars for businesses and financial institutions to provide you with an overview of the new law and its implications on your business. Seminars will be located throughout the state. If you are interested in attending any of these complimentary sessions, please RSVP to Holly Kammer at 248.293.7194 or hkammer@rehmann.com by July 16, 2007. She will need your name, company name, contact information and which location you will be attending.

For Businesses:
All seminars include continental breakfast with presentation from 7:30 AM - 9:30 AM

Monday, July 23, 2007
Rehmann
2330 E. Paris Avenue, SE
Grand Rapids, MI 49546

Tuesday, July 24, 2007
MSU Management Education Center
811 West Square Lake Road
Troy, MI 48098

Wednesday, July 25, 2007
Rehmann
5800 Gratiot Avenue, Suite 201
Saginaw, MI 48638

Thursday, July 26, 2007
Park Place Hotel
300 East State Street
Traverse City, MI 49684

Monday, July 30, 2007
University Club of MSU
3435 Forest Rd.
Lansing, MI 48910

Tuesday, July 31, 2007
Cascade Manor House
1970 Kibby Road
Jackson, MI 49203


For Financial Institutions:
All seminars include lunch with presentation from 11:30 AM - 1:30 PM.

Wednesday, July 25, 2007
Rehmann
5800 Gratiot Avenue, Suite 201
Saginaw, MI 48638

Thursday, July 26, 2007
Park Place Hotel
300 East State Street
Traverse City, MI 49684

Monday, July 30, 2007
University Club of MSU
3435 Forest Rd.
Lansing, MI 48910


7/1/07
Senate Bill 94 (CR-1) would create the "Michigan Business Tax" Act , which would establish a business income tax and a modified gross receipts tax, along with numerous tax credits, including both new tax credits and existing tax credits that would be carried over from the single business tax. In addition, this bill is tie-barred to House Bill 4369, House Bill 4370, House Bill 4371, and House Bill 4372, which would exempt industrial and commercial personal property from various portions of the State education and local school property taxes. Click here to read a summary of the major provisions of Senate Bill 94.

6/29/07
You probably have heard that the Michigan Legislature has passed the Michigan Business Tax (MBT) which will replace the Single Business Tax (SBT), scheduled to expire on December 31, 2007. The MBT is intended to be revenue neutral for the state, as it is projected to produce approximately the same $1.9 billion in revenue currently generated under the SBT.

Please be assured that Rehmann is keeping a close eye on the status and we are thinking about your business. As soon as it is available, we will be digesting the details as quickly as possible to provide you the information you need.

We will be sponsoring seminars to provide you with an overview of the new law and its implications to your business. These seminars, which will be located throughout the state, will be scheduled for later in July - exact dates to be announced soon.

Please watch your mail for additional information and seminar dates.

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