Senate Package Seeks to Right a Gross Receipts Wrong
When the recently enacted Michigan Business Tax (MBT) replaced the Single Business Tax (SBT), questions began to arise about how the new tax would handle sales taxes collected and remitted. According to the Michigan Department of Treasury, gross receipts includes sales tax, and therefore a retailer would be subject to the 0.8% gross receipts tax on the 6% sales tax collected and remitted to the state. Essentially, this is a tax on a tax.
This was not supposed to be the case when negotiations were underway on the SBT replacement. In order to rectify the situation, MRA and key allies have been petitioning both Republican and Democratic lawmakers for a legislative remedy prior to the first quarterly filing of the MBT on April 15. A package of bills was introduced last week that solves the sales and use tax issue as well as some other oversights in the MBT.
SB 1038 would amend the MBT Act to exclude from the definition of "gross receipts" certain proceeds, interest income, royalties, dividends, taxes, fees and surcharges, and to include hedging transactions.
The bills were briefly discussed in the Senate Finance Committee on Thursday, with MRA supporting the bills. Finance Chair Nancy Cassis (R-Novi), sponsor of SB 1038, said it’s her intention to move the bills to the full Senate this week after another committee meeting. She has asked MRA to have a couple of members testify on the negative consequences associated with not fixing the definition of gross receipts. As expected, Treasury opposes the move without an alternative funding source to replace the lost revenue. Early estimates put the sales tax fix alone at upwards of $50 million.
Tracfone an Issue Once Again
MRA was recently successful in defeating a proposal to require retailers to collect a 911 funding fee when selling prepaid wireless phones and cards. Now, legislation has been introduced seeking to require retailers to collect driver’s license information and store this data for six months when selling such products.
The legislation is reportedly an attempt to help law enforcement track suspected drug dealers. The bill has been referred to the Judiciary Committee.
Penny Plan is Resurrected
A plan to charge a penny for each retail transaction over $2 to fund statewide recycling programs was recently introduced after it failed to pass in the last legislative session. Rep. Michael Sak (D-Grand Rapids) introduced the bill, and it was referred to the House Committee on Commerce.
Any business that makes a good faith estimate that it will collect less than $20 in recycling fees in a month may choose not to collect the fee. Businesses that collect the fee must reimburse themselves by adding the cost of the recycling fee to the cost of each sales transaction. A fee payer may retain 0.75 percent of the recycling fee for administrative costs.
The bill is an effort by some grocery and soft drink industry representatives to avoid an expansion of the bottle deposit law to include juice, water and other containers.
Fingerprinting Bill is Vague
HB 5543, introduced by Rep. LeBlanc (D-Westland), would allow local units of government to fingerprint individuals involved in certain occupations for background checks by the State Police. It is thought that the bill is aimed at occupations such as daycare, foster homes and teaching. The bill does not specify this, however, and therefore MRA will be watching the bill closely to determine if it will impact retail.
KEY BILL INTRODUCTIONS:
No bill introductions at this time.
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