By: Michael F. Harris Executive Director, Michigan Paralyzed Veterans of America The mission of the Michigan Paralyzed Veterans of America (MPVA) is to enhance the lives of veterans with spinal-cord injury or disease, as well as all citizens with disabilities, by advocating for civil rights, assuring quality health care, supporting continued research and education, and […]
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By Bonnie Bochniak MBPA/MFBA, Director of Government Relations The Michigan Business and Professional Association (MBPA) and the Michigan Food and Beverage Association (MFBA), work diligently to keep you up to date on the happenings in Washington D.C. as our new healthcare law continues to move forward. What follows is an update of what is and […]
By Bonnie Bockniak MBPA/MFBA Government Relations Director The Michigan Business and Professional Association (MBPA), along with its sister group, the Michigan Food and Beverage Association (MFBA), work diligently to keep you up to date on the happenings at our State Capitol in Lansing, and also on federal issues in Washington D.C. We would like to […]
By Wayne Roberts Tax Attorney, Dykema, Grand Rapids It has been a tough road, but we can finally bid farewell to Michigan’s onerous MBT. We can focus more on keeping businesses in our great state, and also looking attractive again to outsiders who want to relocate here. The optimism of the MBT repeal has had […]
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2011-08-30 11:42:182015-10-08 00:00:00Farewell to Michigan’s Business Tax (the “MBT”)
By Chuck Moss Appropriations Chair State Representative So what’s going on in Lansing? The big news is that it’s summer and we’re not working on our budget. How come? We finished it two months ago. The 2011-2012 state budget was done before June 1st, balanced, and cut around $1.2 billion. Considering that the last four […]
By Evie Zois Dykema Along with “return on investment”, “dashboards”, and “relentless positivity”, “tax fairness” is one of the trendiest phrases to catch fire in state government in recent memory. This philosophy is one of the primary drivers shepherding Senate Bill 331 through the legislature. The bill, introduced by Senator Joe Hune (R-Fowlerville), proposes to […]
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2011-08-30 09:49:132021-08-25 11:00:38“Cheers” to Tax Equity; Senate Bill 331
Don’t miss the FIRST EVER statewide SBA Small Business Outreach Tour! Are you a small business owner looking for tools to take your business to the next level? Do you need information, contacts, and resources to start your own business? Fifteen tour stops available. Hurry! Last Stop in Michigan is September 30, 2011. Click here for […]
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2011-08-29 07:55:522015-10-08 00:00:00Get Connected. Get Inspired. Get to the Small Business Outreach Tour!
The Michigan Business and Professional Association (MBPA), along with its sister group, the Michigan Food and Beverage Association (MFBA), work diligently to keep you up to date on the happenings in Washington, D.C. and Michigan as our new healthcare law continues to move forward. We value our relationship with the agent community and work towards […]
Forty percent of Michigan small business owners say the health of their business improved within the past year, according to a member Economic Pulse Survey conducted by the Michigan Business and Professional Association (MBPA) and the Michigan Food and Beverage Association (MFBA). And 61 percent of the respondents believe that their business’ health will improve […]
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2011-08-16 14:35:592015-10-08 00:00:00Businesses More Upbeat About Economy — According to Recent Member Survey
On May 25, 2011, Governor Rick Snyder fulfilled his campaign promise to rid Michigan of the complicated Michigan Business Tax (MBT) by signing into law H.B. 4361; PA 38, and creating the Michigan Corporate Income Tax (CIT). Following is a summary of the impact of this new law on the business community.
Highlights of PA 38 Related to Corporate Income Tax (“CIT”)
PA 38 repeals the Michigan Business Tax Act effective January 1, 2012 and creates a CIT on “C” corporation business income at a rate of 6%. Business income is generally federal taxable income with some common adjustments including, but not limited to, the add back of bonus deprecation and domestic production deduction. It retains a small business credit, but eliminates most other credits available under the MBT.
Elimination of double taxation of pass-through entities by requiring only “C” corporations to pay CIT. Previously, owners of pass-through entities were taxed on business activity first via the MBT and a second time when paying tax at the individual level on their share of Michigan business income. By requiring only “C” corporations to pay the CIT, owners of pass-through entities will only be subject to one layer of tax at the individual level. This is true of both individual Michigan resident and non-resident owners.
Pass-through entities will be required to withhold Michigan Income Tax on the applicable share of Michigan source business income of non-resident individuals; “C” Corporations; and other pass-through entities that are members or partners.
Retains the unitary filing requirement rule for commonly controlled “C” corporations and provides that if the tax liability is less than $100, no return will be required.
Retains the MBT nexus standard for Domestic corporations:
Physical presence in Michigan for a period of one day during the tax year,
Active solicitation of sales in Michigan and gross receipts of $350,000 sourced to Michigan; or
A taxpayer with a beneficial ownership in a pass-through entity that has substantial nexus in Michigan.
We believe there will be more to come on the issue of nexus. Public Law 86-272 prohibits a state from assessing an income tax when a taxpayer’s activities are limited to certain protected activities such as sales solicitation.
Retains the apportionment methodology of the MBT using a single factor formula based on sales.
Limits the previous MBT exclusion from filing that previously applied to all Foreign (non-U.S.) businesses that met certain requirements to limiting the exemption from CIT to businesses organized in NAFTA countries (Canada & Mexico) that meet certain requirements.
Businesses that received MEGA Credits will have to elect to continue to be taxed under the MBT in order to utilize credits.
Planning Thoughts
Domestic businesses that currently operate as a “C” corporation should review their operating structure to determine if it would be advantageous to reorganize as a pass-through entity. The CIT rate for a corporation is 6% while the tax rate for Michigan Individual income tax is 4.35%.
Foreign (Non-U.S./Non-NAFTA) Corporations should analyze the types of activities they are conducting in Michigan. Many foreign businesses have created subsidiaries based in Michigan. The parent companies of those subsidiaries generally send parent company employees into Michigan. It is important to understand the activities of those employees to ensure a Michigan tax filing responsibility isn’t created for the parent. There are planning opportunities for those foreign companies selling tangible personal property that is delivered to a Michigan customer. For example, PA 38 states that when calculating a Michigan tax base, foreign corporations would only include sales where title passes in the U.S. This would allow the foreign corporation the opportunity to structure transactions so that title passes outside the U.S. Service businesses have more complexity in structuring activities to avoid Michigan nexus.
Review MBT position for 2011 and maximize opportunities to reduce the gross receipts tax and take advantage of credits that will be eliminated in the future. For example, consider whether it would be beneficial to accelerate items that qualify as “purchases from other firms,” make sure industrial personal property taxes are paid, etc.
Business that have MEGA credits will have to review tax calculations under both the MBT and CIT to determine if they should elect to continue to be taxed under the MBT system to take advantage of credits.
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2011-08-16 14:34:592015-10-08 00:00:00Highlights of the Michigan Business Tax Replacement ACT
Shannon Hensel Hensel HR Consulting With Permission of Hennessey Capital Management Over the last couple of years US employers have seen more employment law changes than in the last three decades combined. Human Resource professionals nationwide anticipate this trend to continue. What do business owners need to know or should be doing in order to […]
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Provided by Paul Nobels Prudential Wherever your small business lies in the business lifecycle, it may be time for a financial tune-up. Like the name implies, a financial tune-up is a fresh look at how well your small business is working for you, the owner. Here’s a short list of things to consider. Type of […]
Daron Powers While the goodwill of American taxpayers have spared Wall Street, the banks and automotive companies, unfortunately there are… No “Bail Outs” for the Entrepreneur When times were better, you could make a reletively good living even with an average product or service, minimal sales and marketing. Consumers spent more freely. Now with Michigan’s […]
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2011-08-16 13:18:552015-10-08 00:00:00When All You Need is a Cardboard Sign
Peter Marsack Vision Computer Solutions Tape drives were the option of choice for many small businesses for years. If you are still using one to backup your important company data then you need to be aware of a few facts: Fact #1. The average failure rate of tapes and tape drive technology is 100%. […]
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2011-08-15 10:11:072015-10-08 00:00:00Think That Tape Drive is a Good Choice for Backing Up the Company’s Data? You may not after reading this.
Lynn Drake Compass Commercial As any commercial real estate realtor or broker can tell you, leasing a commercial space is complicated. The leases are long and full of tiny clauses meant to give the landlord as much of your hard-earned dollar as possible. If you don’t speak lease, you’re likely to hit a series of […]
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2011-08-15 10:05:052015-10-08 00:00:00Commercial Real Estate Leasing: Know Before You Sign
A Message From The Michigan Paralyzed Veterans of America
/in Business KnowledgeBy: Michael F. Harris Executive Director, Michigan Paralyzed Veterans of America The mission of the Michigan Paralyzed Veterans of America (MPVA) is to enhance the lives of veterans with spinal-cord injury or disease, as well as all citizens with disabilities, by advocating for civil rights, assuring quality health care, supporting continued research and education, and […]
National Healthcare Update September 2011
/in Legislative InfluenceBy Bonnie Bochniak MBPA/MFBA, Director of Government Relations The Michigan Business and Professional Association (MBPA) and the Michigan Food and Beverage Association (MFBA), work diligently to keep you up to date on the happenings in Washington D.C. as our new healthcare law continues to move forward. What follows is an update of what is and […]
Unionization Ruling
/in Legislative InfluenceBy Bonnie Bockniak MBPA/MFBA Government Relations Director The Michigan Business and Professional Association (MBPA), along with its sister group, the Michigan Food and Beverage Association (MFBA), work diligently to keep you up to date on the happenings at our State Capitol in Lansing, and also on federal issues in Washington D.C. We would like to […]
Farewell to Michigan’s Business Tax (the “MBT”)
/in Legislative InfluenceBy Wayne Roberts Tax Attorney, Dykema, Grand Rapids It has been a tough road, but we can finally bid farewell to Michigan’s onerous MBT. We can focus more on keeping businesses in our great state, and also looking attractive again to outsiders who want to relocate here. The optimism of the MBT repeal has had […]
State Budget Update, “It’s finally making cents”
/in Legislative InfluenceBy Chuck Moss Appropriations Chair State Representative So what’s going on in Lansing? The big news is that it’s summer and we’re not working on our budget. How come? We finished it two months ago. The 2011-2012 state budget was done before June 1st, balanced, and cut around $1.2 billion. Considering that the last four […]
“Cheers” to Tax Equity; Senate Bill 331
/in Legislative InfluenceBy Evie Zois Dykema Along with “return on investment”, “dashboards”, and “relentless positivity”, “tax fairness” is one of the trendiest phrases to catch fire in state government in recent memory. This philosophy is one of the primary drivers shepherding Senate Bill 331 through the legislature. The bill, introduced by Senator Joe Hune (R-Fowlerville), proposes to […]
Get Connected. Get Inspired. Get to the Small Business Outreach Tour!
/in Legislative InfluenceDon’t miss the FIRST EVER statewide SBA Small Business Outreach Tour! Are you a small business owner looking for tools to take your business to the next level? Do you need information, contacts, and resources to start your own business? Fifteen tour stops available. Hurry! Last Stop in Michigan is September 30, 2011. Click here for […]
Healthcare Update August 2011
/in Agent CommunityThe Michigan Business and Professional Association (MBPA), along with its sister group, the Michigan Food and Beverage Association (MFBA), work diligently to keep you up to date on the happenings in Washington, D.C. and Michigan as our new healthcare law continues to move forward. We value our relationship with the agent community and work towards […]
Businesses More Upbeat About Economy — According to Recent Member Survey
/in Business KnowledgeForty percent of Michigan small business owners say the health of their business improved within the past year, according to a member Economic Pulse Survey conducted by the Michigan Business and Professional Association (MBPA) and the Michigan Food and Beverage Association (MFBA). And 61 percent of the respondents believe that their business’ health will improve […]
Highlights of the Michigan Business Tax Replacement ACT
/in Business KnowledgeSue Tuson CPA
Clayton & McKervey P.C.
On May 25, 2011, Governor Rick Snyder fulfilled his campaign promise to rid Michigan of the complicated Michigan Business Tax (MBT) by signing into law H.B. 4361; PA 38, and creating the Michigan Corporate Income Tax (CIT). Following is a summary of the impact of this new law on the business community.
Highlights of PA 38 Related to Corporate Income Tax (“CIT”)
We believe there will be more to come on the issue of nexus. Public Law 86-272 prohibits a state from assessing an income tax when a taxpayer’s activities are limited to certain protected activities such as sales solicitation.
Planning Thoughts
Domestic businesses that currently operate as a “C” corporation should review their operating structure to determine if it would be advantageous to reorganize as a pass-through entity. The CIT rate for a corporation is 6% while the tax rate for Michigan Individual income tax is 4.35%.
Foreign (Non-U.S./Non-NAFTA) Corporations should analyze the types of activities they are conducting in Michigan. Many foreign businesses have created subsidiaries based in Michigan. The parent companies of those subsidiaries generally send parent company employees into Michigan. It is important to understand the activities of those employees to ensure a Michigan tax filing responsibility isn’t created for the parent. There are planning opportunities for those foreign companies selling tangible personal property that is delivered to a Michigan customer. For example, PA 38 states that when calculating a Michigan tax base, foreign corporations would only include sales where title passes in the U.S. This would allow the foreign corporation the opportunity to structure transactions so that title passes outside the U.S. Service businesses have more complexity in structuring activities to avoid Michigan nexus.
Review MBT position for 2011 and maximize opportunities to reduce the gross receipts tax and take advantage of credits that will be eliminated in the future. For example, consider whether it would be beneficial to accelerate items that qualify as “purchases from other firms,” make sure industrial personal property taxes are paid, etc.
Business that have MEGA credits will have to review tax calculations under both the MBT and CIT to determine if they should elect to continue to be taxed under the MBT system to take advantage of credits.
Emerging HR Policies – What Employers Need to Know
/in Business KnowledgeShannon Hensel Hensel HR Consulting With Permission of Hennessey Capital Management Over the last couple of years US employers have seen more employment law changes than in the last three decades combined. Human Resource professionals nationwide anticipate this trend to continue. What do business owners need to know or should be doing in order to […]
Small Businesses Financial Tune-up
/in Business KnowledgeProvided by Paul Nobels Prudential Wherever your small business lies in the business lifecycle, it may be time for a financial tune-up. Like the name implies, a financial tune-up is a fresh look at how well your small business is working for you, the owner. Here’s a short list of things to consider. Type of […]
When All You Need is a Cardboard Sign
/in Business KnowledgeDaron Powers While the goodwill of American taxpayers have spared Wall Street, the banks and automotive companies, unfortunately there are… No “Bail Outs” for the Entrepreneur When times were better, you could make a reletively good living even with an average product or service, minimal sales and marketing. Consumers spent more freely. Now with Michigan’s […]
Think That Tape Drive is a Good Choice for Backing Up the Company’s Data? You may not after reading this.
/in Business KnowledgePeter Marsack Vision Computer Solutions Tape drives were the option of choice for many small businesses for years. If you are still using one to backup your important company data then you need to be aware of a few facts: Fact #1. The average failure rate of tapes and tape drive technology is 100%. […]
Commercial Real Estate Leasing: Know Before You Sign
/in Business KnowledgeLynn Drake Compass Commercial As any commercial real estate realtor or broker can tell you, leasing a commercial space is complicated. The leases are long and full of tiny clauses meant to give the landlord as much of your hard-earned dollar as possible. If you don’t speak lease, you’re likely to hit a series of […]