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Legislative Update: Tax Reform, Blight Removal Among Four Bills to Watch This Month in Lansing

Following the passage of road funding legislation last week, the Detroit Regional Chamber focused on several key issues ranging from tax appeal reform to incentives for blight removal being discussed in Lansing:

Michigan Tax Tribunal Reform

The Chamber is leading efforts to comprehensively reform Michigan’s Tax Tribunal, the sole court of jurisdiction for property tax appeals in Michigan. Senate Bill 537 includes wide-ranging changes to ensure more consistent decision-making through a more affordable and accessible appeals system for Michigan taxpayers. The legislation has been introduced and is awaiting a hearing in the Senate Finance Committee. Read more about SB 537.

Health Insurance Claims Assessment

House Bill 5014 has been introduced to continue the Health Insurance Claims Assessment (HICA), which is set to expire. HICA is a .75 percent tax levied on certain insurance carriers, self-insured entities, employers, employee organizations and third party administrators that pay health insurance claims for Michigan residents. The bill would also eliminate the $450 million cap on revenue from HICA and HMO Use Tax collections, which currently provides refunds of excess revenue to employers paying the HICA tax.

This legislation effectively creates an unexpected and ongoing tax of $250 million on Michigan employers and eliminates refunds owed under current statute. The Chamber is opposed to this arbitrary tax on Michigan businesses. Read more about HB 5014.

Commercial Rehabilitation Act

The Chamber and a regional coalition of stakeholders are working with Sen. Ken Horn, R-Frankenmuth, to continue the Commercial Rehabilitation Act, which is set to expire. A local tax abatement program authorized by the Legislature and administered by municipal governments, this program has successfully incentivized the rehabilitation of blighted property throughout the region and state. The Act is set to expire on Dec. 31. Senate Bill 556 will repeal the expiration. It is currently awaiting a floor vote in the Senate. Read more about SB 556.

Software as a Service

On Oct. 27, the Michigan Court of Appeals ruled against the Michigan Department of Treasury on the matter of defining how and when online services such as Lexis Nexis and Cisco WebEx are subject to Michigan’s Use Tax, a companion to the state sales tax for purchases made online or outside of the state.

In its opinion, the Court stated that the transfer of information and data that was processed using the software of a third party business does not constitute delivery of prewritten computer software and that, even if delivery did occur, the Use Tax did not apply if such delivery was incidental to the service provided. This opinion is consistent with the objectives of House Bill 4018-19 and Senate Bill 83-83 legislation supported by the Chamber. Read more about the legislation.

For more information on any of these issues, contact Jason Puscas, director of government relations, at jpuscas@detroitchamber.com.