Weekly Round-Up: Michigan Taxpayers Prepare for State’s New Tax Regime


In Michigan, beginning Jan. 1, 2012, what is old becomes new again as, on that date, a corporate income tax (CIT) goes into effect, Patrick R. Van Tiflin, a partner with Honigman, Miller, Schwartz & Cohn LLP, writes in this week’s issue of the Weekly State Tax Report.

“It is new in the sense that Michigan has previously imposed a value-added tax known as the single business tax (SBT) for 31 years,” Van Tiflin says. However, in 2008, Van Tiflin states, this was replaced with a combination gross receipts and net income tax known as the Michigan business tax (MBT).

 

Michigan took a circuitous route to a more simplified tax.

“What you may not know is that, before the SBT, Michigan imposed a corporate income tax, supplemented by a franchise tax, an intangibles tax, a personal property tax on inventory, a premiums tax on insurance companies, and an excise tax on financial institutions—a complex maze of tax impositions which rendered compliance with Michigan taxes an onerous and burdensome undertaking,” according to Van Tiflin. 

Van Tiflin warns, however, that the CIT has some new provisions, including three statutory tests for determining nexus. Two of these tests, he says, were found under the MBT but the third test is new.

For Van Tiflin’s complete look at some of the more unusual provisions of Michigan’s new tax regime, check out this week’s issue of the Weekly State Tax Report.

In other developments,

Sign up now for BNA’s Dec. 1 Webinar covering state tax planning opportunities and pitfalls related to cloud computing.


BNA State Tax Law Editor Denise Ryan’s article on the New York Tax Appeals Tribunal’s decision in In re Ginsburg, dealing with the taxes eligible for the Qualified Empire Zone Enterprise real property tax credit, can be read in its entirety here.

Mary T. Benton and Jeffrey C. Glickman, both with Alston+Bird, take a closer look at the sales tax rules involving digital goods.

Sutherland releases a summary of the federal nexus bills.

Joseph Henchman, at the Tax Foundation, provides an update on H.R. 1864, the Mobile Workforce State Income Tax Simplification Act.

By Priya D. Nair

 

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