Michigan: MTC election would be barred for MBT, new corporate income tax

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Michigan legislation (H.B. 4479) introduced on March 23, 2011, would bar taxpayers subject to either the Michigan Business Tax (MBT) or the Income Tax Act of 1967 from electing to utilize the equally-weighted three-factor formula under the Multistate Tax Compact (MTC).

Newly-elected Governor Rick Snyder (R) has proposed to repeal the MBT and replace it with a corporate income tax. The sponsor of H.B. 4479, the Republican Chair of the Tax Policy Committee, Rep. Jud Gilbert, is also the sponsor of a bill (H.B. 4361) that would eliminate the MBT and replace it with a new 6% corporate income tax in line with Gov. Snyder's proposal. Because H.B. 4361 would implement this new tax by amending the Income Tax Act of 1967, Rep. Gilbert's proposed bar of the MTC election under H.B. 4479 would also apply to taxpayers under the proposed corporate income tax.

It is unclear whether the MTC election prohibition would apply retroactively (no effective date is specified in the bill), or would apply prospectively from the effective date of the anticipated MBT repeal and replacement, January 1, 2012. [H.B. 4479, referred to Committee on Tax Policy, 3/24/11; testimony scheduled for Committee meeting, 3/30/11]



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