February 13, 2019, Introduced by Reps. Coleman, Kuppa, Cynthia Johnson, Gay-Dagnogo, Robinson, Sneller, Ellison, Kennedy, Whitsett, Bellino and Jones and referred to the Committee on Tax Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
(MCL 206.1 to 206.713) by adding section 672.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 672. (1) For tax years beginning on and after January 1,
2019, a qualified taxpayer may claim a credit against the tax
imposed by this part for each qualified employee during the tax
year of an amount equal to 20% of the compensation paid by the
qualified taxpayer to the qualified employee during the tax year or
$3,000.00, whichever is less.
(2) If the credit allowed under this section for the tax year
and any unused carryforward of the credit allowed under this
section exceed the tax liability of the qualified taxpayer for the
tax year, the excess shall not be refunded, but may be carried
forward as an offset to the tax liability in subsequent tax years
for 5 tax years or until the excess credit is used up, whichever
(3) If a taxpayer terminates the employment of a qualified
employee for which a credit under this section was claimed within 1
year after the taxpayer hired that employee, the department may
reduce, terminate, or have a percentage of the amount of the credit
already claimed under this section added back to the tax liability
of the taxpayer in the tax year that the taxpayer terminated that
(4) For purposes of this section, taxpayer includes a
financial institution and an insurance company.
(5) As used in this section:
(a) "Compensation" means all wages, salaries, fees, bonuses,
commissions, and other payments made in the tax year on behalf of
or for the benefit of employees, officers, or directors of the
taxpayers. Compensation includes, but is not limited to, payments
that are subject to or specifically exempt or excepted from
withholding under sections 3401 to 3406 of the internal revenue
code. Compensation also includes, on a cash or accrual basis
consistent with the taxpayer's method of accounting for federal
income tax purposes, payments to a pension, retirement, or profit
sharing plan other than those payments attributable to unfunded
accrued actuarial liabilities, and payments for insurance for which
employees are the beneficiaries, including payments under health
and welfare and noninsured benefit plans and payment of fees for
the administration of health and welfare and noninsured benefit
plans. Compensation does not include any of the following:
(i) Discounts on the price of the taxpayer's merchandise or
services sold to the taxpayer's employees, officers, or directors
that are not available to other customers.
(ii) Except as otherwise provided in this subdivision,
payments to an independent contractor.
(iii) Payments to state and federal unemployment compensation
(iv) The employer's portion of payments under the federal
insurance contributions act, 26 USC 3101 to 3128, the railroad
retirement tax act, 26 USC 3201 to 3241, and similar social
(v) Payments, including self-insurance payments, for worker's
compensation insurance or federal employers' liability act
insurance pursuant to 45 USC 51 to 60.
(b) "Dependent" means that term as defined in section 152 of
the internal revenue code.
(c) "Full-time job" means a job performed by an individual for
35 hours or more each week and whose income and social security
taxes are withheld from the wages earned by that individual for
performing the job.
(d) "Qualified employee" means any individual who satisfies
each of the following:
(i) Is currently unemployed and certifies by signed affidavit
that he or she has not held a full-time job during the immediately
preceding 60-day period before the date that he or she began
employment with the qualified taxpayer.
(ii) Is not employed by the qualified taxpayer to replace
another employee of that qualified taxpayer unless that other
employee separated from employment voluntarily or for cause.
(iii) Is not a relative or dependent of an individual who
owns, directly or indirectly, more than 50% in value of the
outstanding stock of the qualified taxpayer, or if the qualified
taxpayer is an entity other than a corporation, is not a relative
or dependent to any individual who owns, directly or indirectly,
more than 50% of the capital and profits interests in the entity.
(e) "Qualified taxpayer" means a taxpayer that is an employer
that employs fewer than 100 full-time employees.
(f) "Relative" means an individual who bears a relationship
described in section 152(d)(2)(A) through (H) of the internal
revenue code to the qualified employer.
(g) "Unemployed" means an individual who is without a job and
who wants and is available for work. For purposes of this section,
an individual who is retired or receiving a pension, or both, is
considered unemployed if he or she does not have a job, has
actively looked for work in the prior 4 weeks, and is currently
available and able to work.