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.




     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


occurs first.


     (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


insurance programs.


     (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.