§ 18-10-12.1. Renaissance zones.
(a)
Gross income; Deductions. Notwithstanding any other provision of this article, and to the extent and for the duration provided in the Michigan Renaissance Zone Act, being MCL 125.2681 et seq.; MSA 3.540(2681) et seq., for the 1997 tax year and each tax year thereafter, in determining income subject to tax hereunder a qualified taxpayer, to the extent a deduction is applicable, may deduct from gross income an amount equal to one of the following for the specified types of taxpayers:
(1)
Qualified taxpayer—Individual.
a.
For a qualified taxpayer—Individual, as defined in section 18-10-2 of this Code, except as provided in subparagraphs (2) and (3), income subject to the tax that is earned or received in the tax year during the period of time that the taxpayer was a qualified taxpayer.
b.
Capital gains subject to the tax that is received during the tax year during the period of time that the taxpayer was a qualified taxpayer. The deduction allowed under this subsection shall be prorated based on the percentage of time that the asset was held by the taxpayer while the taxpayer was a qualified taxpayer.
c.
Income received by the qualified taxpayer from winning i) an on-line lottery game sponsored by the State of Michigan if the date of the drawing for that game is after the date on which the taxpayer became a qualified taxpayer of a renaissance zone, and/or ii) an instant lottery game sponsored by the State, if the taxpayer was a qualified taxpayer of a renaissance zone on the validation date of the lottery ticket for that game.
(2)
Qualified taxpayer—Corporation. For a qualified taxpayer—corporation, as defined in section 18-10-2 of this Code, the amount determined pursuant to sections 18-10-5 and 18-10-6 of this Code is calculated as follows: the amount is multiplied by a fraction, the numerator of which is the percentage that the average net book value of the tangible personal property owned and the real property, including leasehold improvements, owned or used by the qualified taxpayer in the business and situated within the renaissance zone during the taxable period, is of the average net book value of all such property, including leasehold improvements, owned or used by the taxpayer in the business during the same period situated in the city, plus the percentage that the total compensation paid to employees for work done or services performed within the renaissance zone is of the total compensation paid to all the taxpayer's employees within the city during the period covered by the return, and the denominator of which is two (2).
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Fraction
The percentage that all property owned or used which is situated in the zone is of the total property owned or used in the city during the same period
Plus
The percentage that all compensation paid to employees for work done in the zone is of the total compensation paid to employees for work done in the city
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For allocation purposes, compensation shall be computed on the cash or accrual basis in accordance with the method used in computing the entire net income of the taxpayer. Real property includes real property rented or leased by the qualified taxpayer, and the value of that property is considered to be eight (8) times the annual gross rental on the property as that term is defined in section 18-10-6 of this Code.
(3)
Qualified taxpayer—Unincorporated business, profession, and other activities. For a qualified taxpayer—Unincorporated business, profession, and other activities, as defined in section 18-10-2 of this Code, the amount determined pursuant to section 18-10-6 of this Code is calculated as follows: the amount is multiplied by a fraction, the numerator of which is the percentage that the average net book value of the tangible personal property owned and the real property, including leasehold improvements, owned or used by the qualified taxpayer in the business and situated within the renaissance zone during the taxable period, is of the average net book value of all such property, including leasehold improvements, owned or used by the taxpayer in the business during the same period situated in the City, plus the percentage that the total compensation paid to employees for work done or services performed within the renaissance zone is of the total compensation paid to all the taxpayer's employees within the City during the period covered by the return, and the denominator of which is two (2).
____________
Fraction
The percentage that all property owned or used which is situated in the zone is of the total property owned or used in the city during the same period
Plus
The percentage that all compensation paid to employees for work done in the zone is of the total compensation paid to employees for work done in the city
____________
For allocation purposes, compensation shall be computed on the cash or accrual basis in accordance with the method used in computing the entire net income of the taxpayer. Real property includes real property rented or leased by the qualified taxpayer, and the value of that property is considered to be eight (8) times the annual gross rental on the property as that term is defined in section 18-10-6 of this Code.
(b)
Income; illegal activities. A qualified taxpayer—corporation or unincorporated business, profession and other activities, as defined in section 18-10-2 of this Code, shall not use any portion of income subject to tax under this article that is derived from illegal activity, whether conducted in a renaissance zone or elsewhere within the city, to calculate the deduction allowed under this section. For a qualified taxpayer—individual, as defined in section 18-10-2 of this Code, who is an individual any portion of income subject to tax under this article that is derived from illegal activity conducted anywhere shall not be used to calculate the deduction allowed under this section.
(c)
Income; casino activities. For a qualified taxpayer—corporation or unincorporated business, profession and other activities, as defined in section 18-10-2 of this Code, any portion of the taxpayer's tax liability that is attributable to business activity related to the operation of a casino, and business activity that is associated or affiliated with the operation of a casino, including, but not limited to, the operation of a parking lot, hotel, motel, or retail store, shall not be used to calculate a credit under this section.
(d)
Income; calculation for this purpose only. Income used to calculate a deduction under any other section of this article shall not be used to calculate a deduction under this section.
(e)
Residency requirements; tax year.
(1)
Residency requirements completed before end of tax year following residency. If a qualified taxpayer completes the residency requirements as defined in section 18-10-2 of this Code before the end of the tax year in which the qualified taxpayer first resided in the renaissance zone, the qualified taxpayer may claim the deduction allowed under this section for that tax year.
(2)
Residency requirements completed subsequent to tax year following residency. If the taxpayer completes the residency requirements as defined in section 18-10-2 of this Code in a year subsequent to the tax year in which the qualified taxpayer first resided in the renaissance zone, the following apply:
(i)
If a qualified taxpayer completes the residency requirement in a tax year subsequent to the tax year in which the taxpayer first resided in the renaissance zone, and before the date for filing the annual return under this article for the tax year in which the taxpayer first resided in the renaissance zone, the taxpayer may claim the deduction under this section for the tax year in which the taxpayer first resided in the renaissance zone.
(ii)
If the qualified taxpayer completes the residency requirement in a tax year subsequent to the tax year in which the taxpayer first resided in the renaissance zone and after the date for filing the annual return under this article for the tax year in which the taxpayer first resided in the renaissance zone, the qualified taxpayer may claim the deduction allowed under this section for the tax year in which the residency requirement is completed on the annual return for the tax year in which the residency requirement is completed, and may claim the deduction for the tax year in which the qualified taxpayer first resided in the renaissance zone by filing an amended return for that tax year in which the qualified taxpayer first resided in the renaissance zone.
(f)
Eligibility; annual return. To be eligible for the deduction provided for in this section, a taxpayer shall file an annual return under this article.
(g)
Reserved.
(h)
Eligibility; withholding form. A qualified taxpayer shall file a withholding form prescribed by the city with his or her employer after the date the qualified taxpayer completes the requirements as defined in section 18-10-2 of this Code, or, at the option of the city, for taxpayers who claim to be qualified taxpayers under subsection (1) of the definition of qualified taxpayer in section 18-10-2 of this Code, the taxpayer shall file with the city a form prescribed by the city after the date the taxpayer completes the requirements under subsection (1). If the city verifies the information on the form, the city shall issue a certificate of qualification to the taxpayer, which the taxpayer shall file with his or her employer. Where a taxpayer who filed a form under this subsection is no longer a qualified taxpayer as defined in section 18-10-2 of this Code, the taxpayer shall send a written notice of that change in status to the city not more than ten (10) days after the change in status occurs.
(i)
False claim; interest and penalties. If the administrator finds that a taxpayer has claimed a deduction under this section to which the taxpayer is not entitled, the taxpayer is subject to the interest and penalty provisions under this article.
(j)
Deduction; continuation after expiration of zone designation. The deduction allowed under this section continues through the tax year in which the renaissance zone designation expires.
(k)
Change of status. Where a taxpayer who was a qualified taxpayer during the tax year changes status, and is not a qualified taxpayer or vice versa, income subject to tax under this article shall be determined separately for income in each status.
(Ord. No. 43-98, § 1, 12-1-98)