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Contact Information:
Edward S. Kisscorni, CPA
290 Suncrest Court, SW
Grandville, MI 49418

Office: 616/233-0667
Cell: 616/443-6730
Fax: 616/233-0667

Blog: www.EdKisscorni.com/Blog1
Email: Ed@EdKisscorni.com
 



 



 

 Michigan Business Tax Review 

The Michigan Business Tax Act (MBTA) was signed into law on July 12, 2007 (Public Act 36 of 2007).  Since enactment it has been amended with approximately sixty different tax acts.  The Michigan Business Tax (MBT) is five different taxes under one umbrella.  The business income tax is imposed on federal income tax with adjustments. The modified gross receipts tax is imposed on gross receipts less exclusions and purchases from other firms.  Financial institutions are exempt from the business income tax and the modified gross receipts tax; but are subject to a tax on net worth.  Insurance companies are also exempt from the business income tax and the modified gross receipts tax; but are subject to a gross premium tax.  Certain qualified small businesses can pay the alternative profits tax (APT) computed at the rate of 1.8% of adjusted business income.  The APT is in lieu of all other taxes imposed under the MBTA. 

 

The MBT is imposed on the privilege of doing business in Michigan.  The measure of the tax is the business activity conducted in Michigan. 

 

A surcharge of 21.99% was imposed on the MBT.  The tax is reduced by a significant number of credits.  Major credits designed to reward engaging is a Michigan business activity including the compensation credit, the investment tax credit and a research and development credit. 

 

The MBT imposes a physical presence/economic presence nexus standard combined with a single factor (sales) apportionment with destination sourcing.  The nexus and apportionment provisions are designed to reward a Michigan based business activity.

 

The MBT is a fitting successor to the Single Business Tax.  It is by far the most complicated annual privilege tax in the United States.  We have attacked this problem by taking a proactive approach emphasizing creative tax planning to develop solutions to the Michigan Business Tax problem.  The complexity in the tax creates opportunities for creative tax planning and when properly implemented can substantially reduce the Michigan Business Tax liability. 

 

A Michigan BusinessTax Review first looks to identify all entities that may be subject to the tax.  A determination is made as to whether the entities are included in a unitary business group or if they may file a separate return.  Once the filing status is determined, then a review is made of all the factors that go into the tax base.

 

 

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