Gov. Snyder signs bills modernizing tax structure to adapt to emerging technology

Legislation signed by Gov. Rick Snyder last Wednesday will modernize the structure of Michigan’s tax code to ensure treatment of data center inputs more closely aligns with treatment of manufacturing inputs and tax laws in other states.

“Michigan has a long tradition of innovation and talent, and is quickly becoming known as an ideal place for high tech jobs and growth of the emerging technology industry,” Snyder said. “It’s imperative that our tax policies continually develop and evolve to meet the needs of the jobs of tomorrow. The world constantly changes in how we make things, and we need to adapt and ensure we remain a state that continually draws on innovative commerce and new opportunities for Michiganders.”

Senate Bills 616 and 617, sponsored by state Sens. Tonya Schuitmaker and Peter MacGregor, respectively, allow exemptions from sales and use taxes for items in a qualified data center, such as computers, servers, routers, cabling and wiring used in operating, managing or maintaining the business. The bills were approved with bipartisan support in both chambers, and are now Public Acts 251 and 252 of 2015.

There are approximately 40 data centers now in Michigan that would become eligible for the exemptions. At least 16 other states provide some degree of tax exemptions on data center equipment. Aligning Michigan’s tax policies with those of other states puts Michigan in the best position to attract more and better jobs, as well as additional investment. Companies such as Switch have already announced their intent to locate new data centers in Michigan as a result of the tax code modernization.

Last Wednesday Gov. Snyder also signed 15 additional measures:

SBs 518 and 519, and House Bills 4742 and 4744, sponsored by state Sens. Peter MacGregor and Judy Emmons, and state Reps. Robert Kosowski and Klint Kesto, respectively, help ensure collection of child support when parents live in different states or countries. The bill package streamlines the process for collecting international child support and takes the burden of determining the legality of international child support orders off of employers. It also brings Michigan in line with federal child support collection requirements. The bills are now PAs 253-256.

HB 4658, sponsored by state Rep. Michael McCready, allows the state to collect child support, restitution for crime victims, an IRS levy, or other owed tax liabilities before paying a judgement or claim. It is now PA 257.

SBs 425, 426, 418, 612, and 614, sponsored by state Sen. Wayne Schmidt, and 613, sponsored by Goeff Hansen, ensure that an amount equivalent to the sales and use tax revenue generated from the sale or use of aviation fuel is used for aviation purposes, bringing Michigan in line with Federal Aviation Administration standards for the use of taxes on aviation fuel. The bills are now PAs 258-263.

HB 4685, sponsored by state Rep. Earl Poleski, provides an exception to the requirement that sales tax on fuel be prepaid for an exporter or supplier of fuel for immediate export, and provides a similar exemption for fuel that is part of a bulk transfer. The entity would still be required to pay the full amount of tax due on any fuel subject to the sales tax, just not in advance. The bill is now PA 264.

SB 446, sponsored by state Sen. Rick Jones, maintains current regulations on recreational deer and elk feeding in order to prevent the spread of infectious diseases. The bill eliminates the Jan. 1, 2016 sunset date for recreational deer and elk feeding, ensuring that the Natural Resources Commission, after consulting with the Commission of Agriculture and Rural Development, retains the authority to regulate recreational feeding practices. It is now PA 265.

SBs 492 and 493, sponsored by state Sen. Jack Brandenburg and John Proos, respectively, clarify the relationship between employees of a franchise and the franchisor, ensuring control over employees and benefits is determined at the franchise level. The legislation clarifies Michigan law after a recent National Labor Relations Board ruling. The bills are now PAs 266 and 267.

For additional information on this and other legislation, visit