2007 House Bill 5097 (Revise sales tax “bad debt” allowance )

Public Act 105 of 2007

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Introduced by Rep. Steve Bieda (D) on August 8, 2007, to limit a “bad debt” allowance that businesses can deduct from the amount of sales tax they are required to pay, so that only firms that remit taxes for the a specific transaction qualify for the deduction. Essentially the bill would retroactively change some definitions in the Sales Tax Act (related to who is a "taxpayer" for purposes of claiming a bad debt deduction) that will have the effect of reversing the judgement of the Supreme Court in the case "DaimlerChrysler Services North America, LLC v. Department of Treasury," under which the state will be required to honor $93 million in tax refund claims. The bill would also result in an additional $30 million in annual sales and use tax paid by business in the future.
- Referred to the House Tax Policy Committee on August 8, 2007.
- Substitute offered by Rep. Steve Bieda (D) on September 24, 2007, to replace the previous version of the bill with one that revises details but does not change the substance of the bill as previously described. The substitute passed in the House by voice vote on September 24, 2007.
Passed in the House (57 to 52) on September 24, 2007. [Vote Details and Comments]
Received in the Senate on September 25, 2007.
- Referred to the Senate on September 25, 2007.
Passed in the Senate (22 to 16) on September 30, 2007, to limit a “bad debt” allowance that businesses can deduct from the amount of sales tax they are required to pay, so that only firms that remit taxes for the a specific transaction qualify for the deduction. Essentially the bill would retroactively change some definitions in the Sales Tax Act (related to who is a "taxpayer" for purposes of claiming a bad debt deduction) that will have the effect of reversing the judgement of the Supreme Court in the case "DaimlerChrysler Services North America, LLC v. Department of Treasury," under which the state will be required to honor $93 million in tax refund claims. The bill would also result in an additional $30 million in annual sales and use tax paid by business in the future. [Vote Details and Comments]
Signed by Gov. Jennifer Granholm on October 1, 2007.

Most Recent Comments

1) Thanks INDEED [by jmd364 on October 3, 2007]
If these idiots would read the bills before they vote on them they might find out they left a loop hole big enough for a semi-tractor trailer.

Don't encourage them by saying thank you for doing a lousy job to begin with. We pay these people a full time wage!

If they worked for me, I would fire them. A partial shut down of the government speaks for itself. THEY ARE INCOMPETENT!
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2) HR 5097 [by Great Laker on August 15, 2007]
Thanks, Steve Bieda, for closing a loophole in the sales tax law.

Previous legislation allowed sales tax payers to claim a deduction when they hadn't even made a payment. This legislation, putting sales tax on an accounting basis that agrees with Federal tax law, is long overdue.

What other loopholes exist in the Michigan Treasury that should be closed ?
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3) 2007 House Bill 5097 (Revise sales tax “bad debt” allowance ) [by admin on January 1, 2001]
Introduced in the House on August 8, 2007, to limit a “bad debt” allowance that businesses can deduct from the amount of sales tax they are required to pay, so that only firms that remit taxes for the a specific transaction qualify for the deduction. Essentially the bill would retroactively change some definitions in the Sales Tax Act (related to who is a "taxpayer" for purposes of claiming a bad debt deduction) that will have the effect of reversing the judgement of the Supreme Court in the case "DaimlerChrysler Services North America, LLC v. Department of Treasury," under which the state will be required to honor $93 million in tax refund claims. The bill would also result in an additional $30 million in annual sales and use tax paid by business in the future

The vote was 57 in favor, 52 opposed and 1 not voting

(House Roll Call 392 at House Journal 95)

Click here to view bill details.
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