Tax News

CCH (cch.taxgroup.com) reports:

  A qualified taxpayer, defined as a taxpayer whose Michigan business activity includes the manufacturing of polycrystalline silicon, may claim a credit against the Michigan business tax based on its consumption of electricity. The credit amount is calculated by multiplying the qualified consumption of electricity by the difference between the projected cost and the guaranteed cost of electricity. "Qualified consumption of electricity" means up to 1.445 million megawatt hours of electricity consumed during the tax year at the facility. The statute provides definitions of "projected cost" and "guaranteed cost" of electricity, based on varying cents per kilowatt hour, depending on the tax year. For tax years that begin after 2011 and before 2016, the credit may be calculated using the actual delivered price of electricity billed under a tariff rate or the projected cost of electricity, whichever is less. In addition, the credit is reduced for the 2022 and 2023 tax years: for the 2022 tax year, the qualified consumption of electricity is cut in half, and for the 2023 tax year, it is multiplied by 25%. The credit is effectively repealed for tax years after 2023.

  The credit may be claimed for 12 years (2012 through 2023) and is claimed after other Michigan business tax credits. If the amount of the credit exceeds the taxpayer's liability, the taxpayer may choose a refund or carry forward the unused amount for up to 10 years.

  The taxpayer must enter an agreement with the Michigan Economic Growth Authority (MEGA) before the end of 2008. MEGA will issue a certificate, which must be attached to the taxpayer's annual tax return.

  According to a press release, this credit is geared towards Dow Corning's Hemlock Semiconductor Corporation, which produces hyper-pure polycrystalline silicon for the semiconductor and solar industries.

Act 262 (S.B. 1270), Act 263 (H.B. 5972), Act 264 (H.B. 5976), Act 265 (S.B. 1267), Act 266 (S.B. 1268), Act 267 (H.B. 5973), Laws 2008, effective August 6, 2008; Press Release , Governor Jennifer M. Granholm, August 6, 2008.