USE & SALES TAX EXEMPTION; PPE H.B. 4224 (S-1) & 4225 (S-1):
SUMMARY OF BILL
REPORTED FROM COMMITTEE
House Bill 4224 (Substitute S-1 as reported)
House Bill 4225 (Substitute S-1 as reported)
Sponsor: Representative Jim Lilly (H.B. 4224)
Representative Sarah Anthony (H.B. 4225)
House Committee: Rules and Competitiveness
CONTENT
House Bill 4224 (S-1) and House Bill 4225 (S-1) would amend the General Sales Tax Act and the Use Tax Act, respectively, to exempt from taxation under those Acts, beginning March 10, 2020, through December 31, 2021, the sale or use, storage, or consumption, as applicable, of personal protective equipment (PPE) and supplies to a person engaged in a business enterprise that had implemented a COVID-19 safety protocol plan.
The PPE and supplies would be exempt from the taxes imposed by the Acts only insofar as they were used for the exempt purpose stated above. The exemption would be limited to the percentage of exempt use to total use determined by a reasonable formula or method approved by the Department of Treasury.
A person engaged in a business enterprise that adopted a COVID-19 safety protocol plan could request a refund from the Department for any tax paid for the purchase of PPE and supplies, including tax paid on transactions before the implementation of the plan. The person would need to submit all of the following to the Department to be eligible for a refund:
-- A copy of its COVID-19 safety protocol plan.
-- An accurate record of the purchase, including a paper, electronic or digital receipt, invoice, or purchase order related to the sale, that included the date of the purchase and the amount of sales or use tax paid to the seller.
-- Any other information required by the Department to substantiate the refund claim (the Department could not request the information unless that information was necessary to implement the refund and it is not sought under another purpose).
The bills state that they would be retroactive and would apply beginning March 10, 2020.
Proposed MCL 205.54gg (H.B. 4224) Legislative Analyst: Jeff Mann
Proposed MCL 205.92gg (H.B. 4225)
FISCAL IMPACT
The bills would reduce sales and use tax revenue to the General Fund and School Aid Fund, and local unit revenue, by an unknown and potentially significant amount that would depend on the sales that occurred, the prices of covered goods, the number of affected taxpayers that have implemented a COVID-19 safety protocol, and the interpretation of the bills' provisions.
Estimates of spending on PPE vary widely. A recent press release by a market research firm claimed the US market for PPE would reach $13.2 billion by 2027, after growing at a compounded annual growth rate of 29.1% between 2020 and 2027. On the other hand, a report from late 2020 from another market research firm forecasted the global market would reach $10.1 billion by 2027 while another report released the same month by a different firm estimated the global market at $86.7 billion by 2026. Yet another report, from before the COVID-19 pandemic, estimated the marke