HOUSE BILL NO. 5140
A bill to amend 1974 PA 263, entitled
"An act to permit counties and local units of government to impose and collect an excise tax on persons engaged in the business of providing rooms for dwelling, lodging, or sleeping purposes to transient guests; to provide for the disposition of the proceeds of the excise tax; and to prescribe penalties,"
by amending the title and sections 1, 2, 2a, 3, 4, and 7 (MCL 141.861, 141.862, 141.862a, 141.863, 141.864, and 141.867), the title and sections 1, 2, 3, 4, and 7 as amended and section 2a as added by 2024 PA 35, and by adding sections 1a, 2b, 2c, 2d, and 6a.
the people of the state of michigan enact:
An act to permit counties and local units of government to impose and collect an excise tax on persons engaged in the business of providing rooms for dwelling, lodging, or sleeping purposes accommodations to transient guests; to provide for the disposition of the proceeds of the excise tax; to permit the collection, enforcement, and administration of the excise tax by this state; to provide for the creation and administration of certain funds and the distribution of money from those funds; to provide for the powers and duties of certain state and local governmental officers and entities; to allow the promulgation of rules; and to prescribe penalties.
(a) "Accommodations" means the room or other space provided for dwelling, lodging, or sleeping purposes, including furnishings and other accessories in the room or other space. Accommodations do not include food and beverages.
(b) "Administration agreement" means an agreement between a county or local unit of government and the department under section 2c.
(c) (b) "Administrator" means the official designated by the county or local unit of government to collect the excise tax and to administer and enforce the ordinance.
(d) "Booking transaction" means when a marketplace facilitator facilitates a rental of accommodations by a marketplace seller by doing both of the following:
(i) Listing or advertising the accommodations for rent by the marketplace seller to a transient guest in a marketplace.
(ii) Either directly or indirectly through agreements or arrangements with third parties or its affiliates collecting payment from the customer and transmitting all or a portion of that payment to the marketplace seller for consideration.
(e) (c) "Convention and entertainment facilities" means all, any part, or any combination of convention halls, auditoriums, stadiums, music halls, arenas, sports complexes, aquariums, meeting rooms, exhibit areas, and related public areas.
(f) "Department" means the department of treasury.
(g) (d) "Excise tax" means the excise tax levied by a county or local unit of government under this act.
(h) "Local accommodations excise tax trust fund" or "fund" means the local accommodations excise tax trust fund created in section 6a.
(i) (e) "Local governing body" means the body in which the legislative powers of a local unit of government are vested.
(j) (f) "Local unit of government" means a city, village, or township.
(k) "Marketplace facilitator" means that term as defined in section 5c of the use tax act, MCL 205.95c.
(l) "Marketplace seller" means that term as defined in section 5c of the use tax act, MCL 205.95c.
(m) (g) "Ordinance" means an ordinance enacted by a county or local unit of government under this act to levy, assess, and collect an excise tax.
(n) (h) "Person" means a natural person, partnership, fiduciary, association, corporation, or other entity.
(o) (i) "Revenues" means the income derived from the excise tax, plus interest and penalties imposed by this act, levied and assessed under an ordinance adopted pursuant to this act.
(p) (j) "Sports complex" means a facility designed and primarily used for organized sports competitions.
(q) (k) "Transient guest" means a natural person staying less than 30 consecutive days.
(r) "Use tax" means the tax levied under the use tax act.
(s) "Use tax act" means the use tax act, 1937 PA 94, MCL 205.91 to 205.111.
Sec. 1a. This act may be known as the "essential services tax enabling act".
Sec. 2. (1) The Subject to section 2b, the county board of commissioners of a county that has a population of less than 600,000 and that has a city with a population of not less than 40,000 may enact an ordinance to levy, assess, and collect an excise tax from all persons engaged in the business of providing rooms for dwelling, lodging, or sleeping purposes, accommodations, except in hospitals or nursing homes, to transient guests, whether or not membership is required for the use of the accommodations.
(2) If a county meets the requirements of subsection (1) on the date it enacts an ordinance under this act and, after the 1990 decennial census, the county has a population of less than 120,000 and has a city with a population of 35,000 or more, that county may continue to levy, assess, and collect the excise tax until October 1, 1991.
(3) If a county described in subsection (2) has any accommodations located within the county that are also located within the boundaries of a city in which the majority of the population of that city reside in an adjoining county, then the accommodation is exempt from the excise tax levied by the county.
(4) If a county described in subsection (2) has any accommodations located within the county that are also located within the boundaries of a city with a population of less than 5,000 persons, then the accommodation is exempt from the excise tax levied by the county.
(5) An ordinance described in subsection (1) may be amended or repealed in the same manner as it was adopted.
(6) The excise tax imposed by a county under this section must be at a rate of not more than 8% of the total charge for accommodations subject to this act.
(7) If a county meets the requirements of subsection (1) on the date it enacts an ordinance, the county may continue to levy, assess, and collect the excise tax and, subject to subsections (6) and (8), may increase the rate at which the excise tax is levied.
(8) The county board of commissioners of a county shall not levy an excise tax under this section at a rate of more than 5% of the total charge for accommodations subject to this act unless a majority of the qualified electors of that county voting on the question approve the levy of the excise tax in compliance with section 31 of article IX of the state constitution of 1963.
Sec. 2a. (1) Subject to subsection (4) and section 2b, the local governing body of a local unit of government that is located in a county with a population of more than 600,000 and less than 775,000 may enact an ordinance to levy, assess, and collect an excise tax from all persons engaged in the business of providing rooms for dwelling, lodging, or sleeping purposes, accommodations, except in hospitals or nursing homes, to transient guests, whether or not membership is required for the use of the accommodations.
(2) An ordinance described in subsection (1) may be amended or repealed in the same manner as it was adopted.
(3) The excise tax imposed by a local unit of government must be at a rate of not more than 2% 3% of the total charge for accommodations subject to this act.
(4) The local governing body of a local unit of government shall not levy an excise tax unless a majority of the qualified electors of that local unit of government voting on the question approve the levy of the excise tax in compliance with section 31 of article IX of the state constitution of 1963.
(5) If a local unit of government meets the requirements of subsection (1) on the date it enacts an ordinance, the local unit of government may continue to levy, assess, and collect the excise tax.If a village has any accommodation located within a township that levies an excise tax authorized by this section, then the accommodation is exempt from the excise tax levied by the village.
Sec. 2b. (1) Except as otherwise provided in subsection (2), a county or local unit of government shall not impose an excise tax under this act on accommodations unless all of the following requirements are met:
(a) The county or local unit of government enters into an administration agreement with the department. If an administration agreement is terminated, a marketplace facilitator, marketplace seller, or any other person engaged in providing accommodations to transient guests is not responsible for collecting and remitting the tax under this act with respect to the county or local unit of government that was party to the terminated administration agreement.
(b) The rate of the excise tax is the same for, and applied uniformly to, all forms of accommodations.
(c) A marketplace facilitator that has nexus with this state under section 2d(10) is required to collect and remit the excise tax on all booking transactions facilitated by the marketplace facilitator that are subject to the excise tax.
(2) A county or local unit of government that imposes an excise tax under this act on or before the enactment date of the amendatory act that added this section may may continue to levy the excise tax in accordance with the ordinance imposing the excise tax. However, a county or local unit of government described in this subsection may not require a marketplace facilitator to collect an excise tax under this act or levy a new or amended excise tax under this act unless the requirements of subsection (1) are met.
Sec. 2c. (1) Except as otherwise provided in subsection (2), a county or local unit of government that imposes an excise tax under this act must enter into an administration agreement with the department under which the department shall administer, enforce, and collect the excise tax on behalf of the county or local unit of government. Not later than 30 days after receiving a copy of an ordinance under subsection (3)(i) that complies with subsection (3)(a) to (f), the department shall enter into an administration agreement with a county or local unit of government that satisfies the requirements of this section.
(2) Except as otherwise provided in this subsection, a county or local unit of government that imposes an excise tax under this act on or before the enactment date of the amendatory act that added this section shall continue to administer the excise tax in accordance with the ordinance imposing the excise tax. Beginning 90 days after the effective date of the amendatory act that added this section, a county or local unit of government described in this subsection may enter into an administration agreement described in subsection (1) with the department.
(3) If a county or local unit of government and the department enter into an administration agreement under this section, all of the following apply:
(a) The ordinance imposing the excise tax must provide for the administration, enforcement, collection, and disposition of the excise tax in accordance with subdivisions (b) to (f).
(b) The excise tax must be collected at the same time and in the same manner as the use tax under the use tax act.
(c) The department shall administer, enforce, and collect the excise tax in the same manner as the use tax is administered, enforced, and collected under the use tax act and 1941 PA 122, MCL 205.1 to 205.31, except that if the use tax act or 1941 PA 122, MCL 205.1 to 205.31, and this act conflict, this act applies.
(d) Except as otherwise provided in subdivisions (e) and (f), excise taxes, interest, penalties, and fees collected under the administration agreement must be deposited in the local accommodations excise tax trust fund and paid to the county or local unit of government that imposed the excise tax in accordance with subdivision (g).
(e) Subject to appropriation, this state may retain not more than 8% of the excise taxes collected, and that portion must be deposited into the state general fund and credited to a restricted account to be used for this state's Pure Michigan campaign. As used in this subdivision, "Pure Michigan campaign" means the Michigan promotion program established under section 89a of the Michigan strategic fund act, 1984 PA 270, MCL 125.2089a.
(f) The department may retain 1% of the excise taxes collected to cover the cost of collection, enforcement, and administration, and that portion must be deposited into the state general fund.
(g) Except as otherwise provided in subdivisions (e) and (f) and section 7(3), not later than 15 days after their due date, the department shall remit excise taxes, interest, penalties, and fees collected by the department under the administration agreement to the county or local unit of government that imposed the excise tax.
(h) If the department does not provide a remittance to a county or local unit of government by the date required under subdivision (g), the department shall pay, to the county or local unit of government, interest on the amount of the delinquent remittance at a rate equal to the rate of interest accrued on the common cash fund of this state during the period the remittance is delinquent.
(i) Not less than 90 days before the excise tax, or a change in the rate of the excise tax, takes effect, the county or local unit of government shall provide the department with a copy of the ordinance that imposes, or changes the rate of, the excise tax and notify the department of both of the following:
(i) The effective date of the excise tax or the change in the rate of the excise tax.
(ii) The rate of the excise tax.
(j) If the department receives the necessary information as required under subdivision (i), the department shall post the information described in subdivision (i)(i) and (ii) on its website not less than 45 days before the excise tax or a change in the rate of the excise tax takes effect.
(k) The department shall not charge to or collect from a taxpayer any amount not otherwise authorized by law in conjunction with the collection of the excise tax.
(4) The department may promulgate rules to implement this act pursuant to the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.
(5) Information obtained pursuant to a provision in state law or the applicable ordinance or through any return, investigation, hearing, or verification required or authorized by state law or the applicable ordinance is confidential, except for official purposes in connection with the enforcement of an excise tax authorized by this act or the use tax act or pursuant to a proper judicial order. A person that divulges or uses this confidential information, except for official purposes in connection with the enforcement of an excise tax authorized by this act or the use tax act or pursuant to a proper judicial order, is guilty of a violation of the ordinance punishable by a fine of not more than $5,000.00, imprisonment for not more than 5 years, or both. Additionally, if the offense is committed by an employee of this state, a county, or a local unit of government, the person must be dismissed from office or discharged from employment on conviction.
Sec. 2d. (1) Notwithstanding anything to the contrary in this act, if an excise tax is levied by a county or local unit of government under this act on accommodations and if that county or local unit of government has entered into an administration agreement with the department, beginning on the later of the following dates, a marketplace facilitator that has nexus with this state under subsection (10) shall collect and remit the excise tax on all booking transactions facilitated by the marketplace facilitator that are subject to the excise tax:
(a) The first day of the first month after the rate of the excise tax has been published on the department's website for 45 days under section 2c(3)(j).
(b) The effective date of the ordinance.
(2) Except as otherwise provided in subsections (5) to (8) and (11), a marketplace facilitator is responsible for collecting and remitting the excise tax under subsection (1) on booking transactions facilitated by the marketplace facilitator, regardless of whether the marketplace facilitator makes only booking transactions or makes a combination of booking transactions and direct transactions.
(3) A marketplace facilitator shall report all facilitated rentals of accommodations in this state that are subject to an excise tax imposed under this act in the form and manner prescribed by the department. A facilitated rental of accommodations must be reported under this subsection regardless of whether the marketplace facilitator is responsible for collecting and remitting the excise tax on the facilitated rental of accommodations. The department shall allow a marketplace facilitator to file a single return to report the facilitated rentals of accommodations. As used in this subsection, "facilitated rental of accommodations" means any of the following:
(a) A direct transaction.
(b) A booking transaction.
(c) A facilitated transaction for which the marketplace facilitator provided the services described in section 1(d)(i) for consideration, but did not directly or indirectly collect payment on behalf of the marketplace seller.
(4) If a marketplace facilitator is required to remit the excise tax under subsection (1), the department shall audit only the marketplace facilitator for booking transactions and shall not audit a marketplace seller for booking transactions unless either of the following applies:
(a) The marketplace seller fails to provide the marketplace facilitator with sufficient information to the extent that the marketplace facilitator is not liable under subsection (5).
(b) The marketplace seller has entered into a written agreement to remit the excise tax under subsection (11).
(5) A marketplace facilitator is relieved of liability under this section for failure to remit the correct amount of excise tax to the extent that the marketplace facilitator demonstrates, to the satisfaction of the department, that the failure was due to incorrect or insufficient information given to the marketplace facilitator by the marketplace seller. The relief under this subsection does not apply if the marketplace seller is an affiliate of the marketplace facilitator.
(6) A marketplace facilitator is relieved of liability under this section if the marketplace facilitator demonstrates, to the satisfaction of the department, that the excise tax was paid to the department by the marketplace seller or that the excise tax was not due because of an exemption under this act.
(7) A taxpayer is relieved of liability under this act for failure to remit the correct amount of excise tax to the extent that the taxpayer collects the rate of tax published by the department under section 2c.
(8) A marketplace seller is not liable for the excise tax on booking transactions facilitated by a marketplace facilitator required to remit tax under subsection (1) unless either of the following applies:
(a) The marketplace seller fails to provide the marketplace facilitator with sufficient information to the extent that the marketplace facilitator is not liable under subsection (5).
(b) The marketplace seller has entered into a written agreement with the marketplace facilitator to remit the excise tax under subsection (11).
(9) Unless the marketplace seller fails to provide the marketplace facilitator with sufficient information to the extent that the marketplace facilitator is not liable under subsection (5) or has entered into a written agreement to remit the excise tax under subsection (11), a marketplace seller does not have to file a return under this act for rental transactions if both of the following requirements are met:
(a) All of the marketplace seller's rental transactions are booking transactions facilitated by a marketplace facilitator required to remit tax under subsection (1).
(b) The marketplace seller files an attestation with the department, in the form and manner prescribed by the department, that all of the marketplace seller's rental transactions are booking transactions facilitated by a marketplace facilitator required to remit tax under subsection (1). An attestation under this subdivision is effective for 12 months beginning with the month in which the attestation is made, and, thereafter, the attestation is due annually on a date determined by the department. A marketplace seller may file a single attestation for purposes of this subdivision and section 5(6)(b) of the use tax act, MCL 205.95.
(10) If a person is a marketplace facilitator and has nexus with this state under the use tax act, the person has nexus with this state for purposes of this act.
(11) A marketplace seller that enters into a written agreement described in section 5c(12)(b)(iii) of the use tax act, MCL 205.95c, is solely liable for remitting the tax due under this act on booking transactions to the department.
(12) The applicable excise tax due on rental transactions that are not booking transactions facilitated by a marketplace facilitator must be collected and remitted by the person providing the accommodations.
(13) As used in this section:
(a) "Affiliate" means an affiliated person as that term is defined in section 5a of the use tax act, MCL 205.95a.
(b) "Direct transaction" means the rental of accommodations on one's own behalf or on behalf of an affiliate rather than facilitated for another person.
(c) "Rental transaction" means any rental of accommodations, including a direct transaction, a booking transaction, or another facilitated rental of an accommodation.
Sec. 3. A Except as otherwise provided in section 2c, a county or local unit of government levying an excise tax shall provide in the ordinance for all of the following:
(a) The effective date of the ordinance, which must comply with section 5.
(b) The rate of the excise tax to be imposed.
(c) The rate and manner of the imposition of interest and penalties for delinquency in payment of excise taxes or other violations of the ordinance. The interest imposed on delinquency in payment of the excise tax must not be more than 1% per month or fraction of a month of the unpaid excise tax after the due date until paid. The penalty for delinquency in payment of the excise tax when due or other violations of the ordinance may be in addition to the interest but must not be more than 5% of the amount of the unpaid excise tax per month or fraction of a month after the due date until paid. However, the penalty must not exceed 25% of the unpaid excise tax.
(d) The determination and allowance of abatements and refunds.
(e) The designation of the administrator of the tax and methods of collection.
Sec. 4. (1) A county or local unit of government levying that levied an excise tax on or before the enactment date of the amendatory act that added section 2d and that has not entered into an administration agreement with the department under section 2c may provide in the ordinance for 1 or more of the following:
(a) The adoption and enforcement of rules to apply, interpret, effectuate, and administer the ordinance and the purposes of the excise tax.
(b) The prescribing and furnishing to taxpayers of forms, instructions, manuals, and other materials necessary for indorsement of the excise tax and the auditing of tax returns.
(c) The examination by the administrator or the administrator's agent of the books and records of a taxpayer for purposes of determining the correctness of a tax return or information filed, or the determination of any tax liability under this act.
(d) The imposition of a fine of not more than $500.00, or imprisonment of not more than 90 days, or both for violation of the ordinance.
(e) If the excise tax remains unpaid for more than 90 days, the treasurer of the county the delinquent excise tax may collect the tax be collected in the same manner as a delinquent special assessment, along with any associated interest, fees, and costs, under the general property tax act, 1893 PA 206, MCL 211.1 to 211.155.
(2) The confidentiality provisions and corresponding penalties set forth in section 2c(5) apply to a county or local unit of government that levied an excise tax on or before the enactment date of the amendatory act that added this subsection and that has not entered into an administration agreement with the department under section 2c.
Sec. 6a. (1) The local accommodations excise tax trust fund is created in the state treasury.
(2) The state treasurer shall deposit money and other assets received under section 2c(3)(d) in the fund. The state treasurer shall direct the investment of money in the fund and credit interest and earnings to the fund. Money and other assets deposited in the fund attributable to a specific excise tax must be accounted for separately within the fund and must not be used to make payments to a county or local unit of government other than the county or local unit of government that imposed the excise tax or for a purpose related to an excise tax other than the specific excise tax.
(3) Money in the fund at the close of the fiscal year remains in the fund and does not lapse to the general fund.
(4) The department is the administrator of the fund for audits of the fund.
(5) The department shall expend money from the fund only for 1 or more of the following purposes:
(a) To remit excise taxes, interest, penalties, and fees collected by the department under an administration agreement to the county or local unit of government that imposed the excise tax in accordance with section 2c(3)(g).
(b) To pay claims for refund of an excise tax imposed under this act.
(c) To pay liabilities on termination of an administration agreement under subsection (7).
(6) This state may not borrow money from the fund.
(7) If an administration agreement is terminated, any liabilities that relate to that administration agreement must be paid from the fund. If there is insufficient money in the fund to pay those liabilities, the county or local unit of government that entered into the administration agreement shall pay those liabilities.
Sec. 7. (1) The revenues derived from the excise taxes must be deposited in a special fund to be used by the county, by the local unit of government, or by an authority that is organized pursuant to state law, together with other available funds, only to pay for 1 or more of the following:
(a) The cost of administration and enforcement of the ordinance.
(b) The financing of the acquisition, construction, improvement, enlargement, repair, or maintenance of convention and entertainment facilities, including, except as provided in subdivision (e), the payment of principal and interest, when due, on bonds or other evidence of indebtedness issued by the county or local unit of government for convention and entertainment facilities.
(c) Except as provided in subdivision (e), current or future annual rental payable by the county or local unit of government to an authority organized pursuant to state law for the purpose of acquiring, constructing, improving, enlarging, repairing, or maintaining the convention and entertainment facilities and leasing them to the county or local unit of government.
(d) The promotion and encouragement of tourist and convention business in the county or local unit of government.
(e) The principal and interest, when due, on bonds or other evidence of indebtedness issued by or on behalf of the county for the purpose of financing the construction of a museum, or the current or future rental payable by the county to an authority organized pursuant to state law for the purpose of constructing a museum and leasing it to the county, only if the museum is located in a city with a population of 180,000 or more.
(f) General fund expenses.
(2) Beginning January 1, 2027, not later than March 15 of each year, a county or local unit of government levying an excise tax shall file with the department a report that includes all of the following information for the immediately preceding calendar year and, not later than 60 days after the receipt of that report, the department shall publish the report on its website:
(a) The rate of the excise tax.
(b) The total amount of revenues received by the county or local unit of government.
(c) The amount of revenues expended by the county or local unit of government, or an authority that is organized pursuant to state law, and the purposes for which the revenues were expended.
(d) A schedule of all revenues from the excise tax that the county or local unit of government, or an authority that is organized pursuant to state law, expended for a purpose described in subsection (1)(b) to (e). The schedule must identify each project and contracted entity involved in each expenditure.
(3) If a county or local unit of government fails to file the report required under subsection (2), the department shall not remit excise taxes, interest, penalties, and fees collected by the department to that county or local unit of government until the report is filed.
Enacting section 1. This amendatory act does not take effect unless all of the following bills of the 103rd Legislature are enacted into law:
(a) House Bill No. 5139 (request no. H04187'25).
(b) House Bill No. 5138 (request no. H04188'25).