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 MBT Dissection Continues as Initial Guidance is Released On July 12, 2007, Michigan Gov. Jennifer Granholm signed Public Act 36
of 2007, officially enacting the Michigan Business Tax (MBT) – the
structure that will replace the current Single Business Tax beginning
January 1, 2008.
The MACPA also recently launched a web page devoted to the Michigan Business Tax providing numerous resources including articles, links, and information on all CPE programming on the MBT. A popular and useful tool, an online Q&A forum allows members to submit questions to state and local tax experts on the structure of the new tax. Answers are posted online for the benefit of all members. Technical Corrections The first major technical issue with the MBT related to the disclosure requirements of FAS 109 has been brought to the attention of the legislature, including via communication from the MACPA. Due to the mechanics of the accounting rules under Generally Accepted Accounting Principles (GAAP), which generally apply to all companies that issue financial statements whether publicly traded or not, many companies in Michigan are facing an adverse earnings impact in the current calendar quarter from the implementation of the MBT. The rules under GAAP require that a tax expense be recognized for book purposes when book income exceeds income reported on a tax return. Many companies doing business in Michigan that have recorded such "deferred tax" liabilities in prior years are now facing the requirement of adjusting their liability for the MBT by recording a one-time increase in their tax expense that will have the effect of lowering their earnings in 2007. House Bill (HB) 5104 and the more recently introduced Senate Bill (SB) 687 would prevent calendar year companies from recording a charge to earnings in their current calendar quarter. As long as this technical correction is enacted by September 30, 2007, companies will not be forced to adjust their liability. The state senate approved SB 687 on August 30 and the state House Committee on Tax Policy approved HB 5104 on September 5; however, the governor has stated her opposition to the current resolutions. A conference committee will likely be established in the near future to develop an amended bill more palatable to the administration. MACPA has offered all state legislators its technical assistance in providing objective information on this extremely complex issue. Association representatives have met with several officeholders to provide clarity. Top |
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| PO Box 5068 Troy, MI 48007-5068 Phone: 248.267.3700 Fax: 248.267.3737 E-mail: macpa@michcpa.org | |
