What activity is subject to the SBT?
The SBT applies to "business activity," which includes:
- The sale of real or personal property in exchange for a tangible or intangible consideration.
- Property rental, including both real property and personal property.
- Performance of a service for a fee, except services rendered as an employee or services rendered as the director of a corporation.
What persons or activities are exempt from the SBT?
The following may be exempt from the SBT. Each of these exemptions, however, has some restrictions.
- Most persons, other than non-US persons, who are exempt from federal income tax under the Internal Revenue Code.
- Nonprofit cooperative housing corporations.
- Production of agricultural goods, if the taxpayer's primary activity is production of agricultural goods.
- Partners of partnerships and shareholders of Sub S corporations (unless they have other business activities). Partnerships and Sub S corporations, however, are subject to the SBT.
Partners and shareholders should contact the Individual Taxes Division at 517-636-4486 for information on Michigan income tax filing requirements.
Who is subject to the SBT?
All persons engaged in a "business activity" in Michigan are subject to the SBT. A "person" includes an individual, trust, estate, and every type of business entity.
Persons engaged in "business activity" both within and without the State of Michigan should refer to RAB 98-1 "Single Business Tax Nexus Standards" for guidance.
Who must file an SBT return?
Any "person" engaged in a business activity in Michigan whose gross receipts allocated or apportioned to Michigan are $350,000 or more is required to file a return.
Gross receipts include all receipts derived from a business activity including rental and lease receipts. If a business operated for less than 12 months (and is not a sole proprietor), it must annualize allocated or apportioned gross receipts to determine whether it meets the filing requirement. Special rules apply for controlled groups.
What are the filing requirements for a member of a controlled group of entities?
If you are a member of an affiliated group, a controlled group of corporations or an entity under common control, the group must combine its members' allocated or apportioned gross receipts on Form C-8010AGR, Single Business Tax Adjusted Gross Receipts For Controlled Groups, to determine if members of the group are required to file.
- Do not include a member whose allocated or apportioned gross receipts are less than $100,000.
- Members whose allocated or apportioned gross receipts equal or exceed $100,000 are required to file a return if the group's allocated or apportioned gross receipts are $350,000 or more.
- Each member's business activities attributable to its tax year ending within a calendar year must be consolidated on Form C-8010AGR.
- Members whose allocated or apportioned gross receipts are less than $100,000 must include their business activity to determine the small business credit for the controlled group on Form C-8009, Single Business Tax Allocation of Statutory Exemption, Standard Small Business Credit and Alternate Tax for Members of Controlled Groups.
Gross receipts of all members must also be included to determine the Adjusted Gross Receipts Percentage for calculating the Investment Tax Credit on Form C-8000ITC, Single Business Tax Investment Tax Credit.
Do I need to file an SBT return if my allocated or apportioned gross receipts are below the filing requirement ($350,000 for tax years beginning after 2002)?
If your allocated or apportioned gross receipts are below the filing requirement, you are not legally required to file a return. There may be situations in which you choose to file; for example, to allow a business loss or credit carryforward to remain viable for a subsequent year.