Corporate Tax Base 13. How are gross receipts used under the CIT?
First, gross receipts are used to determine whether a taxpayer has nexus in Michigan. There are three separate alternative nexus standards under the CIT. One of these is that a taxpayer has nexus with Michigan if the taxpayer actively solicits sales in Michigan and has gross receipts of $350,000 or more sourced to Michigan. Therefore, the amount of a taxpayer's gross receipts, in conjunction with active solicitation of sales, is determinative of whether a taxpayer has nexus in Michigan.
Second, gross receipts are used as a threshold to determine whether a taxpayer is required to file an annual CIT return and pay the tax. A taxpayer, other than an insurance company or a financial institution, whose apportioned or allocated gross receipts are less than $350,000 is not required to file a return or pay the tax imposed under the CIT. MCL 206.685(1). A taxpayer whose gross receipts exceed this amount must file a return and pay the tax.
Finally, gross receipts are used to determine whether a taxpayer qualifies for a small business alternative credit under MCL 206.671. Subject to other disqualifying conditions set forth at MCL 206.671, the credit is available to a taxpayer with gross receipts that do not exceed $20,000,000 for the tax year. In addition, the credit is reduced by a fraction where the taxpayer's gross receipts exceed $19,000,000 up to the $20,000,000 disqualifying threshold.