Section 281(1) of the MBTA provides as follows:

(1) In addition to the taxes imposed and levied under the act ?, to meet deficiencies in state funds an annual surcharge is imposed and levied on each taxpayer equal to the following percentage of the taxpayer's tax liability under this act after allocation or apportionment to this state under this act but before calculation of the various credits available under this act:

(a) For each taxpayer other than a person subject to the tax imposed and levied under chapter 2B, 21.99%.

MCL § 208.1281(1). Thus, the surcharge is imposed on each taxpayer subject to the MBT after allocation or apportionment under section 301, but prior to the calculation and application of any available credits, including SBT credits carried forward by the taxpayer. Section 281(5) provides that the surcharge "shall constitute a part of the tax imposed under this act and shall be administered, collected, and enforced as provided under this act." MCL § 208.1281(5).

Under the statutory language quoted above, the surcharge is imposed upon ?the taxpayer's tax liability under this act." MCL § 208.1281(1). Subject to filing thresholds, nexus standards, and exemptions, both the modified gross receipts tax and the business income tax are components of a taxpayer's MBT liability. Accordingly, the surcharge applies to both the modified gross receipts tax and the business income tax.

The various credits available under the MBT can be utilized to mitigate a taxpayer's tax liability only to the extent specified in the statute. With respect to the small business alternative credit, section 417(1) provides that this credit is to be taken after the credits provided for in sections 403 and 405. MCL § 208.1417(1). The combined compensation and investment tax credits allowed under section 403 may not exceed 50% of the taxpayer's total MBT liability in tax year 2008 and 52% of the taxpayer's total MBT liability in tax years 2009 and beyond, while the research and development credit allowed under section 405, combined with the taxpayer's total section 403 credits, cannot exceed 65% of the taxpayer's total tax liability under the MBT. MCL §§ 208.1403(1); 208.1405.

If the taxpayer is then eligible for and calculates the section 417 small business alternative credit, the amount of the credit ?shall not exceed 100% of the tax liability imposed under this act." MCL § 208.1417(5). Since the surcharge (which constitutes a part of the taxpayer's tax liability imposed under the act) is imposed prior to the calculation of any credits, including the section 417 small business alternative credit, it is possible that the application of that credit could totally eliminate the taxpayer's tax liability for that tax year, including the amount of that liability that is attributable to the surcharge.