C43. Is a staffing company as defined in section 113(6)(d)(ii) eligible for the section 403 compensation credit on wages etc. paid to the personnel it supplies to its customers?
Yes. A staffing company is an entity primarily engaged in supplying temporary
or continuing help on a contract or fee basis. The help supplied is always on
the payroll of the supplying establishment, but is under the direct or general
supervision of the business to whom the help is furnished.
Regarding a staffing company and the compensation credit, section 403 of the
Michigan Business Tax Act (MBTA) does not expressly address this type of entity.
The compensation a staffing company pays to the personnel it supplies to its
customers is recognized by the MBTA as falling under "purchases from other
firms" and thus may be deducted in calculating the staffing company's modified
gross receipts tax base.
Section 403 provides in pertinent part that, subject to a capping amount:
[f]or the 2008 tax year a taxpayer may claim a credit against the tax imposed by
this act equal to 0.296% of the taxpayer's compensation in this state. For the
2009 tax year and each tax year after 2009, . . . a taxpayer may claim a credit
against the tax imposed by this act equal to 0.370% of the taxpayer's
compensation in this state . . . .
The MBTA's recognition of the compensation that a staffing company pays to the
personnel it supplies to its customers as a "purchases from other firms" does
not disqualify the staffing company from claiming that amount as a credit
pursuant to the conditions provided in section 403.