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| M63. When determining the modified gross receipts portion of MBT tax liability, do you include and report receipts from out-of-state companies or just Michigan-based receipts? |
A taxpayer must report all gross receipts, whether from Michigan or
out-of-state sources. For MBT purposes a "taxpayer" includes a unitary business
group. For a taxpayer that is a unitary business group, all gross receipts must
be reported, but gross receipts attributable to transactions between members of
the unitary business are deducted from the determination of the modified gross
receipts tax base. MCL 208.1203(3).
The modified gross receipts tax is imposed on the modified gross receipts tax
base of the taxpayer, after allocation or apportionment to Michigan, at a rate
of 0.80%. MCL 208.1203(1). The modified gross receipts tax base is calculated as
gross receipts less "purchases from other firms," as defined in MCL 208.1113(6),
before apportionment. The modified gross receipts tax base is apportioned based
upon a sales factor. The sales factor is a fraction, the numerator of which is
the taxpayer's total sales in Michigan during the tax year and the denominator
of which is the taxpayer's total sales everywhere during the tax year. MCL
208.1301(2) and 208.1303(1). Therefore, the determination of the taxpayer's
modified gross receipt tax liability will depend upon sales that are sourced to
Michigan relative to sales everywhere. For a taxpayer that is a unitary business
group, sales include Michigan sales of every person included in the unitary
business group whether or not the unitary member has nexus in Michigan. Sales
between unitary members are eliminated when calculating the sales factor for
apportionment. MCL 208.1303(2).
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