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On Feb. 25, 2014, the Michigan Legislature passed H.B. 5011, which modifies the addback calculation for certain credit amounts claimed under the Michigan Business Tax or the former Michigan Single Business Tax (each tax law will be generally referred to as the Business Tax Act).

Under this modified addback provision, a taxpayer that previously took the credit will have a percentage or the entire amount of the credit it claimed under the Business Tax Act added to the taxpayer’s tax liability in the tax year in which the triggering event occurred. A triggering event occurs when a taxpayer who claimed a credit under the Business Tax Act with respect to a tangible asset has sold, transferred out of Michigan or otherwise disposed of the tangible asset.

The amount to be added back to the taxpayer’s liability under H.B. 5011 is formulaic in nature and based on numerous factors specific to the triggering event and the taxpayer’s history with the underlying asset.

H.B. 5011 became effective on Feb. 25, 2014 and is retroactive to tax years beginning after Dec. 31, 2011.

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