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Important Information for 2012 — Corporate Income Tax, Insurance Companies

However, a taxpayer claiming the Special Consideration

Corporate Income Tax (CIT) Overview

Historic Preservation Credit under section 435(20) may elect to

The CIT took effect January 1, 2012, and replaces the Michigan

claim an accelerated refund for the balance of the credit, but

Business Tax (MBT), except for certain businesses that wish to

the amount of that refund shall be equal to 86 percent of the

retain certain certificated credits.

amount of the credit.

NOTE: Per Public Act 38 of 2011, the Corporate Income Tax

For more details, see the 2012 Request for Reduced Refundable

(CIT) replaces the MBT for most taxpayers effective January

Credit Payout for the Brownfield Redevelopment Credit and

1, 2012. After that the MBT continues for those that made the

Historic Preservation Credit (Form 4889). Michigan Tax Forms

election to continue to file MBT. This election is irrevocable.

are online at An accelerated credit

See the MBT booklet for more details. For information on the

refund will be paid within 60 days after Form 4889 is filed.

MBT election, see the 2012 MBT Forms and Instructions for

Standard Taxpayers (Form 4600), MBT Forms and Instructions

Flow-Through Withholding

for Insurance Companies (Form 4592), or MBT Forms and

On January 1, 2012, several changes to the Income Tax Act

Instructions for Financial Institutions (Form 4599).

of 1967 (ITA) went into effect establishing a new withholding

requirement for flow-through entities that have members,

Estimates

partners, or shareholders that are corporations or other flow-

If making estimated payments by Electronic Funds Transfer

through entities. These withholding requirements are known as

(EFT), the associated vouchers are not required to be

Flow-Through Withholding (FTW).

submitted.

Under FTW, every flow-through entity with business activity

Amended Returns

in Michigan that reasonably expects to accrue more than

To amend a current or prior year annual return, complete the

$200,000 in apportioned or allocated business income for

the tax year must withhold on the distributive share of each

Insurance Company Amended Return for Corporate Income

and Retaliatory Taxes (Form 4906) that is applicable for

member that is a corporation at the CIT rate of 6 percent.

that year, explaining the reason for the changes. Include an

“Business income” for this purpose is defined using the same

amended federal return or a signed and dated Internal Revenue

rules as those contained in the CIT. However, because FTW

Service (IRS) audit document. Include all schedules filed with

is concerned with the business income of flow-through entities

and not corporations, business income for flow-through entities

the original return, even if not amending that schedule. Enter

the figures on the amended return as they should be. Do not

is further defined to include payments and items of income

include a copy of the original return with your amended return.

and expense that are attributable to business activity of the

flow-through entity and separately reported to its members.

Accelerated Credits in 2012

The distributive share of business income of a flow-through

A taxpayer with a certificated credit under section 435

entity is subject to FTW, and the CIT, even if it is not actually

(Historic) or 437 (Brownfield) of the Michigan Business

distributed or paid to the member.

Tax Act (MBTA), in which certificated credit or any unused

When a corporation had taxes withheld under FTW, the

carryforward may be claimed in a tax year ending after

amount is treated as a CIT payment that will be applied against

December 31, 2011, may elect to pay the tax imposed by the

the corporation’s CIT liability. A corporation that had taxes

MBTA in the tax year in which that certificated credit may be

withheld on the distributive share of business income is not

claimed in lieu of the CIT. If a person with a certificated credit

required to make quarterly estimated payments on that income.

under section 435 or 437 elects to pay the MBT is a member

To claim payments, the corporation will be required to file

of a Unitary Business Group (UBG), the Designated Member

a Form 4891. If the corporation is a member of a UBG, the

of the UBG, and not the member, shall file a UBG return and

payments may be claimed on that corporation’s Form 4897. If

pay the tax, if any, under the MBTA and claim that certificated

the corporation is below one of the CIT filing thresholds then it

credit.

may file a Form 4891 to claim payments.

For a tax year beginning after December 31, 2011, if a

The flow-through entity is required to notify the members it

certificate of completion, assignment certificate, or component

has withheld on of the amount of withholding paid on behalf of

completion certificate is issued under section 437 to a taxpayer,

that member as well as other information that the member will

or if a certificate of completed rehabilitation, assignment

certificate, or reassignment certificate is issued under section

need to complete its CIT return. There is no set method for this

reporting to be done. The Department has recommended that

435 to a taxpayer, beginning on and after January 1, 2012,

this be reported to the members as a supplemental attachment

the taxpayer may elect to claim an accelerated refund for 90

to the federal Schedule K-1 that is required to be submitted to

percent of the amount of that certificate.

each member. For a corporation, this information will include

If section 437 or 435 provides that payment of a credit will be

the:

made over a period of years or limits the annual amount of a

• FEIN of the flow-through entity

payment, an accelerated refund may only be claimed for the

amount payable in the year claimed.

• Tax year of the flow-through entity

• FTW paid on behalf of that member

Form 4905 - Insurance Company Annual Return For Corporate Income And Retaliatory Taxes - 2012 Page 2

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