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February 26, 2021
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Business Review Western MI
Business Review Western MI
Michigan Business Tax
(2007-07-25)
(wgvu) - The Michigan Business Tax signed into law this month is already
generating plenty of activity for accountants and tax lawyers.

Firms are moving quickly to understand the single largest re-write of a
state tax law in more than three decades since the much-maligned
Single Business Tax was enacted in 1976 so they can explain it to
their clients.

It has definitely absorbed a great deal of time of late, said Curtis
Ruppal, a partner at Plante & Moran in Grand Rapids and head of the
accounting firm's state and local tax practice in Michigan.

I would say that the potential for me for this to become a
once-in-a-career event is certainly a possibility, Ruppal said.

Gov. Jennifer Granholm signed the Michigan Business Tax into law July
13. It replaces the SBT that expires at the end of 2007.
Backers of the Michigan Business Tax say it will result in a net tax
reduction for seven out of 10 businesses.

Designed as revenue-neutral, it creates a business income and a margins
tax, provides personal-property tax relief and includes credits for
capital investment and research and development.
Questions from clients about the tax are generally straight to the
point: How will it affect me?

To fully answer that question, tax attorneys and accountants say their
first priority is to learn all aspects and nuances of the tax law.

That includes going over the legislation point by point and figuring out
the implications for individual clients as well as for economic sectors
as a whole and, for instance, companies out of state that do business in
Michigan.

This is a major change, said Paul Jackson, a partner in the Muskegon
office and chairman of the Tax Practice Group at law firm Warner,
Norcross & Judd.

I won't call it confusing, exactly. But we're in the absorption
process, Jackson said.

It's not that it's daunting. It's just this process of how this is
going to work in the context of how our clients do business.
As tax pros dissect the law, the work initially occurs without
generating coveted billable hours.

We have to do this all on our own time and our own nickel to develop
the expertise that tax clients and potential clients expect we're going
to have, Jackson said.

We view it as an investment.

The opportunity to develop new business will come as companies seek
advice and counsel on the new tax structure's implications.

Any time you have a significant change as Michigan has, you not only
have your existing clients asking, What does this mean to us?' but you
have others asking the same question, Ruppal said.

Law firms, accounting firms and business groups already are planning
seminars on the tax.

Plante & Moran has seminars scheduled for Grand Rapids and Kalamazoo in
August, as does law firm Miller Canfield.
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