Yesterday the Senate Finance Committee accepted testimony on SB 192, which would amend the Michigan Business Tax (MBT) Act to remove from a taxpayer's modified gross receipts tax base, payments by joint ventures for construction management, architectural, and engineering services for a construction project under a contractual agreement specific to that project.

ACEC Executive Director, Ron Brenke P.E., testified in support of the bill, but requested that Architectural & Engineering firms also receive the deduction for pass-through payments for their subconsultants. Brenke testified that A/E firms are being treated unfairly because the MBT Act does not allow for a subtraction or deduction from gross receipts for payments to subconsultants/subcontractors.  As such, it places an undue burden on the prime for a contract, as they are paying gross receipts tax on monies that they simply pass through to their subconsultants.  In addition, it results in double taxation (at a minimum), since the sub also must pay gross receipts tax on these same dollars.  Furthermore, if the sub in turn has subs to pay out of those monies, the impact compounds.

The committee chair, Senator Nancy Cassis, stated she understood the problem and hopes to correct it via separate legislation, not in the bill being discussed today. The ACEC legislative team will continue to pursue a solution with Senator Cassis which will reduce unfair tax burdens for A/E firms.

For more information Contact: ACEC