Insurance: other; housing opportunity credits against the retaliatory tax; provide for, the official text

Act No. 31

Public Acts of 2026

Approved by the Governor

July 21, 2026

Filed with the Secretary of State

July 21, 2026

EFFECTIVE
DATE: July 21, 2026

state of michigan

103rd Legislature

Regular session of 2026

Introduced by Reps. Aragona, Grant and Wooden

ENROLLED HOUSE BILL No. 5807

AN ACT to amend 1956 PA 218,
entitled “An act to revise, consolidate, and classify the laws relating to the
insurance and surety business; to regulate the incorporation or formation of
domestic insurance and surety companies and associations and the admission of
foreign and alien companies and associations; to provide their rights, powers,
and immunities and to prescribe the conditions on which companies and
associations organized, existing, or authorized under this act may exercise
their powers; to provide the rights, powers, and immunities and to prescribe
the conditions on which other persons, firms, corporations, associations, risk
retention groups, and purchasing groups engaged in an insurance or surety
business may exercise their powers; to provide for the imposition of a
privilege fee on domestic insurance companies and associations and the state
accident fund; to provide for the imposition of a tax on the business of
foreign and alien companies and associations; to provide for the imposition of
a tax on risk retention groups and purchasing groups; to provide for the
imposition of a tax on the business of surplus line agents; to provide for the
imposition of regulatory fees on certain insurers; to provide for assessment
fees on certain health maintenance organizations; to modify tort liability
arising out of certain accidents; to provide for limited actions with respect
to that modified tort liability and to prescribe certain procedures for
maintaining those actions; to require security for losses arising out of
certain accidents; to provide for the continued availability and affordability
of automobile insurance and homeowners insurance in this state and to
facilitate the purchase of that insurance by all residents of this state at
fair and reasonable rates; to provide for certain reporting with respect to
insurance and with respect to certain claims against uninsured or self-insured
persons; to prescribe duties for certain state departments and officers with
respect to that reporting; to provide for certain assessments; to establish and
continue certain state insurance funds; to modify and clarify the status,
rights, powers, duties, and operations of the nonprofit malpractice insurance
fund; to provide for the departmental supervision and regulation of the
insurance and surety business within this state; to provide for regulation over
worker’s compensation self-insurers; to provide for the conservation,
rehabilitation, or liquidation of unsound or insolvent insurers; to provide for
the protection of policyholders, claimants, and creditors of unsound or
insolvent insurers; to provide for associations of insurers to protect
policyholders and claimants in the event of insurer insolvencies; to prescribe
educational requirements for insurance agents and solicitors; to provide for
the regulation of multiple employer welfare arrangements; to create an
automobile theft prevention authority to reduce the number of automobile thefts
in this state; to prescribe the powers and duties of the automobile theft prevention
authority; to provide certain powers and duties upon certain officials,
departments, and authorities of this state; to provide for an appropriation; to
repeal acts and parts of acts; and to provide penalties for the violation of
this act,” by amending sections 476a and 476b (MCL 500.476a and 500.476b), as
amended by 2007 PA 187.

The People of the State of
Michigan enact:

Sec.
476a. (1) Beginning August 3, 1987, whenever, by a law in force outside of this
state or country, a domestic insurer or agent of a domestic insurer is required
to make a deposit of securities for the protection of policyholders or
otherwise, or to make payment for taxes, fines, penalties, certificates of
authority, valuation of policies, or otherwise, or a special burden or other
burden is imposed, greater in the aggregate, after the subtraction described in
subsection (8), than is required by the laws of this state for a similar alien
or foreign insurer or agent of an alien or foreign insurer, the alien or
foreign insurer of that state or country is required, as a condition precedent
to its transacting business in this state, to make a like deposit for like
purposes with the state treasurer of this state, and to pay to the revenue
commissioner for taxes, fines, penalties, certificates of authority, valuation
of policies, and otherwise an amount equal in the aggregate to the charges and
payments imposed by the laws of the other state or country upon a similar
domestic insurer and the agents of a domestic insurer, reduced by the
subtraction described in subsection (8), regardless of whether a domestic
insurer or agent of a domestic insurer is actually transacting business in that
state or country. For fire department or salvage corps taxes or other local
taxes the amount shall be computed by the revenue commissioner by dividing the
total of the payments made by domestic insurers in that state or country by the
gross premium received by domestic insurers in that state or country less
return premiums. The commissioner shall revoke the certificate of authority of
an alien or foreign insurer refusing for 30 days to make payment of fees or
taxes as required by this chapter. Except as provided in subsections (3) and
(4), for purposes of this section, an insurer organized under the laws of a
state or country other than these United States shall be considered an insurer
of the state in which its general deposit for the benefit of its policyholders
is made.

(2) The purpose of this section is to promote the interstate
business of domestic insurers by deterring other states from enacting
discriminatory or excessive taxes.

(3) Subsection (4) does not apply to a domestic insurer that
is owned or controlled, directly or indirectly, by an alien or foreign insurer
who prior to 1998 and with the commissioner’s approval did not keep books,
records, and files or true copies thereof in this state.

(4) For purposes of this section, the state treasurer, after
consultation with the commissioner, shall determine that a domestic insurer is
an alien or foreign insurer domiciled in a state or country determined by the
state treasurer if the insurer does not comply with all of the following:

(a) Maintain its principal place of business in this state.

(b) Maintain in this state officers and personnel responsible
for and knowledgeable of the company’s operation, books, records,
administration, and annual statement.

(c) Conduct in this state a substantial portion of its
underwriting, sales, claims, legal, and, if applicable, medical operations
relating to Michigan policyholders and certificate holders.

(d) Comply with section 5256(1)(a) and (2) to (6). The
commissioner shall inform the state treasurer when a domestic insurer is not in
compliance with section 5256(1)(a) or (2) to (6).

(5) Taxes collected under this section are subject to section
243 of the Michigan business tax act, 2007 PA 36, MCL 208.1243, or section 643
of the income tax act of 1967, 1967 PA 281, MCL 206.643.

(6) The state treasurer shall administer the tax prescribed
by this section in the manner provided in 1941 PA 122, MCL 205.1 to
205.31.

(7) The requirements of section 28 of 1941 PA 122, MCL
205.28, that prohibit an employee or an authorized representative or former
employee or authorized representative or anyone connected with the department
of treasury from divulging any facts or information obtained in connection with
the administration of taxes, do not apply to disclosure of the tax return
prescribed in this act.

(8) For tax years that begin on and after January 1, 2027, in
calculating the total burdens imposed by a foreign state or country on a
domestic insurer or agent under subsection (1), including any required
deposits, payments, or other burdens described in that subsection, an alien or
foreign insurer that is a qualified taxpayer may subtract a housing opportunity
tax credit for a qualified project in an amount equal to the amount of that
credit listed on the allocation report for that qualified taxpayer for that
qualified project, and the subtraction shall constitute the housing opportunity
tax credit. Except as otherwise provided in subsection (9), an alien or foreign
insurer that is a qualified taxpayer and an owner shall claim a subtraction for
a housing opportunity tax credit listed on an allocation report for the owner’s
tax year described in section 22e(5) of the state housing development authority
act of 1966, 1966 PA 346, MCL 125.1422e. Except as otherwise provided in
subsection (9), an alien or foreign insurer that is a qualified taxpayer that
has been allocated a housing opportunity tax credit listed on an allocation
report shall claim a subtraction for that credit for the qualified taxpayer’s
tax year described in section 22e(6) of the state housing development authority
act of 1966, 1966 PA 346, MCL 125.1422e. An alien or foreign insurer shall not
claim a subtraction for a housing opportunity tax credit for a calendar year
listed on an allocation report unless the alien or foreign insurer and the
amount of the alien or foreign insurer’s credit are listed on that allocation
report.

(9) To claim the subtraction under subsection (8), an alien
or foreign insurer that is a qualified taxpayer shall attach a copy of the
eligibility statement to the annual tax return filed under this act on which
the subtraction is claimed. However, if the owner of the qualified project that
has received an approval notice has submitted a final cost certification and a
request for an eligibility statement to the authority but the authority has not
yet approved the final cost certification and issued the eligibility statement
to the owner, the alien or foreign insurer that is a qualified taxpayer may
either claim the subtraction on the qualified taxpayer’s annual return for the
tax year as prescribed under subsection (8) by attaching a copy of the approval
notice for that qualified project or wait to claim the subtraction on the
qualified taxpayer’s annual return for the tax year in which the eligibility
statement for the qualified project is issued. If an updated allocation report
is provided to the department under section 22e(8)(b) of the state housing
development authority act of 1966, 1966 PA 346, MCL 125.1422e, that reduces or
increases the amount of a housing opportunity tax credit that was previously
claimed as a subtraction under this section by an alien or foreign insurer that
is a qualified taxpayer, each alien or foreign insurer that is a qualified
taxpayer that had its credit amount adjusted shall file an amended return for
the affected tax year to adjust the amount of the credit accordingly.

(10) If any portion of a federal low-income housing tax
credit claimed for a qualified project for which an alien or foreign insurer
also claimed a subtraction under subsection (8) or a credit under section 678
of the income tax act of 1967, 1967 PA 281, MCL 206.678, is required to be
recaptured or is otherwise disallowed during the credit period under section 42
of the internal revenue code of 1986, 26 USC 42, the alien or foreign insurer
that claimed the subtraction under subsection (8) or the credit under section
678 of the income tax act of 1967, 1967 PA 281, MCL 206.678, for that same
qualified project is also required to recapture a portion of the housing
opportunity tax credit as provided under this subsection. The percentage of the
housing opportunity tax credit subject to recapture must be equal to the
percentage of the federal low-income housing tax credit subject to recapture or
otherwise disallowed during the same tax year. For an alien or foreign insurer
that is a qualified taxpayer that, without regard to the amount of any
recapture that may be required under this subsection, is subject to the tax
under this section for the tax year in which the recapture or disallowance
event is identified on the federal return, any housing opportunity tax credits
recaptured or disallowed must be added back to the tax liability of the
qualified taxpayer in a like amount and must be included on the annual return
of the qualified taxpayer submitted for the tax year in which the recapture or
disallowance event is identified on the federal return.

(11) As used in this section:

(a) “Allocation report”, “approval notice”, “eligibility
statement”, “federal low-income housing tax credit”, “flow-through entity”, “housing
opportunity tax credit”, “owner”, and “qualified project” mean those terms as
defined under section 22e of the state housing development authority act of
1966, 1966 PA 346, MCL 125.1422e.

(b) “Authority” means the Michigan state housing development
authority created under section 21 of the state housing development authority
act of 1966, 1966 PA 346, MCL 125.1421.

(c) “Qualified taxpayer” means any of the following:

(i) The owner of a qualified project that
has received an eligibility statement for that qualified project.

(ii) The owner of a qualified project that
received an approval notice and has submitted a final cost certification and a
request for an eligibility statement to the authority but the authority has not
yet approved the final cost certification and issued the eligibility statement
to the owner.

(iii) An alien or foreign insurer that owns a
direct or indirect, through 1 or more other flow-through entities, interest in
an owner described under subparagraph (i) or (ii) and that has been allocated a housing opportunity tax
credit at any time prior to filing an annual or amended return under this act
on which a subtraction under subsection (8) is claimed.

Sec.
476b. Authorized insurers are subject to the tax as provided in section 476a if
applicable or the Michigan business tax act, 2007 PA 36, MCL 208.1101 to
208.1519, or part 2 of the income tax act of 1967, 1967 PA 281, MCL 206.601 to
206.699, whichever is greater.

Enacting section 1. This amendatory act does not
take effect unless all of the following bills of the 103rd Legislature are
enacted into law:

(a) Senate Bill
No. 966.

(b) House Bill No.
5806.

This act is ordered to take
immediate effect.

Clerk of the House of
Representatives

Secretary of the Senate

Approved___________________________________________

____________________________________________________

Governor