[ Previous Page] [ Home Page ]
The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5636 January 30, 1980 TAXATION: Sales tax exemption The contractor for a county medical care facility renovation project is not exempt from the payment of sales tax on tangible personal property to be incorporated as a component of the renovated facility. Honorable John Engler State Senator State Capitol Lansing, Michigan 48901 You have requested my opinion concerning the status of the Grand Traverse Medical Care Facility in relation to renovation project costs arising out of the imposition of Michigan sales tax on materials utilized by the project contractor. You specifically inquire whether legislation is necessary to relieve the Grand Traverse Medical Care Facility of the pass-on costs attributable to payment of sales tax by the contractor on project materials. 1933 PA 167, Sec. 4(a), as amended, the General Sales Tax Act; MCLA 205.54a; MSA 7.525, exempts various nonprofit institutions like the Grand Traverse Medical Care Facility, from payment of sales tax on tangible personal property purchased by such institutions for use or consumption in connection with their operation. Prior to 1970, 1933 PA 167, Sec. 1(c), MCLA 205.51(c); MSA 7.521, additionally exempted contractors from the payment of sales tax on tangible personal property purchased by them to be utilized and becoming a part of the construction, alteration, repair or improvement of real estate operated by the various exempt classifications included within Sec. 4(a) of the act, supra. Subsequently, Sec. 1(c) contractor's exemption was amended by 1970 PA 16 in order to apply only to tangible personal property to be affixed and made a part of the real estate of nonprofit hospitals and nonprofit housing. The Sec. 1(c) exemption was further amended by 1976 PA 70 to apply to nonprofit hospitals or nonprofit housing qualified as exempt pursuant to 1966 PA 346, Sec. 15(a), as amended, the Housing Development Authority Act, MCLA 125.1415a; MSA 16.114(15a). 1968 PA 17, Sec. 2, Michigan Hospital Licensing Act, MCLA 331.412; MSA 14.1179(2), formerly defined the term 'hospital' as follows: 'For the purposes of this act, a hospital is an establishment offering inpatient services for observation, diagnosis, active treatment and overnight care of persons with obstetrical, medical, surgical, tubercular, alcoholic, chronic or rehabilitative conditions requiring the daily direction or supervision of physicians licensed to practice in the state. The director, by rule, with the concurrence of the state health facilities council, shall further define hospitals and hospital services to clearly differentiate between the active intensive care expected in hospitals and that which is characteristically expected in long-term extended care facilities or in nursing or convalescent homes.' Effective September 30, 1978, the Hospital Licensing Act was repealed by the new Public Health Code, being 1978 PA 368; MCLA 333.1101 et seq; MSA 14.15(1101) et seq. Section 20106 of the Public Health Code, MCLA 333.20106; MSA 14.15(20106), in defining the term 'health facility or agency', distinguishes, as did the former Hospital Licensing Act, between hospitals and county medical care facilities, and Sec. 20104(4) of the Code, MCLA 333.20104; MSA 14.15(20104), expressly defines 'county medical care facility' as being 'a nursing care facility, other than a hospital long-term care unit or a nursing home, which provides organized nursing care and medical treatment to 7 or more unrelated individuals who are suffering or recovering from illness, injury, or infirmity and which is owned by a county or counties.' Section 21511 of the Public Health Code, MCLA 333.21511; MSA 14.15(21511), requires all hospitals other than those operated by the Department of Mental Health, the federal government, or a veterinary hospital, to be licensed by the Michigan Department of Public Health. It is my understanding that the Grand Traverse Medical Care Facility is currently licensed under the Public Health Code as a nursing care facility, rather than a hospital. In view of the express provisions of the Public Health Code as heretofore indicated, the Grand Traverse Medical Care Facility is not a nonprofit hospital within the intendment of Sec. 1(c), supra, of the General Sales Tax Act. It is, therefore, my opinion that the contractor for the proposed Grand Traverse Medical Care Facility renovation project is thus not exempt from the payment of sales tax on tangible personal property to be incorporated as a component part of the renovated facility. Frank J. Kelley Attorney General
[ Previous Page] [ Home Page ]