Mich. Admin. Code (Treasury) | Michigan Administrative Code — Department of Treasury

Bureau of Local Government Services Bureau of Local Government Services

R 141.1 to R 141.2 City Utility Users Tax

Mich. Admin. Code R 141.1 Definitions {#sec-r-141.1 omnilex-key=us-mi-regs-official--dept-treasury--R 141.1}

DEPARTMENT OF TREASURY

BUREAU OF REVENUE

CITY UTILITY USERS TAX

(By authority conferred on the state commissioner of revenue by section 3 of Act No. 100 of the Public Acts of 1990, being S141.1153 of the Michigan Compiled Laws)

PART 1. GENERAL PROVISIONS

Rule 1. (1) As used in these rules:

(a) "Act" means Act No. 100 of the Public Acts of 1990, being S141.1151 et seq. of the Michigan Compiled Laws, and known as the city utility users tax act.

(b) "Bureau" means the bureau of revenue of the Michigan department of treasury.

(2) Words defined in the act have the same meanings when used in these rules.

History

History: 1995 AACS.

Mich. Admin. Code R 141.2 Scope {#sec-r-141.2 omnilex-key=us-mi-regs-official--dept-treasury--R 141.2}

Rule 2. (1) An appeal and any subsequent proceedings in the appeal filed with the commissioner pursuant to the act shall be considered a contested case.

(2) The practice and procedure in the proceedings specified in subrule (1) of this rule shall be governed by the rules for contested cases in effect for the bureau.

(3) Where there is no applicable rule to govern contested cases, chapter 4 of Act No. 306 of the Public Acts of 1969, as amended, being S24.271 et seq. of the Michigan Compiled Laws, shall govern.

History

History: 1995 AACS.

Bureau of Tax and Economic Policy Bureau of Tax and Economic Policy

R 205.1 to R 205.142 General Sales and Use Tax Rules Specific Sales and Use Tax Rules

Mich. Admin. Code R 205.1 Sales tax licenses {#sec-r-205.1 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1}

DEPARTMENT OF TREASURY

STATE TREASURER

GENERAL SALES AND USE TAX RULES

SPECIFIC SALES AND USE TAX RULES

(By authority conferred on the Department of Treasury by section 3 of 1941 PA 122, MCL 205.3)

GENERAL SALES AND USE TAX RULES

Rule 1. (1) Except as provided in subrules (7) and (8) of this rule, a Michigan sales tax license must be obtained by every person engaged in the business of selling tangible personal property at retail in this state. A person shall not engage or continue in the business of making sales at retail in this state without securing a license, regardless of the amount of sales or the manner of obtaining goods for sale. An application for a license, before or at the time of beginning business, must be made to the department of treasury on a form or in a manner prescribed by the department of treasury. All licenses must be displayed on the licensed premises.

(2) Every sales tax license expires on September 30 of each year, regardless of the date the license is issued, and must be renewed by furnishing the information as the department of treasury may require. A person selling at retail at more than 1 location or place of business shall display a copy of the license at each location. If a valid license is lost or destroyed, it may be replaced without charge by notifying the department of treasury.

(3) A license is not transferable and a new license must be secured immediately if there is a change of ownership of the business. For example, if a partner is added or dropped, or if a corporation is formed or dissolved, this constitutes a change of ownership necessitating application in the name of the new ownership for a sales tax license to sell at retail. If the new owner fails to apply for a license, the new owner may be subjected to penalty for operating without a valid sales tax license.

(4) The fact that a person is licensed by the department of treasury to sell at retail does not automatically mean that sales to the licensed person are exempt from sales tax as sales for resale.

(5) The department of treasury may deny a license to an applicant if the department of treasury considers the applicant to be the agent or representative of a principal required to be licensed and responsible for filing the sales tax returns.

(6) The department of treasury may require an applicant for a sales tax license to submit a surety bond as provided by statute.

(7) A person making retail sales at 2 or fewer events per calendar year is not required to obtain a license, but instead shall file a per event tax return as follows (a) If the 2 or fewer events are for purposes of fundraising, a special events sales tax return must be filed.

(b) If the 2 or fewer sales events are not for fundraising purposes, a concessionaire’s sales tax return must be filed.

(8) A person only making casual and isolated sales as described in R 205.13 is not required to obtain a Michigan sales tax license.

History

History: 1979 AC; 2013 AACS; 2023 AACS.

Mich. Admin. Code R 205.2 Rescinded {#sec-r-205.2 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.3 Rescinded {#sec-r-205.3 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.4 Rescinded {#sec-r-205.4 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.5 Rescinded {#sec-r-205.5 omnilex-key=us-mi-regs-official--dept-treasury--R 205.5}

History

History: 1979 AC; 2013 AACS.

Mich. Admin. Code R 205.6 Rescinded {#sec-r-205.6 omnilex-key=us-mi-regs-official--dept-treasury--R 205.6}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.7 Rescinded {#sec-r-205.7 omnilex-key=us-mi-regs-official--dept-treasury--R 205.7}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.8 Rescinded {#sec-r-205.8 omnilex-key=us-mi-regs-official--dept-treasury--R 205.8}

History

History: 1979 AC; 2013 AACS; 2023 AACS.

Mich. Admin. Code R 205.9 Rescinded {#sec-r-205.9 omnilex-key=us-mi-regs-official--dept-treasury--R 205.9}

History

History: 1979 AC; 2013 AACS.

Mich. Admin. Code R 205.10 Rescinded {#sec-r-205.10 omnilex-key=us-mi-regs-official--dept-treasury--R 205.10}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.11 Rescinded {#sec-r-205.11 omnilex-key=us-mi-regs-official--dept-treasury--R 205.11}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.12 Rescinded {#sec-r-205.12 omnilex-key=us-mi-regs-official--dept-treasury--R 205.12}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.13 Casual or isolated sales {#sec-r-205.13 omnilex-key=us-mi-regs-official--dept-treasury--R 205.13}

Rule 13. (1) Sales at retail must not include an isolated transaction made other than in the ordinary course of repeated and successive transactions of a like character, which includes, but is not limited to, a situation where an individual sells personal household furniture, a farmer sells farm machinery or other farm equipment, or a merchant sells a cash register, counters or other store fixtures at auction or otherwise. These sales are casual or isolated transactions and are not subject to tax. However, any individual who in any manner or at any time advertises, solicits, or offers tangible personal property for sale for the purpose of repeated sales is determined to be regularly engaged in business and those sales are not considered casual or isolated, even though they may be few or infrequent.

(2) Vehicles, aircraft other than a qualified aircraft under section 11 of the streamlined sales and use tax revenue equalization act, 2004 PA 175, MCL 205.181, ORVs, manufactured housing, snowmobiles, and watercraft acquired in an isolated transaction from a person that is not a retailer are subject to an equalization tax. The equalization tax on vehicles, snowmobiles, and watercraft must be paid to the secretary of state before the transfer of a vehicle title, snowmobile registration, or watercraft registration. The equalization tax on the transactions is imposed at a rate of 6% of the retail dollar value of the item at the time of acquisition. The equalization tax on the transfer of aircraft, other than a qualified aircraft under section 11 of the streamlined sales and use tax revenue equalization act, 2004 PA 175, MCL 205.181, must be paid directly to the department of treasury by the purchaser. The equalization tax on manufactured housing must be collected by the secretary of state before the transfer of the certificate of title. All use tax exemptions also apply to the equalization tax. Credit is given for any use tax paid against equalization tax that is due on the same transaction.

(3) A person that is not licensed as an automobile dealer by the secretary of state is presumed to be in the business of making retail sales when selling or offering for sale 3 or more used vehicles in the previous 12 months.

(4) A person that holds a single sales event per calendar year, such as a garage or yard sale to sell personal household items, that lasts no longer than 3 consecutive days, is not making sales at retail and is not liable for tax on the transactions.

(5) The tax base under the streamlined sales and use tax revenue equalization act, 2004 PA 175, MCL 205.179, is the retail dollar value of the property as listed in an industry accepted pricing guide applicable to the property. It is solely within the department of treasury’s discretion to determine if a pricing guide is industry accepted.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.14 Rescinded {#sec-r-205.14 omnilex-key=us-mi-regs-official--dept-treasury--R 205.14}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.15 Trade-in deduction and core charges {#sec-r-205.15 omnilex-key=us-mi-regs-official--dept-treasury--R 205.15}

Rule 15. (1) Except as provided in subrules (2) and (3) of this rule, no deduction from the sales price of a retail sale is allowed for any credit given by the seller for a trade-in taken in exchange or as partial payment for tangible personal property and the tax applies to the full selling price.

Example: A customer purchases an LP tank filled with propane gas for the sales price of $49.95. Tax is due on the sales price of $49.95. Months later, the customer returns for more propane gas, trades in an empty LP tank, and receives an LP tank full of propane gas. The customer is charged $24.95, and the seller credits $25.00 for the empty LP tank traded in. No deduction is allowed for the empty LP tank taken in trade on the transaction. Tax is due on the total amount of $49.95, $24.95 plus $25.00, without a reduction for the trade-in amount.

(2) Credit given by a seller, except for rentals and leases, is not part of the sales price and is not subject to tax if the agreed-upon value is separately stated on the invoice, bill of sale, or similar document given to the purchaser, in the following circumstances:

(a) Credit for the agreed-upon value of a titled watercraft used as part payment of the purchase price of a new titled watercraft or used titled watercraft purchased from a watercraft dealer.

(b) Credit for the agreed-upon value of a motor vehicle used as part payment of the purchase price of a new or used motor vehicle or new or used recreational vehicle purchased from a dealer. This deduction does not apply to a recreational vehicle used as part payment for a motor vehicle. This deduction is limited, as follows:

(i) Beginning January 1, 2019, the lesser of the following:

(A) $5,000.00. Beginning January 1, 2020, and each January 1 after that, this limit is increased by $1,000.00.

(B) The agreed-upon value of the motor vehicle used as part payment.

(ii) Beginning January 1, 2029, the full agreed-upon value of the traded-in motor vehicle is eligible for the deduction.

(iii) Beginning January 1, 2018, credit for the full agreed-upon value of a recreational vehicle used as part payment for a new or used recreational vehicle purchased from a dealer.

Example: A customer purchases a new motor vehicle on February 1, 2019 from a dealer for $25,000.00. The dealer agrees to take the customer’s used motor vehicle in on trade and agrees to credit the customer $10,000.00 for the traded in vehicle. The customer pays the remaining $15,000.00 through a financing agreement. Only up to $5,000.00 of the trade-in vehicle is eligible for the deduction, therefore, the taxable sales price of the vehicle is $20,000.00.

(3) Beginning January 1, 2017, credit for the core charge attributable to a recycling fee, deposit, or disposal fee for a motor vehicle or recreational vehicle part or battery is deductible from the sales price if the recycling fee, deposit, or disposal fee is separately stated on the invoice, bill of sale, or similar document given to the purchaser.

Example: A retailer sells a customer a car battery for $100.00. The invoice given to the customer separately itemizes a $20.00 charge for a recycling fee for the battery.

The taxable sales price of the battery is $80.00.

(4) Tangible personal property acquired by the seller through a trade-in that is later sold at retail is subject to sales tax on the full sales price.

History

History: 1979 AC; 2013 AACS; 2023 AACS.

Mich. Admin. Code R 205.16 Returned goods {#sec-r-205.16 omnilex-key=us-mi-regs-official--dept-treasury--R 205.16}

Rule 16. (1) The term “returned goods” does not include repossession or recapture of merchandise by legal process, abandonment of contract, voluntary surrender of goods without a refund or credit being given for the amount paid, or goods accepted in trade or barter.

(2) If the seller provides a full or partial refund or credit on returned goods within the time period for returns stated in the seller’s refund policy or 180 days after the initial sale, whichever is sooner, the seller shall refund tax on the full amount or that portion of the purchase price that was refunded or credited. If the seller allows for a full or partial refund or credit on returned goods after the time period for returns stated in the seller’s refund policy or 180 days after the initial sale, the seller may refund tax on the full amount or that portion of the purchase price that was refunded or credited. The seller may claim a refund or credit of the tax paid to the department of treasury on all or that portion of the purchase price that was refunded or credited to the seller’s customer. The seller’s claim for refund must be submitted to the department of treasury within 4 years after the date set for the filing of the original return for the period in which the tax was due.

(3) A refund or credit of tax must not be given on goods returned to the seller for a refund or exchange without proof that Michigan tax was paid on the original sale.

(4) A rehandling or restocking charge by the seller in connection with returned goods is not a reduction of the sales or purchase price for refund purposes. Charges attributable to use of the returned goods by the purchaser are taxable.

(5) A credit or refund of tax is allowed for a motor vehicle returned to a manufacturer under 1986 PA 87, MCL 257.1401 to 257.1410, less allowances for use certified by the manufacturer on a form provided by the department of treasury.

History

History: 1979 AC; 2013 AACS; 2023 AACS.

Mich. Admin. Code R 205.17 Rescinded {#sec-r-205.17 omnilex-key=us-mi-regs-official--dept-treasury--R 205.17}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.18 Rescinded {#sec-r-205.18 omnilex-key=us-mi-regs-official--dept-treasury--R 205.18}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.19 Rescinded {#sec-r-205.19 omnilex-key=us-mi-regs-official--dept-treasury--R 205.19}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.20 Interpretation of rules {#sec-r-205.20 omnilex-key=us-mi-regs-official--dept-treasury--R 205.20}

Rule 20. These rules must be read and interpreted in their entirety, taking into account the effect of all pertinent legislation, rules, and court decisions.

History

History: 1979 AC; 2013 AACS; 2023 AACS.

Mich. Admin. Code R 205.21 Rescinded {#sec-r-205.21 omnilex-key=us-mi-regs-official--dept-treasury--R 205.21}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.22 Discounts, coupons, and rebates generally; discounts on certain motor vehicle sales {#sec-r-205.22 omnilex-key=us-mi-regs-official--dept-treasury--R 205.22}

Rule 22. (1) Except as provided in subrule (2) of this rule, trade, quantity, or other discounts given directly by a seller to a purchaser are deductible in arriving at the net sales price subject to tax. These discounts are not deductible until the actual discount has been given to the purchaser. For discounts offered directly by a seller after the time of sale, through the mail or other means, the purchaser may seek a refund of the sales tax paid on the discount or rebate amount from the seller if the seller collected the tax from the purchaser. The seller may request a refund from the department of treasury after the seller has refunded the tax to its customer. The discounts must appear on the invoices, records, and accounts of the seller and be substantiated to the satisfaction of the department of treasury.

Example 1: ABC is a retailer that sells widgets for a sales price of $10.00 each.

ABC offers a quantity discount of $2.00 per widget if the customer purchases 10 widgets. Customer purchases 10 widgets at a sales price of $80.00. The taxable sales price of the widgets is $80.00.

Example 2: ABC is a retailer that sells musical instruments. ABC sells a baby grand piano to a customer for a sales price of $25,000.00. ABC’s contract with the customer provides that if the customer pays $20,000.00 within 60 days, ABC must reduce the price of the piano to $20,000.00. The customer pays in 59 days. The taxable sales price of the property is $20,000.00. However, when the sale is first reported by ABC it must include gross proceeds of $25,000.00 on its return and remit the appropriate tax. If ABC collected tax from the customer on the $5,000.00 discount, ABC shall refund its customer before taking a credit or seeking a refund.

(2) A discount or rebate does not reduce the taxable sales price of a sale at retail and is subject to tax, if all the following conditions are met:

(a) The seller receives consideration from a person other than the purchaser, for example, from a manufacturer, and the consideration is directly related to the price reduction or discount.

(b) The seller is obligated to pass the price reduction or discount through to the purchaser.

(c) The amount of the consideration attributable to the sale is fixed and determinable by the seller at the time of the sale of the item to the purchaser.

(d) One of the following criteria are met:

(i) The purchaser presents documentation to the seller to claim a price reduction or discount granted by a third-party with the understanding that the third-party will reimburse any seller to whom the documentation is presented.

(ii) The purchaser identifies himself or herself as a member of a group or organization entitled to a reduction or discount. Preferred customer cards that are available to any patron do not constitute membership in a group or organization.

(iii) The price reduction or discount is identified as a third-party reduction or discount on the invoice received by the purchaser or on other documentation presented by the purchaser.

Example 3: ABC is a retailer that sells widgets manufactured by XYZ for a sales price of $10.00. XYZ mails manufacturer coupons to the public for $2.00 off per widget. ABC and XYZ have an agreement that XYZ will reimburse ABC $2.00 per widget sold when the coupon is presented. The agreement requires ABC to pass this discount on to its customers. A customer presents XYZ’s coupon to ABC and ABC sells the customer a widget for $8.00. The taxable sales price of the widget for purposes of the seller’s liability is $10.00. Even though the retailer only charged the purchaser a sales price of $8.00, the seller may collect the full 60 cents from the purchaser to reimburse itself for the sales tax due on the transaction in accordance with section 23(1) of the General Sales Tax Act, 1933 PA 167, MCL 205.73.

Example 4: XYZ, a non-profit member association and service organization, has agreements with various merchants and service providers under which XYZ’s members are entitled to discounts. Membership in XYZ is based on a fee and is not available to the public free of charge. ACME Hotel Group is a merchant that provides its accommodations throughout this state to XYZ members at a discount under such an agreement. Depending on the location within this state, XYZ reimburses ACME Hotel Group in an amount equal to or less than the amount of the discount. At one of ACME Hotel Group’s locations, a $100.00 hotel room is rented at a 10% discount to a XYZ member who pays $90.00 with the remaining $10.00 paid to ACME Hotel Group by XYZ. At another ACME Hotel Group location, a $100.00 hotel room is rented at a 10% discount to a XYZ member who pays $90.00 with only $6.00 of the remaining $10.00 paid by XYZ to ACME Hotel Group. ACME Hotel Group absorbs the remaining $4.00 to have the hotel room rented out. Use tax is due on the full consideration paid to ACME Hotel Group by the XYZ member and XYZ. In the first transaction, use tax of $6.00 is due on the consideration received by ACME Hotel Group of the $100.00 purchase price, while in the second transaction, use tax of $5.76 is due on the consideration of $96.00 received by ACME Hotel Group.

(3) For the sale of a motor vehicle, a discount given to a purchaser because of the purchaser’s status as a current employee, where the amount of the discount is reimbursed to the seller by a third-party, is not included in sales price and is not subject to tax.

Retired employees and relatives of an employee are not considered current employees.

(4) An automobile dealer may reduce the taxable sales price, calculate a credit, or seek a refund for consideration received from an automobile manufacturer to reimburse the dealer for a discount or price reduction given on the sale of a motor vehicle, to a member of a group designated by the manufacturer as entitled to a price identified on the manufacturer’s invoice to the automobile dealer that the manufacturer requires the dealer to charge the purchaser of that vehicle, if all of the following conditions are met:

(a) The purchaser is not employed by the manufacturer when the discount or price reduction is given.

(b) The dealer did not reimburse itself tax on the portion of the sales price it receives from the manufacturer.

(c) The amount of the credit or refund does not exceed the actual amount of sales tax paid on the portion of the sales price received from the manufacturer.

History

History: 1979 AC; 2013 AACS; 2023 AACS.

Mich. Admin. Code R 205.23 Rescinded {#sec-r-205.23 omnilex-key=us-mi-regs-official--dept-treasury--R 205.23}

History

History: 1979 AC; 2013 AACS.

Mich. Admin. Code R 205.24 Rescinded {#sec-r-205.24 omnilex-key=us-mi-regs-official--dept-treasury--R 205.24}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.25 Rescinded {#sec-r-205.25 omnilex-key=us-mi-regs-official--dept-treasury--R 205.25}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.26 Use tax registration {#sec-r-205.26 omnilex-key=us-mi-regs-official--dept-treasury--R 205.26}

Rule 26. (1) Except as provided in subrules (5) and (6) of this rule, activities that require a registration under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111, include, but are not limited to, the following:

(a) An out-of-state seller making sales into this state that has nexus with this state if the transfer of ownership of the tangible personal property occurs outside of this state.

(b) An out-of-state seller making sales into this state that voluntarily collects and remits use tax that does not have nexus with this state.

(c) A business in this state that purchases tangible personal property from a seller that does not provide proof that sales or use tax was due and paid on the transaction.

(d) A lessor of tangible personal property that elects to collect and remit use tax on its rental receipts.

(e) A provider of intrastate or interstate telecommunications services.

(f) A provider of rental accommodations for a continuous period of 1 month or less.

(g) A provider of laundering or textile cleaning service under a sale, rental, or service agreement with a term of not less than 5 days.

(h) A provider of mobile wireless services.

(i) A person holding a direct payment authorization.

(2) A use tax registration must be obtained as prescribed by the department of treasury.

(3) A use tax registration is not transferable.

(4) Registration under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111, requires the filing of returns on forms and at a frequency required by the department of treasury. Filing by electronic means, by accelerated filing, or by other methods approved by the department of treasury may be required. Failure to register and file returns may subject the taxpayer to penalties.

(5) A seller holding a sales tax license under the General Sales Tax Act, 1933 PA 167, MCL 205.51 to MCL 205.78, is not required to register for use tax.

(6) A seller registered under the Streamlined Sales and Use Tax Agreement who is not otherwise subject to use tax under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111, is not required to register for use tax because of the registration under the Streamlined Sales and Use Tax Agreement.

History

History: 1979 AC; 2013 AACS; 2023 AACS.

Mich. Admin. Code R 205.27 Rescinded {#sec-r-205.27 omnilex-key=us-mi-regs-official--dept-treasury--R 205.27}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.28 Use tax included in gross proceeds {#sec-r-205.28 omnilex-key=us-mi-regs-official--dept-treasury--R 205.28}

Rule 28. The use tax act requires a seller to collect use tax as a separate line item and prohibits the inclusion of such charge as part of the sales price or purchase price.

History

History: 1979 AC.; 2013 AACS.

Mich. Admin. Code R 205.29 Exemption for use tax already paid on tangible personal property or services {#sec-r-205.29 omnilex-key=us-mi-regs-official--dept-treasury--R 205.29}

Rule 29. (1) A person in this state that purchases or otherwise acquires from a seller located in another state tangible personal property that is used, stored, or consumed in this state is not liable for the tax levied under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111, if the use tax was already paid to the seller by that person for the tangible personal property. In addition, a person who uses or consumes a service in this state that is taxable to that person under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111, is not liable for the use tax if the seller or provider of the service collected the use tax from that person in connection with the sale or provision of the service or the person otherwise paid the use tax that was billed by the provider of the service.

(2) For purposes of subrule (1) of this rule, it is the responsibility of the person using, storing, or consuming the tangible personal property in this state, or using or consuming the service in this state, to retain proof that the use tax was paid by that person for the purchase or acquisition of the tangible personal property or service, or was otherwise collected from that person by the seller or provider of the tangible personal property or service.

SPECIFIC SALES AND USE TAX RULES

History

History: 2023 AACS.

Mich. Admin. Code R 205.51 Agricultural producing {#sec-r-205.51 omnilex-key=us-mi-regs-official--dept-treasury--R 205.51}

Rule 1. (1) For the purpose of this rule, "agricultural producing" means the commercial production, for sale, of crops, livestock, poultry, and other products by persons regularly engaged in business as farmers, nurserymen, or agriculturists.

(2) Sales of tangible personal property are subject to the sales or use tax under this rule, if the sales are to persons other than those specified in subrule (1), or if the sales are made to persons specified in subrule (1), but the property is used or consumed by those persons for a purpose other than the commercial production of agricultural products for sale.

(3) Sales to farmers of fuel, clothing, and all other tangible personal property for personal living or human consumption or use are taxable. Sales of tangible personal property to all persons are taxable when the property is used in producing food or other products for personal consumption and not for sale.

(4) All sales to persons using land, but not included in the definition of "agricultural producing" in subrule (1), are taxable. For example, a mowing machine is taxable when sold to the operator of a riding stable for use in cutting hay to be fed to the operator's riding horses. The sale of the machine is exempt, however, if made to a person regularly engaged in business as a farmer for use in cutting hay to be fed to the farmer's work horses or cattle.

(5) Sales of the following are exempt only when used in "agricultural producing" as defined in subrule (1):

(a) Seeds and other propagative portions of plants.

(b) Fertilizer and similar substances for improving quality of the soil.

(d) Livestock, poultry, their feeds, and foodstuffs, including salt, bone meal, cod liver oil, limestone, grit, oyster shell, and other similar substances used to sustain animals or poultry.

(e) Sacks, wrappers, and other nonreturnable containers resold with crops; also, binding twine and baling wire.

(f) Machinery, tools, other equipment, repair parts, motor fuel, oil, grease, and other tangible personal property necessary for their operation and maintenance, except that sales of such equipment are taxable under the following circumstances:

(i) If the equipment is to be attached to and becomes a part of real estate.

(ii) If a motor vehicle is used on a public highway and is required by the motor vehicle law to have registration license plates.

(iii) Gasoline, oil, tires, and parts for a motor vehicle specified in paragraph (ii).

(g) Electricity or gas used directly in producing agricultural products.

When a separate meter is not installed for recording exempt electrical use, an allocation for exemption may be utilized if the total electrical consumption exceeds 1,500 kwh per month, or 2,500 kwh per month for homes with electric heat during the months of November to March. (See R 205.115)

(6) Sales of all tangible personal property used to improve real estate, or attached to and becoming a structural part of real estate, are taxable. Sales of tangible personal property consumed or used in the construction, alteration, repair, or maintenance of houses, barns, water supply systems, fences, drains, and all other structures and appurtenances forming a part of real estate are taxable. Readily movable equipment, such as portable hog houses and feeding troughs, is not considered a part of real estate and is not taxable if used in commercial agricultural producing. Sales of tangible personal property used in clearing land of trees, stumps, and rocks or used in ditching, tiling, or otherwise improving real estate are taxable.

(7) Sales of seed, fertilizer, equipment, and all other tangible personal property to anyone for use on homes or other noncommercial gardens, lawns, parks, boulevards, and golf courses or for use by landscape gardeners are taxable.

(8) Every person, including farmers, nurserymen, and agriculturists, who sells tangible personal property, other than food at retail, to persons for consumption or use, and not for resale, shall obtain a sales tax license and pay the tax to the state on the entire gross proceeds from those sales. It is immaterial whether the retail sales are made at the place of production, a roadside stand, a market, from a vehicle, or elsewhere.

(9) A retail sale of tangible personal property used for agricultural production may be deducted from gross proceeds before computation of the tax if, at the time of sale, the following certificate is signed by the purchaser:

CERTIFICATE UNDER AGRICULTURAL

PRODUCING EXEMPTION

The undersigned hereby certifies that all items, except as indicated hereon, are purchased for use of consumption in connection with the production of horticultural or agricultural products as a business enterprise, and agrees to reimburse the seller the sales tax if used or consumer otherwise.

DATE _______________________

SIGNED____________________________________

Purchaser ADDRESS _______________________________________________________________ Unlawful use of this certificate subjects persons to the penalties of the sales tax act.

(10) A deduction for sales in agricultural producing shall not be taken from gross sales for agricultural production in the absence of an executed exemption certificate, as specified in subrule (9), covering each deductible sale. A blanket or so-called standing or continuous certificate is not acceptable, except for continuous sales of utilities wherein the taxability for consumption does not change from month to month.

More than 1 item upon which a claim for exemption is made may be covered by certificate if all the items are purchased at the time of the given sale. Taxable and nontaxable sales may be listed on the sales invoice, if taxable items are indicated.

For example, the letter "T" may be placed before a taxable item.

(11) Separate copies of the certificate may be used by sellers, or the wording may be imprinted or rubber-stamped on sales invoices. All language expressed in the certificate shall be used. The date of purchase or address of the purchaser may be made to appear anywhere on the invoices; however, provision for the signature of the purchaser shall follow the wording of the certificate. Selection of the size of type used in the preparation of certificates is discretionary.

(12) A deduction for agricultural producing shall not be considered in the absence of the seller being in possession of executed certificates.

History

History: 1979 AC.

Mich. Admin. Code R 205.52 Rescinded {#sec-r-205.52 omnilex-key=us-mi-regs-official--dept-treasury--R 205.52}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.53 Auctioneers, agents, factors, and brokers {#sec-r-205.53 omnilex-key=us-mi-regs-official--dept-treasury--R 205.53}

Rule 3. (1) Auctioneers, agents, factors, brokers, etc., selling tangible personal property on a repeated basis from a fixed location, are retailers regardless of whether the sales are on their own behalf or for a principal.

(2) Where an auctioneer is engaged by a manufacturer, farmer, or householder to act as his agent in selling tangible property at the premises of the manufacturer, farmer, or householder, the auctioneer will not be liable for sales tax on such sales unless the auctioneer actually purchases the merchandise and then sells the property acquired on his own behalf.

History

History: 1979 AC.

Mich. Admin. Code R 205.54 Automobile and other vehicle sales {#sec-r-205.54 omnilex-key=us-mi-regs-official--dept-treasury--R 205.54}

Rule 4. (1) Sales of new and used automobiles, buses, trucks, tractors, trailers, housetrailers, motorcycles, motor scooters, and other vehicles for consumption or use are subject to the tax on the full retail sales price. The sales price includes the total amount of consideration, including cash, credit, property, and services, for which the vehicle is sold, whether received in money or otherwise, and without any deductions for federal taxes, freight, handling, delivery, commissions, repossessions, advertising, future free service, or any expense incurred as part of the cost of doing business. The sales tax must be paid to the secretary of state when the application of title is submitted by the dealer.

(2) In calculating the retail sales price of a motor vehicle subject to tax, if separately stated on the invoice, bill of sale, or similar document given to the purchaser, the following may be excluded:

(a) The agreed-upon value of a vehicle used as partial payment to a dealer, subject to the limitations set forth in R 205.15.

(b) Interest, financing, or carrying charges from credit extended on the sale of the vehicle.

(3) Unless otherwise exempt, vehicle transfers between individuals are subject to use tax on the purchase price of the vehicle. In addition, equalization tax as computed under section 9 of the streamlined sales and use tax revenue equalization act, 2004 PA 175, MCL 205.179, is imposed to the extent that the retail dollar value at the time of acquisition exceeds the purchase price of the vehicle. The use tax and equalization tax due in a vehicle transfer between individuals is payable to the secretary of state when the application for title is submitted by the purchaser.

(4) When a vehicle is sold by a dealer, the sales price, together with the amount of sales tax to be paid to the secretary of state, must be indicated on the invoice, sales order, the statement of this state’s retail sales tax paid as provided by the secretary of state, and on the records of the dealer. Authorized discounts are deductible only when given to the purchaser by the dealer at the time of sale and shown on the invoice, sales order, the statement of sales tax paid as provided by the secretary of state, and on the records of the dealer. See R 205.22.

(5) The sale of a vehicle for delivery and use outside this state is not subject to tax if all the following conditions exist:

(a) The dealer delivers and assumes all responsibility for delivery without knowledge that the vehicle will be returned to this state, except for a temporary use in this state.

(b) Title to the vehicle passes to the purchaser at a point outside this state.

(d) The dealer’s records substantiate subdivisions (a) to (c) of this subrule.

(6) For a vehicle sold and delivered in this state to a person securing special registration under section 226 of the Michigan vehicle code, 1949 PA 300, MCL 257.226, to register and use that vehicle in a state that does not impose use tax upon registration in that state or that does not have a sales tax reciprocity agreement with this state, no tax is collected upon the sale and delivery of that vehicle in this state.

(7) Unless otherwise exempt, tax is levied on any vehicle sold and delivered in this state if the purchaser intends to register and use that vehicle in another country or does not qualify for special registration issued by the secretary of state. (See MCL 257.226.) A vehicle purchased and remaining in this state for a period of more than 30 days is subject to sales tax even if the purchaser is not a legal resident of this state or the vehicle will be registered in another state. If the purchaser is not a resident and is actively serving in the Armed Forces of the United States, the sale may be exempt from tax if that purchaser provides a sworn statement of nonresidency from that purchaser’s commanding officer and registers the vehicle in the purchaser’s state of residency or domicile.

(8) For a vehicle sold and delivered in this state to a person securing special registration under section 226 of the Michigan vehicle code, 1949 PA 300, MCL 257.226, to register and use that vehicle in a state having a sales tax reciprocity agreement with this state, tax is imposed on the lesser of the tax to be imposed on the vehicle by the state in which the vehicle will be registered and the amount of Michigan sales tax due on the sale of the vehicle. In computing the tax due in each state under this provision, the value of any trade-in should be deducted in accordance with the respective law of each state. See R 205.15.

(9) When a vehicle that has been sold is returned to the dealer voluntarily by the purchaser and the dealer refunds money or other consideration given by the purchaser, the dealer may receive a refund or credit for the amount of sales tax paid to the state on the portion of the original price that was refunded. When a vehicle that has been sold is returned to the manufacturer under 1986 PA 87, MCL 257.1401 to 257.1410, and the manufacturer certifies the amount of money or consideration paid by the purchaser that has been refunded, less an allowance for the purchaser’s use of the vehicle, a refund for the amount of sales tax paid to the state may be issued to the manufacturer.

(10) Each new vehicle dealer is allowed a maximum number of tax-free demonstrators in a calendar year in accordance with the total number of new cars and trucks sold in the current calendar year or the immediately preceding calendar year as follows:

(a) Zero to 25 2 tax-free demonstrators (b) 26-100 7 tax-free demonstrators (c) 101-500 20 tax-free demonstrators (d) 501 or more 25 tax-free demonstrators (11) To qualify as a demonstrator the vehicle must be registered in the name of a dealer as provided on an affidavit prescribed the department of treasury.

(12) A vehicle dealer that is engaged in the business of renting or leasing vehicles shall pay tax on the vehicle at the time of purchase, unless that dealer elects to pay use tax on rental receipts. See R 205.132(5).

(13) The annual surety bond required of each new and used vehicle dealer under this state’s vehicle code must provide for indemnification or reimbursement to the state for sales or use tax deficiencies for the year in which the bond was in effect upon the entry of a final judgment in a court of record against the dealer.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.55 Sale of Automotive Parts {#sec-r-205.55 omnilex-key=us-mi-regs-official--dept-treasury--R 205.55}

Rule 5. (1) Sales at retail of automotive parts for consumption or use are taxable.

Every retailer of automotive parts, such as a garage, car dealer, or service station, shall have a sales tax license. Sales for resale by a wholesaler to a licensed retailer are exempt.

A wholesaler is liable for the tax for retail sales to the consumer or user, including a person with a sales tax license who purchases automotive parts or tools, equipment, and supplies for consumption or use. For instance, the sale of piston rings to a duly licensed garage operator is exempt if the rings are to be resold over the counter to a person that will install them, sold in connection with repair work for a customer, or installed in a used car that the retailer has purchased or taken as trade-in, which is being reconditioned for sale. However, the sale of the rings to the retailer is taxable if the retailer installs them in a vehicle maintained for the retailer’s own use, such as a wrecker used in the retailer’s business or a car maintained for use by the retailer’s family.

(2) Any amount allowed or allowable as a trade-in, exchange, or deposit is part of the gross proceeds subject to tax. Beginning January 1, 2017, any core charges attributable to a recycling fee, deposit, or disposal fee for a motor vehicle or recreational vehicle part or battery are excluded if the core charge is separately stated on the invoice, bill of sale, or similar document given to the purchaser. See R 205.15.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.56 Rescinded {#sec-r-205.56 omnilex-key=us-mi-regs-official--dept-treasury--R 205.56}

History

History: 1944 AC; 1954 AC; 1979 AC; 2007 AACS; 2023 AACS.

Mich. Admin. Code R 205.57 Rescinded {#sec-r-205.57 omnilex-key=us-mi-regs-official--dept-treasury--R 205.57}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.58 Rescinded {#sec-r-205.58 omnilex-key=us-mi-regs-official--dept-treasury--R 205.58}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.59 Rescinded {#sec-r-205.59 omnilex-key=us-mi-regs-official--dept-treasury--R 205.59}

History

History: 1944 AC; 1954 AC; 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.60 Rescinded {#sec-r-205.60 omnilex-key=us-mi-regs-official--dept-treasury--R 205.60}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.61 Rescinded {#sec-r-205.61 omnilex-key=us-mi-regs-official--dept-treasury--R 205.61}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.62 Aircraft {#sec-r-205.62 omnilex-key=us-mi-regs-official--dept-treasury--R 205.62}

Rule 12. (1) Except for exempt sales under section 4x of the General Sales Tax Act, 1933 PA 167, MCL 205.54x, and sales to a purchaser that has made a valid lessor election under section 5(4) of the Use Tax Act, 1937 PA 94, MCL 205.95, sales of new and used aircraft are subject to sales tax on the full selling price without deductions for expenses incurred as part of the cost of doing business or trade-in credit given to a purchaser. To make a valid election under section 5(4) of the Use Tax Act, 1937 PA 94, MCL 204.95, a lessor of an aircraft must register for use tax by the earlier of the date set for the first payment of use tax under the lease or rental agreement or 90 days after the lessor first brings the aircraft into this state.

(2) Unless exempt under section 4x of the General Sales Tax Act, 1933 PA 167, MCL 205.54x, gasoline, jet fuel, oil, repair parts, and other tangible personal property sold and delivered in this state for operation of aircraft are subject to sales tax regardless of where the plane will be flown or used.

(3) A seller in the ordinary course of business, including an aircraft dealer engaged in the purchasing, selling, brokering, exchanging, or dealing in aircraft parts or in aircraft of a type required to be registered under the Aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.1 to 259.208, shall remit sales tax on the full sales price of an aircraft, regardless of whether the sales are on its own behalf or on behalf of the aircraft owner.

(4) Aircraft purchased for consumption or use in this state from sellers outside this state are subject to use tax.

(5) A dealer, as that term is defined in section 3 of the Aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.3, that uses the property solely for demonstration and for which no charge is made while holding it for sale is exempt from tax on account of such use.

(6) When an aircraft used for demonstration is converted to a taxable use, such as for personal use, use tax is owed on the dealer’s original purchase price, if the aircraft was converted to a purpose other than selling, brokering, exchanging, or dealing in aircraft parts or in sales of aircraft.

(7) Sales tax applies to the retail sale of the aircraft following its use for demonstration without deduction for use tax previously paid under subrule (6) of this rule.

(8) A specific tax under the streamlined sales and use tax revenue equalization act, 2004 PA 175, MCL 205.171 to 205.191, of 6% is owed, less an amount equal to the use tax paid, on the retail value of a qualified aircraft for the privilege of storing, registering, or transferring ownership in this state, unless exempt from sales or use tax, including for purposes of resale. The retail value is determined at the time the aircraft first enters this state and is to be based on an industry accepted pricing guide applicable to the aircraft. It is solely within the department of treasury’s discretion to determine if a pricing guide is industry accepted. As used in this subrule, “qualified aircraft” means an aircraft purchased outside of this state, used solely for personal, non-business purposes, and either brought into this state more than 90 days after the date of purchase by a nonresident or brought into this state more than 360 days after the date of purchase by a resident.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.63 Rescinded {#sec-r-205.63 omnilex-key=us-mi-regs-official--dept-treasury--R 205.63}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.64 Rescinded {#sec-r-205.64 omnilex-key=us-mi-regs-official--dept-treasury--R 205.64}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.65 Churches and houses of religious worship {#sec-r-205.65 omnilex-key=us-mi-regs-official--dept-treasury--R 205.65}

Rule 15. (1) Sales, not for resale, to regularly organized churches and houses of religious worship are not subject to the tax if the item purchased is paid for by the church from church funds; however, sales of property used in a commerical enterprise by a church or house of religious worship, and sales of vehicles licensed for use on the public highways, are taxable. Sales of tangible personal property, including sales of meals in a commercial activity, when conducted as a retail business for gain, benefit, or advantage, direct or indirect, are taxable, and a sales tax license shall be obtained for the purpose of reporting and paying the tax due.

(2) Sales to religious organizations and societies composed of church members are taxable.

(3) Sales of merchandise to be given as prizes in games of skill or chance are taxable.

(4) Sales to all church employees for their own use are taxable.

(5) If an exemption is to be claimed, the seller, at the time of transfer of the tangible personal property, shall retain, as part of the seller's records, an executed exemption certificate which reads as follows:

CERTIFICATE TO BE EXECUTED WHEN TAX EXEMPT SALE

IS MADE TO AN EXEMPT INSTITUTION OR AGENCY

The undersigned hereby certifies that the item or items being purchased are to be used or consumer in connection with the operation of the exempt institution for agency named in the space provided below, and that the consideration for this purchase moves from the funds of the designated institution or agency. In the event this claim is disallowed, the transferee promises to reimburse the seller for the amount of the tax involved. ___________________________________________________ Name of exempt institution or agency DATE _______________________________ ___________________________________________________ Signature and title of person making certification

History

History: 1979 AC.

Mich. Admin. Code R 205.66 Rescinded {#sec-r-205.66 omnilex-key=us-mi-regs-official--dept-treasury--R 205.66}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.67 Fuel dealers {#sec-r-205.67 omnilex-key=us-mi-regs-official--dept-treasury--R 205.67}

Rule 17. (1) The sale of coal, coke, wood, fuel oil, liquid petroleum gas, and other fuel that is not otherwise exempt is taxable based on the sales or purchase price. The sale for residential use of electricity, natural or artificial gas, or home heating fuels is exempt from the sales tax at the additional rate of 2%, as approved by the electors on March 15, 1994.

(2) The sale of equipment, tools, materials and supplies, consumed or used in handling and preparing fuel for market or delivery is taxable.

(3) The sale of bottled gas cylinders by dealers and distributors is subject to tax at the time of sale. A dealer or distributor that rents bottled gas cylinders to its customers may elect to pay use tax on the rental receipts instead of paying sales tax when the dealer or distributor purchases the cylinder for use in its rental business. See R 205.132.

(4) The sale of fuel used in rail operations is exempt from tax, except for use in vehicles licensed and titled for use on public highways.

(5) The sale of fuel used or consumed in the manufacturing of power, heat, light, or gas to be sold at retail is not taxable.

(6) The sale of fuel used for an exempt agricultural purpose or industrial processing is exempt from tax.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.68 Containers, cartons, and wrapping materials {#sec-r-205.68 omnilex-key=us-mi-regs-official--dept-treasury--R 205.68}

Rule 18. (1) As used in this rule, “containers” means the articles and devices in which tangible personal property is placed for shipment and delivery, such as wrapping materials, bags, cans, twines, gummed tapes, barrels, boxes, tote boxes, pallets, racks, bottles, drums, carboys, cartons, sacks, and materials from which the containers are manufactured.

(2) Sales of containers to persons engaged in rendering a service are taxable.

(3) Sales of containers that will be resold with the product are eligible for a resale exemption. If a separate charge is made for the sale of a container to a person, other than for resale, it is taxable. Sales of containers that are not resold with the property it contains are taxable.

Example 1: ABC manufactures golf balls. ABC sells its golf balls for resale to retailers. When a retailer places an order, ABC packages its golf balls by the dozen into boxes that are intended to be sold with the golf balls. When ABC receives an order from a retailer it places multiple boxes of golf balls into a larger box for shipment. The box that is sold with the golf balls is eligible for the resale exemption.

However, the larger box used to ship multiple boxes of golf balls is taxable because it is not resold. ABC shall pay sales tax when it purchases the larger box or remit use tax on the purchase price of the box.

Example 2: Same facts as Example 1 except that ABC packages a gross of golf balls, a dozen boxes of a dozen golf balls, for shipment to retailers with the packaging into the larger box occurring before the packages of golf balls first come to rest in finished goods inventory. The larger box, and associated packing materials such as popcorn, styrofoam, and peanuts, are exempt as it was used in the packaging before the golf ball boxes came to rest in finished goods inventory.

(4) Sales of containers to a person, such as a manufacturer, wholesaler, jobber, or retailer, who uses the containers to ship or deliver goods, and retains the ownership or legal right of possession of the containers, are taxable.

(5) Sales or purchases, for a single use only, of bracings, blocking, skidding, shoring, and other materials, commonly known as dunnage are taxable when used in the shipment of a product to a customer.

(6) Deposits on a returnable container for a beverage, or the deposit on a carton or case which is used for returnable beverage containers, are not taxable when sold in conjunction with a sale of a beverage.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.69 Rescinded {#sec-r-205.69 omnilex-key=us-mi-regs-official--dept-treasury--R 205.69}

History

History: 1979 AC.

Mich. Admin. Code R 205.70 Consignments {#sec-r-205.70 omnilex-key=us-mi-regs-official--dept-treasury--R 205.70}

Rule 20. (1) Sales of tangible personal property consigned, delivered, or entrusted to a retailer for the purpose of selling at retail are taxable to the retailer on the total retail sale price without deduction for any expense, such as storage, rental, commission, or repairs. It is immaterial whether the goods are different from those sold in the regular business of the retailer.

(2) Where a retailer selling tangible personal property belonging to another has the right to withhold or claim a portion of the sale price as compensation, the retailer shall include the total amount received from the sale of the goods in its tax return.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.71 Contractors {#sec-r-205.71 omnilex-key=us-mi-regs-official--dept-treasury--R 205.71}

Rule 21. A contractor includes only prime, general, and subcontractors directly engaged in the business of constructing, altering, repairing, or improving real estate for others.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.72 Rescinded {#sec-r-205.72 omnilex-key=us-mi-regs-official--dept-treasury--R 205.72}

History

History: 1979 AC; 2007 AACS; 2023 AACS.

Mich. Admin. Code R 205.73 Rescinded {#sec-r-205.73 omnilex-key=us-mi-regs-official--dept-treasury--R 205.73}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.74 Educational institutions {#sec-r-205.74 omnilex-key=us-mi-regs-official--dept-treasury--R 205.74}

Rule 24. (1) Sales, not for resale, to regularly organized educational institutions not operated for profit are not taxable. "Not operated for profit," as used in this rule, means operated by an entity of government, a regularly organized church, religious or fraternal organization, where the income from the operation does not inure, in whole or in part, to the benefit of individuals or private shareholders, directly or indirectly, and where the activities of the entity are carried on exclusively for the benefit of the public at large and are not limited to the advantage, interests, or benefits of its members or a restricted group.

"Educational institution," as used in this rule, means an institution of learning, organized solely for educational purposes, which maintains a faculty of qualified instructors, and teaches regular, continuous courses of study, and which confers upon students a recognized diploma after completion of a specific curriculum.

(2) Sales of athletic equipment to a regularly organized educational institution for consumption or use are not taxable if the athletic activities are under the management and control of the educational institution and the entire receipts are expended for athletic or educational purposes.

(3) Educational institutions which are not operated for profit, and which operate lunchrooms, cafeterias, or dining rooms for the exclusive use of bona fide enrolled students, are not taxable. Whenever such a lunchroom, school cafeteria, or dining room sells to nonstudents, including teachers, the institution operating it is subject to the tax on those sales.

(4) Sales of class pins, rings, and similar articles are taxable when paid for, directly or indirectly, by the students.

(5) Sales to educational associations, parent teacher organizations, teachers, and other personnel of an educational institution are taxable.

(6) If an exemption is claimed, then at the time of the transfer of the tangible personal property, the seller shall retain, as part of the seller's records, an executed exemption certificate which reads as follows:

CERTIFICATE TO BE EXECUTED WHEN TAX EXEMPT SALE

IS MADE TO AN EXEMPT INSTITUTION OR AGENCY

The undersigned hereby certifies that the item or items being purchased are to be used or consumed in connection with the operation of the exempt institution or agency named in the space provided below and that the consideration for this purchase moves from the funds of the designated institution or agency. In the event this claim is disallowed the transferee promises to reimburse the seller for the amount of tax involved. _________________________________________________ Name of exempt institution or agency Date ___________________________ __________________________________________________ Signature and title of person making certification (7) Schools operating a kindergarten through twelfth grade program are not required to pay tax on the sales of textbooks to enrolled students. Sales of textbooks to nonstudents are taxable. Sales of yearbooks and annuals to both students and nonstudents are taxable.

History

History: 1979 AC.

Mich. Admin. Code R 205.75 Rescinded {#sec-r-205.75 omnilex-key=us-mi-regs-official--dept-treasury--R 205.75}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.76 Employer sales and employer-sponsored incentive programs {#sec-r-205.76 omnilex-key=us-mi-regs-official--dept-treasury--R 205.76}

Rule 26. (1) When an employer sells tangible personal property to employees, allows them to purchase through the organization or to buy from others on discounts available to the employer, or in another manner obtain goods through the employer, the sales are taxable.

(2) An employer shall report and pay tax on sales to employees under subrule (1) of this rule, even if the employer is exempt from tax on the employer’s regular business.

(3) Tax applies on the sale of tangible personal property to an employer who purchases that tangible personal property for free distribution to employees, unless the tangible personal property is otherwise exempt. For example, tax would not apply to the sale of goggles, protective gear, and other safety equipment to a manufacturer for use by employees engaged in an exempt industrial process.

(4) The sale of tangible personal property to an employee by a third-party retailer through an employer-sponsored rewards, performance improvement, or other incentive program is taxable. The tax on any such transaction is imposed on the total value of the points, rewards, or other consideration redeemed in the transaction for the tangible personal property. Tax is not imposed on the redemption of any product that is not tangible personal property.

Example: An employer contracts with a company to operate a points-based incentive plan for employees. Under the plan, employees accumulate points that may be used to redeem certain prizes from the company, including tangible personal property and travel packages. Under the service agreement, the company then bills the employer based upon the value of points redeemed each period. Under this arrangement, tax is imposed on any redemption of tangible personal property by the employee based upon the total value of the points used to redeem that tangible personal property. Tax is not imposed on any redemption of prizes that does not involve tangible personal property, such as travel packages. The payments from the employer to the company for the points redeemed each period relate to the operation of the service agreement and are not taxable.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.77 Fairs, circuses, carnivals, and other public exhibitions {#sec-r-205.77 omnilex-key=us-mi-regs-official--dept-treasury--R 205.77}

Rule 27. Persons operating or sponsoring a fair, circus, carnival, exposition, bazaar, or similar event are liable, as the principal, for the tax upon the sale or use of tangible personal property sold, given as prizes, or otherwise disposed of by a person engaged in business without a sales tax license at the exhibition, unless the tax is paid by the dispenser of the property.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.78 Rescinded {#sec-r-205.78 omnilex-key=us-mi-regs-official--dept-treasury--R 205.78}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.79 Federal and state governments {#sec-r-205.79 omnilex-key=us-mi-regs-official--dept-treasury--R 205.79}

Rule 29. (1) Sales to the United States government, its unincorporated agencies and instrumentalities, any incorporated agency wholly owned by the United States or by a corporation wholly owned by the United States, the American Red Cross and its chapters and branches, and this state and its political subdivisions, departments, and institutions are not taxable if the sales are paid for directly to the seller with government funds.

(2) When the sales are made without the required purchase order form being supplied in advance, the sale is taxable, but the licensee may later take credit for the tax payment upon the licensee’s receipt of purchase order and warrant covering the sales.

(3) Sales to governmental employees for their own consumption or use are taxable.

(4) Sales to and purchases by non-governmental entities doing business on federal areas are taxable, if the sale is not made directly to an exempt federal instrumentality.

(5) A person subject to a tax under this act need not include in the amount of his or her gross proceeds used for the computation of the tax any proceeds of his or her business derived from sales to the United States, its unincorporated agencies and instrumentalities, any incorporated agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States, the American Red Cross and its chapters and branches, and this state or its departments and institutions or any of its political subdivisions.

(6) Sales to and purchases by national banks are taxable.

(7) Sales made by political subdivisions of this state, including counties, municipalities, villages, school districts, water districts, and airport districts, are taxable, unless otherwise specifically exempted.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.80 Florists and nurserymen {#sec-r-205.80 omnilex-key=us-mi-regs-official--dept-treasury--R 205.80}

Rule 30. (1) Flowers, trees, plants, shrubs, seeds, grass, and other similar property are tangible personal property subject to tax. Florists, nurserymen, and other persons engaged in the business of selling such tangible personal property are liable for the tax on their gross sales. The tax applies regardless of where or how the items are grown or produced and regardless of whether sold from a store, curb, market, greenhouse, farm, or other place.

(2) The following apply only to sales made through telegraphic delivery association, wire service, or in similar manner:

(a) On all orders taken by a florist in this state and communicated to a second florist, either located in this state or another state, the florist taking the order is liable for the tax.

(b) Where florists in this state receive instructions from other florists either located in this state or another state for the delivery of flowers, the florist receiving the instructions is not held liable for the tax with respect to any proceeds from the transaction.

(3) A florist or nurseryman that contracts to provide and plant flowers, trees, plants, shrubs, seeds, grass, and other similar property for others is improving real estate and use tax will apply based on the purchase price of the property consumed.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.81 Rescinded {#sec-r-205.81 omnilex-key=us-mi-regs-official--dept-treasury--R 205.81}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.82 Rescinded {#sec-r-205.82 omnilex-key=us-mi-regs-official--dept-treasury--R 205.82}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.83 Rescinded {#sec-r-205.83 omnilex-key=us-mi-regs-official--dept-treasury--R 205.83}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.84 Rescinded {#sec-r-205.84 omnilex-key=us-mi-regs-official--dept-treasury--R 205.84}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.85 Rescinded {#sec-r-205.85 omnilex-key=us-mi-regs-official--dept-treasury--R 205.85}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.86 Rescinded {#sec-r-205.86 omnilex-key=us-mi-regs-official--dept-treasury--R 205.86}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.87 Hospitals {#sec-r-205.87 omnilex-key=us-mi-regs-official--dept-treasury--R 205.87}

Rule 37. (1) Sales, not for resale, of tangible personal property to hospitals not operated for profit, are not taxable. A "hospital," for the purpose of this rule, means only a separately organized institution or establishment, the primary purpose of which is to provide medical, obstetrical, psychiatric, or surgical attention and nursing to persons requiring the same. The sales tax exemption for sales to a hospital which is not operated for profit does not apply to an institution, establishment, or organization that is not a hospital as defined above, notwithstanding the fact that it may not be operated for profit. "Not operated for profit" means that the income or benefit from the operation of the hospital does not inure, in whole or in part, to individuals or private shareholders, directly or indirectly, and that the activities of the entity or agency are carried on exclusively for the benefit of the public at large, and are not limited to the advantage, interests, and benefits of its members or a restricted group.

(2) If an exemption is claimed, then, at the time of transfer of the tangible personal property, the seller shall retain, as part of the seller's records, an executed exemption certificate which reads as follows:

CERTIFICATE TO BE EXECUTED WHEN TAX EXEMPT SALE IS

MADE TO AN EXEMPT INSTITUTION OR AGENCY

Date __________________ _________________________________________________ Name of exempt institution or agency _________________________________________________ Signature and title of person making certification (3) A hospital claiming an exemption shall prove by its articles of association and bylaws that it is not directly or indirectly operated for profit, and that its income and assets may not inure, in whole or in part, directly or indirectly, to the benefit of any individuals, members, or private shareholders whatsoever. A copy of the articles of association and bylaws shall be submitted to the revenue division of the department of treasury for determination as to whether the hospital is entitled to the exemption.

(4) Sales by hospitals which are taxable retail sales include, but are not limited to, the following:

(a) Meals sold to visitors and employees.

(b) Nonprescription drugs, nonprescription medicines, and supplies sold to patients, doctors, employees, and the general public for consumption off the premises.

(5) Sales by hospitals which are not taxable retail sales include, but are not limited to, the following:

(a) Drugs, medicines, insulin, and meals furnished patients and consumed on the premises.

(b) Charges for oxygen, blood plasma, and blood administered to patients.

(d) Charges for X-ray radiation treatments, braces, splints, cases, therapeutic diets, and intravenous solutions furnished patients.

(e) Charges for anesthesia supplies and laboratory tests.

(f) Sales of eyeglasses prescribed or dispensed to correct a person's vision by an ophthalmologist, optometrist, or optician, and repair and replacement parts for such eyeglasses. (See R 205.104.)

(6) Hospitals making sales at retail shall be licensed and shall pay the sales tax, where applicable, whether organized for profit or not.

History

History: 1979 AC.

Mich. Admin. Code R 205.88 Lodging provided by hotels, motels, cabins and camps {#sec-r-205.88 omnilex-key=us-mi-regs-official--dept-treasury--R 205.88}

Rule 38. (1) Use tax is imposed on rental receipts from rooms or lodgings furnished by hotel keepers, motel operators, and other persons furnishing accommodations that are available to the public based on commercial and business enterprise, irrespective of whether membership is required for use of the accommodations.

(2) The following rentals are not taxable:

(a) Rooms or lodging rented for a continuous period of more than 1 month to the same tenant. As used in this subdivision, “1 month” means 30 days or the calendar month of the rental period, whichever is shorter.

(b) Rooms or lodging furnished by hospitals, nursing homes, convalescent homes, and mental institutions or similar institutions dedicated to the care and treatment of the sick under medical supervision.

(c) Rooms or lodging furnished by camps operated by a nonprofit organization and camps licensed under 1973 PA 116, MCL 722.111 to 722.128.

(3) The following rentals are exempt from the tax:

(a) Rooms or lodging furnished directly to the United States government, its unincorporated agencies or instrumentalities, any incorporated agency wholly owned by the United States or by a corporation wholly owned by the United States, the American Red Cross or its chapters or branches, if paid for directly to the seller with government funds.

(b) Rooms or lodging furnished directly to this state or its political subdivisions, departments, or institutions, if paid for directly to the seller with government funds.

(c) Rooms or lodging furnished directly to nonprofit organizations, as provided under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.89 Rescinded {#sec-r-205.89 omnilex-key=us-mi-regs-official--dept-treasury--R 205.89}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.90 Rescinded {#sec-r-205.90 omnilex-key=us-mi-regs-official--dept-treasury--R 205.90}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.91 Rescinded {#sec-r-205.91 omnilex-key=us-mi-regs-official--dept-treasury--R 205.91}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.92 Rescinded {#sec-r-205.92 omnilex-key=us-mi-regs-official--dept-treasury--R 205.92}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.93 Sales and breeding of animals {#sec-r-205.93 omnilex-key=us-mi-regs-official--dept-treasury--R 205.93}

Rule 43. (1) Unless otherwise exempt, sales of horses, dogs, cats, birds, goldfish, guinea pigs, reptiles, and other animals, including household pets, are taxable sales of tangible personal property.

(2) Persons that breed and sell animals as pets, including those who engage in the activities merely as a hobby or pastime, are engaged in the business of making retail sales and are required to pay sales tax on all sales of animals not for resale. While a single, isolated sale of an animal would not be subject to tax, a breeder who advertises or offers animals for sale at any time and in any manner, including on the internet, for purposes of repeated sales is determined to be regularly engaged in the business of making retail sales, and their sales are not considered casual or isolated, even if they are few or infrequent as described under R 205.13.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.94 Labels, tags, and other property included in or affixed to containers {#sec-r-205.94 omnilex-key=us-mi-regs-official--dept-treasury--R 205.94}

Rule 44. (1) Sales of labels, tags, or nameplates to persons using them in rendering services or for personal or business use or which do not accompany products sold, are sales for consumption and are taxable.

(2) Sales of labels, tags, or nameplates is not subject to tax if the labels, tags, or nameplates will be affixed to tangible personal property that will be sold at retail or affixed to the containers sold with the property.

(3) Sales of labels to persons retaining title to containers to which the labels are affixed are not sales for resale but are sales for consumption and subject to tax.

(4) Sales of manuals, pamphlets, warranty cards, and other similar tangible personal property that is included in the container or packaged with a product that is sold at retail is not subject to tax.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.95 Leased departments {#sec-r-205.95 omnilex-key=us-mi-regs-official--dept-treasury--R 205.95}

Rule 45. (1) Where an established business leases a portion of its shelves, counters, or floor space to other persons selling tangible personal property to consumers, the sales of tangible personal property by the leased departments shall be included in the tax return of the lessor, who shall pay the tax thereon to the state. A lessor not otherwise subject to the tax shall obtain a license in behalf of the lessee.

(2) When the lessee conducts the leased department in the same manner as an established like business, and gives evidence to the public that he is conducting his department separately from the lessor's business, or if separate business records are kept, the lessee may apply for a sales tax license, if the lessee keeps separate records of his business and files separate returns. The lessor shall be responsible for the tax unless the lessee obtains such a license.

(3) The word "lease," as used in this rule, includes permitted occupancy, regardless of consideration. The liquor commission restrains persons licensed by the commission from subleasing or surrendering any part of the business conducted at or on the licensed premises.

History

History: 1979 AC.

Mich. Admin. Code R 205.96 Rescinded {#sec-r-205.96 omnilex-key=us-mi-regs-official--dept-treasury--R 205.96}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.97 Rescinded {#sec-r-205.97 omnilex-key=us-mi-regs-official--dept-treasury--R 205.97}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.98 Sales made in transit {#sec-r-205.98 omnilex-key=us-mi-regs-official--dept-treasury--R 205.98}

Rule 48. Prepared food or other tangible personal property sold or otherwise provided on any form of transportation, including, but not limited to, a railcar, watercraft, or airplane while operating in this state, or upon this state’s waters, is subject to tax as described under R 205.136.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.99 Rescinded {#sec-r-205.99 omnilex-key=us-mi-regs-official--dept-treasury--R 205.99}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.100 Rescinded {#sec-r-205.100 omnilex-key=us-mi-regs-official--dept-treasury--R 205.100}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.101 Rescinded {#sec-r-205.101 omnilex-key=us-mi-regs-official--dept-treasury--R 205.101}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.102 Rescinded {#sec-r-205.102 omnilex-key=us-mi-regs-official--dept-treasury--R 205.102}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.103 Rescinded {#sec-r-205.103 omnilex-key=us-mi-regs-official--dept-treasury--R 205.103}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.104 Optometrists, ophthalmologists, opticians, and optical supply houses {#sec-r-205.104 omnilex-key=us-mi-regs-official--dept-treasury--R 205.104}

Rule 54. (1) Licensed optometrists and ophthalmologists that examine, prescribe, and dispense eyeglasses and contact lenses are considered, for sales tax purposes, to be making retail sales. A sales tax license is required for this activity.

(2) Eyeglasses dispensed to a patient by an ophthalmologist, optometrist, or optician pursuant to a prescription to correct that patient’s vision, and repair and replacement parts for the eyeglasses, are exempt. Contact lenses are taxable. If necessary to complete the sale of contact lenses, examination charges or other service charges are taxable, even if billed separately.

(3) Sales by opticians and optical supply houses to optometrists and ophthalmologists are exempt when sold for resale, provided the optometrist or ophthalmologist is properly licensed as a retailer as noted in subrule (1) of this rule.

(4) Physicians acting in the capacity of optometrists or ophthalmologists are subject to this rule, see R 205.111.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.105 Rescinded {#sec-r-205.105 omnilex-key=us-mi-regs-official--dept-treasury--R 205.105}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.106 Rescinded {#sec-r-205.106 omnilex-key=us-mi-regs-official--dept-treasury--R 205.106}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.107 Rescinded {#sec-r-205.107 omnilex-key=us-mi-regs-official--dept-treasury--R 205.107}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.108 Postage stamps {#sec-r-205.108 omnilex-key=us-mi-regs-official--dept-treasury--R 205.108}

Rule 58. (1) Sales by the United States Postal Service or by an approved postal provider of uncancelled United States postage valid for transportation of mail are not taxable. Sales of these items made by other sellers are subject to tax. Sales of cancelled domestic or foreign stamps or of uncancelled foreign postage stamps not valid for transportation of mail in the United States are taxable.

(2) As used in this rule, “approved postal provider” means a business that has entered into a contractual agreement with the United States Postal Service to provide authorized postal services, including the sale of postage stamps, to the public.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.109 Photographers and photo processors {#sec-r-205.109 omnilex-key=us-mi-regs-official--dept-treasury--R 205.109}

Rule 59. (1) If a photographer’s sitting fee or session fee is part of a package that includes tangible personal property, such as prints, the total amount charged for the package is taxable, even if the packaged parts are separately itemized on the invoice. If a sitting fee or session fee is charged as a separate transaction, and the customer is not required to also purchase prints or other products, then the sitting fee or session fee is not taxable.

(2) The development and processing of photographic images, whether using a physical or digital process, together with the production of prints, film strips, slides, or other tangible personal property, are subject to sales tax on the total price charged to the customer. Whether equipment, materials, and supplies purchased for use in the creation and development of photographic images are used in industrial processing and are therefore exempt from tax, depends upon the process used to develop the photographic images. Equipment, materials, and supplies purchased for use in the creation, development, and sale of digital products, including digital photographic images, are not used in industrial processing, and are taxable. However, equipment, materials, and supplies purchased for use in the physical processing of non-digital photographic images, such as the development of exposed film or film negatives, may be used in industrial processing and are exempt from tax, as described in section 4t of the General Sales Tax Act, 1933 PA 167, MCL 205.54t and section 4o of the Use Tax Act, 1937 PA 94, MCL 205.94o.

(3) Coloring, tinting, retouching, restoration, and similar services, if performed on photographs or images owned by the customer, are nontaxable. If the services are performed as part of a package that includes tangible personal property, or in connection with the photographer’s creation of photographic images to be sold as prints or other tangible personal property, the total amount charged to the customer is taxable.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.110 Rescinded {#sec-r-205.110 omnilex-key=us-mi-regs-official--dept-treasury--R 205.110}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.111 Physicians, surgeons, dentists, veterinarians, osteopaths, and other health professionals {#sec-r-205.111 omnilex-key=us-mi-regs-official--dept-treasury--R 205.111}

Rule 61. (1) Physicians, surgeons, dentists, veterinarians, osteopaths or other health professionals not otherwise specifically provided for in these rules render nontaxable services.

(2) Unless otherwise exempt, sales of drugs, medications, instruments, equipment, and other tangible personal property to persons for use in rendering professional services or for use within their offices, laboratories, or other similar quarters are taxable.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.112 Premiums and gifts {#sec-r-205.112 omnilex-key=us-mi-regs-official--dept-treasury--R 205.112}

Rule 62. (1) Unless an exemption applies, donors of tangible personal property are regarded as consumers of that tangible personal property and the sale of that property to them is taxable. Similarly, the sale to an employer of tangible personal property for free distribution to its employees may also be taxable, under R 205.76. The sale of goods to be given away for advertising purposes is also taxable.

(2) If goods purchased for resale are subsequently given away or used by the retailer, the retailer is liable for use tax on the purchase price of the goods, unless otherwise exempt.

(3) The redemption of scrips, whether in the form of punch cards, certificates, box tops, tokens, proofs of purchase, points, or similar promotional consideration for premiums is a taxable sale at retail and sales tax must be paid on the redemption value of the scrips. Sales tax does not apply if the consideration is redeemed for cash rather than for tangible personal property. Premiums acquired for resale purposes are not subject to sales or use tax.

(4) Purchasers of tangible personal property to be awarded as prizes, the winning of which depends upon chance or skill, are regarded as consumers of that property and the tax applies to sales of the property to them. Similarly, purchasers of tangible personal property for use in games, promotions, and similar operations, in which each customer receives some merchandise or prize regardless of skill or chance, are regarded as the consumers of that property and the tax applies to sales of the property to them.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.113 Rescinded {#sec-r-205.113 omnilex-key=us-mi-regs-official--dept-treasury--R 205.113}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.114 Rescinded {#sec-r-205.114 omnilex-key=us-mi-regs-official--dept-treasury--R 205.114}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.115 Rescinded {#sec-r-205.115 omnilex-key=us-mi-regs-official--dept-treasury--R 205.115}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.116 Rescinded {#sec-r-205.116 omnilex-key=us-mi-regs-official--dept-treasury--R 205.116}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.117 Rescinded {#sec-r-205.117 omnilex-key=us-mi-regs-official--dept-treasury--R 205.117}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.118 Rescinded {#sec-r-205.118 omnilex-key=us-mi-regs-official--dept-treasury--R 205.118}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.119 Rescinded {#sec-r-205.119 omnilex-key=us-mi-regs-official--dept-treasury--R 205.119}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.120 Rescinded {#sec-r-205.120 omnilex-key=us-mi-regs-official--dept-treasury--R 205.120}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.121 Rescinded {#sec-r-205.121 omnilex-key=us-mi-regs-official--dept-treasury--R 205.121}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.122 Rescinded {#sec-r-205.122 omnilex-key=us-mi-regs-official--dept-treasury--R 205.122}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.123 Rescinded {#sec-r-205.123 omnilex-key=us-mi-regs-official--dept-treasury--R 205.123}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.124 Rescinded {#sec-r-205.124 omnilex-key=us-mi-regs-official--dept-treasury--R 205.124}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.125 Rescinded {#sec-r-205.125 omnilex-key=us-mi-regs-official--dept-treasury--R 205.125}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.126 Rescinded {#sec-r-205.126 omnilex-key=us-mi-regs-official--dept-treasury--R 205.126}

History

History: 1979 AC; 2007 AACS; 2023 AACS.

Mich. Admin. Code R 205.127 Water {#sec-r-205.127 omnilex-key=us-mi-regs-official--dept-treasury--R 205.127}

Rule 77. (1) Sales of water are taxable except when delivered through water mains, sold in bulk tanks in quantities of not less than 500 gallons, sold as bottled water, or sold for an exempt use.

(2) The sale of equipment, tools, machinery, pipes, fittings and supplies to a person for consumption or use in distributing and carrying water is taxable. Sales of tangible personal property for installation as a component part of a water pollution control facility are exempt if the facility was issued a tax exemption certificate under part 37 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.3701 to 324.3708.

(3) As used in this rule, “bottled water” means water that is placed in a safety sealed container or package for human consumption, including water that is delivered to the buyer in a reusable container that is not sold with the water. Bottled water is calorie free and does not contain sweeteners or other additives except that it may contain 1 or more of the following:

(a) Antimicrobial agents.

(b) Fluoride.

(d) Vitamins, minerals, and electrolytes.

(e) Oxygen.

(f) Preservatives.

(g) Only those flavors, extracts, or essences derived from a spice or fruit.

History

History: 1979 AC; 2007 AACS; 2020 MR 24, Eff. Dec 22, 2020.

Mich. Admin. Code R 205.128 Federal and state taxes {#sec-r-205.128 omnilex-key=us-mi-regs-official--dept-treasury--R 205.128}

Rule 78. (1) Federal manufacturers' excise taxes imposed on the following products are not deductible from a retailer's gross proceeds in computing sales or use taxes: Trucks, buses, tractors, accessories and similar products, tires and tubes, gasoline and lubricating oil, fishing equipment, and firearms.

(2) The federal retailers' excise taxes imposed on the following products are deductible from a retailer's gross proceeds in computing sales or use taxes: Diesel fuel, liquid petroleum gas, and other special motor fuels.

(3) The federal communications tax imposed on persons using communication services is not part of the tax base for computing the use tax on such services.

(4) Michigan taxes which are deductible when included in gross are as follows:

(a) Motor fuel retailers may deduct from gross proceeds on their sales tax return the amount of Michigan motor fuel tax paid to the state or to the distributor.

(b) The Michigan cigarette tax may be deducted only by taxpayers engaged in the business of selling cigarettes at retail if the seller is not enriched by collecting the sales tax on the full selling price.

History

History: 1979 AC.

Mich. Admin. Code R 205.129 Rescinded {#sec-r-205.129 omnilex-key=us-mi-regs-official--dept-treasury--R 205.129}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.130 Rescinded {#sec-r-205.130 omnilex-key=us-mi-regs-official--dept-treasury--R 205.130}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.131 Rescinded {#sec-r-205.131 omnilex-key=us-mi-regs-official--dept-treasury--R 205.131}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.132 Lease or rental {#sec-r-205.132 omnilex-key=us-mi-regs-official--dept-treasury--R 205.132}

Rule 82. (1) A lessor is a person engaged in the business of renting or leasing tangible personal property.

(2) The terms “lease” and “rental” have the same meaning and may be used interchangeably. For agreements entered into after September 1, 2004, a lease or rental means either of the following:

(a) Any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration and may include future options to purchase or extend.

(b) An agreement covering motor vehicles or trailers if the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property, as that term is defined in 26 USC 7701(h)(1).

(3) A lease or rental does not include any of the following:

(a) A transfer of possession or control of tangible personal property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments.

(b) A transfer of possession or control of tangible personal property under an agreement requiring transfer of title upon completion of the required payments and payment of an option price that does not exceed $100.00 or 1% of the total required payments, whichever is greater.

(c) Except as provided in subrule (4) of this rule, the provision of tangible personal property along with an operator for a fixed or indeterminate period of time, where that operator is necessary for the equipment to perform as designed. To be necessary, an operator shall do more than maintain, inspect, or set up the tangible personal property.

(4) Beginning March 29, 2019, a lease also includes the transfer of possession or control for consideration, for a fixed or indeterminate term and including future options to purchase or extend, of a school bus primarily used in the performance of a contract entered into with an authorized representative of a school for the transportation of preprimary, primary, or secondary school pupils to or from a school or school-related events authorized by the administration of the school. A transaction described in this subrule qualifies as a lease even if the operator of the school bus is also provided under the lease.

(5) A lessor may elect to pay use tax on the rental receipts for tangible personal property that would otherwise be taxed on the full cost at the time of purchase. The election to pay on rental receipts is made on each item of tangible personal property. The election is made by claiming an exemption from sales or use tax at the time of purchase and paying use tax on the rental receipts.

(6) A lessor remitting tax on rental receipts must hold a sales tax license, or register under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111. For aircraft, a person shall register for use tax with the department of treasury by the earlier of the date set for the first payment of use tax under the lease or rental agreement or 90 days after the lessor first brings the aircraft into this state.

(7) The remittance of use tax on rental receipts is the obligation of the lessor. If the lessor places the economic burden of the tax on the lessee, the charge must be separately itemized.

(8) A taxpayer that makes the lessor election will lose that election if tangible personal property is converted to personal use. Tax is owed at the time of conversion on the original purchase price of the property.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.133 Rescinded {#sec-r-205.133 omnilex-key=us-mi-regs-official--dept-treasury--R 205.133}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.134 Rescinded {#sec-r-205.134 omnilex-key=us-mi-regs-official--dept-treasury--R 205.134}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.135 Rescinded {#sec-r-205.135 omnilex-key=us-mi-regs-official--dept-treasury--R 205.135}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.136 Rescinded {#sec-r-205.136 omnilex-key=us-mi-regs-official--dept-treasury--R 205.136}

History

History: 1979 AC; 2007 AACS; 2013 AACS; 2024 MR 17, Eff. September 17, 2024

Mich. Admin. Code R 205.137 Air and water pollution control facility {#sec-r-205.137 omnilex-key=us-mi-regs-official--dept-treasury--R 205.137}

Rule 87. (1) Tangible personal property purchased for installation as a component part of a water pollution control facility or an air pollution control facility for which a tax exemption certificate is issued by the state tax commission is exempt from sales and use tax. The exemption is effective for dates on and after the date the certificate is issued by the state tax commission. If a tax exemption certificate previously issued is revoked by the state tax commission, the exemption may no longer be claimed beginning on the effective date of the revocation.

(2) When sales or use tax has been paid on tangible personal property, which later qualifies for exemption as a result of obtaining a certificate of exemption from the state tax commission, a refund may be requested by the purchaser upon submission of both of the following documents to the department of treasury:

(a) A copy of the exemption certificate issued by the tax commission indicating the approved cost of the tangible personal property installed and entitled to exemption.

(b) A copy of the seller’s invoice showing the name and address of the seller, identification of purchaser, identification of the items purchased, the date of purchase, and amount of tax paid to seller.

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.138 Rescinded {#sec-r-205.138 omnilex-key=us-mi-regs-official--dept-treasury--R 205.138}

History

History: 1979 AC; 1996 AACS; 1997 AACS.

Mich. Admin. Code R 205.139 Rescinded {#sec-r-205.139 omnilex-key=us-mi-regs-official--dept-treasury--R 205.139}

History

History: 1979 AC; 2023 AACS.

Mich. Admin. Code R 205.140 Nonprofit entities {#sec-r-205.140 omnilex-key=us-mi-regs-official--dept-treasury--R 205.140}

Rule 90. (1) Sales of tangible personal property and services to properly qualified nonprofit entities for their own use and consumption, but not for resale, are exempt.

(2) The claimant shall meet the following requirements for exemption:

(a) Qualify as a school, hospital, home for the care and maintenance of children or aged persons, and other health, welfare, educational, charitable, or benevolent institutions and agencies.

(b) Be operated by an entity of government, a regularly organized church, religious or fraternal organization, a veterans organization, or a corporation incorporated under laws of the state.

(c) The income or benefit from the operation shall not inure, in whole or in part, to any individuals or private shareholders, directly or indirectly.

(d) The activities of the entity or agency shall be carried on exclusively for the benefit of the public at large and not limited to the advantage, interests, and benefits of its members or any restricted group.

(3) When an exemption is claimed, the seller, at the time of the transfer of the tangible property or services, shall retain, as part of the seller's records, an executed exemption certificate which reads as follows:

CERTIFICATE IS TO BE EXECUTED WHEN TAX EXEMPT SALE

IS MADE TO AN EXEMPT INSTITUTION OR AGENCY

Date __________________ _________________________________________________ Name of exempt institution or agency _________________________________________________ Signature and title of person making certification (4) The department does not issue so-called "exemption numbers." If there is some question regarding exemption status, the claimant may contact the department for a ruling.

(5) Nonprofit entities engaged in a retail sales activity of any kind are required to have a sales tax license. The fact that the receipts or profits from such sales may be used for otherwise exempt purposes is not material.

History

History: 1979 AC.

Mich. Admin. Code R 205.141 Marihuana {#sec-r-205.141 omnilex-key=us-mi-regs-official--dept-treasury--R 205.141}

Rule 91. (1) All sales of marihuana, whether legal or illegal, are subject to the general sales tax act, 1933 PA 167, MCL 205.51 to 205.78, based on the “sales price” of the property as defined by section 1(1)(d) of the general sales tax act, 1933 PA 167, MCL 205.51(1)(d). The taxable “sales price” of marihuana includes the 10% excise tax levied under section 13(1) of the Michigan regulation and taxation of marihuana act, 2018 IL 1, MCL 333.27963(1).

Example: ABC Inc. is licensed to sell adult-use marihuana as a marihuana retailer under the Michigan regulation and taxation of marihuana act, 2018 IL 1, MCL 333.27951 to 333.27967. ABC sells marihuana to customer for $100.00. ABC is liable for $10.00 of marihuana excise tax. ABC is also liable for sales tax on this transaction. The amount of sales tax due is 6% of $110.00 or $6.60.

(2) The use, storage, or consumption of marihuana in this state is subject to the use tax act, 1937 PA 94, MCL 205.91 to 205.111.

(3) For purposes of the general sales tax act and the use tax act, marihuana, in any form, does not constitute the exempt sale, use, storage, or consumption of food or prescription drugs under MCL 205.54g or 205.94d.

History

History: 2020 AACS.

Mich. Admin. Code R 205.142 Exemption for Diesel Fuel Used in Certain Vehicles Operated for Hire {#sec-r-205.142 omnilex-key=us-mi-regs-official--dept-treasury--R 205.142}

Rule 92. Sales or use tax does not apply on retail sales or purchases of diesel fuel for use in passenger vehicles of a capacity of 10 or more operated for hire under a certificate of authority issued by the state transportation department. As used in this rule, “diesel fuel” means that term as defined in section 2 of the motor fuel tax act, 2000 PA 403, MCL 207.1002.

History

History: 2023 AACS.

R 205.150 to R 205.151 Taxation of Marihuana Sales

Mich. Admin. Code R 205.150 “Sales price” definition {#sec-r-205.150 omnilex-key=us-mi-regs-official--dept-treasury--R 205.150}

DEPARTMENT OF TREASURY

STATE TREASURER

TAXATION OF ADULT-USE (RECREATIONAL) MARIHUANA RULES

(By authority conferred on the department of treasury by section 3 of 1941 PA 122, MCL 205.3, and by section 13 of the Michigan regulation and taxation of marihuana act, 2018 IL 1, MCL 333.27963)

TAXATION OF ADULT-USE (RECREATIONAL) MARIHUANA RULES

Rule 150. As used in these rules, “sales price” means the total amount of consideration, including cash, credit, property, services, or any other valuable consideration given in exchange for marihuana.

History

History: 2020 MR 3, Eff. Feb. 6, 2020.

Mich. Admin. Code R 205.151 “Bundled transactions” {#sec-r-205.151 omnilex-key=us-mi-regs-official--dept-treasury--R 205.151}

Rule 151. (1) If property or services other than marihuana are bundled and sold in a single transaction in violation of section 13(2) of the Michigan regulation and taxation of marihuana act, 2018 IL 1, MCL 333.27963(2), the entire sales price of the transaction, including the property or services that do not constitute marihuana, is subject to the tax imposed by section 13(1) of the Michigan regulation and taxation of marihuana act, 2018 IL 1, MCL 333.27963(1).

(2) As used in this rule, “bundled transaction” means the retail sale of marihuana together with 1 or more other products or services that includes both of the following:

(a) The products or services are distinct and identifiable.

(b) The marihuana and the products or services, or both, are sold for 1 non-itemized price.

(3) A retail sale for which an invoice is given that separately itemizes marihuana from non-marihuana property or services does not constitute a “bundled transaction.”

History

History: 2020 MR 3, Eff. Feb. 6, 2020.

R 205.401 to R 205.416 Cigarette Tax

Mich. Admin. Code R 205.401 Rescinded {#sec-r-205.401 omnilex-key=us-mi-regs-official--dept-treasury--R 205.401}

DEPARTMENT OF TREASURY

BUREAU OF REVENUE

CIGARETTE TAX

(By authority conferred on the revenue division of the department of treasury by section 2 of Act No. 265 of 1947, as amended, being S205.502 of the Michigan Compiled Laws)

History

History: 1979 AC; 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.402 Licensing; applications; fees {#sec-r-205.402 omnilex-key=us-mi-regs-official--dept-treasury--R 205.402}

Rule 2. (1) To obtain a license, a manufacturer, wholesaler, secondary wholesaler, vending machine operator, unclassified acquirer, transportation company, or transporter shall file with the department a verified application upon a form prescribed and furnished by the department. These applications may be obtained at the Michigan Department of Treasury, Treasury Building, Lansing, Michigan 48922.

(2) The application of a manufacturer, wholesaler, secondary wholesaler, or unclassified acquirer shall contain all of the following information:

(a) The name of the owner.

(b) The name under which the applicant intends to transact business.

(d) If a corporation, the corporate name, the state where incorporated, the date incorporated, and the name of its officers and directors.

(e) If a foreign corporation, the name and address of its resident agent.

(f) The location or locations of the place or places of business.

(g) The date such business was established.

(h) The percentage of cigarettes purchased to be sold for resale.

(i) Any other information the department may require.

(3) The application for a vending machine operator license shall contain all of the following information:

(a) The name of the owner.

(b) The name under which the applicant intends to transact business.

(d) If a corporation, the corporate name, the state where incorporated, the date incorporated, and the name and address of its resident agent.

(e) The number of vending machines operated.

(f) A listing of locations at which vending machines are placed.

(g) Any other information the department may require.

(4) The application for a transporter license shall contain all of the following information:

(a) The name of the owner.

(b) The name under which the applicant intends to transact business.

(d) If a corporation, the corporate name, the state where incorporated, the date incorporated, and the names and addresses of its officers and directors.

(e) If a foreign corporation, the name and address of its resident agent.

(f) Any other information the department may require.

(5) The application for a transportation company license shall contain all of the following information:

(a) The name of the owner.

(b) The name under which the applicant intends to transact business.

(d) If a corporation, the corporate name, the state where incorporated, the date incorporated, and the names and addresses of its officers and directors.

(e) If a foreign corporation, the name and address of its resident agent.

(f) A list of persons, containing names and addresses, from whom cigarettes are purchased.

(g) Any other information the department may require.

(6) The annual fee for a manufacturer or wholesaler license shall be $100.00. The fee for each additional location shall be $25.00.

(7) The annual fee for a secondary wholesaler license shall be $25.00.The fee for each additional location shall be $6.25.

(8) The following fees shall be charged to persons qualifying as unclassified acquirers:

(a) State of Michigan No fee (b) Retail importer or mail order buyer $10.00 (c) Vending machine operator buying direct from a manufacturer 100.00 (d) Manufacturer 100.00 (9) The annual fees for a vending machine license shall be as follows:

(a) 1 machine $5.00 (b) 2 machines 10.00 (c) 3 machines 15.00 (d) 4 to 24 machines, inclusive 25.00 (e) 25 to 49 machines, inclusive 50.00 (f) 50 or more machines 100.00 The fee for each additional location shall be 1/4 of the fee prescribed above.

(10) The annual fee for a transportation company license shall be $5.00.

(11) The annual fee for a transporter license shall be $50.00.

History

History: 1980 AACS.

Mich. Admin. Code R 205.403 Surety bond; financial statement {#sec-r-205.403 omnilex-key=us-mi-regs-official--dept-treasury--R 205.403}

Rule 3. (1) If an applicant for a license cannot satisfy the department as to the applicant's financial responsibility, the department may require the applicant to furnish a surety bond, payable to the "State of Michigan," in such amount as the department may determine, conditioned upon payment of the tax as specified by section 7 of the act. The department may also require any licensee to file a financial statement with the department showing all assets and liabilities, together with any other financial information the department may prescribe.

(2) If there is a change of corporate ownership or control, a new financial statement may be required.

History

History: 1980 AACS.

Mich. Admin. Code R 205.404 Rescinded {#sec-r-205.404 omnilex-key=us-mi-regs-official--dept-treasury--R 205.404}

History

History: 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.405 License; suspension; revocation; refusal to issue; hearing; appeal {#sec-r-205.405 omnilex-key=us-mi-regs-official--dept-treasury--R 205.405}

Rule 5. (1) The department may suspend, revoke, or refuse to issue any license required under the act for failure of the licensee to comply with any provisions of this act, or for any other good cause, after notice and departmental hearing. Good cause may be, but is not limited to, any of the following items:

(a) Failure to file return.

(b) Failure to pay tax.

(d) Failure to issue proper invoices as in R 205.406.

(e) Failure to identify vending machines with a marker.

(f) Failure to have prescribed stamp on half-cases of cigarettes as required in R 205.408.

(g) Failure to file bond if required under R 205.403.

(2) After such departmental hearing, a person aggrieved by a suspension, revocation, or refusal to issue a license may appeal to the state board of tax appeals as provided in Act No. 122 of the Public Acts of 1941, as amended, being S205.1 et seq. of the Michigan Compiled Laws. Contact the State Board of Tax Appeals, Michigan Department of Treasury, Lansing, Michigan 48922, for rules of procedure. Any person aggrieved shall have the right to appeal to the courts of the state as provided by law.

History

History: 1980 AACS.

Mich. Admin. Code R 205.406 Rescinded {#sec-r-205.406 omnilex-key=us-mi-regs-official--dept-treasury--R 205.406}

History

History: 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.407 Inspection of books and records; entry upon premises to inspect equipment, inventories, and storage areas {#sec-r-205.407 omnilex-key=us-mi-regs-official--dept-treasury--R 205.407}

Rule 7. (1) The department, or its duly authorized agent, may examine the books, records, and papers of any licensee, retailer, common carrier, or warehouseman pertaining to the records of cigarettes received, purchased, used, shipped, or delivered, as the case may be, to verify the truth and accuracy of any statement, report, or return.

(2) The department, or its duly authorized agent, may enter in and upon the premises of any licensee or retailer, as defined in these rules, at all reasonable times for the purpose of inspecting stamping equipment, cigarette inventories, and storage areas, together with all pertinent records and papers for the reasonable administration of the act.

History

History: 1980 AACS.

Mich. Admin. Code R 205.408 Rescinded {#sec-r-205.408 omnilex-key=us-mi-regs-official--dept-treasury--R 205.408}

History

History: 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.409 Shipping case identification {#sec-r-205.409 omnilex-key=us-mi-regs-official--dept-treasury--R 205.409}

Rule 9. (1) The first purchaser of cigarettes in this state is required to identify each original manufacturer's shipping case of cigarettes purchased with his name and address and an impression of a seal prescribed by the department of treasury.

(2) The seal has been designed by the department and it includes the license number assigned to the first purchaser. The name and address of the original purchaser and the seal referred to in this rule shall be incorporated in a rubber stamp which shall be obtained by each person licensed to make purchases of cigarettes from unlicensed sources.

(3) The stamp shall be obtained from a stamp manufacturer authorized by the department and may be manufactured only on the written authority of the department.

(4) A manufacturer of stamps desiring to manufacture or reproduce such stamps may receive authorization upon written application and approval by the department. A list of authorized manufacturers shall be supplied to cigarette licensees upon request.

(5) The stamp manufacturer shall obtain verification from the department that the purchaser is a properly qualified licensee. The department shall advise the manufacturer of the license number to be incorporated in the seal.

(6) The name and address of the licensee and the prescribed seal shall appear on each shipping case so that when a manufacturer's shipping case is split, the name, address, and seal shall appear in its entirety on each half of the case.

(7) Cigarettes in cases not stamped as provided in these rules shall be subject to seizure and confiscation pursuant to section 9 of the act.

History

History: 1980 AACS.

Mich. Admin. Code R 205.410 Rescinded {#sec-r-205.410 omnilex-key=us-mi-regs-official--dept-treasury--R 205.410}

History

History: 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.411 Rescinded {#sec-r-205.411 omnilex-key=us-mi-regs-official--dept-treasury--R 205.411}

History

History: 1979 AC; 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.412 Rescinded {#sec-r-205.412 omnilex-key=us-mi-regs-official--dept-treasury--R 205.412}

History

History: 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.413 Rescinded {#sec-r-205.413 omnilex-key=us-mi-regs-official--dept-treasury--R 205.413}

History

History: 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.414 Rescinded {#sec-r-205.414 omnilex-key=us-mi-regs-official--dept-treasury--R 205.414}

History

History: 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.415 Rescinded {#sec-r-205.415 omnilex-key=us-mi-regs-official--dept-treasury--R 205.415}

History

History: 1980 AACS; 1998 - 2000 AACS.

Mich. Admin. Code R 205.416 Enforcement {#sec-r-205.416 omnilex-key=us-mi-regs-official--dept-treasury--R 205.416}

Rule 16. The state police and all local police authorities shall have the authority to enforce the provisions of the act.

History

History: 1980 AACS.

R 205.451 to R 205.455 Tobacco Products Tax

Mich. Admin. Code R 205.451 Definitions {#sec-r-205.451 omnilex-key=us-mi-regs-official--dept-treasury--R 205.451}

DEPARTMENT OF TREASURY

BUREAU OF REVENUE

TOBACCO PRODUCTS TAX

(By authority conferred on the revenue commissioner by section 13(2) Act No.327 of the Public Acts of 1993, as amended, being §205.433(2) of the Michigan Compiled Laws)

Rule 1. As used in these rules:

(a) "Act" means Act No. 327 of the Public Acts of 1993, as amended, being §205.421 et seq. of the Michigan Compiled Laws.

(b) "Licensed wholesaler or unclassified acquirer" means a wholesaler or unclassified acquirer who possesses such license issued under the act by the department during the current licensing year and whose license is not suspended or revoked by the department.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.452 Prescribed markings on cigarette boxes and shipping cases; resale and refund of returned cigarettes {#sec-r-205.452 omnilex-key=us-mi-regs-official--dept-treasury--R 205.452}

Rule 2. (1) Licensed wholesalers and unclassified acquirers shall submit stamp orders on the form prescribed by the department. The department shall establish guidelines for ordering and the timing of shipments, and shall determine the mode of shipment of an order. On the day of shipment, the department shall fax notice of shipment to the wholesaler or unclassified acquirer.

(2) Stamps given to a wholesaler or unclassified acquirer are on assignment from the department to the specific wholesaler or unclassified acquirer.

(3) A licensed wholesaler of cigarettes who receives cigarettes from the manufacturer at a Michigan location from which deliveries to other states will be made will report all cigarettes received into its unstamped Michigan inventory. When cigarettes destined for another state are pulled from inventory for stamping and export, the cigarettes will be reported as a deduction on schedule C of the multiple schedule. Such licensed wholesaler may have in its possession stamps from other states as needed to perform its multistate stamping duties.

The stamps for other states are to be segregated from Michigan stamps, and the wholesaler must be able to provide documentation to the department and its representatives of the unaffixed stamps that are in the wholesaler's possession.

(4) A wholesaler or unclassified acquirer who possesses unaffixed stamps at the time its license is revoked or expired or at the time it discontinues the business of selling cigarettes shall return all unaffixed stamps to the department within 14 calendar days of the date of license revocation, license expiration, or discontinuance of its business.

(5) Beginning September 1, 1998, the refund to wholesalers and unclassified acquirers of the tax on cigarettes returned to manufacturers is allowed if all of the following conditions are met:

(a) A cigarette pack returned to a wholesaler or unclassified acquirer by a secondary wholesaler, retailer, or vending machine operator before September 1, 1998, for return to a manufacturer shall be kept separate from cigarettes returned to wholesalers on or after September 1, 1998.

(b) A cigarette pack returned to a wholesaler or unclassified acquirer by a secondary wholesaler, retailer, or vending machine operator on or after September 1, 1998, for return to the manufacturer must bear the stamp prescribed by the department in order to qualify for refund or credit of the tax paid.

(c) A refund claim for cigarettes held for return as of September 1, 1998, shall be submitted separately from any claims for cigarettes received for return on or after September 1, 1998.

(6) A wholesaler or unclassified acquirer is liable for the amount of the face value of any stamps which are lost through negligence, theft, or mysterious disappearance or which are not otherwise accounted for in the records of the wholesaler or unclassified acquirer. The tax due shall be less the percentage compensation under section 7(3) of the act. The tax due shall be assessed in accordance with the provisions of Act No. 122 of the Public Acts of 1941, as amended, being §205.1 et seq. of the Michigan Compiled Laws.If identifiable stamps that have been lost through negligence, theft, or mysterious disappearance are recovered within 4 years of the date of mailing by the department, then credit will be given against the tax due, less the percentage compensation under section 7(3) of the act, if adequate proofs are submitted to the department.

(7) Relating to the tax liability described under item (6) above, credit may be given against the tax due, less the percentage compensation, for the denominated value of stamps affixed to packs that have been destroyed by fire, flood, or other casualty before distribution. The wholesaler or unclassified acquirer must establish by clear and convincing evidence that the cigarettes were destroyed by fire, flood, or other casualty before distribution and must establish the denominated value of the affixed stamps. "Destroyed," as used in this subrule, refers to unaffixed stamps which can no longer be identified and affixed to cigarette packs, or stamps which are affixed to cigarette packs that no longer qualify for return to the manufacturer.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.453 Manufacturers' representatives; permissions; limitations {#sec-r-205.453 omnilex-key=us-mi-regs-official--dept-treasury--R 205.453}

Rule 3. Manufacturers' representatives may legally possess individual packs of cigarettes if the application is submitted to Tobacco Products Tax Division, Michigan Department of Treasury, Lansing, MI 48922, all of the permissions are obtained, and all of the following are met:

(a) The application shall contain all of the following information:

(i) The representative's name, address, and telephone number.

(ii) Make, model, and license number of the representative's vehicle.

(iii) Counties in Michigan in which the representative will be working.

(iv) States other than Michigan in which the representative will be working.

(b) A manufacturer shall promptly notify the commissioner if the manufacturer's representative is no longer employed by the manufacturer or if there is any change in any representative's territory in the state of Michigan, name, address, telephone number, or vehicle make, model, or license number.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.454 Stamping agents; permissions; limitations {#sec-r-205.454 omnilex-key=us-mi-regs-official--dept-treasury--R 205.454}

Rule 4. (1) To be a stamping agent, a person shall comply with all of the following provisions:

(a) Receive written authorization from the department.

(b) Be licensed by the department as a wholesaler or unclassified acquirer.

(c) Be appointed as an agent of 1 or more wholesalers or unclassified acquirers for the purpose of affixing stamps prescribed by the department to individual packs of cigarettes.

(d) Submit to the department a current list of all persons for whom he or she acts as a stamping agent as these persons change.

(e) Submit proof of insurance to indemnify the state for any lost or stolen stamps.

(2) Each stamping agent shall keep separate records, by denomination, of stamps received, affixed, and in inventory at the end of each month for each wholesaler or unclassified acquirer, or both, for whom the agent acts as a stamping agent.

(3) Upon the written request of a wholesaler or unclassified acquirer, the department may, at its discretion, ship stamps directly to the wholesaler's or unclassified acquirer's authorized stamping agent or allow the stamping agent to pick up a stamp order on behalf of the wholesaler or unclassified acquirer.

(4) A stamping agent shall not give, sell, or lend an unaffixed stamp to another person and shall not accept, purchase, or borrow an unaffixed stamp from another person for whom the agent has not been authorized by the department to act as a stamping agent.

(5) A stamping agent shall not affix a stamp received from a wholesaler or unclassified acquirer to another person's individual cigarette pack.

(6) Upon notice from the department for proper administration of the act, a stamping agent shall not affix stamps for any wholesaler or unclassified acquirer whose license has been revoked or not renewed by the department and shall return any related unaffixed stamps to the department.

(7) A stamping agent who discontinues acting as a stamping agent or discontinues business shall return any unaffixed stamps to the respective wholesaler or unclassified acquirer from whom the stamps were received within 14 calendar days of the date of discontinuance. The department must be provided with written notification of the date of return, the denomination of the stamps, and the respective numbers of stamps returned. The wholesaler or unclassified acquirer must certify receipt of the stamps in writing. If the wholesaler or unclassified acquirer has a revoked or expired license or has discontinued business, then the stamping agent shall return any unaffixed stamps to the department within 14 calendar days of the date of his or her license revocation, expiration, or discontinuance and identify the related wholesaler or unclassified acquirer.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.455 Rescission {#sec-r-205.455 omnilex-key=us-mi-regs-official--dept-treasury--R 205.455}

Rule 5. R 205.411 of the Michigan Administrative Code, appearing on page 32 of the 1980 Annual Supplement to the 1979 Michigan Administrative Code, is rescinded.

History

History: 1998 - 2000 AACS.

Bureau of Local Government Services Bureau of Local Government Services

R 205.901 to R 205.917 City Income Tax

Mich. Admin. Code R 205.901 Nature of appeal {#sec-r-205.901 omnilex-key=us-mi-regs-official--dept-treasury--R 205.901}

DEPARTMENT OF TREASURY

BUREAU OF LOCAL GOVERNMENT SERVICES

CITY INCOME TAX

(By authority of Act No. 284 of the Public Acts of 1964, being S141.501 et seq. of the Michigan Compiled Laws)

Rule 1. Appeals to the commissioner of revenue are limited to:

(a) A final determination of the board of review on a final assessment, denial in whole or part of a claim for refund, or a special ruling.

(b) Adoption of a rule or regulation by the administrator.

History

History: 1979 AC.

Mich. Admin. Code R 205.902 Time and place of appeal {#sec-r-205.902 omnilex-key=us-mi-regs-official--dept-treasury--R 205.902}

Rule 2. The appeal, in form and content as provided in R 205.905, shall be filed with the commissioner of revenue at his offices in Lansing, Michigan, not later than 30 days after notice of the final determination of the board of review or the date of the adoption of the rule or regulation.

History

History: 1979 AC.

Mich. Admin. Code R 205.903 Representation {#sec-r-205.903 omnilex-key=us-mi-regs-official--dept-treasury--R 205.903}

Rule 3. A taxpayer or any other person entitled to appeal may appear for himself or by a duly authorized representative. The commissioner may require adequate identification and authority.

History

History: 1979 AC.

Mich. Admin. Code R 205.904 Form and style of papers {#sec-r-205.904 omnilex-key=us-mi-regs-official--dept-treasury--R 205.904}

Rule 4. (1) All papers filed with the commissioner of revenue shall be either printed or typewritten, and if typewritten, shall be on only one side of plain white paper. This paper shall be no more than 8 1/2 inches wide and 11 inches long. Copies shall be legible but may be on any weight paper. Citations shall be in italics when printed, and underscored when typewritten.

(2) The proper caption shall be placed upon all papers filed. If the petitioner is an individual, the full given name and surname shall be set forth in the caption. If the petitioner is a married woman, her given name shall be used, not the name of her husband preceded by "Mrs." If the petitioner is a husband and wife who have filed a joint return, the full given name and surname of each shall be set forth. If the petitioner is a fiduciary, the names of the estate, trust, or other person for whom he acts, shall be given first, followed by the name of the fiduciary.

(3) Except as otherwise provided in these rules, a signed original and 1 copy of all papers shall be filed. Whenever any paper is filed in more than 1 proceeding (as a motion to consolidate proceedings or in proceedings already consolidated), 1 additional copy shall be filed for each additional proceeding.

(4) The written signature, whether of the representative or of the petitioner, shall be in individual and not in the firm name, except that where the petitioner is a corporation the written signature shall be by an active officer of the corporation. The name and mailing address of the petitioner or of the representative shall be typed or printed immediately following the written signature.

History

History: 1979 AC.

Mich. Admin. Code R 205.905 Initiation of a proceeding {#sec-r-205.905 omnilex-key=us-mi-regs-official--dept-treasury--R 205.905}

Rule 5. (1) A proceeding shall be initiated by filing with the commissioner of revenue a notice of appeal by petition as provided in R 205.904, and substantially in accordance with the form hereinafter set forth.

(2) The petition shall be complete in itself so as to fully state the issues and shall contain the following:

STATE OF MICHIGAN DEPARTMENT OF REVENUE _____________________________________________________________________ _____ ________________________________________ Appellant vs. DOCKET NO.

City of ________________________________ Appellee _____________________________________________________________________ _____ PETITION TO THE STATE COMMISSIONER OF REVENUE:

The above-named appellant hereby petitions for a redetermination of the (final assessment, denial in whole or part of a claim for refund, special ruling, adoption of a rule or regulation by the administrator) set forth by the City of ________ in its determination, decision or order dated ______, 19 ______ and as a basis of his proceeding alleges as follows:

The appellant is (set forth whether individual, corporation, etc.) with principal office or residence at ____________________________________.

(Street) (City) (State)

The matter in controversy is ______________________________________________ _____________________________________________________________________ _____ _____________________________________________________________________ _____ _____________________________________________________________________ _____ _____________________________________________________________________ _____ 3. The determination, decision or order is based upon the following errors:

(Enumerate specifically the assignments of error in a concise manner and avoid pleading facts which properly belong in the succeeding paragraph.) Copy of said determination, decision or order is hereto attached and marked exhibit A.

The facts upon which the appellant relies as the basis of this proceeding are as follows:

(Here set forth allegations of facts relied upon, the prior legal steps taken by the petitioner, in orderly and logical sequence, with subparagraphs lettered, so as to inform the commissioner of revenue of the issues to be presented and to enable the city to admit or deny each specific allegation.) Wherefore, the appellant prays that the commissioner of revenue may hear the proceedings and (state the relief desired).

Signed ___________________________ Appellant ___________________________ Address State of ____________________________________ County of _________________________________ _________________________, being duly sworn, says that he is the petitioner (if a corporation, or fiduciary, state title of office or trust of person verifying and that he is duly authorized to verify the foregoing petition) above named; that he has read the foregoing petition, or had the same read to him, and is familiar with the statements contained therein, and that the statements contained therein are true, except those stated to be upon information and belief, and that those he believes to be true.

Signed ____________________________ Subscribed and sworn to before me this ________day of _______, 19 Signed __________________________________ (Official title)

(Seal)

History

History: 1979 AC.

Mich. Admin. Code R 205.906 Filing {#sec-r-205.906 omnilex-key=us-mi-regs-official--dept-treasury--R 205.906}

Rule 6. Any document to be filed with the commissioner of revenue must be filed at the office of the commissioner of revenue in Lansing, Michigan; provided that, whenever hearings are held outside of Lansing, Michigan, documents pertaining thereto may be filed at the hearings; provided, further, that any document to be filed with the commissioner of revenue may be filed by mail. The postmark will be considered the date of filing.

History

History: 1979 AC.

Mich. Admin. Code R 205.907 Docket {#sec-r-205.907 omnilex-key=us-mi-regs-official--dept-treasury--R 205.907}

Rule 7. Upon receipt of the petition, the proceedings will be docketed and assigned a number, and the parties notified thereof. This number shall be placed by the parties on all papers thereafter filed in the proceeding.

History

History: 1979 AC.

Mich. Admin. Code R 205.908 Service of petition {#sec-r-205.908 omnilex-key=us-mi-regs-official--dept-treasury--R 205.908}

Rule 8. (1) The appellant in any case initiated before the commissioner of revenue shall forthwith serve a copy of the petition upon the administrator of the city, or any agent within the city, designated by the administrator. The appellant shall then file proof of service with the commissioner of revenue within 5 days after such service. If proof of service is filed with the commissioner of revenue by mail the postmark will be considered the date of filing.

(2) Such service upon the administrator or his designated agent may be made by the appellant or his representative either personally or by registered or certified mail with the return receipt demanded.

History

History: 1979 AC.

Mich. Admin. Code R 205.909 Answer {#sec-r-205.909 omnilex-key=us-mi-regs-official--dept-treasury--R 205.909}

Rule 9. (1) After service of a copy of the petition, the city shall have 20 days within which to file an answer to the petition. The answer shall be drawn fully and completely so as to advise the appellant and the commissioner of revenue of the nature of the defense. It shall contain a specific admission or denial of each material allegation of fact contained in the petition, and a statement of any facts upon which the city relies for defense, and shall contain any affirmative allegations to be relied upon by the city.

(2) Each paragraph contained in the answer shall be numbered to correspond with the paragraphs of the petition. An original and 1 copy of the answer shall be filed, of which the original shall be signed by the administrator of the city or his counsel and the copies conformed by him.

(3) The city shall forthwith serve a copy of the answer upon the representative of record, or if there is no representative of record then upon the appellant, and shall file proof of service with the commissioner of revenue within 5 days after such service.

History

History: 1979 AC.

Mich. Admin. Code R 205.910 Stipulations {#sec-r-205.910 omnilex-key=us-mi-regs-official--dept-treasury--R 205.910}

Rule 10. Matters involving interpretation of law and statements of fact in which parties are in agreement shall be stipulated 5 days prior to the date set for the hearing.

History

History: 1979 AC.

Mich. Admin. Code R 205.911 Notice of hearings {#sec-r-205.911 omnilex-key=us-mi-regs-official--dept-treasury--R 205.911}

Rule 11. (1) Upon the filing of the answer, the commissioner of revenue shall have jurisdiction to review such determination, decision or order, and both the appellant and the city shall have the right to swear witnesses and to be represented by counsel.

(2) Said hearing shall be had within 60 days after filing of the answer.

(3) When a proceeding has been placed upon the calendar for hearing, the commissioner of revenue will notify the parties of the time and place of hearing not less than 15 days prior thereto. In his discretion the commissioner may adjourn the hearing to another time or place. Parties shall arrange to have their witnesses at the time and place designated in the notice of hearing, and exhibits must be ready for presentation at such time.

History

History: 1979 AC.

Mich. Admin. Code R 205.912 Failure to appear {#sec-r-205.912 omnilex-key=us-mi-regs-official--dept-treasury--R 205.912}

Rule 12. The unexcused absence of a party or his representative at the place and hour set for hearing of any proceeding before the commissioner of revenue will not be an occasion for delay. The hearing will proceed and the case will be regarded as submitted on the part of the absent party or parties.

History

History: 1979 AC.

Mich. Admin. Code R 205.913 Amendments {#sec-r-205.913 omnilex-key=us-mi-regs-official--dept-treasury--R 205.913}

Rule 13. Either party may amend his petition or answer at any time prior to the hearing by consent of the adverse party or by leave of the commissioner of revenue. An original and 1 copy of such amendment shall be filed with the commissioner of revenue, and the adverse party or his representative of record shall be served with a copy thereof. All motions to amend must be accompanied by the proposed amendments.

History

History: 1979 AC.

Mich. Admin. Code R 205.914 Hearings {#sec-r-205.914 omnilex-key=us-mi-regs-official--dept-treasury--R 205.914}

Rule 14. (1) The commissioner of revenue may delegate an employee of the department of revenue to hold the hearing in his behalf.

(2) All hearings before the commissioner of revenue shall be public; provided, however, that the commissioner of revenue, upon motion of the appellant, may exclude from the hearing all persons not directly interested therein. The commissioner of revenue may make such an order upon a proper showing by the appellant that information divulged would be detrimental to the appellant's business.

(3) Either party may, at his own expense, arrange to have a transcript of the proceedings.

History

History: 1979 AC.

Mich. Admin. Code R 205.915 Briefs {#sec-r-205.915 omnilex-key=us-mi-regs-official--dept-treasury--R 205.915}

Rule 15. The commissioner of revenue, or his delegate, in his discretion, may require that briefs be submitted either before or after the hearing and may designate the manner of filing and serving the same and the time therefor.

History

History: 1979 AC.

Mich. Admin. Code R 205.916 Proposed findings of fact {#sec-r-205.916 omnilex-key=us-mi-regs-official--dept-treasury--R 205.916}

Rule 16. The commissioner of revenue or his delegate may require either party to a proceeding to submit proposed findings of fact at the close of the hearing or within such time as he may direct.

History

History: 1979 AC.

Mich. Admin. Code R 205.917 Order and opinion {#sec-r-205.917 omnilex-key=us-mi-regs-official--dept-treasury--R 205.917}

Rule 17. The commissioner of revenue, after completion of the hearing, shall review the record, briefs, and such other matters as may have been submitted and by written order affirm, reverse, or modify the action of the city, and shall further serve upon the appellant or his duly authorized representative and the duly authorized official of the city by registered or certified mail with the return receipt demanded, a copy of his order and opinion.

History

History: 1979 AC.

Bureau of Tax and Economic Policy Bureau of Tax and Economic Policy

R 205.1001 to R 205.1013 Taxpayers Bill of Rights

Mich. Admin. Code R 205.1001 Definitions {#sec-r-205.1001 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1001}

DEPARTMENT OF TREASURY

STATE TREASURER

TAXPAYER BILL OF RIGHTS

(By authority conferred on the Department of Treasury by sections 3, 4, 23, and 24 of 1941 PA 122, MCL 205.3, MCL 205.4, MCL 205.23, and MCL 205.24 of the Michigan Compiled Laws)

PART 1. GENERAL PROVISIONS

Rule 1. As used in these rules:

(a) "Act" means 1941 PA 122, MCL 205.1 to 205.31.

(b) "Confidential information" means information and facts that are treated in a confidential manner under section 28 of the act.

(c) “Department" means the department of treasury and includes those employees and officers of this state, or their agents, who implement or carry out the functions described in the act.

(d) “Department representative” means a contractor, consultant, agent, or other person acting in a representative capacity for or on behalf of the department.

(e) "Informal conference" means a meeting involving a taxpayer and a department representative before a referee to review and, where appropriate, to resolve a tax dispute pursuant to section 21 of the act.

(f) “Notice of audit refund” means the notice the department must provide pursuant to section 21(3) of the act.

(g) “Notice of denial of refund” means the notice of adjustment or other written communication from the department indicating that a request for refund is rejected in whole or in part, or that a credit forward sought by a taxpayer will not be allowed in whole or in part.

(h) "Notice of final assessment" means the notice that advises the taxpayer that an assessment issued under section 21 of the act is final and subject to appeal.

(i) "Notice of intent to assess" means the notice that advises the taxpayer of the department's intent to assess the tax and provides the amount of the tax the department believes the taxpayer owes, the reason for the deficiency, and a statement that advises the taxpayer of all of the following:

(i) The right to an informal conference.

(ii) The requirement of a written request by the taxpayer for the informal conference, including the taxpayer's statement of the contested amounts and an explanation of the dispute.

(iii)The 60-day time limit for the request.

(j) "Person" means any of the following:

(i) An individual.

(ii) A firm.

(iii) A bank.

(iv) A financial institution.

(v) A limited partnership.

(vi) A copartnership.

(vii) A partnership.

(viii) A limited liability company.

(ix) A joint venture.

(x) An association.

(xi) A corporation.

(xii) A receiver.

(xiii) An estate.

(xiv) A trust.

(xv) Any other group or combination acting as a unit.

(k) "Referee" means an individual who is authorized by the treasurer to conduct an informal conference pursuant to section 21 of the act.

(l) “Tax" means any tax that is administered and collected under the act. Tax includes any tax, penalty, and interest.

(m) "Taxpayer representative" means a person who is authorized by the taxpayer to represent the taxpayer before the department.

(n) "Third party" means any of the following:

(i) A relative, except for a husband or wife when a joint return is filed. However, if a joint return has not been filed and a spouse has been claimed as an exemption on a return, that spouse may not receive information without written permission from the taxpayer. If a joint return has been filed and the parties are separated or divorced, current information, such as the current address, employment information, or collection information, about 1 party shall not be disclosed to the other party.

(ii) A friend of the taxpayer.

(iii) Any elected official acting in his or her official capacity, including a member of the United States Congress or the state legislature.

(iv) Any professional, such as an accountant or attorney, who is not authorized as the taxpayer’s representative. For example, a return preparer who has prepared and signed a return is not entitled to receive the return upon request without express written authorization from the taxpayer.

(v) Any person, other than the taxpayer, who is not authorized by the act or these rules to obtain confidential information.

(o) “Treasurer” means the treasurer of this state or his or her designee.

PART 2. DEPARTMENT EMPLOYEE, DEPARTMENT REPRESENTATIVE

CONDUCT

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1002 Standards for treatment of public by department employees and representatives {#sec-r-205.1002 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1002}

Rule 2. (1) The department, department employees, and department representatives shall treat the public in a fair and courteous manner. A department employee, or department representative, that has direct contact with the public in the course of his or her duties shall perform his or her duties in a businesslike manner.

(2) A department employee, or department representative, shall not engage in improper conduct in interactions with the public and shall strive to avoid the appearance of impropriety. The following are examples of improper conduct:

(a) The use, or appearance of use, of one’s position or knowledge of department procedures or access to confidential information to intentionally harass or personally benefit from another person or grant privileges to another person.

(b) Conduct, the natural consequence of which is to oppress or abuse another person.

(c) The use, or threat of use, of violence or other criminal means to harm a person’s physical integrity, reputation, or property.

(d) The use of profane or offensive language.

(e) Name-calling of a derogatory nature.

(f) Soliciting raffle tickets during work hours for a charity.

(g) The acceptance of, or an agreement to accept, a gift or anything of value from a person that could reasonably be expected to influence the manner in which an employee or department representative performs work or makes decisions.

(h) The making of false statements or statements with false implications in the course of collecting debts, such as falsely implying that the employee or department representative is an attorney, using a false name, or falsely implying that the taxpayer has committed a crime.

(i) An employee’s, or department representative’s, participation in any business transaction or private arrangement for direct or indirect financial gain or deferment or discount of payment that accrues from or is based upon the employee’s, or department representative’s, official position or on confidential information gained by reason of the employee’s, or department representative’s, position.

(j) An employee’s, or department representative’s, failure to report to the employee’s, or department representative’s, supervisor or the supervisor’s supervisor appearances of a possible conflict of interest in relation to taxpayers with whom the employee or department representative may have direct or indirect involvement.

(k) The employee’s, or department representative’s, failure to report to the employee’s, or department representative’s, supervisor or the supervisor’s supervisor a taxpayer’s complaint about the employee, another employee, or department representative, or the employee’s, or department representative’s, failure to report to the employee’s or department representative’s, supervisor or the supervisor’s supervisor a possible interference in a taxpayer’s attempts to discuss matters with a management person.

(l) The falsification of reports or other records of contacts or attempts to contact or personally serve taxpayers with any notice or the falsification of other work activities.

(m) Other conduct that may be subject to disciplinary action.

(3) An employee, or department representative, shall perform his or her duties at the following times and places:

(a) For collection purposes, the department, and its representatives, shall observe the following rules with respect to taxpayers, but not third parties:

(i) Taxpayers may be contacted only during the day after 8 a.m. and before 9 p.m., local time, except with prior supervisory approvals based upon the following:

(A) The taxpayer has noncustomary working hours and has expressed to the department, or its representative, that he or she wishes to be contacted at a different time of the day.

(B) On a case-by-case basis for activities authorized under the act, such as those related to jeopardy assessment accounts, seizures that require earlier contact to make personal service, or similar activities.

(ii) Except as provided by the following and unless otherwise agreed to by the department, or its representative, and the taxpayer, in the absence of knowledge of circumstances to the contrary, the department, or its representative, shall presume that a convenient place for communicating with the taxpayer is the location of the taxpayer or, if the taxpayer is represented and the department, or its representative, has been properly notified of the representation, the location of the taxpayer representative, for example, the address of record:

(A) The department, or its representative, shall not communicate with the taxpayer regarding the collection of a debt at any time or place known, or which should be known, to be inconvenient to the taxpayer.

(B) A department employee, or department representative, shall not contact a taxpayer at his or her place of employment if the employee, or department representative, knows or has reason to know that the taxpayer’s employer prohibits the taxpayer from receiving the communication.

(C) If a taxpayer representative does not respond to a communication from the department, or its representative, then a department employee, or department representative, shall refer the matter to his or her immediate supervisor and shall refrain from contacting the taxpayer representative until further instructions are provided.

(b) For audit purposes, the department, and its representatives, shall observe the following rules with respect to taxpayers:

(i) Auditors shall keep the work hours as established by the taxpayer, shall limit lunchtime to not more than an hour, and shall leave the taxpayer at the established time.

(ii) Auditors shall respect the taxpayer’s property, rules, business practices, and hours and shall obtain permission to use the taxpayer’s equipment, such as the telephone or copying machine.

(c) For all other purposes, the department, and its representative, shall contact taxpayers during regular working hours unless otherwise agreed to by the taxpayer.

(4) The department, and its representatives, shall have a system for monitoring compliance with the standards of fair and courteous treatment of the public. The system shall provide for aggrieved persons to complain to the immediate supervisor of the employee, or department representative, who acts improperly, or to the supervisor’s supervisor; for the department, or its representative, to discipline the employee, or department representative, who acts improperly; and for a taxpayer advocate to respond to complaints from the public. The system for monitoring compliance shall include, but not be limited to, all of the following:

(a) Each supervisor shall monitor the behavior of employees and department representatives on the telephone and review outgoing correspondence for compliance.

(b) The audit confirmation letter that the department, or its representative, sends to the taxpayer to confirm the scheduled audit shall identify by name and telephone number the auditor, the audit supervisor, and the audit manager.

(c) The department, or its representative, shall enclose with the audit confirmation letter information about the audit process, which shall also instruct the taxpayer how to contact the department’s taxpayer advocate office.

(5) The department, and its representatives, shall not use collection goals or quotas during the conduct of an audit for a tax administered under the act.

(6) The department, and its representatives, in carrying out the department’s responsibilities under the act, shall fairly and consistently apply all applicable statutes and rules to all taxpayers.

(7) Department employees, and department representatives, shall satisfactorily complete relevant departmental training before performing collection or auditing procedures.

PART 3. DISCLOSURE OF CONFIDENTIAL INFORMATION

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1003 Confidentiality of information {#sec-r-205.1003 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1003}

Rule 3. (1) Except as otherwise provided by law, the treasurer, any employee or authorized representative or former employee or former authorized representative, or anyone connected with the department shall not disclose to any person, except the taxpayer or his or her or its authorized representative, any facts or information obtained in connection with the administration of a tax or information or parameters that would enable a person to ascertain the audit selection or processing criteria for a tax administered by the department or collection or assessment parameters or collection information.

(2) Access to confidential information shall be restricted to department employees who have a need to access the information to perform their duties. A department employee shall not disclose confidential information to another department employee, except as needed to perform duties. For example, if an employee reviews a taxpayer's individual return and discovers a letter concerning the taxpayer's business tax liability, the employee shall refer the correspondence to the business tax division for further action and shall identify the source of the correspondence.

(3) A department employee shall not disclose confidential information to confirm information made public by another party or source or which is part of any public record.

For example, if an unauthorized third party wants to know if a tax lien has been filed against a certain business, a department employee shall not release that information. A tax lien becomes part of the public record upon filing, but still retains its identity as tax return information and may not be released to unauthorized parties.

(4) An employee or authorized representative of another agency of the federal, state, or local government who handles confidential information pursuant to an agreement or subpoena is subject to the same restrictions as department employees or authorized representatives and shall not disclose the confidential information.

(5) A department employee shall not disclose confidential information obtained about a taxpayer without proper authorization.

(6) The department shall keep records of persons who are not department employees or authorized representatives of the department and are granted access to, or given copies of, returns or return information. The records must contain all of the following information:

(a) The name and address of the person who has been granted access to, or given copies of, returns.

(b) The representative capacity of the person specified in subdivision (a) of this subrule if not the taxpayer.

(d) The name of the taxpayer or taxpayers.

(e) The type of returns.

(f) The taxable periods involved.

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1004 Confidentiality of information; exceptions to disclosure prohibition {#sec-r-205.1004 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1004}

Rule 4. (1) Subject to the same restrictions as department employees on the treatment of confidential information, a private contractor or its employees shall not disclose taxpayer information to a third party. The prohibition against disclosure does not bar an employee of a private contractor that processes tax returns or payments pursuant to the act from having access to confidential information that is reasonably required for the processing or collection of amounts due this state.

(2) The department may use a taxpayer's name, address, and social security number or employer identification number to the extent necessary in connection with the processing and mailing of forms for any report or return required in the administration of any tax administered under the act.

(3) The department may disclose confidential information in any of the following circumstances:

(a) If the disclosure is required for the proper administration of a tax law administered under the act.

(b) If the disclosure is required by judicial order sought by an agency charged with the duty of enforcing or investigating support obligations pursuant to an order of a court in a domestic relations matter as that term is defined in section 31 of 1982 PA 294, MCL 552.531.

(c) If the disclosure is required pursuant to a judicial order, including a subpoena, search warrant, or other court order, sought by an agency of the federal, state, or local government charged with the responsibility for the administration or enforcement of criminal law for purposes of investigating or prosecuting criminal matters or for federal or state grand jury proceedings.

(d) If the disclosure is required by judicial order where the taxpayer's liability for a tax administered under the act is to be adjudicated by the court that issued the judicial order.

(e) If the disclosure is required by a reciprocal agreement between the department and other departments of state government, the United States Department of Treasury, local governmental units within this state, or taxing officials of other states.

(f) If the disclosure is upon the written request of a head of an institution, agency, or department of state government when it is required for the effective administration or enforcement of the laws of this state, is upon the written request of a proper officer of the United States Department of Treasury, or is upon the written request of a proper officer of another state reciprocating in this privilege.

(g) For all of the types of disclosure specified in this subrule, the request for information, subpoena, or other judicial order shall be directed to the disclosure officer Michigan department of treasury, Austin building, Lansing, Michigan 48922.

(4) The department may disclose records and information that are not confidential, for example, that the department is not barred from disclosing under the act, pursuant to a request filed under 1976 PA 442, MCL 15.231 to 15.246. Requests shall be addressed to the FOIA coordinator, Michigan department of treasury, Austin Building, Lansing, Michigan 48922.

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1005 Representation before department {#sec-r-205.1005 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1005}

Rule 5. (1) Any person may represent a taxpayer before the department as a taxpayer representative. A taxpayer may appear for himself, herself, or itself or may be represented by an accountant, attorney, bookkeeper, tax preparer, or any other third party that the taxpayer may choose.

(2) The person shall file, with the department, either an appearance in the dispute or written authorization as described in R 205.1006. The person's name, address, and telephone number shall be included in the appearance or the written authorization. The person's appearance applies only to the extent authorized by the taxpayer.

(3) A person who has entered an appearance in a dispute may withdraw from the representation after giving the department notice of the withdrawal.

(4) The appearance of a business firm or an organization shall include the name of an individual who serves as a contact person and the address and phone number of the individual if different from the business firm or the organization.

History

History: 1996 AACS.

Mich. Admin. Code R 205.1006 Rescinded {#sec-r-205.1006 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1006}

History

History: 1996 AACS; 1998 AACS; 1998 - 2000 AACS; 2018 AACS.

Mich. Admin. Code R 205.1006a Implied authorization for disclosure of confidential information to third parties {#sec-r-205.1006a omnilex-key=us-mi-regs-official--dept-treasury--R 205.1006a}

Rule 6a. (1) Before a department officer or employee may disclose confidential information to a third party, the department shall confirm that the third party is authorized by the taxpayer to receive the confidential information.

(2) Before giving out confidential information, whether the request is by telephone or in person, the department shall obtain information about the taxpayer and the subject matter as it determines to be necessary to identify the requesting party.

(3) For a refund inquiry, the department shall obtain the approximate amount of the expected refund, unless that amount is computed by the department, and the manner in which the return was filed; for example, an individual, separate, or a joint return.

(4) A telephone conference call that is initiated by the taxpayer and includes the taxpayer, a third party, and the department may be used to discuss confidential information concerning the taxpayer without written authorization. However, the department, if it is unable to verify the identity of the caller to its satisfaction, may mail, or otherwise transmit electronically, requested confidential information to the taxpayer at the taxpayer's address of record rather than discussing it in a telephone conference call.

(5) A taxpayer's conduct may constitute either express or implied authorization to the department to disclose confidential information to a third party. For example, if a taxpayer brings a friend to an informal conference or other face-to-face meeting with department personnel and invites the friend to sit in, the taxpayer, by that conduct, has given implied consent to the department to disclose the taxpayer’s confidential tax information to the friend. If the taxpayer does not authorize the department to disclose confidential tax information to the friend, then the friend must leave the informal conference or other face-to-face meeting. As an additional example, the conduct of a deaf individual seeking translation services from the department constitutes implied consent to the translator to relay or receive confidential information on the individual's behalf if the deaf individual is a party to the conversation with the department.

(6) The department may accept tax information that is voluntarily offered by a third party, but, in the absence of express or implied authorization from the taxpayer consistent with these rules, shall not disclose information to the third party. For example, a third party may provide canceled check information to initiate a payment tracer on a bill, but the department shall not disclose the balance due or the nature of the assessment to the third party in the absence of express or implied authorization from the taxpayer consistent with these rules. Absent express or implied authorization from the taxpayer consistent with these rules, the department may discuss with a third party only general information concerning the meaning of a bill or a notice or information provided by the third party.

History

History: 2018 AACS.

Mich. Admin. Code R 205.1006b Written authorization by taxpayer for representative to represent taxpayer in communications with department {#sec-r-205.1006b omnilex-key=us-mi-regs-official--dept-treasury--R 205.1006b}

Rule 6b. (1) Michigan Department of Treasury Form 151, entitled “Authorized Representative Declaration (Power of Attorney),” shall incorporate separate parts or sections in order to accommodate both of the following:

(a) A taxpayer’s designation of an authorized representative to act on its behalf and represent the taxpayer in communications with the department.

(b) A taxpayer’s written request to the department that copies of future letters and notices regarding a single, specified tax type and tax period or periods for that tax type be sent to the taxpayer’s official representative, as provided in MCL 205.8. Michigan Department of Treasury Form 151 shall be used by a taxpayer for either purpose, or for both purposes.

(2) A taxpayer may provide written authorization for a representative to act on its behalf and represent the taxpayer in communications with the department. The written authorization shall be provided by the taxpayer on 1 of the following:

(a) Michigan Department of Treasury Form 151.

(b) Another written document that meets all the requirements set forth in subrule (3) of this rule.

(c) Another document that provides clear legal authority for a representative to act on the taxpayer’s behalf and to represent the taxpayer in communications with the department, such as a court approved guardianship or conservatorship or other court order.

(3) In order to be valid, the written authorization must include, at a minimum, all of the following information:

(a) The taxpayer's name, address, telephone number, and account or identification number.

(b) The name, address, and telephone number of the taxpayer’s representative and, if the representative is an entity, such as a law firm rather than an individual, the name of a contact person. If the taxpayer’s representative is an entity, the written authorization permits the department to disclose confidential information to any member of the named entity. The specification of a contact person is only to ensure that information sent to the entity is directed to the individual overseeing the representation.

(c) The time period for which the authorization is effective. If no start date is specified, the authorization is effective as of the date that it is signed by the taxpayer. If no expiration date is indicated, the authorization is effective until revoked.

(d) The type of authority granted to the representative, and any restrictions on that authority, such as tax type and/or tax period.

(e) The signature of the taxpayer or, if the taxpayer is not an individual, for example, a corporation, the signature of a person authorized to sign on behalf of the taxpayer; the printed name of the person signing; the title of the person signing if the taxpayer is not an individual; and the date of signing.

(4) A taxpayer’s written authorization should be provided by filing a properly completed Michigan Department of Treasury Form 151, except as provided in subrules (2)(b) or (c) or (8) of this rule. Form 151 is available on the department’s website or may be requested by contacting the department. Directions for returning the completed form shall be included in the instruction page, and the taxpayer shall return the completed form in accordance with the instructions.

(5) Except as provided under subrule (2)(c) of this rule, a written authorization is properly completed only if the requirements of subrule (3) of this rule are met, and as to Michigan Department of Treasury Form 151, in addition to any requirements specified by the department on Form 151 and instructions to this form.

(6) If a written authorization submitted by a taxpayer is incomplete, has been filled out incorrectly, or fails to meet all the requirements under subrule (3) of this rule, the authorization is not effective, and the department shall notify the taxpayer, identify the information needed, and request that the taxpayer submit to the department a new, properly completed Michigan Department of Treasury Form 151.

(7) Only 1 taxpayer representative, either an individual or an entity, may be named on a single written authorization. A written authorization filed with the department is presumed to be valid until it expires according to its terms, or until the taxpayer specifically revokes the representative’s authority. A taxpayer may revoke a representative’s authority in whole or in part by completing the indicated portions of Michigan Department of Treasury Form 151 or by providing another written document that clearly revokes that prior representative’s authority. Directions for revoking a representative’s authority by Michigan Department of Treasury Form 151 must be included in the form’s instructions page. Filing a new written authorization through a Michigan Department of Treasury Form 151, without completing the revocation section of the form, does not automatically revoke a previously filed written authorization.

(8) If circumstances exist that make it impossible for the taxpayer to provide a written authorization as specified in subrule (2) of this rule, for example, the taxpayer is incapacitated, the party purporting to represent the taxpayer shall contact the department so that special arrangements can be made.

(9) A written authorization granting authority to a representative to act on the taxpayer’s behalf and represent the taxpayer in communications with the department does not constitute a written request to the department that copies of future letters and notices regarding a single, specified tax type and tax period or periods for that tax type be sent to the taxpayer’s official representative, as provided in MCL 205.8, unless that authorization is provided in accordance with R 205.1006c.

Editor's Note: An obvious error in R 205.1006b was corrected at the request of the promulgating agency, pursuant to Section 56 of 1969 PA 306, as amended by 2000 PA 262, MCL 24.256. The rule containing the error was published in Michigan Register, 2018 MR 9. The memorandum requesting the correction was published in Michigan Register, 2019 MR 1.

History

History: 2018 AACS.

Mich. Admin. Code R 205.1006c Requesting copies of letters and notices with respect to tax dispute {#sec-r-205.1006c omnilex-key=us-mi-regs-official--dept-treasury--R 205.1006c}

Rule 6c. (1) Michigan Department of Treasury Form 151, entitled “Authorized Representative Declaration (Power of Attorney),” shall incorporate separate parts or sections in order to accommodate both of the following:

(a) A taxpayer’s designation of an authorized representative to act on its behalf and represent the taxpayer in communications with the department.

(b) A taxpayer’s written request to the department that copies of future letters and notices regarding a single, specified tax type and tax period or periods for that tax type be sent to the taxpayer’s official representative, as provided in MCL 205.8. Except as provided under Rule 6b(2), Michigan Department of Treasury Form 151 shall be used by a taxpayer for purposes of subdivision (a) of this subrule, or for purposes of subdivision (a) of this subrule and this subdivision.

(2) A taxpayer may file a written request with the department that copies of future letters and notices regarding a dispute be sent to the taxpayer’s official representative, as provided in MCL 205.8.

(3) For purposes of this rule and MCL 205.8, the taxpayer’s identification of a single, specified tax type and tax period or periods for which the taxpayer is requesting copies of future letters and notices is considered a dispute.

(4) Letters and notices that are subject to the authorization under this rule and MCL 205.8 shall be any written correspondence from the department with content that relates to the audit, assessment, and/or collection of the respective tax type or that involves the appeal rights of the taxpayer under MCL 205.22, and may include additional written correspondence as systems capabilities of the department can accommodate. Letters and notices regarding a dispute under this subrule may be sent by the department by mail or, if systems capabilities of the department can accommodate, to a secure, encrypted electronic mailbox designated by the department that was authorized by the taxpayer.

(5) A taxpayer shall make a written request under subrule (2) of this rule only by filing a properly completed Michigan Department of Treasury Form 151. This form is available on the department’s website, or may be requested by contacting the department.

The taxpayer shall return the completed form as provided for in the form and its instructions.

(6) The taxpayer shall identify on the appropriate line or lines of Michigan Department of Treasury Form 151 the specific tax type or types and the tax period or periods for each respective tax type.

(7) If a taxpayer has more than 1 dispute with the department and wants its named official representative to also receive copies of future letters and notices with respect to those additional disputes, the taxpayer shall complete and submit 1 or more Michigan Department of Treasury Form 151, as prescribed by the department in the form and instructions, for the respective tax type and tax period desired by taxpayer.

(8) Only 1 official representative authorized under this rule and MCL 205.8 may receive copies of future letters and notices regarding a single, specified tax type and tax period or periods for that tax type. If the named official representative is an entity, the department shall send copies of future letters and notices regarding the single, specified tax type and tax period or periods for that tax type to the individual named as the contact person.

(9) If a taxpayer’s written request for copies of letters and notices as submitted to the department is incomplete or the relevant portions of Michigan Department of Treasury Form 151 have been filled out incorrectly, the written request for copies of letters and notices will not be effective, and the department shall notify the taxpayer, identify the information needed, and request that the taxpayer submit to the department a new, properly completed Michigan Department of Treasury Form 151.

(10) Once filed with the department, a taxpayer’s written request authorizing its official representative to receive copies of future letters and notices regarding a dispute shall be presumed to be valid until the matter in dispute is concluded, or until the taxpayer specifically revokes the official representative’s authority. A taxpayer may revoke an official representative’s authority to receive copies of letters and notices regarding a dispute by completing the indicated portions of Michigan Department of Treasury Form 151, directions for which are included on the form and instructions.

(11) A taxpayer’s written request that copies of future letters and notices regarding a dispute with that taxpayer be sent to the taxpayer’s official representative does not give the official representative authority to act on the taxpayer’s behalf or to represent the taxpayer in communications with the department.

(12) If a taxpayer files a written request with the department that copies of future letters and notices regarding a dispute with that taxpayer be sent to the taxpayer’s official representative in accordance with the requirements under this rule, but the department fails to provide the taxpayer’s representative with a copy of a letter or notice regarding the respective tax type and tax period or periods that gives rise to appeal rights to the taxpayer, the department shall do the following, as applicable:

(a) If the department sent subsequent letters or notices regarding the dispute only to the taxpayer and not also to the taxpayer’s official representative, the department shall deem the time period in which to request an informal conference under MCL 205.21(2), or to otherwise appeal to the Michigan Court of Claims or the Tax Tribunal under MCL 205.22(1), to commence when a copy of the pertinent letter or notice is subsequently furnished to the taxpayer’s official representative. The copy of the pertinent letter or notice sent to the taxpayer’s official representative must be accompanied by a letter from the department stating the appeal period.

(b) If the taxpayer has been denied appeal rights by the department, the Court of Claims or the Tax Tribunal because of an untimely appeal arising from the department’s failure to provide the taxpayer’s official representative with a required copy of a pertinent letter or notice, the department shall reinstate the taxpayer’s applicable appeal rights upon the taxpayer’s written request to the department for an informal conference. The taxpayer’s written request must include the taxpayer’s name, federal employer identification number or other identification number, the tax type and tax period or periods, and any relevant assessment number. In the case of a denied or reduced refund, the taxpayer shall provide the tax type and tax period or periods, or other identifying information. All of the following apply:

(i) The taxpayer’s written request must include a copy of the taxpayer’s original letter or other document that had requested copies of future letters and notices be sent to the taxpayer’s official representative.

(ii) If decided adversely to the taxpayer, the informal conference must result in a decision, order, or assessment by the department that may be appealed to the Court of Claims or the Tax Tribunal under MCL 205.22(1).

(iii) If the matter had been to informal conference, and the denial of appeal rights is based upon a Final Bill for Taxes Due (Final Assessment), the taxpayer shall contact the department’s office of the taxpayer advocate, which shall issue the taxpayer’s official representative a copy of the pertinent letter or notice and which must be accompanied by a letter stating the new appeal period.

(c) If the taxpayer has been denied appeal rights by the department, the Court of Claims, or the Tax Tribunal because of an untimely appeal arising from the department’s receipt of a written request not in accordance with this rule and the department failed under subrule (7) of this rule to advise the taxpayer that the written request was not in accordance with this rule, the department shall reinstate the taxpayer’s applicable appeal rights that were denied because of the department’s failure to advise the taxpayer. The taxpayer’s written request must include the taxpayer’s name, federal employer identification number or other identification number, the tax type and tax period(s), and any relevant assessment number. In the case of a denied or reduced refund, the taxpayer shall provide the tax type and tax period or periods, or other identifying information. All of the following apply:

(13) If a taxpayer’s appeal rights were denied by the Court of Claims or the Tax Tribunal and the related opinion or order denying relief to the taxpayer addresses the merits of any notice issues arising under MCL 205.8, then the relief provided under subrule (12) of this rule shall not be provided.

History

History: 2018 AACS.

Mich. Admin. Code R 205.1006d Discussing return information with preparer of return {#sec-r-205.1006d omnilex-key=us-mi-regs-official--dept-treasury--R 205.1006d}

Rule 6d. (1) A taxpayer may authorize the department to discuss the taxpayer’s return with the preparer of the return by checking the designated box on the return and providing information regarding the authorized preparer as specified on the return or instructions.

(2) The checked box on the return authorizes the department to contact the preparer of the return concerning the contents of the return. In addition, it authorizes the preparer of the return to do all of the following:

(a) Provide the department with information missing from the return.

(b) Contact the department to obtain information about processing or the status of refunds and payments related to the return.

(c) Request copies of any correspondence related to matters concerning the return, such as math errors, return preparation, and any adjustments to the return.

(d) Respond to any such correspondence related to matters concerning the return.

(3) The checked box on the return does not authorize the department to discuss with the preparer any other tax return or to provide the preparer any information regarding audit, assessment, or collection activities on the taxpayer’s account. In addition, the checked box on the return does not authorize the preparer to take any action on behalf of the taxpayer, such as requesting an informal conference or undertaking an appeal of any assessment, decision, or order of the department, receive a refund check, or otherwise represent the taxpayer before the department. The taxpayer shall execute a Michigan Department of Treasury Form 151 under Rule 6b, or other written authorization as permitted under R 205.1006b(2), designating the preparer as its representative in order for the preparer to discuss with the department any matters outside the scope of those referenced in subrules (1) and (2) of this rule, or to take action on behalf of the taxpayer.

History

History: 2018 AACS.

Mich. Admin. Code R 205.1007 Disclosure officer; delegation of authority {#sec-r-205.1007 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1007}

Rule 7. (1) The authority to disclose state tax information is delegated to the disclosure officer and to certain other positions within the department. The disclosure officer serves as a contact person for all governmental and nongovernmental agencies that seek confidential information. The disclosure officer shall determine that a request for confidential information meets the requirements of the act and these rules.

(2) The following positions within the department shall ensure the confidentiality of tax information and coordinate requests for authorized disclosure of tax information within the department:

(a) The disclosure officer shall develop security directives and the periodic review of security procedures within the department. For those agencies that the department discloses information to, a report of all findings is furnished to the treasurer for action as deemed appropriate. The disclosure officer shall develop information sharing agreements with appropriate federal and state agencies. The disclosure officer serves as the liaison with federal and state agencies and their appropriate administrators concerning the exchange of information. The disclosure officer reviews all requests from local jurisdictions seeking confidential information.

(b) Division administrators who have primary custody or control of returns or tax return information shall determine that the necessary safeguards are in place to prevent the unauthorized use or disclosure of state or federal tax information. The department shall issue appropriate written instructions to employees and shall adopt measures to ensure that employees remain thoroughly familiar with, and strictly adhere to, the rules and procedures governing confidentiality and the disclosure of tax information.

(3) All new department employees shall review the policies, procedures, and bulletins governing confidentiality and the authorized disclosure of confidential information and certify that they are familiar with the documents as the documents relate to the employee’s specific duties. Periodically, department employees shall review the policies, procedures, and bulletins associated with confidential information in the performance of their duties. The disclosure officer shall annually remind department employees of the confidentiality requirements.

PART 4. INFORMAL CONFERENCE

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1008 Right to informal conference; request requirements for informal conference; acknowledgment {#sec-r-205.1008 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1008}

Rule 8. (1) If a notice of intent to assess, a notice of denial of refund, or a notice of audit refund is sent to a taxpayer, the notice shall include all of the following:

(a) A statement of the taxpayer's right to an informal conference, provided the taxpayer sends a written request to the address specified in the notice requesting an informal conference within 60 days after the taxpayer receives a notice of intent to assess or within 60 days of the date of issuance of a notice of denial of refund or a notice of audit refund.

(b) A statement that the written request seeking an informal conference must include the taxpayer’s statement of the contested amounts and an explanation of the dispute.

(2) The taxpayer shall be entitled to an informal conference with respect to a notice of intent to assess, a notice of denial of refund, or a notice of audit refund if a taxpayer or taxpayer representative does all of the following:

(a) Serves written notice upon the department, to the address specified in the notice, within 60 days after the taxpayer receives the notice of intent to assess or within 60 days of the date of issuance of the notice of denial of refund, or notice of audit refund. The department will accept a United States postmarked certified or registered mail receipt as proof of service if the certified mail receipt number is listed on the written notice of appeal.

(b) Remits the uncontested portion of the liability, if any, indicated in the notice in cash, by check payable to the "State of Michigan," or other means of payment.

(3) At such time that a taxpayer requests an informal conference or at any time thereafter before the issuance of a decision and order by the department, a taxpayer who is contesting an intent to assess may by written notice sent to the hearings division, Austin Building, 430 West Allegan, Lansing, MI 48922, accompanied by payment of the contested amount, convert his or her contest to a claim for refund. The taxpayer preserves the right to address the issues raised in the intent to assess as if it remained unpaid and to have the matter resolved as a contested denial of refund.

(4) A taxpayer who has made a timely request for an informal conference by complying with subrule (2) of this rule may, at any time before the issuance of a decision and order in the matter, withdraw the request by filing written notice to the hearings division, Austin Building, 430 West Allegan, Lansing, MI 48922. Upon receipt of the request for withdrawal, the department shall issue a decision and order and, where appropriate, a final assessment from which the taxpayer may seek appeal.

(5) If the taxpayer complies with the provisions of subrule (2) of this rule, the department shall respond, in writing, by acknowledging the request. If a taxpayer does not satisfy all of the conditions specified in subrule (2) of this rule, the department shall inform the taxpayer, in writing, of that fact and shall advise the taxpayer that the taxpayer is not entitled to an informal conference.

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1009 Time and place of informal conference; requests to change time {#sec-r-205.1009 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1009}

Rule 9. (1) The department shall set the informal conference at a convenient or reasonable time and place. This rule establishes general principles for the department to apply in determining whether a particular time and place for an informal conference are convenient or reasonable. The department shall exercise sound judgment in applying the principles.

(2) It is reasonable for the time of an informal conference to be set during the regular business hours of the department and during regular working days of the department.

The regular business hours of the department are 8 a.m. to 5 p.m., Monday through Friday, except legal holidays or other days that the department is closed.

(3) It is reasonable for the department to schedule informal conferences throughout the year without regard to seasonal fluctuations in the businesses of particular taxpayers or taxpayer representatives. However, the department shall work with taxpayers or taxpayer representatives to try to minimize any adverse effects that may arise in scheduling an informal conference.

(4) The department shall schedule the place of an informal conference at a location that is available to the department and that has adequate resources for the safe, proper, and efficient handling of an informal conference. The department’s determination of the place for an informal conference is based upon the requirements of fair and efficient tax administration and the availability of conducting the informal conference by telecommunications.

(5) The department shall resolve a request by a taxpayer or taxpayer representative to change the date of an informal conference on a case-by-case basis taking into consideration all of the following factors:

(a) The availability of conducting the informal conference by telecommunications.

(b) Whether this is the first request to change the time of an informal conference.

(d) Factors that indicate that holding the informal conference could pose an undue inconvenience to the taxpayer.

(e) Factors that indicate that holding the informal conference would fulfill the requirements of fair and efficient tax administration.

(6) Nothing in this rule shall be interpreted as precluding the department from rescheduling an informal conference if it would promote the effective and efficient conduct of the informal conference. If a taxpayer requests that the informal conference not be rescheduled, then the department shall consider the request according to the provisions of subrule (5) of this rule.

(7) If a request to change the time of a scheduled informal conference is denied, then the informal conference shall be at the time as established by the department.

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1010 Informal conference generally {#sec-r-205.1010 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1010}

Rule 10. (1) The purpose of the informal conference is to informally discuss the positions of the parties, more thoroughly narrow the issues that may not be capable of resolution at this level, and present arguments to the referee in support of the parties' positions, to permit the referee to make a recommendation to the treasurer.

(2) The informal conference is not a contested case proceeding and is not subject to the provisions of the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. The provisions of the open meetings act, 1976 PA 267, MCL 15.261 to 15.275 do not apply.

(3) The department shall provide the taxpayer or taxpayer representative a written notice of the assignment of the informal conference to a referee.

(4) The department shall provide written notice of the time and place of the informal conference by certified mail. The department shall provide the notice not less than 20 days before the informal conference. The notice shall specify whether the conference will address a notice of intent to assess, a notice of denial of refund, or a notice of audit refund, the type of tax, and the tax period that is the subject of the informal conference.

The department shall explain the nature of the informal conference and advise that the final determination will be made by the treasurer.

(5) At the beginning of the informal conference, the referee shall ascertain whether any portion of the tax dispute has been resolved. If the parties resolve any portion of the tax dispute at any time after the tax dispute has been assigned to a referee, but before the treasurer has issued a decision and order, the parties shall notify the referee assigned to conduct the informal conference.

(6) The referee shall conduct the informal conference in an informal manner that facilitates the exchange of information needed to review and, where applicable, to resolve the tax dispute. The referee shall hear and receive testimony. Generally, testimony is not taken under oath, although matters alleged as fact may be submitted in the form of affidavits or may be declared to be true under penalties of perjury. The department shall provide the reasons and authority for the proposed assessment. The parties shall discuss their respective positions with a view to narrowing the issues and shall present arguments based upon the law in support of their respective positions.

(7) Instead of attending the informal conference, the parties may have the dispute reviewed and resolved based upon a written statement that contains the facts, a discussion of the law, and the legal arguments that the parties would have presented had they attended the informal conference. A party that chooses to have a dispute reviewed in this manner shall so advise the referee as early as possible in advance of the scheduled informal conference.

(8) A taxpayer may request that an informal conference be conducted by telecommunications. The department may require an informal conference by telecommunication, if required for fair and efficient tax administration.

(9) If an informal conference is conducted by telecommunications, the referee shall identify all persons, by name and title, and shall ask whether any participant is recording the informal conference and whether any participant objects to the recording of the informal conference.

(10) If a taxpayer or taxpayer representative fails to appear at a scheduled informal conference without permission to change the time, then the referee shall proceed in the absence of that party and the referee shall prepare a recommendation based upon the information available.

(11) A formal record of the informal conference is not made. A taxpayer at whose request the informal conference is being held or the department may make a sound recording of the informal conference at the recording party's expense. The taxpayer or department employee who makes the sound recording shall give advance written notice of not less than 7 days to the opposing party and to the referee. The authorization to make a sound recording of the informal conference does not include authorization to make a video recording.

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1011 Informal conference; referee recommendation; decision and order of treasurer following informal conference {#sec-r-205.1011 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1011}

Rule 11. (1) After reviewing the testimony, evidence, comments, and, if applicable, written submissions at an informal conference, the referee shall prepare a written recommendation to the treasurer.

(2) The treasurer or an authorized representative of the treasurer shall review the recommendation and shall issue a written decision and order of determination. In the written decision and order of determination, the treasurer, or an authorized representative of the treasurer, shall do either of the following:

(a) Accept the recommendation of the referee.

(b) Reject the recommendation of the referee, in whole or part, with a written rebuttal explanation of the reasons for rejecting the recommendation of the referee.

(3) The decision and order of determination shall contain a statement of the reasons and authority for the decision and shall assess the tax, interest, and penalty found to be due and payable. The decision and order of determination shall be limited to the subject of the informal conference. Neither the taxpayer nor the department representative shall be provided an opportunity to review the recommendation of the referee and to file objections to the recommendation in advance of the issuance of the decision and order of determination by the treasurer or an authorized representative of the treasurer. There shall not be a rehearing of a decision and order of determination.

(4) The department shall send, to the taxpayer, by certified mail if the taxpayer is not represented, or by first-class mail if the taxpayer is represented in the dispute, a copy of the recommendation, the decision and order of determination, and, if applicable, the rebuttal explanation. If a taxpayer is represented in the informal conference, the department shall send, by certified mail, to the taxpayer representative, a copy of the recommendation, the decision and order of determination, and, if applicable, the rebuttal explanation.

(5) If the decision and order of determination affirms an intent to assess in whole or in part, the decision and order of determination must state that a notice of final assessment will be issued. The notice of final assessment must include a statement advising the taxpayer of the right to appeal. If the decision and order of determination confirms the denial of a refund, in whole or in part, the decision and order of determination must include a statement advising the taxpayer of the right to appeal. A decision and order of determination addressing audit refunds must include a statement advising the taxpayer of the right to appeal.

History

History: 1996 AACS; 2018 AACS.

Mich. Admin. Code R 205.1012 Taxpayer negligence determination; burden of proof; examples of negligence; examples of reasonable cause for waiving negligence penalty {#sec-r-205.1012 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1012}

Rule 12. (1) Negligence is the lack of due care in failing to do what a reasonable and ordinarily prudent person would have done under the particular circumstances. The standard for determining negligence is whether the taxpayer exercised ordinary care and prudence in preparing and filing a return and paying the applicable tax in accordance with the statute. The facts and circumstances of each case will be considered.

(2) When the department imposes a negligence penalty, the department bears the burden of establishing facts to support a finding of negligence and the taxpayer bears the burden of establishing facts that will negate a finding of negligence. The taxpayer shall file a written statement that explains, in detail, the facts which are relied upon to defeat the penalty and which constitute reasonable cause.

(3) The following illustrative examples, when clearly established, are generally considered to constitute negligence:

Example no. 1: The income tax and single business tax instructions clearly require the prepayment of the annual tax, but the taxpayer remits estimated tax payments of less than the required amount.

Example no. 2: A taxpayer fails to file an income tax or single business tax amended return within 120 days, as required by law, after a final alteration, modification, recomputation, or determination of a deficiency under the provisions of the internal revenue code.

Example no. 3: The taxpayer has been assessed a tax deficiency. There is a subsequent audit of the taxpayer that results in a similar deficiency for a subsequent tax period resulting from the taxpayer's failure to correct internal controls and reporting procedures that contributed to the original assessment.

Example no. 4: The income tax and single business tax instructions clearly require payment of the estimated annual tax at the time of filing an extension request. The taxpayer understates and underpays the annual liability with the extension request.

Example no. 5: The estate tax act requires an amended return to be filed within 60 days of the date of the federal determination. The personal representative fails to file the amended return within the 60 days allowed.

(4) The following illustrative examples, when clearly established, are generally considered to constitute reasonable cause for purposes of waiving the negligence penalty:

Example no. 1: The taxpayer was assessed a deficiency of sales and use taxes and negligence penalty on the taxpayer's first audit. Reporting procedures were not adequate during the audit period. The taxpayer overstated and understated food deductions in each year. The taxpayer claimed a resale exemption on fixed asset purchases, expense items, and out-of-state purchases. The taxpayer hired an accountant after the deficiency was issued. The taxpayer has subsequently invested in a new system for record keeping purposes. Reasonable cause has been established because corrective steps were taken to prevent the recurrence of this situation.

Example no. 2: The taxpayer was assessed an income tax deficiency and negligence penalty. The taxpayer is a Michigan resident who is employed in a neighboring state. The taxpayer's employer withheld income tax for the wrong state.

The taxpayer's employer provided the taxpayer and the department with a letter acknowledging the error as an error of the employer. The taxpayer requests a waiver of the negligence penalty. Reasonable cause has been established because the taxpayer's employer created the error and acknowledged the error. The taxpayer exercised ordinary care and prudence.

History

History: 1996 AACS.

Mich. Admin. Code R 205.1013 Failure to file or pay penalty; waiver of penalty; reasonable cause for failure to file or pay {#sec-r-205.1013 omnilex-key=us-mi-regs-official--dept-treasury--R 205.1013}

Rule 13. (1) Except as otherwise provided in the act, if a taxpayer fails or refuses to file a return, or fails or refuses to pay a tax administered under the act within the time specified by law, a penalty of $10.00 or 5% of the tax, whichever is greater, shall be added to the tax owed if the failure is for a period of not more than 1 calendar month.

An additional penalty shall be added to the tax owed at the rate of 5% for each additional month or fraction of a month during which the failure continues or the tax is not paid. The maximum penalty shall be 50% of the tax owed.

(2) If a return is filed or a remittance is paid after the time specified, the taxpayer may request that the commissioner of revenue waive and the commissioner shall waive the penalty authorized by section 24(4) of the act if the taxpayer establishes that the failure to file the return or to pay the tax was due to reasonable cause and not to willful neglect.

(3) A waiver of penalty request shall be in writing and shall state the reasons alleged to constitute reasonable cause and the absence of willful neglect.

(4) The taxpayer bears the burden of affirmatively establishing, by clear and convincing evidence, that the failure to file or failure to pay was due to reasonable cause.

(5) A taxpayer is required to exercise ordinary business care and prudence in complying with filing and payment requirements.

(6) When determining whether a taxpayer was unable to file a return or pay a tax in spite of the exercise of ordinary business care and prudence, the timeliness, facts and circumstances of each case will be considered.

(7) The examples set forth in this subrule, if clearly established and if other contributing circumstances do not exist, generally constitute reasonable cause for failure to file or pay. The following examples are not intended to be the only instances in which reasonable cause may be established and each case shall be judged individually upon its own facts and circumstances:

(a) The delay in filing or payment is caused by the prolonged unavoidable absence of the taxpayer responsible for filing and the taxpayer who is precluded, due to circumstances beyond the taxpayer's control, from making alternate arrangements for filing and paying.

(b) The delay in filing or payment is caused by the destruction, by fire or other casualty, of the taxpayer's records or the taxpayer's business if the destroyed records directly related to and prevented timely compliance.

(c) The delay arose from the taxpayer's inability to obtain the necessary records or information due to reasons beyond the taxpayer's control. The taxpayer shall explain why the records are needed to comply, why the records are unavailable, other avenues explored to secure the information, and why the information is not estimated.

(d) The taxpayer receives erroneous written information from a department employee who responds to the taxpayer's request and the taxpayer provided all complete and relevant information. The erroneous written information directly relates to and prevents the taxpayer from complying with state tax obligations.

(e) The filing of a return or payment of tax is delayed in delivery by the United States post office or is filed or paid in the wrong office of the department.

(f) A bank error that is the sole cause of the failure to pay.

(8) The following factors alone do not constitute reasonable cause for failure to file or pay. However, these factors may be considered with other facts and circumstances and may constitute reasonable cause. The following factors are for illustration only and are not an exclusive listing of factors:

(a) The compliance history of the taxpayer.

(b) The nature of the tax.

(c) The taxpayer's financial circumstances, including the amount and nature of the taxpayer's expenditures in light of the income the taxpayer, at the time of the expenditures, could reasonably expect to receive before the due date prescribed for paying the tax.

(d) The taxpayer was incorrectly advised by a tax advisor who is competent in Michigan state tax matters after furnishing the advisor with all necessary and relevant information and the taxpayer acted reasonably in not securing further advice.

(e) The taxpayer's accounting and financial system that is designed to ensure timely filing breaks down due to unavoidable circumstances and, upon discovery, the taxpayer promptly complies.

(f) The death or serious incapacitating illness of the taxpayer or the person responsible for filing the return or making the payment or a member of his or her immediate family.

(g) Lack of funds to make timely payment.

(h) A taxpayer's reliance on an employee or agent to file the return or make the payment.

History

History: 1996 AACS.

R 205.2001 to R 205.2011 Audit Standards for Field Audits

Mich. Admin. Code R 205.2001 Definitions {#sec-r-205.2001 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2001}

DEPARTMENT OF TREASURY

STATE TREASURER

AUDIT STANDARDS FOR FIELD AUDITS

(By authority conferred on the Department of Treasury by sections 3 and 21 of 1941 PA 122, MCL 205.3 and MCL 205.21.)

Rule 1. As used in these rules:

(a) “Audit sampling” means the application of an audit procedure to less than 100% of the items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance or class.

(b) “Audit workpapers” mean workpapers created by the auditor. The auditor shall retain the audit workpapers and may only share them with the audited person or his or her or its authorized representative to the extent disclosure is allowed by statute. The workpapers provide support for the auditor’s opinion as to the proper tax owed for a tax period.

(i) Workpapers include information about the procedures followed, the tests performed, the information obtained, including identification of the documents or accounts that constitute the evidence pertinent to the auditor’s review and conclusions about an audited person’s tax liability. The workpapers may include samples of the documents or accounts that support the auditor’s conclusions.

(c) “Field audit” means the examination of the books and records of a person to determine the proper tax liability for a tax period. A field audit includes an examination of the audited person’s books and records to test if they are sufficient to accurately determine the tax liability for a tax period. All of the following apply:

(i) The books and records of a person are sufficient if they allow transactions to be traced back to the source or forward to a final total. For example, bank deposit slips, receipt books, credit card charge slips, cash register tapes, canceled checks, credit card sales slips, invoices, bills of lading, and shipping documents are source documents.

(ii) Sales transactions must identify the item sold. Sales records include, but are not limited to sales slips, receipts, invoices, cash register tapes or other original sales documents.

(iii) Documents prepared for internal use by the audited person are not source documents for purposes of tracing a final total to a transaction if the documents do not provide detail at the transaction level and if the documents were created in a process for which the auditor cannot obtain reasonable assurance that the transactions were accurately reproduced from the original documents.

(d) “Indirect audit procedures” means the determination of the tax liability through an analysis of the audited person’s business activities using information from a range of sources beyond the person’s declaration and formal books and records.

(e) A “review” generally requires the examination of only one or two documents but in some instances may require a review of other related documents to substantiate an item that was reported, or that should have been reported on a tax return or claim form. A review is not a field audit. The audit standards for field audits, rule 2 through rule 11 of these rules, do not apply to reviews.

(i) Generally, department employees who conduct reviews are not required to meet the minimum educational standards for auditors outlined by the Michigan civil service commission but they must meet the minimum educational requirements that are commensurate with the scope and expertise necessary to conduct a review.

(ii) Department employees who conduct reviews do not visit the taxpayer’s place of business.

(iii) Reviews do not require an understanding of the entity or the entity’s internal controls. Reviews do not require an assessment of audit risk and do not involve sampling.

(iv) Department employees who conduct reviews are subject to the standards for the treatment of the public set forth in the taxpayer bill of rights rules, R 205.1001 through R 205.1013, the ethical conduct standards set forth in the state ethics act, 1973 PA 196, MCL 15.341 through 15.348, as well as civil service commission rules and regulations.

Employees are also subject to the department policies and procedures set forth in the treasury employee handbook regarding confidential information, employee conduct, training and development. Employees are also subject to the policies and procedures set forth in the taxpayer rights handbook regarding conduct, including but not limited to conflicts of interest, confidentiality, fairness and impartiality, and courtesy and consideration.

(v) The results of the review may be reported to the taxpayer or claimant through a letter, a notice of refund adjustment or a notice of intent to assess.

Editor's Note: An obvious error in R 205.2001 was corrected at the request of the promulgating agency, pursuant to Section 56 of 1969 PA 306, as amended by 2000 PA 262, MCL 24.256. The rule containing the error was published in Michigan Register, 2015 MR 9. The memorandum requesting the correction was published in Michigan Register, 2015 MR 9.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2002 Technical training; competence for field audits {#sec-r-205.2002 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2002}

Rule 2. (1) Auditors must meet the minimum educational requirements outlined by the Michigan civil service commission in the applicable civil service job specification.

(2) Auditors must possess the professional competence needed to adequately address the field audit objectives and perform the field audit.

(3) Auditors must have adequate technical training and proficiency to perform a field audit. Auditors must satisfactorily complete relevant departmental training prior to conducting an audit.

(4) Departmental training must be conducted by employees who have previously demonstrated competence in the area in which training is being provided. Training includes instruction in all of the following:

(a) The tax under audit.

(b) Sampling methods employed in the audit.

(5) Auditors must have appropriate technical knowledge. Appropriate technical knowledge contemplates all of the following:

(a) The ability and resources to conduct necessary research.

(b) Access to consult with knowledgeable individuals as necessary.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2003 Objectivity, independence {#sec-r-205.2003 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2003}

Rule 3. (1) Independence is a state of mind that permits the performance of a field audit without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity and exercise objectivity and professional skepticism.

(2) Objectivity imposes the obligation to be impartial, intellectually honest, and free of conflicts of interest. Independence precludes relationships that may appear to impair the auditor’s objectivity.

(i) Relationships that may appear to impair objectivity include a direct or a material indirect interest in a taxpayer by the auditor or a family member of the auditor.

(3) An auditor’s independence and objectivity are not impaired by the selection of a taxpayer for audit by the department because the taxpayer or the taxpayer’s industry has been identified through audit selection criteria as at risk for noncompliance with tax laws.

(4) If an auditor believes that a conflict of interest may exist in relation to an audit, he or she shall inform the audit supervisor. The audit supervisor will assist the auditor in determining the best course of action.

(5) The department will provide periodic training to promote awareness about the necessity for independence and objectivity in carrying out the duties of an auditor.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2004 Due professional care for field audits {#sec-r-205.2004 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2004}

Rule 4. (1) Auditors must exercise due professional care in the performance of the field audit and the preparation of the audit report. Due professional care requires auditors to plan and perform the audit observing field audit standards. Field audit standards include all of the following:

(a) Adequately planning the audit and supervising assistants.

(b) Obtaining a sufficient understanding of the audited person and internal controls that are significant within the audit objectives.

(2) Auditors should possess the skills commonly possessed by other auditors and exercise those skills with reasonable care and diligence.

(3) The lead auditor shall assign tasks and supervise assistants.

(a) Auditors should be assigned to tasks and supervised commensurate with their level of knowledge, skill, and ability so that they can evaluate the audit evidence they are examining.

(b) The lead auditor shall know the relevant auditing standards and be knowledgeable of the person being audited.

(4) Throughout the field audit, auditors shall exercise professional skepticism when evaluating the competency and sufficiency of the evidence. Professional skepticism requires the auditor to have a questioning mind and the ability to make a critical assessment of the evidence.

(5) Auditors shall diligently, in good faith and with integrity, gather evidence for objective evaluation.

(6) When evaluating the quality of information provided by the audited person, auditors shall recognize that the information should not be accepted without some basis for reliance. Auditors should seek to verify the accuracy of the audited person’s assertions.

(7) Failure of the audited person to provide requested evidence shall not reflect on the due professional care of the auditor.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2005 Reasonable assurance for field audits {#sec-r-205.2005 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2005}

Rule 5. (1) Auditors shall obtain sufficient and appropriate evidence to provide reasonable assurance that the findings of the field audit have reasonably determined the tax liability of the audited person.

(2) Auditors shall use professional judgment regarding the areas to be tested and the nature, timing, and extent of the testing to be performed.

(3) Auditors shall use professional judgment in interpreting the results and evaluating the audit evidence.

(4) Reasonable assurance is not absolute assurance. Absolute assurance is not attainable because of the nature of audit evidence and the fact that auditors must rely on evidence that is persuasive rather than convincing.

(5) Reasonable assurance does not apply to an audit if the audited person does not have sufficient records or does not permit access to records. The auditor may then rely on the best available information to determine estimated tax due.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2006 Planning and supervision of field audits {#sec-r-205.2006 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2006}

Rule 6. (1) To the extent possible, the field audit plan should be discussed with the audited person or the person’s authorized representative prior to the commencement of fieldwork.

(2) Auditors should plan audit procedures to obtain the quality and quantity of evidence necessary to accurately determine the tax liability.

(a) The specific procedures employed and the evidence gathered will vary depending upon the audited person’s record-keeping system, amounts reported, risk of misstatement of the tax liability, and other circumstances.

(3) The nature, timing, and extent of the direction and supervision of field audits depend on many factors, including the following:

(a) The size and complexity of the entity.

(b) The area of the audit.

(d) The capabilities and competence of the field auditors.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2007 Understanding audited person, including internal controls, and assessment of risk {#sec-r-205.2007 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2007}

Rule 7. (1) Auditors must have an understanding of all of the following as it pertains to the audited person:

(a) Matters relating to the person’s business, including its organization, operating characteristics, business lines, and capital structure.

(b) Matters affecting the industry in which the person operates, such as financial reporting practices, economic conditions, laws and regulations, and technological changes.

(d) Public information about the person.

(e) The relative complexity of the person's operations.

(2) Auditors shall obtain an understanding of the internal controls that are significant within the context of the audit objective. Both of the following apply:

(a) The audit objective is not to conduct an audit of internal control over financial reporting or to express an opinion on the effectiveness of the person's internal control over financial reporting.

(b) Auditors should have an understanding of the internal controls in order to plan and perform the audit to obtain appropriate evidence that is sufficient to obtain reasonable assurance the tax liability is accurately determined.

(3) Auditors shall assess the risk that findings, conclusions, and ultimately the tax liability may be improper or incomplete. The auditor's risk assessment and the determination of the necessary procedures includes consideration of all of the following:

(a) The complexity of the organization, business unit, or process.

(b) The condition of the records.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2008 Field audit evidence and documentation {#sec-r-205.2008 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2008}

Rule 8. (1) Auditors must obtain sufficient and appropriate audit evidence by performing audit procedures to provide a reasonable assurance for the conclusions reached in the audit.

(2) Auditors must prepare audit documentation in sufficient detail to enable an experienced auditor, having no previous connections to the audit, to understand from the audit documentation the nature, timing, extent, and results of audit procedures performed; the audit evidence obtained and its source; and the conclusions reached.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2009 Field audit sampling and sampling projections {#sec-r-205.2009 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2009}

Rule 9. (1) When designing an audit sample, auditors must consider the purpose of the audit procedure and the characteristics of the population from which the sample will be drawn. The auditor may use statistical or nonstatistical sampling. The sampling method shall be determined on a case-by-case basis. The auditor may consider the circumstances of the audit, the type of taxpayer entity, and the taxpayer’s internal control system.

(2) Auditors must select items for the sample in such a way that the auditors can reasonably expect the sample to be representative of the relevant population and likely to provide the auditors with a reasonable basis for conclusions about the population.

(3) Auditors must perform audit procedures, appropriate to the purpose, on each item selected.

(4) Auditors must investigate the nature and causes of any deviations or misstatements identified and evaluate their possible effect on the purpose of the audit procedure and on other areas of the audit.

(5) Auditors must project the results of audit sampling to the population.

(6) Auditors may use either statistical or non-statistical sampling of the audited person’s books and records to provide sufficient evidence to form a conclusion about the correct tax liability. Non-statistical sampling includes judgmental samples, random samples, simple random sampling, systematic sampling, and cluster sampling or any other sampling method that does not involve statistical evaluation.

(7) Whenever 2 or more accounting populations for a particular tax return are combined and examined with the aid of a statistical sample, the sample result can be combined according to the rules for a stratified sample.

(8) When sampling the same accounts for multiple years, the auditor may combine the accounts into 1 population. The result must be projected by a reasonable method that the auditor determines prior to selecting the sampling units.

(9) If an audited person does not have sufficient records or fails to provide records, the auditor shall determine the best information available and base the estimated tax liability on that information.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2010 Elements of audit report of findings {#sec-r-205.2010 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2010}

Rule 10. The audit report shall disclose all of the following information:

(a) The audit scope, methods, and procedures used, as well as books, records, and papers examined and relied upon to determine any tax deficiency or credit for the tax period or periods involved.

(b) If the evidential matter warrants, a recommendation for penalty and interest, along with the basis for the recommendation, and the statutory authority providing for penalty and interest.

(c) Whether the audited person is in agreement or disagreement with the audit findings. If the audited person disagrees with the findings, indicate the audited person’s basis for disagreement if the audited person has communicated a basis for disagreement.

History

History: 2015 AACS.

Mich. Admin. Code R 205.2011 Confidentiality {#sec-r-205.2011 omnilex-key=us-mi-regs-official--dept-treasury--R 205.2011}

Rule 11. Auditors are bound by the same confidentiality rules promulgated under the taxpayer bill of rights rules which are R 205.1001(c), R 205.1003, R 205.1004, R 205.1006 and R 205.1007.

History

History: 2015 AACS.

R 205.3101 to R 205.3802 Contested Case Procedures

Mich. Admin. Code R 205.3101 Definitions {#sec-r-205.3101 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3101}

DEPARTMENT OF TREASURY

BUREAU OF REVENUE

CONTESTED CASE PROCEDURES

(By authority conferred on the state commissioner of revenue by section 3 of Act No. 122 of the Public Acts of 1941, as amended, and section 33 of Act No. 306 of the Public Acts of 1969, as amended, being SS205.3 and 24.233 of the Michigan Compiled Laws)

PART 1. GENERAL PROVISIONS

Rule 101. (1) As used in these rules:

(a) "Act" means Act No. 306 of the Public Acts of 1969, as amended, being S 24.201 et seq. of the Michigan Compiled Laws, and known as the administrative procedures act of 1969.

(b) "Bureau" means the Michigan bureau of revenue.

(d) "Petitioner" means a person or a party who initiates the commencement of a contested case.

(e) "Presiding officer" means presiding officer as referred to in sections 79 and 80 of the act.

(f) "Respondent" means a party against whom a contested case proceeding is commenced.

(2) Words defined in the act have the same meanings when used in these rules.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3102 Construction of rules {#sec-r-205.3102 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3102}

Rule 102. These rules shall be construed to secure a just, speedy, efficient, and fair determination of the issues presented in a contested case proceeding consistent with due process and the safeguarding of the rights of the parties. In light of the variety of circumstances in which an appeal proceeding may arise, these rules shall be applied flexibly to achieve the goals of the act without prejudice to the rights of the parties.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3103 Scope {#sec-r-205.3103 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3103}

Rule 103. (1) These rules govern the practice and procedure in all contested case proceedings before the commissioner.

(2) Where there is no applicable rule, chapter 4 of the act shall govern.

PART 2. COMMENCEMENT OF APPEAL PROCEEDING

History

History: 1995 AACS.

Mich. Admin. Code R 205.3201 Nature of appeal {#sec-r-205.3201 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3201}

Rule 201. Appeals to the commissioner are limited to the following:

(a) A final determination of the city or the administrator on a final assessment, denial in whole or part of a claim for refund, or a special ruling.

(b) Adoption of a rule by the administrator.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3202 Time and place for filing appeal {#sec-r-205.3202 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3202}

Rule 202. The appeal, in the form and content as provided in these rules, shall be filed with the commissioner at the commissioner's office in Lansing, Michigan, not later than 56 days after notice of the final determination of the administrator or the date of the adoption of a rule.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3203 Petition for appeal proceeding {#sec-r-205.3203 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3203}

Rule 203. Except as otherwise provided by the commissioner, a person who seeks to initiate an appeal proceeding shall submit a written petition to the commissioner.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3204 Docket number {#sec-r-205.3204 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3204}

Rule 204. Upon receipt of the petition, the matter will be docketed and assigned a number. The parties will be notified of the docket number. Thereafter, the parties shall place the docket number on all papers filed in the proceeding.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3205 Service of petition {#sec-r-205.3205 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3205}

Rule 205. (1) In any case filed with the commissioner, the petitioner shall serve a copy of the petition upon the administrator of the city or any agent within the city designated by the administrator. The petitioner shall file proof of service with the commissioner within 7 days after service on the respondent. If proof of service is filed with the commissioner by mail, the postmark will be considered the date of filing.

(2) Service on the administrator or his or her designated agent may be made by the petitioner or his or her representative either personally or by registered or certified mail, with the return receipt requested.

(3) If service is made by mail, proof of service shall be made by filing an affidavit of service with the commissioner which certifies compliance with subrules (1) and (2) of this rule and which specifies all of the following:

(a) The method of service.

(b) The identity of the server.

(d) The address to which the materials were mailed. The mailing receipt shall be attached to the affidavit.

(4) If the service is made by personal service, proof of service shall be made by filing an affidavit of service with the commissioner that certifies all of the following:

(a) The method of service.

(b) The identity of the server.

(d) The date and place of service.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3206 Filed papers; service of party {#sec-r-205.3206 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3206}

Rule 206. (1) A party shall serve all papers filed in an appeal proceeding by that party upon all other parties. In a case in which there is an unusually large number of parties on the same side, the presiding officer may order the following:

(a) The parties need not serve their papers on each other.

(b) A response to a party pleading need only be served on the party who filed the pleading.

(c) A cross-claim, counterclaim, or allegation in an answer demanding a reply is deemed denied by the parties not served.

(d) The filing of a pleading and service on an adverse party constitutes notice of the pleading to all parties.A copy of the order shall be served on all parties.

(2) Except for the service of a petition that is otherwise provided for in these rules, a party shall serve papers in person or by first-class mail.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3207 Filing of papers {#sec-r-205.3207 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3207}

Rule 207. Any document to be filed with the commissioner shall be filed at the commissioner's office in Lansing, Michigan; however, when hearings are held outside of Lansing, Michigan, documents may be filed at the place of hearing with the commissioner's designated representative. Any document to be filed with the commissioner may be filed by mail. The postmark will be considered the date of filing.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3208 Form of petition {#sec-r-205.3208 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3208}

Rule 208. The petition shall be complete so as to fully state the issues and shall appear as follows:

STATE OF MICHIGAN

BUREAU OF REVENUE

Petitioner, Docket No. ____________________ City of Respondent.

PETITION

TO THE STATE COMMISSIONER OF REVENUE:

The petitioner seeks a redetermination of the (final assessment, denial in whole or in part of a claim for refund, special ruling, adoption of a rule or regulation by the administrator) set out by the City of _________________ in its determination, decision, order, or rule dated_______________ and as a basis of this proceeding alleges:

The petitioner is (state whether individual, corporation, or other entity) with principal office (or residence) at (provide address, city, state, and zip code).
The matter in dispute is _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ 3. The determination, decision, order, or rule is based on the following errors:

(enumerate with specificity the claim of error in a concise manner; avoid pleading facts that properly belong in the succeeding paragraph). A copy of the challenged determination, decision, order or rule is attached and marked as Exhibit A.

The facts upon which the petitioner relies as the basis for this proceeding are:

(set out the allegations of fact relied upon, the prior legal steps taken by the petitioner, in orderly and logical sequence, with subparagraphs lettered in a manner to inform the commissioner of the issues to be presented and to enable the city to admit or deny each specific allegation). The petitioner respectfully requests the commissioner to hear the proceedings and (state the relief desired).

Signed_________________________ Name and address ___________________________

History

History: 1995 AACS.

Mich. Admin. Code R 205.3209 Notice of appearance by attorney {#sec-r-205.3209 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3209}

Rule 209. An attorney who represents a party in an appeal shall promptly file an appearance with the commissioner.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3210 Appearances generally; representation {#sec-r-205.3210 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3210}

Rule 210. A party may appear in person, by an authorized representative, or by legal counsel. The commissioner may require adequate identification and authority.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3211 Mailing addresses and telephone numbers of parties {#sec-r-205.3211 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3211}

Rule 211. All parties to a proceeding shall keep the commissioner informed of their current mailing addresses and telephone numbers.

PART 3. PLEADINGS, MOTION PRACTICE, AND INTERVENTION

History

History: 1995 AACS.

Mich. Admin. Code R 205.3301 Answer {#sec-r-205.3301 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3301}

Rule 301. (1) After service of a copy of the petition, the respondent shall have 21 days within which to file an answer to the petition. The answer shall fully and completely inform the petitioner and the commissioner of the nature of the defense.

It shall contain a specific admission or denial of each material allegation of fact contained in the petition, a statement of any facts upon which the respondent relies for defense, and any affirmative defenses to be relied upon by the respondent.

(2) Each paragraph contained in the answer shall be numbered and lettered to correspond with the paragraphs of the petition. An answer, signed by the respondent or the respondent's legal representative, shall be filed with the commissioner.

(3) The respondent shall serve a copy of the answer upon the petitioner or his or her representative of record and shall file proof of service with the commissioner within 7 days after such service.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3302 General rules of pleading; late filing of pleadings {#sec-r-205.3302 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3302}

Rule 302. (1) R 205.3208, R 205.3303, and R 205.3304 regarding the form, captioning, and signing of a petition apply to all motions, affidavits, and other papers provided for by these rules. However, an affidavit shall be verified by oath or affirmation.

(2) Every pleading shall be legibly typewritten or printed and cover only 1 side of plain white paper. The paper shall be not more than 8 1/2 inches wide and 11 inches long. Copies may be on any weight paper.

(3) Except as otherwise provided in these rules, a signed original of all papers shall be filed.

(4) If a pleading or other paper is not filed in accordance with applicable time limits, the right of a party to make that filing is waived. The presiding officer may exercise discretion and may, upon a showing of good cause for the late filing, permit the late filing of a pleading or other paper.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3303 Names of parties {#sec-r-205.3303 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3303}

Rule 303. (1) In a petition, the caption shall include the names of all parties. In other papers, it is sufficient to state the name of the first party on each side, with an appropriate indication of other parties, such as "et al."

(2) If the petitioner is an individual, the full given name and surname shall be stated in the caption. If the petitioner is a married woman, her given name shall be used, and not the name of her husband preceded by "Mrs." If the petitioners are husband and wife, the full given name and surname of each shall be stated.

(3) If the petitioner is a fiduciary, the names of the estate, trust, or other person for whom he or she acts shall be given first, followed by the name of the fiduciary.

(4) If the petitioner is a business operating under an assumed name, the full name of the business, for example, the d/b/a, shall be stated. If the petitioner is a corporation, the full name of the corporation shall be stated. If the petitioner is a limited liability company, the full name of the limited liability company shall be stated.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3304 Signature {#sec-r-205.3304 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3304}

Rule 304. The written signature, whether of the representative or of the petitioner, shall be in individual form and not in the firm name, except that if the petitioner is a corporation, the written signature shall be by an active officer of the corporation, and if the petitioner is a limited liability company, the written signature shall be by a managing member of the limited liability company. The name and mailing address of the petitioner or of the representative shall be typed or printed immediately following the written signature.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3305 Reply to motion; failure to file; oral argument {#sec-r-205.3305 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3305}

Rule 305. (1) A party may file a written reply to a written motion. A party shall have not less than 14 days from the date of service of a motion to file a reply unless a shorter response period is specified by the presiding officer for good cause. The presiding officer may order an opposing party to file a written reply to a written motion.

(2) Failure to file a reply as ordered shall constitute consent to the granting of relief sought in the motion.

(3) The presiding officer may order oral argument on any motion.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3306 Relief sought by motion; disposal by proposal for decision {#sec-r-205.3306 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3306}

Rule 306. Any relief sought by motion that has the result of substantially affecting a significant claim or interest of any party shall be disposed of by proposal for decision by the presiding officer.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3307 Motion for extension of time {#sec-r-205.3307 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3307}

Rule 307. (1) Except as otherwise provided by law and except for oral motions made during a hearing, requests for extensions of time in which to perform any act required or allowed to be done at or within a specific time by these rules shall be made by a written motion. The motion shall be filed before the expiration of the period originally prescribed or previously extended. If the presiding officer determines that there is good cause for the extension of time, the motion may be granted. The presiding officer shall state, with particularity, the reasons for granting the extension.

(2) This rule shall not apply to motions for adjournment of a prehearing conference or a hearing.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3308 Time for filing motion for more definite statement, motion for amendment, or motion for intervention {#sec-r-205.3308 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3308}

Rule 308. A party may file a motion for more definite statement, a motion for amendment, or a motion for intervention at any time before the date set by the presiding officer for a prehearing conference.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3309 Amendments {#sec-r-205.3309 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3309}

Rule 309. (1) Either party may amend his or her petition or answer at any time before the hearing by consent of the adverse party or by leave of the presiding officer. All motions to amend shall be accompanied by the proposed amendments.

(2) An original of the motion shall be filed with the commissioner, and a copy shall be served upon the adverse party or authorized representative.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3310 Summary decision {#sec-r-205.3310 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3310}

Rule 310. A party may move for a summary decision in the party's favor upon any of the following grounds:

(a) The opposing party has failed to state a claim upon which relief may be granted.

(b) The opposing party has failed to state a valid defense to the claim asserted by that party.

(c) There is no genuine issue of material fact and the moving party is entitled to a summary decision as a matter of law.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3311 Motion for more definite statement {#sec-r-205.3311 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3311}

Rule 311. If a pleading is so vague or ambiguous that it cannot be understood or answered, an opposing party may move for a more definite statement before filing a responsive pleading. The motion shall identify the defects and shall request the desired details. If the motion is granted and not obeyed within 14 days after notice of the order, the presiding officer may strike the pleading to which the motion was directed or make any other order that is deemed just. If the motion is denied, the moving party shall promptly file the responsive pleading that was delayed by the motion.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3312 Intervention {#sec-r-205.3312 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3312}

Rule 312. (1) A person shall be permitted to intervene in a proceeding if either of the following occurs:

(a) The applicant has an unconditional right to intervene conferred by law.

(b) An interest of the applicant that may be directly affected is not adequately represented by the existing parties and the applicant may be bound by a decision in the proceeding.

(2) A person may be permitted to intervene in a proceeding if any of the following occurs:

(a) A statute of this state confers a conditional right to intervene.

(b) The applicant's claim or defense and the proceeding have a question of law or fact in common.

(3) When ruling on an application for intervention, the presiding officer shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3313 Application for intervention; filing; late filing {#sec-r-205.3313 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3313}

Rule 313. (1) Any person claiming a right to intervene or an interest of such a nature that intervention may be appropriate may file an application to intervene. An application for intervention shall state the grounds for intervention and the supporting facts in a manner that fully advises the parties and the presiding officer of the specific issues of fact or law with which the applicant is concerned.

(2) A person shall file an application for intervention not less than 14 days before the date set for the hearing. The person who files the application shall attach copies of all the proofs of service for papers served upon parties to the proceeding. The presiding officer shall not grant an application for intervention that is filed late unless the person who files the application shows good cause for the delay and shows that a denial of the application is detrimental to the public interest.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3314 Answer to application for intervention; waiver; time for filing {#sec-r-205.3314 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3314}

Rule 314. (1) A party to a proceeding may file an answer to an application for intervention.

(2) Failure of a party to file an answer waives the party's right to object to the intervention.

(3) An answer shall be filed with the commissioner within 7 days after the date of service of the application, but not later than 4 days before the date of the hearing. The presiding officer may set other dates for filing an answer where an application has been filed late.

(4) An application shall not be granted until all parties have had an opportunity to object to the intervention.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3315 Ruling on application for intervention {#sec-r-205.3315 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3315}

Rule 315. (1) As soon as practicable after expiration of the time for filing an answer to an application for intervention, the presiding officer shall grant or deny, in whole or in part, the application and may, if appropriate, authorize limited participation. The presiding officer shall indicate in an order granting intervention any limits on participation. The presiding officer shall not authorize intervention beyond that for which the intervenor applied.

(2) Where intervenors have substantially like interests and positions, the presiding officer may, in order to expedite the proceedings, limit the number of attorneys that will be permitted to take part in the proceedings and limit the extent to which intervenors may engage in the following activities:

(a) Filing of pleadings, briefs, motions, and other papers.

(b) Presenting opening and closing statements, oral arguments, and motions.

(d) Introducing evidence.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3316 Limited intervention without party status {#sec-r-205.3316 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3316}

Rule 316. (1) Upon order of the presiding officer, a person may testify or make a statement at a proceeding if all of the following actions occur:

(a) The person files a statement with the administrator, not less than 7 days before the date of hearing, in which the person discloses the person's interest in the proceeding and the position the person intends to take, establishes that the person's contentions are relevant to an issue in the case, and disclaims any right to broaden the issues in the case.

(b) The person serves copies of the statement described in subdivision (a) of this subrule upon all the parties to the case before the hearing.

(c) The presiding officer decides that the person has served the parties and that the person's contentions are relevant to an issue in the case.

(2) The presiding officer may limit the testimony or statement to expedite the proceedings.

(3) A person does not become a party to the proceeding due to the person's testifying or making a statement pursuant to this rule.

PART 4. JOINT AND CONSOLIDATED PROCEEDINGS

History

History: 1995 AACS.

Mich. Admin. Code R 205.3401 Joint hearing; consolidation of proceedings; other orders {#sec-r-205.3401 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3401}

Rule 401. When proceedings involving a substantial and controlling common question of fact or law are pending before the commissioner, the presiding officer may, on the presiding officer's own motion or on motion by a party, take any of the following actions:

(a) Order a joint hearing on any or all of the matters in issue.

(b) Order the proceedings consolidated.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3402 Notice of intent to issue order; filing; hearing {#sec-r-205.3402 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3402}

Rule 402. Before issuing an order pursuant to R 205.3401, the presiding officer shall serve a notice of intent to issue the order on the parties. The parties shall have 5 days from the receipt of the notice to file objections to the order.

PART 5. PREHEARING CONFERENCES

History

History: 1995 AACS.

Mich. Admin. Code R 205.3501 Purposes of the prehearing conference {#sec-r-205.3501 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3501}

Rule 501. (1) The presiding officer may direct the parties to appear before the presiding officer for 1 or more prehearing conferences for any of the following purposes:

(a) To simplify and clarify factual and legal issues.

(b) To consider amendments to pleadings.

(d) To expedite the discovery and presentation of evidence.

(e) To produce all proposed exhibits in the possession of a party.

(f) To identify witnesses, specify the issues on which they will testify, and summarize their testimony.

(g) To set a time for the exchange of any written testimony.

(h) To estimate the time required for the hearing.

(i) To discuss settlement or other disposition of the case.

(j) To consider other matters that may aid in the disposition of the proceedings.

(2) The presiding officer may conduct the prehearing conference by telephone, by other electronic media, or face-to-face. A face-to-face prehearing conference shall be conducted if a party requests a face-to-face prehearing conference.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3502 Prehearing conference; notification of parties; record of conference {#sec-r-205.3502 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3502}

Rule 502. (1) Upon an approved request by a party or upon the presiding officer's own motion, a prehearing conference may be held. The presiding officer shall notify the parties of the time, place, and manner of a conference. The initial notice shall direct the parties to appear or to be available and shall state the subjects to be discussed at the conference.

(2) The presiding officer may require that a conference or any portion of a conference be recorded.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3503 Failure to appear at prehearing conference; waiver of objections; binding nature of conference {#sec-r-205.3503 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3503}

Rule 503. (1) If a party fails to appear or to be available at a conference after proper service of notice or after filing a request for a conference, the presiding officer may proceed with the conference if no adjournment is granted.

(2) Failure of a party to attend or be available for the conference shall constitute a waiver of all objections to any agreements reached and any ruling or summary with respect to matters covered by the notice of the conference.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3504 Record of ruling; summary; copies; objection {#sec-r-205.3504 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3504}

Rule 504. (1) After a prehearing conference and before the hearing, the presiding officer shall enter any rulings in the record and may enter a summary of the conference in the record.

(2) The presiding officer shall distribute to the parties copies of the rulings or summaries entered in the record.

(3) A party may object to a summary of a conference and file a motion to seek correction of the summary.

History

History: 11995 AACS.

Mich. Admin. Code R 205.3505 Adjournment of prehearing conference {#sec-r-205.3505 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3505}

Rule 505. (1) A prehearing conference may be adjourned only upon an order of the presiding officer.

(2) Before a scheduled prehearing conference date, motions or stipulations for adjournment filed by the parties shall be in writing and shall be filed, with appropriate proof of service, at least 1 week before the date scheduled for the prehearing conference, unless a shorter period is allowed by order of the presiding officer. The presiding officer may order an adjournment on his or her own motion.

(3) The presiding officer may grant 1 adjournment to each party.

(4) The presiding officer may grant adjournments in such other instances as the presiding officer finds are in the interests of justice.

PART 6. CONDUCT OF HEARINGS

History

History: 1995 AACS.

Mich. Admin. Code R 205.3601 Notice of hearing; service; place of hearing {#sec-r-205.3601 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3601}

Rule 601. (1) Except as otherwise provided or required by law, an initial notice of hearing shall be served not less than 21 days before the date of hearing, unless the parties consent to a lesser time period.

(2) Except as otherwise provided by law, the bureau shall serve a notice of hearing and any amendments to a notice of hearing in person or by certified mail, return receipt requested.

(3) A hearing may be conducted by telephone, by other electronic media, or face-toface. A face-to-face hearing shall be conducted if a party requests a face-to-face hearing.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3602 Adjournments {#sec-r-205.3602 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3602}

Rule 602. The procedure and time limit established by R 205.3505 for the adjournment of a prehearing conference shall apply to an adjournment of a hearing.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3603 Failure to appear {#sec-r-205.3603 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3603}

Rule 603. The unexcused absence of a party or his or her representative at the place and hour set for hearing of any proceeding before the commissioner will not be an occasion for delay. The hearing shall proceed and the case will be considered as submitted on the part of the absent party.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3604 Opening statement; presentation of evidence; regulation of order of presentation {#sec-r-205.3604 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3604}

Rule 604. (1) The presiding officer may allow the parties to make opening statements or appropriate motions.

(2) Unless otherwise directed by the presiding officer, the petitioner or other party having the burden of proof shall first present the evidence in support of that party's case.

(3) An intervenor shall follow the party on whose behalf the intervention is made, except where the intervention is not in support of any party.

(4) Except as otherwise provided by law, the presiding officer may regulate the order of the hearing to promote the fair and efficient determination of the issues presented.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3605 Witnesses; oath or affirmation; examination {#sec-r-205.3605 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3605}

Rule 605. A witness shall be administered an oath or affirmation before testifying.

A witness shall be examined orally unless the testimony is submitted in written form pursuant to these rules. Where appropriate, the presiding officer may require a party submitting written testimony to make the witness available for cross-examination.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3606 Objections; notation on record; failure to object {#sec-r-205.3606 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3606}

Rule 606. An objection to an offer of evidence shall be made in a timely manner and shall state fully the grounds for objection. An objection to evidence shall be noted in the record. Failure to object to evidence in a timely manner constitutes a waiver of the right to object.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3607 Witnesses; limitation {#sec-r-205.3607 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3607}

Rule 607. The presiding officer may limit the number of witnesses on an issue to prevent undue delay, waste of time, or the needless presentation of cumulative evidence.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3608 Additional evidence {#sec-r-205.3608 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3608}

Rule 608. The presiding officer may call for evidence upon an issue and require the evidence to be presented by a party or other person.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3609 Adverse witnesses; interrogation; impeachment {#sec-r-205.3609 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3609}

Rule 609. A witness, an adverse party, or an officer, agent, or employee of an adverse party who appears to be hostile, unwilling, or evasive may be interrogated by leading questions and may be contradicted and impeached by the party calling the witness.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3610 Conference during hearings {#sec-r-205.3610 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3610}

Rule 610. (1) At the opening of a hearing or at any other time during a hearing, the presiding officer may hold a conference upon the request of a party or upon the presiding officer's own motion.

(2) A conference may be held for the purpose of clarifying or simplifying issues presented at the hearing, including the possibility of obtaining stipulations and admissions of fact and consideration of the authenticity of evidence and contents of documents so as to avoid unnecessary proof.

(3) A conference may be held to expedite the presentation of evidence, the exchange of copies of proposed exhibits, and other matters as may promote a fair and expeditious hearing or aid in the disposition of the proceeding.

(4) At the conclusion of a conference, the presiding officer may enter in the record a ruling or order that states the matters agreed upon by the parties and any procedural determinations made by the presiding officer.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3611 Notice of judicially cognizable facts {#sec-r-205.3611 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3611}

Rule 611. The presiding officer may take official notice of judicially cognizable facts and may take notice of general or technical facts within the presiding officer's specialized knowledge.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3612 Use of expertise to evaluate evidence {#sec-r-205.3612 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3612}

Rule 612. The presiding officer may use his or her experience, technical competence, and specialized knowledge in the evaluation of evidence presented to him or her.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3613 Evidence and arguments {#sec-r-205.3613 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3613}

Rule 613. The parties shall be given an opportunity to present oral and written arguments on issues of law and policy and an opportunity to present evidence and argument of issues of fact.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3614 Cross-examination and rebuttal evidence {#sec-r-205.3614 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3614}

Rule 614. (1) A party may cross-examine a witness, including the author of a document prepared by, on behalf of, or for use by, the agency and offered in evidence.

(2) A party may submit rebuttal evidence.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3615 Use of rules of evidence {#sec-r-205.3615 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3615}

Rule 615. (1) The rules of evidence as applied in a nonjury civil case in circuit court shall be followed as far as practicable, but the presiding officer may admit and give probative effect to evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs.

(2) Irrelevant, immaterial, or unduly repetitious evidence may be excluded.

(3) Effect shall be given to the rules of privilege recognized by law.

(4) Objections to offers of evidence may be made and shall be noted in the record.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3616 Documentary evidence {#sec-r-205.3616 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3616}

Rule 616. Documentary evidence may be received in the form of a copy or excerpt if the original is not readily available or may be incorporated by reference if the materials so incorporated are available for examination by the parties. Upon timely request, a party shall be given an opportunity to compare the copy with the original when available.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3617 Preparation of official hearing record {#sec-r-205.3617 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3617}

Rule 617. The commissioner shall prepare an official record of a hearing, which shall include all of the following:

(a) Notices, pleadings, motions, and intermediate rulings.

(b) Questions and offers of proof, objections, and rulings thereon.

(d) Matters officially noticed, except matters so obvious that a statement of such matters would serve no useful purpose.

(e) Proposed findings and exceptions.

(f) Any decision, opinion, order, or report by the presiding officer at the hearing or the commissioner.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3618 Record of hearings {#sec-r-205.3618 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3618}

Rule 618. Hearings shall be recorded, but need not be transcribed unless requested by a party. The party requesting the transcript shall pay for the transcript.

PART 7. DECISIONS

History

History: 1995 AACS.

Mich. Admin. Code R 205.3701 Decision and order of the commissioner {#sec-r-205.3701 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3701}

Rule 701. (1) Promptly after the completion of the hearing, the commissioner shall affirm, reverse, or modify the respondent's action by written order.

(2) Where required by section 81 of the act, a proposal for decision shall be prepared by the presiding officer and the parties shall be given an opportunity to file exceptions and present written arguments to the presiding officer and commissioner. The proposal for decision shall contain a proposed decision, a statement of the reasons for the decision, and a statement for each issue of fact or law necessary to the decision.

(3) In any proceeding, the commissioner may ask the presiding officer to prepare a proposal for decision within a reasonable time after the hearing. Before preparing the proposal, the presiding officer may require or allow the parties to submit briefs and proposed findings of fact and conclusions of law. Where briefs are to be submitted, the presiding officer shall specify a filing date.

(4) After a review of the record or the proposal for decision and exceptions thereto, if any, the commissioner shall issue an order setting forth findings of fact, conclusions of law, and a final order.

(5) If a party files an exception to the proposal for decision, the exception shall contain specific reference to the record.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3702 Service of final order {#sec-r-205.3702 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3702}

Rule 702. The commissioner shall serve a copy of the final order on the parties by registered or certified mail.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3703 Request for rehearing {#sec-r-205.3703 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3703}

Rule 703. A request for rehearing pursuant to section 87 of the act shall state the grounds upon which the moving party relies. A party shall file any objections to a request for rehearing within 7 days of being served with the request for rehearing.

PART 8. REMAND PROCEEDINGS

History

History: 1995 AACS.

Mich. Admin. Code R 205.3801 Initiation of remand proceedings {#sec-r-205.3801 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3801}

Rule 801. (1) When a contested case is remanded to the commissioner, a party shall initiate the remand proceeding by filing a petition with the commissioner.

(2) The caption of the petition shall carry the same names of the parties and docket number as appeared in the pleadings in the original proceeding. In addition, the caption of the petition shall carry the phrase, ON REMAND, directly below the docket number.

(3) The petition shall include a copy of the remand order.

History

History: 1995 AACS.

Mich. Admin. Code R 205.3802 Applicability of parts 2 through 7 to remand proceedings {#sec-r-205.3802 omnilex-key=us-mi-regs-official--dept-treasury--R 205.3802}

Rule 802. (1) The rules contained in parts 2 through 7 of these rules apply to a remand proceeding, except as otherwise provided in this rule.

(2) If a respondent initiates the remand proceeding, then the terms "petitioner" and "respondent" may be used interchangeably to correspond factually, in context, with the appropriate action to be taken by the appropriate party.

(3) The caption of all papers filed in the remand proceeding shall comply with R 205.3801(2).

History

History: 1995 AACS.

R 205.4101 to R 205.4114 Tax Electronic Recordkeeping and Retention Rules

Mich. Admin. Code R 205.4101 Scope {#sec-r-205.4101 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4101}

DEPARTMENT OF TREASURY

BUREAU OF REVENUE

RECORDKEEPING AND RETENTION RULES

(By authority conferred upon the department by section 3(b) of 1941 PA 122, MCL 205.3(b))

PART 1. GENERAL PROVISIONS

Rule 1. These rules set forth the requirements imposed on taxpayers for the maintenance and retention of books, records, and other sources of information under the revenue act, MCL 205.1 et seq, and each of the tax statutes that are administered by the department in accordance with the revenue act. These rules also address the requirements where all or part of the taxpayer's records are received, created, maintained or generated through various computer, electronic, and imaging processes and systems.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4102 Definitions {#sec-r-205.4102 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4102}

Rule 2. As used in these rules:

(a) "Commissioner" means the commissioner of the bureau of revenue of the Michigan department of treasury.

(b) "Database management system" means a software system that controls, relates, retrieves, and provides access to data stored in a database.

(d) "Electronic data interchange" or "EDI" or "EDI technology" means the computer-to-computer exchange of business transactions in a standardized structured electronic format.

(e) "Hardcopy" means any documents, records, reports or other data printed on paper.

(f) "Machine-sensible record" means a collection of related information in an electronic format. Machine-sensible records do not include hard copy records that are created or recorded on paper or stored in or by an imaging system such as microfilm, microfiche, or storage-only imaging systems.

(g) "Storage-only imaging system" means a system of computer hardware and software that provides for the storage, retention, and retrieval of documents originally created on paper. It does not include any system, or part of a system, that manipulates or processes any information or data contained on the document in any manner other than to reproduce the document in hard copy or as an optical image.

(h) "Taxpayer" means a person subject to a tax administered in accordance with the revenue act.

(i) "The revenue act" means 1941 PA 122, MCL 205.1 et seq.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4103 General recordkeeping requirements {#sec-r-205.4103 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4103}

Rule 3. (1) Pursuant to section 28(3) of the revenue act, MCL 205.28(3), a taxpayer shall maintain all records that are necessary for the proper determination of the taxpayer's tax liability. In addition, a taxpayer shall maintain the records required by each of the tax statutes that are administered by the department in accordance with the revenue act. All required records shall be made available to the commissioner at the request of the commissioner or the commissioner's authorized representatives as provided for in section 3(a) of the revenue act, MCL 205.3(a).

(2) If a taxpayer retains in both machine-sensible and hardcopy formats records required to be retained under the revenue act, the tax statutes administered through the revenue act, and these rules, the taxpayer shall make the records available to the department in machine-sensible format upon request of the commissioner or the commissioner's authorized representatives as provided for in MCL 205.3(a).

(3) Nothing in these rules shall be construed to prohibit a taxpayer from demonstrating tax compliance with traditional hardcopy documents or reproductions of those documents, in whole or in part, whether or not the taxpayer also has retained or has the capability to retain records on electronic or other storage media in accordance with these rules. However, this subrule does not relieve the taxpayer of the obligation to comply with subrule (2) of this rule.

PART 2. RECORDKEEPING REQUIREMENTS FOR MACHINE-SENSIBLE

RECORDS

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4104 General requirements {#sec-r-205.4104 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4104}

Rule 4. (1) Machine-sensible records used to establish tax compliance shall contain sufficient transaction-level detail information so that the details underlying the machine-sensible records can be identified and made available to the department upon request. A taxpayer may discard duplicated records and redundant information if the taxpayer's responsibilities under these rules are otherwise met.

(2) At the time of an examination, the retained records shall be capable of being retrieved and converted to a standard record format.

(3) Taxpayers are not required to construct machine-sensible records other than those created in the ordinary course of business. A taxpayer who does not create the electronic equivalent of a traditional paper record in the ordinary course of business is not required to construct such a record for tax purposes. However, in the absence of the electronic equivalent, the taxpayer shall maintain traditional paper records.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4105 Electronic data interchange requirements {#sec-r-205.4105 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4105}

Rule 5. (1) Where a taxpayer uses electronic data interchange processes and technology, the level of record detail, in combination with other records related to the transactions, shall be equivalent to the level of record detail contained in an acceptable hardcopy record. For example, the retained records should contain information including, but not limited to, the vendor name, invoice date, product description, quantity purchased, price, amount of tax, indication of tax status, and shipping detail. The taxpayer may use codes to identify some or all of the data elements, provided that the taxpayer provides a method that allows the department to interpret the coded information.

(2) The taxpayer may capture the information necessary to satisfy subrule (1) of this rule at any level within the accounting system and need not retain the original EDI transaction records provided that the audit trail, authenticity, and integrity of the retained records can be established. For example, a taxpayer using electronic data interchange technology receives electronic invoices from its suppliers. The taxpayer decides to retain the invoice data from completed and verified EDI transactions in its accounts payable system rather than to retain the EDI transactions themselves. Since neither the EDI transaction nor the accounts payable system captures information from the invoice pertaining to product description and vendor name (i.e., they contain only codes for that information), the taxpayer also retains other records, such as its vendor master file and product code description lists and makes them available to the department. In this example, the taxpayer need not retain its EDI transaction for tax purposes.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4106 Electronic data processing systems requirements {#sec-r-205.4106 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4106}

Rule 6. The requirements for an electronic data processing accounting system shall be similar to the requirements of a manual accounting system. An adequately designed electronic data processing accounting system shall incorporate methods and include records sufficient to satisfy the requirements of these rules.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4107 Business process information {#sec-r-205.4107 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4107}

Rule 7. (1) At the department's request, a taxpayer shall provide a description of the business process that created the retained records. The description shall include the relationship between the records and the tax documents prepared by the taxpayer and the measures employed to ensure the integrity of the records.

(2) The description of the business process shall include all of the following information:

(a) The functions being performed as they relate to the flow of data through the system.

(b) The internal controls used to ensure accurate and reliable processing.

(3) The following specific documentation is required for machine-sensible records retained under these rules:

(a) Record formats or layouts.

(b) Field definitions (including the meaning of all codes used to represent information).

(d) Detailed charts of accounts and account descriptions.

PART 3. RECORDS MAINTENANCE

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4108 Records maintenance requirements {#sec-r-205.4108 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4108}

Rule 8. The taxpayer's computer hardware or software shall accommodate the extraction and conversion of retained, machine-sensible records.

PART 4. ACCESS TO MACHINE-SENSIBLE RECORDS

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4109 Access to machine-sensible records {#sec-r-205.4109 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4109}

Rule 9. (1) The taxpayer may provide access to machine-sensible records by one or more of the following methods:

(a) The taxpayer may arrange to provide the department with the hardware, software and personnel resources necessary to access the machine-sensible records.

(b) The taxpayer may arrange for a third party to provide the hardware, software and personnel resources necessary to access the machine-sensible records.

(c) The taxpayer may convert the machine-sensible records to a standard record format specified by the department, including copies of files, on a magnetic medium that is approved by the department.

(d) The taxpayer and the department may agree on other means of providing access to the machine-sensible records.

(2) In implementing subrule (1) of this rule, the department shall take into account a taxpayer's particular facts and circumstances through consultation with the taxpayer.

PART 5. TAXPAYER RESPONSIBILITY AND DISCRETIONARY

AUTHORITY

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4110 Taxpayer responsibility and discretionary authority {#sec-r-205.4110 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4110}

Rule 10. (1) To meet the requirements of part 2 of these rules, a taxpayer may create files solely for the use of the department. For example, if a data base management system is used, the taxpayer may create and retain a file that contains the transactionlevel detail from the data base management system and that meets the requirements of part 2 of these rules. The taxpayer shall document the process that created the separate file to show the relationship between that file and the original records.

(2) A taxpayer may contract with a third party to provide custodial or management services of the records. The contract shall not relieve the taxpayer of its responsibilities under these rules.

PART 6. ALTERNATIVE STORAGE MEDIA

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4111 Alternative storage media {#sec-r-205.4111 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4111}

Rule 11. (1) For purposes of storage and retention, a taxpayer may convert hardcopy documents received or produced in the normal course of business and required to be retained under these rules to microfilm, microfiche or other storage-only imaging systems and may discard the original hard-copy documents, provided that all other requirements of these rules are met. Documents which may be stored on these media include, but are not limited to, general books of account, journals, voucher registers, general and subsidiary ledgers, and supporting records of details, such as sales invoices, purchase invoices, exemption certificates, and credit memoranda.

(2) Microfilm, microfiche, and other storage-only imaging systems shall meet the following requirements:

(a) Documentation establishing the procedures for converting the hard-copy documents to microfilm, microfiche or other storage-only imaging system shall be maintained and made available to the department at the department's request. The documentation shall, at a minimum, contain a sufficient description to allow an original document to be followed through the conversion system as well as internal procedures established for inspection and quality assurance.

(b) Procedures shall be established for the effective identification, processing, storage, and preservation of the stored documents and for making them available for the period they are required to be retained under R 205.4113.

(c) At the department's request, a taxpayer shall provide facilities and equipment for reading, locating, and reproducing any documents maintained on microfilm, microfiche, or other storage-only imaging system.

(d) When displayed on such equipment or reproduced on paper, the documents shall exhibit a high degree of legibility and readability. For this purpose, legibility is defined as the quality of a letter or numeral that enables the observer to identify it positively and quickly to the exclusion of all other letters or numerals. Readability is defined as the quality of a group of letters or numerals being recognizable as words or complete numbers.

(e) All data stored on microfilm, microfiche, or other storage-only imaging systems shall be maintained and arranged in a manner that permits the location of any particular record.

(f) There is no substantial evidence that the microfilm, microfiche, or other storage-only imaging system lacks authenticity or integrity.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4112 Effect of rules on hard-copy recordkeeping requirements {#sec-r-205.4112 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4112}

Rule 12. (1) Except as otherwise provided in this rule, these rules do not relieve taxpayers of the responsibility to retain hard-copy records that are created or received in the ordinary course of business as required by existing law. Hard-copy records may be retained on a recordkeeping medium as provided in R 205.4111.

(2) If hard-copy records are not produced or received in the ordinary course of transacting business (e.g., when the taxpayer uses electronic data interchange technology), then such hard-copy records need not be created.

(3) Hard-copy records generated at the time of a transaction using a credit or debit card shall be retained unless all of the details necessary to determine correct tax liability relating to the transaction are later received and retained by the taxpayer in accordance with these rules. The details include those listed in R 205.4115(1).

(4) A taxpayer is not required to retain computer printouts that are created for validation, control, or other temporary purposes.

(5) Nothing in this rule shall prevent the department from requesting hard-copy printouts instead of retained machine-sensible records at the time of examination.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4113 Records retention-time period {#sec-r-205.4113 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4113}

Rule 13. All records required to be retained under these rules shall be preserved while the statute of limitations period described in MCL 205.27a(2) or in any of the tax statutes administered under the revenue act is open by operation of law, agreement of the parties, or otherwise, unless the department has stated in writing that the records are no longer required.

History

History: 1998 - 2000 AACS.

Mich. Admin. Code R 205.4114 Confidential nature of taxpayer records {#sec-r-205.4114 omnilex-key=us-mi-regs-official--dept-treasury--R 205.4114}

Rule 14. A person who discloses confidential information in violation of MCL 205.28(1)(e) or 205.28(1)(f), is guilty of a felony punishable by a fine of not more than $5,000, imprisonment for not more than 5 years, or both, together with the costs of prosecution. In addition, if the offense is committed by an employee of the state, the employee shall be dismissed from office or discharged from employment upon conviction.

History

History: 1998 - 2000 AACS.

Customer Service Bureau Customer Service Bureau

R 206.1 to R 206.33 Income Tax

Mich. Admin. Code R 206.1 "Business income" defined {#sec-r-206.1 omnilex-key=us-mi-regs-official--dept-treasury--R 206.1}

DEPARTMENT OF TREASURY

CUSTOMER SERVICE BUREAU

INCOME TAX

(By authority conferred on the department of treasury by sections 3 and 13 of 1941 PA 122, sections 9 and 83 of 1965 PA 380, and sections 471 and 520 of 1967 PA 281, MCL 205.3, 205.13, 16.109, 16.183, 206.471 and 206.520.)

Rule 1. "Business income" means that income which is derived during the regular course of a taxpayer's trade or business. The expenses incurred in deriving the income are allowed as a deduction from gross income in determining the taxpayer's adjusted gross income.

History

History: 1979 AC.

Mich. Admin. Code R 206.2 Employee {#sec-r-206.2 omnilex-key=us-mi-regs-official--dept-treasury--R 206.2}

Rule 2. (1) The term "employee" is defined in section 8(2) of Act No. 281 of the Public Acts of 1967, as amended, being S206.8(2) of the Michigan Compiled Laws.

(2) The term "employee" includes every individual performing services if the relationship between him and the person for whom he performs such services is the legal relationship of employer and employee. The term includes officers and employees, whether elected or appointed, of the United States, a state, territory, Puerto Rico, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any 1 or more of the foregoing.

(3) Generally, the relationship of employer and employee exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work, but also as to the details and means by which that result is accomplished; that is, an employee is subject to the will and control of the employer, not only as to what shall be done, but also as to how it shall be done. However, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work but not as to the means and methods for accomplishing the result, he is not an employee.

(4) Generally, physicians, lawyers, dentists, veterinarians, contractors, subcontractors, public stenographers, auctioneers, and others who follow an independent trade, business, or profession, in which they offer their services to the public, are not employees.

(5) Whether the relationship of employer and employee exists shall, in doubtful cases, be determined upon an examination of the particular facts of each case.

(6) If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee in immaterial. For example, it is of no consequence that the employee is designated as a partner, coadventurer, agent, independent contractor, or the like.

(7) All classes or grades of employees are included within the relationship of employer and employee. Thus, superintendents, managers, and other supervisory personnel are employees. Generally, an officer of a corporation is an employee of the corporation. However, an officer of a corporation who as such does not perform any services, or performs only minor services, and who neither receives nor is entitled to receive, directly or indirectly, any remuneration, is not considered to be an employee of the corporation. A director of a corporation in his capacity as a director is not an employee of the corporation.

(8) The term "employee" includes every individual who receives a supplemental unemployment compensation benefit, which is treated as wages.

History

History: 1979 AC.

Mich. Admin. Code R 206.3 Employer {#sec-r-206.3 omnilex-key=us-mi-regs-official--dept-treasury--R 206.3}

Rule 3. (1) The term "employer" is defined in section 8(3) of Act No. 281 of the Public Acts of 1967, as amended, being S206.8(3) of the Michigan Compiled Laws.

(2) The term "employer" means any person for whom an individual performs or performed any service, of whatever nature, as the employee of such person.

(3) It is not necessary that the services be continuing at the time the wages are paid in order that the status of employer exist. Thus, for purposes of withholding, a person for whom an individual has performed past services for which he is still receiving wages from such person is an employer.

(4) An employer may be an individual, a corporation, a partnership, a trust, an estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture, or other unincorporated organization, group, or entity. A trust or estate, rather than the fiduciary acting for, or on behalf of, the trust or estate, is generally the employer.

(5) The term "employer" embraces not only individuals and organizations engaged in a trade or business, but also organizations exempt from income tax, such as religious and charitable organizations, educational institutions, clubs, social organizations and societies, as well as the governments of the United States, the states, territories, Puerto Rico, and the District of Columbia, including their agencies, instrumentalities, and political subdivisions.

(6) The term "employer" also means any person paying wages on behalf of a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in trade or business within the United States, including Puerto Rico as if a part of the United States.

(7) If the person for whom the services are or were performed does not have legal control of the payment of the wages for such services, the term "employer" means, except for the purpose of the definition of "wages," the person having such control. For example, where wages, such as certain types of pensions or retirement pay, are paid by a trust and the person for whom the services were performed has no legal control over the payment of such wages, the trust is the employer.

(8) The term "employer" also means a person making a payment of a supplemental unemployment compensation benefit when it is treated as if it were wages under the internal revenue code, 26 U.S.C. S3401. For example, if supplemental unemployment compensation benefits are paid from a trust which was created under the terms of a collective bargaining agreement, the trust shall generally be deemed to be the employer. However, if the person making such payment is acting solely as an agent for another person, the term "employer" shall means such other person and not the person actually making the payment.

(9) It is a basic purpose to centralize in the employer the responsibility for withholding, returning, and paying the tax, and for furnishing the statements required under chapter 7 of the Michigan income tax act of 1967.

History

History: 1979 AC.

Mich. Admin. Code R 206.4 "Household income" defined {#sec-r-206.4 omnilex-key=us-mi-regs-official--dept-treasury--R 206.4}

Rule 4. (1) "Income" means the sum of federal adjusted gross income as defined in the internal revenue code, 26 U.S.C. S62 plus:

(a) Benefits received from federal social security, including supplemental security income (SSI), and railroad retirement benefits.

(b) Cash public assistance payments paid by a governmental unit.

(d) Worker's compensation payments whether for temporary disability, permanent disability, or death.

(e) Veteran's disability payments, pension benefits, or mustering out payments.

(f) Amounts received for loss of wages due to permanent disability.

(g) Amounts received as damages for personal injury or sickness.

(h) Amounts in excess of the claimant's contributions received from a pension plan or annuity.

(i) Life insurance proceeds, except benefits from insurance on a spouse.

(j) Money received from a person not a member of the same household who is legally obligated to support a member of the household.

(k) An inheritance, bequest, or devise, excluding an inheritance from a spouse.

(l) Educational benefits received under federal or state legislation with respect to services in the military or naval forces of the United States.

(m) A scholarship or other educational grant.

(n) Income from an obligation issued by a state or its political subdivisions, including this state.

(o) Gifts in cash or kind from nongovernmental sources exceeding $300.00.

(p) The portion of capital gains and dividends excluded or deducted from federal gross income.

(q) Death benefits paid by, or on behalf of, an employer.

(r) The portion of lump sum distributions from pension deducted from federal gross income.

(s) Earned income from foreign sources excluded from federal gross income.

(t) Accumulation distributions received from a trust not previously included in the claimant's adjusted gross income.

(2) "Household income" does not include:

(a) Surplus foods.

(b) Relief in kind by a governmental unit such as medicaid payments to a nursing home or doctor, or rent paid, in whole or in part, directly to the landlord. Chore service payments are income to the provider but not to the person receiving the benefits.

(d) State and city income tax refunds, including homestead property tax credits.

Farmland preservation tax credits shall be included in federal adjusted gross income and household income.

(e) Amounts deducted from social security or railroad retirement benefits for medicare premiums.

(f) Amounts paid by an employer for life, health, or accident insurance.

(g) The first $300.00 in income from gambling, bingo, lottery, or prizes and awards.

(3) Effective with the calendar year 1977, any health or accident insurance premiums paid, in whole or in part, by the claimant, and not by an employer, for himself and his family are deductible from gross income to arrive at household income.

History

History: 1979 AC.

Mich. Admin. Code R 206.5 Residency; determination guidelines {#sec-r-206.5 omnilex-key=us-mi-regs-official--dept-treasury--R 206.5}

Rule 5. (1) A person who is domiciled in this state is a resident of this state.

"Domicile" means the fixed, permanent, and principal home to which a person, wherever temporarily located, always intends to return. A person may have several residences or dwelling places but only may have 1 domicile at a particular time.

Domicile, once established, is not lost until there is a concurrence of all of the following:

(a) The specific intent to abandon the old domicile.

(b) The intent to acquire a specific new domicile.

(c) Actual physical presence in the new state of domicile. Generally, the domicile of the wife follows that of the husband.

(2) To overcome the presumption of residency, as stated in subrule (1), a taxpayer shall present detailed factual data to the department. Factors to be considered in determining a taxpayer's residency or domicile include where he keeps his most important possessions, houses his family, votes, maintains club and lodge memberships, buys automobile licenses, maintains a mailing address and banks, operates a business, or sues for divorce. However, no one of these factors is controlling. The failure of a person to pay income taxes in the state to which he claims to have domicile is very significant.

(3) A person whose residency cannot be determined by the above guidelines shall be deemed a resident of Michigan if he lives within the state for not less than 183 days during the tax year or for more than 1/2 the days during a taxable year of less than 12 months.

History

History: 1979 AC.

Mich. Admin. Code R 206.6 Income from obligations and securities of states other than Michigan {#sec-r-206.6 omnilex-key=us-mi-regs-official--dept-treasury--R 206.6}

Rule 6. (1) Gross interest and dividend income from obligations and securities of states other than Michigan, and their political subdivisions, not subject to federal income taxes, including such interest and dividends from qualifying mutual funds, shall be added to adjusted gross income.

(2) The income may be reduced by related expenses not deducted in computing federal adjusted gross income because of the internal revenue code, 26 U.S.C. S265(1).

(a) Example:

Gross interest income from state of Ohio bonds............. $600.00 Expense (investment counseling fees, bank charges brokerage fees).................................................... 32.00 _______ Interest income to be added to adjusted gross income...... $568.00 (b) Interest on indebtedness incurred in carrying the obligation or security is not deductible from the interest or dividend income.

History

History: 1979 AC.

Mich. Admin. Code R 206.7 Add back of taxes on or measured by income {#sec-r-206.7 omnilex-key=us-mi-regs-official--dept-treasury--R 206.7}

Rule 7. (1) Taxes on or measured by income deducted in computing federal adjusted gross income shall be added back to federal adjusted gross income to determine the income subject to Michigan income tax.

(2) An individual who receives distributive income from partnerships, joint ventures, and subchapter S corporations is required to make the adjustment in subrule (1) if the partnership, joint venture, or subchapter S corporation paid city or state income tax on its distributive income and did not add back such taxes to the amounts distributed to the partners or shareholders.

History

History: 1979 AC.

Mich. Admin. Code R 206.8 Losses on sale or exchange of United States obligations; reporting {#sec-r-206.8 omnilex-key=us-mi-regs-official--dept-treasury--R 206.8}

Rule 8. Losses on the sale or exchange of United States obligations, the income of which the state is prohibited from taxing, shall be subtracted from federal adjusted gross income. To do this, file form MI-1040D and enter a zero in column "Z" of the line on which the loss is reported.

(a) Example:

Mr. Smith is reporting a gain from the sale of stock in the amount of $2,100.00 and a loss from the sale of United States obligations in the amount of $900.00 (b) These transactions are reported on form MI-1040D as follows: _____________________________________________________________________ _______________ Federal Michigan Date Date Gain Gain Acquired Sold Col. Y Co. Z _____________________________________________________________________ ______________ 6. Stock 9-30-68 10-1-77 $2,100.00 $2,100.00 U.S. Obligation 4-1-69 7-10-77 (900.00)

0 - 7. Capital gain distribution 8. Enter gain if applicable from form MI-4797 line 4(a)(1)

Enter your share of net ling-term gain or (loss) from partnerships and fiduciaries 10. Enter your share of net long-term gain from small business corporations (subchapter S)
Net gain or (loss) combine lines 6 through 19 $1,200.00 $2,100.00 12. Long-term capital loss carryover attributable to ( )

( ) years beginning after 1969 13. Net long term gain of (loss) combine lines 11 and 12 $1,200.00 $2,100.00 14. Combine the amounts shown on line 5 and 13 $1,200.00 $2,100.00 and enter the net gain (loss) here 15. If line 14 shows a gain - (a) Enter 50% of line 13 or 50% of line 14, whichever is smaller. Enter zero if there is a loss or no entry on line 13 $600.00 $1,050.00 (b) Subtract line 15(a) from line 14. Enter here and carry amount in column Y to MI-1040 line 39(a) carry amount in column Z to MI-1040 line 32(a) $600.00 $1,050.00

History

History: 1979 AC.

Mich. Admin. Code R 206.9 Interest income and gains from sale or disposal of United States obligations exempted from state taxation; treatment; interest on federal income tax refunds {#sec-r-206.9 omnilex-key=us-mi-regs-official--dept-treasury--R 206.9}

Rule 9. (1) Interest income and gains from the sale or disposal of United States obligations, which are exempted from state taxation by the United States Constitution, treaties, and statutes, are deductible from adjusted gross income. The deduction for such income shall be reduced by any interest on indebtedness incurred in carrying the United States obligation and by any other expense, including amortized bond premiums, deducted from gross income to arrive at adjusted gross income. The income from the following United States obligations is not subject to state income tax:

(a) United States treasury bonds, notes, bills, and savings bonds.

(b) Bonds, notes, debentures, and other obligations issued by:

(i) Federal intermediate credit banks.

(ii) Federal land banks.

(iii) Federal home loan banks.

(iv) Central banks for co-operatives.

(v) Regional banks for co-operatives.

(vi) Tennessee valley authority.

(vii) United States postal service obligations.

(2) Interest on federal income tax refunds is not exempted from state taxation and shall not be claimed as a deduction.

History

History: 1979 AC.

Mich. Admin. Code R 206.10 Compensation for service in the armed forces of the United States; treatment {#sec-r-206.10 omnilex-key=us-mi-regs-official--dept-treasury--R 206.10}

Rule 10. (1) Compensation paid from federal appropriations, including retirement benefits, for military services in the armed forces is exempt from Michigan income tax, and is deductible from adjusted gross income by the recipient to the extent it is included in federal adjusted gross income.

(a) Example 1. Active duty personnel All military compensation is exempt.

(b) Exampe 2. Reservist Figure for 206.10 The guardsman was federalized during the 2 weeks at camp and at the monthly military drills. The pay for these came from federal appropriations.

The $250.00 paid for riot duty came from state funds and is subject to Michigan income tax.

(d) Example 4. National guard technicians National guard technicians, although paid from federal funds, are full-time civilian employees. Their civilian pay is subject to Michigan income tax. They are members of the national guard, however, and compensation paid for the 2 weeks' encampment and the monthly drills is military pay and is exempt from Michigan income tax as in example 3.

(e) Example 5. Armory board of control Compensation for serving as a member of an armory board of control is subject to Michigan income tax.

(f) Example 6. Retirement benefits Retirement benefits paid to retirees of the armed forces for services performed while a member of the armed forces are exempt from Michigan income tax.

(2) Employee business expenses attributable to military income shall reduce the subtraction for military income. If the expenses exceed the military income, there can be no subtraction for military income.

History

History: 1979 AC.

Mich. Admin. Code R 206.11 Rescinded {#sec-r-206.11 omnilex-key=us-mi-regs-official--dept-treasury--R 206.11}

History

History: 1979 AC; 1998 - 2000 AACS.

Mich. Admin. Code R 206.12 Allocation and apportionment of income; adjustments {#sec-r-206.12 omnilex-key=us-mi-regs-official--dept-treasury--R 206.12}

Rule 12. (1) Salaries, wages, and other compensation received by a Michigan resident are allocated to Michigan. The credit provided in section 255 of Act No. 281 of the Public Acts of 1967, being §206.255 of the Michigan Compiled Laws, may be claimed if the compensation was earned in another state and taxed by that state.

(2) Salaries and wages earned in Michigan by a nonresident are allocated to Michigan.

(3) Income from a trade or business as defined in R 206.1 is allocated or apportioned to the state in which the activity takes place.

(4) Business income that is attributable to Michigan and 1 or more other states shall be apportioned as provided in sections 115 to 195 of Act No. 281 of the Public Acts of 1967, as amended, being §§206.115 to 206.195 of the Michigan Compiled Laws.

(5) Net rents and royalties from real property are allocated to the state in which the real property is located.

(6) Net rents and royalties from tangible property are allocated to Michigan, if either of the following provisions applies:

(a) The personal property is utilized in Michigan.

(b) The rent is received by a Michigan resident or the recipient has a commercial domicile in Michigan and is not organized under the laws of, or subject to tax by, the state in which the property was utilized.

(7) Capital gains and losses from the disposition of real property are allocated to the state in which the real property is located.

(8) Capital gains and losses from the disposition of personal property are allocated to Michigan if any of the following provisions apply:

(a) The property was located in Michigan at the time of sale.

(b) The taxpayer is a Michigan resident.

(c) The taxpayer has a commercial domicile in this state and is not taxable in the state in which the property had a situs.

(9) Capital gains and losses from the disposition of intangible personal property are allocated to Michigan if received by a Michigan resident.

(10) Interest, dividends, and pension and annuity income are allocated to Michigan if received by a Michigan resident.

(11) Patent and copyright royalties are allocated to Michigan if either of the following provisions applies:

(a) The patent or copyright is used in Michigan.

(b) The owner is a Michigan resident or has a commercial domicile in Michigan and is not taxable in the state in which the patent or copyright was used.

(12) A patent is used in Michigan if the patented product is produced in Michigan or the patent is used in Michigan production, fabrication, manufacturing, or other processing.

(13) A copyright is used in Michigan if the printing or publication of the copyrighted item takes place in Michigan.

(14) Income includable in federal adjusted gross income not specifically allocated or apportioned by this rule is allocated to Michigan when received by a Michigan resident. Credit for tax paid to another state on income subject to tax in the other state may be claimed by the Michigan resident.

(15) The following forms of income may be claimed as a subtraction from adjusted gross income if not allocated or apportioned to Michigan; conversely, losses not allocated or apportioned to Michigan shall be added to adjusted gross income:

(a) Trade or business, including farming.

(b) Rents and royalties from real and personal property.

(d) Capital gains from the disposition of intangible personal property.

(e) Interest and dividends.

(f) Pensions and annuities.

(g) Patent and copyright royalties.

(16) Distributive share items received by a partner are allocated or apportioned as follows:

(a) Ordinary income is apportioned to Michigan by the partnership apportionment factors provided in sections 115 to 195 of Act No. 281 of the Public Acts of 1967, as amended, being §§206.115 to 206.195 of the Michigan Compiled Laws.

(b) Salary allocated to Michigan when received by a Michigan resident. Credit may be claimed for tax paid to another state if the salary was earned in the other state.

Salary earned in Michigan by a nonresident partner is allocated to Michigan.

(c) Short-term capital gains (losses), long-term capital gains (losses), involuntary conversion gains (losses), and other gains (losses) from real or personal property that had a situs in Michigan at the time of sale are allocated to Michigan. Capital gains from the sale of intangible personal property are allocated to Michigan when received by a Michigan resident.

(d) Additional first-year depreciation on property located in Michigan is allocated to Michigan.

(e) Distributive items from a partnership not allocated or apportioned to Michigan may be claimed as a deduction from adjusted gross income. Conversely, losses and deductions not allocated or apportioned to Michigan shall be added to adjusted gross income.

(17) All distributive income from a subchapter S corporation includable in the shareholder's adjusted gross income is subject to tax if allocated or apportioned to Michigan.

(18) Dividend distributions taxable as ordinary income, plus undistributed income taxable as ordinary income, are apportioned to Michigan if all of the corporation's business activities are confined to Michigan. If the corporation is taxable both within and without Michigan, such income is apportioned to Michigan as provided in sections 115 to 195 of Act No. 281 of the Public Acts of 1967, as amended, being §§206.115 to 206.195 of the Michigan Compiled Laws.

(19) Dividend distributions taxable as long-term capital gains and undistributed long-term capital gains are allocated as follows:

(a) Capital gains from the disposition of real property are allocated to Michigan if the property is located in Michigan.

(b) Capital gains from the disposition of tangible personal property are allocated to Michigan if the property has a situs in Michigan at the time of sale.

(c) Capital gains from the sale of intangible personal property are allocated to Michigan when received by a Michigan resident.

(20) Distributive income from a subchapter S corporation not allocated or apportioned to Michigan may be claimed as a subtraction from adjusted gross income.

Conversely, losses not allocated or apportioned to Michigan shall be added to adjusted gross income.

History

History: 1979 AC; 1998 - 2000 AACS.

Mich. Admin. Code R 206.13 Exemption allowance; proration for nonresident or part-year resident; death of taxpayer {#sec-r-206.13 omnilex-key=us-mi-regs-official--dept-treasury--R 206.13}

Rule 13. (1) A person who is permanently leaving Michigan and is filing a final federal return covering less than 12 months shall file a Michigan return covering the same period and prorate the exemption allowance on the basis of months in Michigan during the calendar year to 12 months.

(2) A proration of the exemption allowance is not required because of the death of the taxpayer during the tax year.

History

History: 1979 AC; 1998 - 2000 AACS.

Mich. Admin. Code R 206.14 Moving expenses {#sec-r-206.14 omnilex-key=us-mi-regs-official--dept-treasury--R 206.14}

Rule 14. Persons moving into or out of the state of Michigan shall allocate all adjustments to gross income resulting from the move to the state of destination as shown in the following examples:

(a) Example 1. Wage earner moves to Michigan.

Figure for 206.14 (1 of 4)

Note: The Michigan income is reduced by the moving expenses.

(b) Example 2. Taxpayer moves to Michigan and his reimbursed expenses exceeded the amount that could be deducted on his federal return.

Figure for 206.14 (2 of 4)

Note: Reimbursed moving expenses include reimbursement for the cost of selling a house in former state, as this is a separate transaction not included in the computation of the gain from the sale of the residence.

Note: Taxpayer's excess reimbursed moving expense is taxable in Michigan.

Figure for 206.14 (3 of 4)

Note: Taxpayer's subtraction of income attributable to state of destination is reduced by the moving expense.

(d) Example 4. Taxpayer moving out of Michigan whose reimbursed moving expenses exceeded the amount that could be deducted on his federal return.

Figure for 206.14 (4 of 4)

Note: Taxpayer's subtraction of income attributable to state of destination includes the excess reimbursed moving expense.

History

History: 1979 AC.

Mich. Admin. Code R 206.15 Credit for income tax withheld from compensation {#sec-r-206.15 omnilex-key=us-mi-regs-official--dept-treasury--R 206.15}

Rule 15. (1) The income tax deducted and withheld from compensation under chapter 7 of Act No. 281 of the Public Acts of 1967, as amended, is allowed as a credit against the income tax of the person from whose wages the tax was withheld. Credit shall be given to the employee even though such tax has not been paid to the department by the employer.

(a) Example 1. An employee received compensation of $15,000.00 from his employer for the year. The employer withheld tax of $500.00 from the employee and furnished him with a W-2 wage and tax statement showing $500.00 withheld.

The department shall give the employee credit for tax withheld of $500.00.

(b) Example 2. The employer paid his employees by check and withheld tax from each payment of wages. Each check contained a stub which itemized all deductions.

One of the deductions was headed "Michigan Tax." The employees did not have W-2 wage and tax statements to attach to their individual income tax returns because the employer did not give the employees the statements. The employees shall receive credit against the tax established by their individual income tax returns for all tax they can prove was withheld. A copy of each check stub shall be accepted as evidence of the tax withheld unless the department can prove otherwise. If the employee cannot support his claim for tax withheld by W-2 wage and tax statements or check stubs, he shall file an employee complaint form with his income tax return.

(2) If a taxpayer files individual income tax returns on any basis other than a calendar year basis, the tax deducted and withheld during any calendar year is allowed as a credit against the income tax on the person from whose wages the tax was withheld for the taxable year which begins in such calendar year. If the person from whose wages the tax was withheld has more than 1 taxable year beginning in that calendar year, the credit shall be allowed against the tax for the last taxable year beginning in such calendar year.

(a) Example 1. A man and his wife own a business and file their individual income tax return, MI-1040, on a fiscal year basis ending June 30th. They made 4 estimated payments totaling $700.00 toward their tax liability for their year ending June 30, 1976. The husband also worked for another business and the employer withheld $325.00 tax from his compensation for calendar year 1975. The tax liability of the husband and wife established by the MI-1040 for fiscal year ending June 30, 1976, was $1,100.00. The taxpayer should take credit for the $700.00 estimated payments made for the fiscal year ending June 30, 1976, plus the $325.00 tax the husband's employer withheld during calendar year 1975. They must pay $75.00 with the MI-1040 when they file.

(b) Example 2. The situation in this example is the same as in example 1 except the husband worked from January 15, 1976, to May 31, 1976, for the employer but did not work for him during calendar year 1975. The husband and wife cannot claim the $325.00 tax the employer withheld from the husband's compensation in 1976 on their MI-1040 for fiscal year ending June 30, 1976, and must pay $400.00 at the time they file their annual return, MI-1040. They must take credit for the $325.00 tax withheld in 1976 on their MI-1040 for the year ending June 30, 1977.

(c) Example 3. After filing his 1976 tax return on a calendar year basis, a taxpayer decides to change his filing to a fiscal year basis using the fiscal period of July 1 to June 30. He must file a return for the period of January 1, 1977, to June 30, 1977, and pay the tax. He shall not receive credit for the tax withheld during that period. When filing his full year return for the fiscal period July 1, 1977, to June 30, 1978, he shall report his income for the last 6 months of 1977 and the first 6 months of 1978 and shall receive credit for the full amount of tax withheld during calendar year 1977. The 1977 W-2 wage and tax statement shall be attached to the return.

Figure for 206.15

History

History: 1979 AC.

Mich. Admin. Code R 206.16 Credit allowed resident for income tax paid to other states {#sec-r-206.16 omnilex-key=us-mi-regs-official--dept-treasury--R 206.16}

Rule 16. (1) A resident taxpayer is allowed a credit for tax imposed on income which is also subject to tax by another state of the United States, or political subdivision thereof, or the District of Columbia. This credit is limited to the smaller of (a) the Michigan tax on such income or (b) the tax imposed by the other state. The credit is that portion of the Michigan income tax that the income which is subject to tax in both states bears to total taxable income. Example:

Michigan wages......................................... $ 8,000.00 Wages earned in another state..................... 2,000.00 United States government bond interest.......... 1,000.00 _________ Adjusted gross income.............................. 11,000.00 United States government bond interest......... 1,000.00 _________ Total taxable income................................ 10,000.00 Income subject to tax in both states $2,000.00 or 20% Taxpayer has 2 exemptions 2 X $1,500.00 ....................................... 3,000.00 Taxable balance .................................... 7,000.00 Tax @ 4.6%........................................................ 322.00 Tax paid to other state; $70.00 Maximum credit allowed 20% of $322.00...... $ 64.00 In this example, the taxpayer cannot claim the full $70.00 paid to another state as his credit is limited to 20% of $322.00 or $64.40. The credit cannot exceed the amount paid to another state.

(2) Since Michigan allows a subtraction of income attributable to other states the credit is ordinarily limited to tax imposed on compensation received for services rendered in another state.

R 206.17. City income tax credit.

Rule 17. (1) Each person subject to tax under Act No. 281 of the Public Acts of 1967, being §§206.1 through 206.532 of the Michigan Compiled Laws, may claim a credit for a portion of the income taxes levied by cities in Michigan that are deductible if that person had not elected the standard deduction. For purposes of computations of this credit, city income taxes do not include penalties or interest paid.

(2) The amount of city income taxes used as a basis for computation of this credit shall be the city income tax paid by the taxpayer in the tax year. The tax paid shall be reduced by any refund of overpaid taxes of a prior year.

(3) If a person is assessed and pays additional city income taxes applicable to prior years, the additional taxes paid shall be added to the city income tax of the year in which they are paid for purposes of computation of this credit.

History

History: 1979 AC.
History: 1979 AC; 1998 - 2000 AACS.

Mich. Admin. Code R 206.18 Rescinded {#sec-r-206.18 omnilex-key=us-mi-regs-official--dept-treasury--R 206.18}

History

History: 1979 AC; 1998 - 2000 AACS.

Mich. Admin. Code R 206.19 Adjustment of pre-tax gains or losses {#sec-r-206.19 omnilex-key=us-mi-regs-official--dept-treasury--R 206.19}

Rule 19. (1) A taxpayer, whose federal adjusted gross income includes gains and losses realized in the tax year from the disposition of property acquired prior to October 1, 1967, which are described in and subject to the provisions of subchapter P of the internal revenue code, 26 U.S.C.S1201 et seq., may reduce taxable income by the portion of gain or loss attributable to the period before October 1, 1967. When this election is made, it shall include all items of gain or loss realized during the taxable year.

(2) To compute this adjustment a fraction is applied to the gain. The denominator is the total months held and the numerator is the number of months held after October 1, 1967. In making this calculation, property acquired or disposed of from the first to the fifteenth of the month shall be counted from the first of the month and property acquired or disposed of after the fifteenth of the month shall be counted from the last day of the month.

(3) Losses resulting from the application of this rule shall not be carried forward.

History

History: 1979 AC.

Mich. Admin. Code R 206.20 Withholding generally {#sec-r-206.20 omnilex-key=us-mi-regs-official--dept-treasury--R 206.20}

Rule 20. (1) Every employer, over whom Michigan has jurisdiction, required to withhold federal income tax from compensation paid an employee, shall also withhold Michigan income tax from (a) compensation paid to the employee if the employee is a resident of Michigan, and (b) from that portion of the compensation earned in Michigan if the employee is not a resident of Michigan, unless (i) the compensation is paid to an employee from whom the employer is prohibited from withholding Michigan income tax because of a federal law, or (ii) the employer is not required to withhold Michigan income tax because of a reciprocal agreement between Michigan and another state or between Michigan and another city. (See employer's tax guide.)

(2) Churches, schools, governmental agencies, and nonprofit organizations exempt from income tax shall withhold Michigan income tax from compensation paid employees the same as any other employer.

(a) Example 1. A church has a full-time secretary and withholds federal income tax from her compensation. The church shall also withhold Michigan income tax from her compensation.

(b) Example 2. A machine shop is located in Michigan close to the Indiana state line. It employs residents of both Michigan and Indiana and is required to withhold federal income tax from all employees. The firm shall withhold Michigan income tax from Michigan residents, but will not be required to withhold Michigan income tax from residents of Indiana who provide the employer with a certificate of nonresidency. Michigan and Indiana have a reciprocal agreement.

(c) Example 3. A contractor from Pennsylvania builds a shopping center in Michigan. He employs residents of Michigan from the local labor force and brings 2 of his permanent employees from Pennsylvania to Michigan for 3 months to supervise the construction. The contractor shall register and withhold Michigan income tax from the compensation paid to all employees engaged in the project including the compensation paid to the 2 residents of Pennsylvania for the compensation paid for the work performed in Michigan. This contractor has the same obligation to withhold the Michigan tax as a Michigan contractor who performs all of his business in Michigan.

History

History: 1979 AC.

Mich. Admin. Code R 206.21 Failure to withhold; withholding less than correct amount; liability of employer {#sec-r-206.21 omnilex-key=us-mi-regs-official--dept-treasury--R 206.21}

Rule 21. (1) If an employer erroneously fails to withhold Michigan income tax from compensation paid to an employee, or withholds less than the correct amount, he is liable for payment of the amount which should have been withheld, whether or not it is collected from the employee by the employer. The employer should correct the error within the same calendar year, if possible, by deducting the difference between the amount withheld and the amount required to be withheld from any compensation still owed the employee.

(2) If the failure to withhold is in a year other than the current year, the employer is still liable for the amount that should have been withheld and shall pay it to the department. Any reimbursement by the employee to the employer is a matter between the employer and the employee.

(3) If the employer fails to withhold the tax as required and, thereafter, the income tax against which the tax may be credited is paid, the tax required to be deducted and withheld shall not be collected from the employer. Such payment does not, however, operate to relieve the employer from liability for penalties and interest on the tax that should have been withheld.

(a) Example 1. An individual started a business on March 1 of the current year. He was an employer and the people on his payroll were employees subject to collection of federal income tax at source on wages under chapter 24 of the internal revenue code, 26 U.S.C. S4101 et seq. The employer did not register and start withholding Michigan income tax until August 1. The employer is liable for withholding the correct tax from the compensation he pays his employees. He should compute the tax he should have withheld from each employee from March 1 to August 1 and withhold this from each employee during the remainder of the year in addition to the correct tax that must be withheld from each payment of compensation. This is according to subrule (1) above.

(b) Example 2. An employer was withholding federal income tax from wages, but was not withholding Michigan income tax. The department made an audit in June, 1976, and determined the following:

Figure for 206.21 The department assessed tax of $2,829.00 plus penalty and interest against the employer. Subsequently, the employer obtained signed employee wage statements from the employees and sent them to the department.

Employee no. 2 claimed he filed MI-1040 returns for the years 1973, 1974, and 1975. The department checked its records and found returns for all 3 years and that the employee did pay the tax on his own MI-1040. Since the assessment had not been paid, the department reduced the assessment by $1,164.00, which is the tax in the audit for the years, 1973, 1974, and 1975. If the assessment had been paid, the department would have issued a refund to the employer. This is according to subrule (3) above. Employee no. 1 also gave his employer signed employee wage statements claiming he filed MI-1040 returns and paid his own tax on the wages he received from the employer. The department checked its records and could not find a return for 1973. They found a joint return for 1974, but the adjusted gross income on the return was $12,000.00. This was compensation the wife received as a schoolteacher. It agreed with the compensation shown on the W-2 issued by the school district. The department also found a joint return for 1975 and the employee and his wife reported the compensation from both their employers. The department reduced the assessment against the employer by $450.00 for the tax included in the audit for 1975 since the employee paid the tax on this compensation on his own MI- 1040. This is according to subrule (3) above. The department cannot give the employer relief for the tax he should have withheld from employee no. 1 in 1973 and 1974 since the employee did not report on any MI-1040 the compensation he received from the employer.

Employee no. 1 is delinquent for the year 1973 and filed a false MI-1040 for 1974.

The department will give the employee credit as tax withheld of $328.00 in 1973 and $438.00 in 1974 at the time it confronts him about his individual income tax returns.

The employer shall look to the employee if he wishes to get reimbursed for these 2 amounts. This is a matter between the employer and the employee. See subrule (2) above. The employer may recover the $449.00 tax he did not withhold in 1976 by deducting it from future compensation paid the employee during the remainder of the year according to subrule (1). The employees shall be given credit for these amounts on their 1976 W-2 plus any additional tax to be deducted for the remainder of 1976.

History

History: 1979 AC.

Mich. Admin. Code R 206.22 Overwithholding or withholding in error {#sec-r-206.22 omnilex-key=us-mi-regs-official--dept-treasury--R 206.22}

Rule 22. (1) If an employer overwithholds income tax from an employee's wages, or if he withholds Michigan tax where he should not have withheld Michigan tax, he may repay the amount withheld in error to the employee at any time within the same calendar year. He shall obtain a receipt from the employee for the amount refunded and keep it as a part of his own records. The employer may adjust his records internally and deduct the amount refunded from the tax owing on his next return or he may ask for a cash refund.

(2) The fact that an employer is withholding more on 1 basis than he would if he were using another method, for example, the wage bracket method as compared to the percentage method, does not mean that there has been an overcollection. The employer may choose whichever method he prefers and if his computation is correct according to the method selected, there is no overcollection. Similarly, if an employee does not file an exemption certificate so that more is withheld than would have been if he had claimed his exemptions, there is no overcollection on that account and no repayments to him by the employer would be authorized.

(3) If the employer does not repay the employee for the overcollection, the employee's remedy lies in claiming credit for the amount withheld on an individual income tax return.

(a) Example 1. An employee was a resident of Michigan and lived and worked in Michigan through June of the current year. On July 1, his employer reassigned the employee to New York state. The employee moved to and became a legal resident of New York state on July 1.

The employer correctly withheld $600.00 Michigan tax from January through June, but erroneously withheld another $200.00 Michigan tax instead of New York tax during July and August and paid Michigan $800.00 tax which was withheld from this 1 employee.

The employer should refund $200.00 to the employee and obtain a receipt for his records. The employer may either reduce his next Michigan return by $200.00 or ask for a refund. The W-2 shall show $600.00 Michigan tax withheld.

(b) Example 2. A coding error resulted in Michigan tax being withheld from an employee who is a resident of Minnesota. The employee never lived or worked in Michigan. The employee found the error when he received his W-2. If the employer can recover the W-2 and issue a corrected W-2 showing no Michigan tax withheld, he may refund the tax to the employee, obtain a receipt, and either deduct it from the amount withheld the following month or ask the department for a refund. If the employer cannot recover the W-2 from the employee, the employee shall obtain relief by filing a Michigan individual income tax return.

History

History: 1979 AC.

Mich. Admin. Code R 206.23 Withholding tax returns {#sec-r-206.23 omnilex-key=us-mi-regs-official--dept-treasury--R 206.23}

Rule 23. The income tax withheld from compensation paid to employees is a personal obligation of the employer (taxpayer) and is due and payable on or before the fifteenth day of the month next succeeding the month in which the tax was withheld.

The commissioner of revenue may require filing of returns on other than a monthly basis. The taxpayer shall make out a tax return for the preceding month on the form required by the department, showing the amount of the tax for which he is liable and mail the return, together with a remittance for the amount of the tax, payable to the state of Michigan, to the address as indicated on the return, on or before the fifteenth day of the month. The return shall be signed by the taxpayer or the duly authorized agent of the taxpayer.

History

History: 1979 AC.

Mich. Admin. Code R 206.24 Withholding exemption certificate {#sec-r-206.24 omnilex-key=us-mi-regs-official--dept-treasury--R 206.24}

Rule 24. (1) Every employee shall file a signed employee's Michigan withholding exemption certificate, form MI-W4, with his or her employer. The number of personal and dependency exemptions claimed on the MI-W4 shall not exceed the number of personal and dependency exemptions the employee is entitled to claim on his or her individual income tax return.If married, and the employee and his or her spouse are both employed, they shall not claim the same personal and dependency exemptions with their employers at the same time. If a person is unmarried and holds more than 1 job, the person shall not claim the same exemption with more than 1 employer at the same time.

(2) An employee may claim exemption from Michigan income tax withholding, which shall be renewed annually, if all of the following conditions exist:

(a) He claimed exemption from federal income tax withholding.

(b) He did not incur a Michigan income tax liability for the previous year.

(c) He does not anticipate a Michigan income tax liability for the current year because his employment is less than full time, intermittent, or temporary, and his personal and dependency exemptions will exceed his annual compensation.

(3) An employee shall file a new certificate within 10 days if the number of exemptions previously claimed decreases because:

(a) The spouse for whom the employee has been claiming exemption is divorced or legally separated, or claims her or his own exemption on a separate certificate.

(b) The employee finds that a dependent claimed as an exemption on the certificate must be dropped for federal purposes.

(4) The death of a spouse or a dependent does not affect the employee's withholding until the following year.

(5) If an employee fails or refuses to furnish an exemption certificate, the employer shall withhold tax from the employee's total compensation without allowance for any exemptions.

History

History: 1979 AC.

Mich. Admin. Code R 206.25 "Homestead" defined {#sec-r-206.25 omnilex-key=us-mi-regs-official--dept-treasury--R 206.25}

Rule 25. (1) "Homestead" means a dwelling, or a unit in a multiple unit dwelling, which is subject to property tax or a service charge in lieu of taxes pursuant to section 15a of Act No. 346 of the Public Acts of 1968, and is occupied as a home by the owner or renter. Real property classified as agricultural land for property tax purposes is part of a person's homestead under any of the following conditions:

(a) If the gross receipts from the taxpayer's agricultural or horticultural operations are greater than his household income, all taxes on farmland may be claimed for credit.

(b) If gross receipts from the taxpayer's agricultural or horticultural operations are less than his household income, the credit for property taxes is limited to the property taxes on land that he has lived on for 10 years or more and which is adjacent or contiguous to his home.

(c) If the taxpayer has not lived on the land for 10 years and the gross receipts from agricultural or horticultural operations do not exceed the taxpayer's household income, only the taxes on the home and 5 acres of land may be claimed for credit.

(2) The taxes on a homestead, which is an integral part of a larger unit of assessment, shall be the proportion of the total property tax that the value of the homestead is to the total value of the assessed property.

(a) Example 1. The taxpayer is an insurance agent and is using the first floor of his 2-story house as a business office. He and his wife live on the second floor. Assuming the value of the real property used for business is equal to the value of the real property used as a home, the taxpayer may claim for credit one-half of the property taxes.

(b) Example 2. The taxpayer has converted the second floor of his home to an apartment which he rents for $175.00 per month. To determine the property taxes applicable to the apartment, the annual rent of $2,100.00 (12 x $175.00 = $2,100.00) is multiplied by 17%. This amounts to $357.00 which is subtracted from the total property taxes assessed to arrive at the homestead property tax the taxpayer may claim for credit. This example is used when the homestead is a part of a larger unit of assessment and that portion of the assessed property not used as a homestead by the taxpayer is rented or leased to another person who occupies it as his home.

(3) A mobile home or trailer coach in a trailer park is a homestead. See R 206.28 for the property taxes that may be claimed for credit by persons residing in a mobile home in a trailer park.

(4) A nursing home or foster care home or home for the aged is the homestead of a permanent resident. A homestead maintained elsewhere by the spouse is considered a part of the same homestead.

(5) A single person who is a permanent resident of a nursing home, foster care home, or home for the aged and also owns the house he formerly occupied may claim for credit either the taxes on the house or his share of the taxes paid by a nursing home, foster care home, or home for the aged, but not both.

(6) See R 206.28 for the property taxes that may be claimed for credit by a person residing in a nursing home, foster care home, or home for the aged.

History

History: 1979 AC.

Mich. Admin. Code R 206.26 Property taxes claimable for homestead property tax credit; sale of property; apportionment of taxes; computation of credit {#sec-r-206.26 omnilex-key=us-mi-regs-official--dept-treasury--R 206.26}

Rule 26. (1) Property taxes which may be claimed for a property tax credit are:

(a) Taxes based on the state equalized value of the homestead, including collection fees. Special assessments based on state equalized value may also be claimed.

(b) The property must be located in Michigan and be the principal residence of the claimant.

(c) The taxes shall be the taxes billed for the year the credit is claimed. For example, a property tax credit claimed for 1976 shall be based on taxes billed to the owner for 1976, usually in July and December.

(2) If the property is sold during the year, the taxes shall be apportioned between the buyer and seller according to the number of days in the calendar year that each occupied the house.

Example 1. The taxpayer sold his home in April, 1976, which he occupied until May 31, 1976. The property taxes for 1976 amounted to $600.00 (summer taxes $200.00, winter taxes $400.00) billed to the new owner in July and December of 1976. On August 1, 1976, he purchased a new home which he first occupied on October 1, 1976. The 1976 taxes on the new home totaled $800.00 (summer taxes $300.00, winter taxes $500.00). The taxes that may be claimed for credit are computed as follows: _____________________________________________________________________ ______________ Computation Homestead Homestead Steps Sold Bought _____________________________________________________________________ _______________ 1. Number of days occupied 152 92 2. Divide line 1 by 366 days 41.5% 25.1% 3. 1976 property taxes $600.00 $800.00 4. Prorated taxes line 3 X line 2 $249.00 $200.80 5. Total taxes for credit $449.80 The taxpayer rented a home for the period June 1 to September 30, 1976, and may also claim the 17% of tax in rent.

History

History: 1979 AC.

Mich. Admin. Code R 206.27 Homestead property tax credit; "owner" defined {#sec-r-206.27 omnilex-key=us-mi-regs-official--dept-treasury--R 206.27}

Rule 27. (1) The term "owner," for the purpose of claiming a homestead property tax credit, means a natural person who owns his home or is:

(a) Purchasing a homestead under a mortgage or land contract.

(b) Purchasing a dwelling on leased land.

(d) Holding a life lease in a homestead previously sold.

(e) The sole occupant of a homestead in which he is a joint owner.

(2) Claimants not related as husband and wife, who jointly own and occupy the same dwelling, shall file separate claims on their prorated share of the taxes.

History

History: 1979 AC.

Mich. Admin. Code R 206.28 Homestead property tax credit; renter {#sec-r-206.28 omnilex-key=us-mi-regs-official--dept-treasury--R 206.28}

Rule 28. (1) A person renting a homestead that is subject to a property tax is entitled to a homestead property tax credit similar to the credit allowed the homeowner.

(2) The renter, in his or her computation of the credit, shall use 17% of gross rent for taxes on his or her homestead.

(3) Gross rent is the contracted rental amount the renter or lessee pays to the landlord. If the department has reason to believe that the amount charged is excessive, the department may adjust the rent to fair market value for purposes of computing the credit.

(4) Persons living in a mobile home park may claim credit on the $3.00 per month specific tax and 17% of the remaining charges as rent.

Example 1. Monthly charges for the lot are $65.00, including the $3.00 per month specific tax. Rent paid for the entire year, $62.00 x 12 = $744.00.

Property tax in rent, 17% x 744.00....................... $126.48 Specific tax at $3.00 per month......................... 36.00 _________ Homestead property taxes for credit computation.... $162.48 (5) A person renting a homestead that is subject to a service fee as provided by section 15a of 1966 PA 346, MCL 125.1415a, in lieu of an ad valorem property tax, shall base his or her property tax credit on the service fee included in the rent he or she pays.

The person does not use 17% of rent paid. For example, John Doe rents a home for $160.00 per month or $1,920.00 per year. The home is tax exempt but a service fee of 7% of rent is paid to the city by the owner. In the computation of the credit, John Doe uses 7% of $1,920.00 or $134.40 for property taxes. The service fees can vary from 1% to 10% of the rent paid depending on the city and type of housing. Therefore, occupants of service fee housing should ask their management agent for the percentage that applies to their homestead.

(6) This rule is effective for the tax year starting January 1, 1978.

History

History: 1979 AC; 2016 AACS.

Mich. Admin. Code R 206.29 Homestead property tax credit; separation or divorce of claimants {#sec-r-206.29 omnilex-key=us-mi-regs-official--dept-treasury--R 206.29}

Rule 29. (1) For the period prior to separation or divorce, the taxes or rent paid shall be prorated on the basis of each spouse's income to total income for the period.

However, if 1 spouse's income does not equal 1/2 the taxes or tax in rent for the period, the other spouse may claim all of the taxes or tax in rent for that period. In the example in subrule (5) Alice is not entitled to claim part of the property taxes during the period they lived together because for that period she did not have income equal to 1/2 of the taxes.

(2) During the period of separation or divorce, the occupant of the homestead is entitled to the credit.

(3) If 1 of the parties to a separation or divorce is required to continue the house payments and taxes or the rent on the dwelling occupied by the other, the occupant shall include these payments in his or her household income.

(4) Household income is that income received during the period the claimant is entitled to claim property taxes or tax in rent.

(5) Example 1. Bob and Alice Jones separated June 1 and were divorced November 3. They owned a home on which the taxes for the year were $900.00.

Alice continued to occupy the home and received title to the property upon their divorce. Bob moved into an apartment June 1 and paid $225.00 per month rent for the balance of the year. Bob's income for the year was $15,000.00 and, at the time they separated, he was ordered to pay Alice $200.00 per month plus the payments on the house ($240.00 per month, including taxes and insurance). The divorce decree called for alimony to Alice of $200.00 per month. Alice earned $30.00 per month on a part-time job through July but quit to go to work full time on August 1 for a salary of $500.00 per month. Their homestead property tax credits are computed as follows:

Figure for 206.29

History

History: 1979 AC.

Mich. Admin. Code R 206.30 Homestead property tax credit; part-year resident {#sec-r-206.30 omnilex-key=us-mi-regs-official--dept-treasury--R 206.30}

Rule 30. A person who moved into or out of the state during the tax year and was a resident for at least 6 months may compute a property tax credit on his or her Michigan household income. For purposes of computing the credit, the taxes on the Michigan home bought or sold shall be reduced to the ratio of days occupied to total days in the tax year.

(a) Example 1. Mr. Jones came to Michigan on May 1, purchased a home, and moved into it with his family on June 1. The taxes on the home for the full year were $720.00. Mr. Jones received the following income:

Figure for 206.30

History

History: 1979 AC.

Mich. Admin. Code R 206.31 Homestead property tax credit; death of taxpayer {#sec-r-206.31 omnilex-key=us-mi-regs-official--dept-treasury--R 206.31}

Rule 31. The 6-month residency rule does not apply to deceased taxpayers.

The taxes on which a credit may be based are those taxes billed to, and paid by, the claimant for the current tax year. For renters, the tax is 17% of the rent paid up to the date of death.

History

History: 1979 AC.

Mich. Admin. Code R 206.32 Veteran's homestead property tax credit {#sec-r-206.32 omnilex-key=us-mi-regs-official--dept-treasury--R 206.32}

Rule 32. (1) The credit allowed servicemen, veterans, or their widows under the requirements of section 506 of Act No. 281 of the Public Acts of 1967, being S206.506 of the Michigan Compiled Laws, shall be known as a veteran's homestead property tax credit.

(2) A person eligible for the veteran's credit may file a claim for the year in which he first became eligible and all years thereafter for which he remains eligible, including the year in which his eligibility is terminated. Eligible claimants of a veteran's homestead property tax credit who buy or sell and rent a home during the tax year shall compute their credit as shown in the following example:

John Brown is an eligible veteran with a 30% service-connected disability which entitles him to a state equalized value allowance of $3,500.00. He sold his home in March and moved out on April 30. Its state equalized value was $10,500.00.

The taxes for the entire year amounted to $546.00. He rented a home for the next 5 months for $275.00 per month. He purchased a new which he moved into on October 1. The state equalized value is $15,000.00. Taxes of $780.00 were assessed for the entire year. Mr. and Mrs. John Brown's household income for the tax year amounted to $12,000.00.

Figure for 206.32 Note: Veterans renting a homestead subject to a service fee in lieu of property taxes should enter their share of the service fee on line 47 instead of 17% of rent paid. See your management agent for your share of the service fee.

History

History: 1979 AC.

Mich. Admin. Code R 206.33 Income tax return preparers {#sec-r-206.33 omnilex-key=us-mi-regs-official--dept-treasury--R 206.33}

Rule 33. (1) An income tax return preparer shall furnish a completed copy of any return or refund claim he prepares to the taxpayer before or at the time he presents it to him for signing.

(2) The preparer shall retain a completed copy of the return or refund claim, or retain on a list the name, taxpayer's social security number and taxable year of the taxpayer for whom such return or claim for refund was prepared.

(3) The preparer shall make such copy or list available for inspection upon request by the commissioner of revenue or his representative. The return copy or list shall be retained for the 3-year period following the close of the return period during which such return or claim for refund was presented to the taxpayer for filing. However, in the case of a return which becomes due during a return period (including extensions, if any) following the return period during which the return was presented to the taxpayer for filing, then such materials as described in this paragraph shall be retained and kept available for inspection upon request for the 3-year period following the close of such later return period in which the return became due. For the definition of "return period" see the internal revenue code, 26 U.S.C. S6060(c).

(4) For the purpose of this rule, the term "income tax return preparer" means any person who prepares for compensation, or who employs 1 or more persons to prepare for compensation, any return of tax imposed by Act No. 281 of the Public Acts of 1967, or any claim for refund under the same act. For the purpose of the preceding sentence, the preparation of a substantial portion of a return or claim for refund shall be treated as if it were the preparation of such return or claim for refund.

(5) In the case of an employment between 2 or more income tax return preparers, the person who employs 1 or more other preparers to prepare for compensation any claim for refund other than for such person (and not the other preparer) shall be considered to be the income tax return preparer.

(6) In the case of a partnership arrangement for the preparation of returns and claims, the partnership shall be considered to be the income tax return preparer.

History

History: 1979 AC.

R 207.101 to R 207.110 State Convention Facility Development Tax

Mich. Admin. Code R 207.101 Definitions {#sec-r-207.101 omnilex-key=us-mi-regs-official--dept-treasury--R 207.101}

DEPARTMENT OF TREASURY

SALES, USE, AND WITHHOLDING TAX DIVISION

STATE CONVENTION FACILITY DEVELOPMENT TAX

(By authority conferred on the revenue division of the department of treasury by section 3 of Act No. 122 of the Public Acts of 1941, as amended, and sections 5 and 16 of Act No. 106 of the Public Acts of 1985, being SS205.3, 207.625, and 207.636 of the Michigan Compiled Laws)

Rule 1. (1) As used in these rules:

(a) "Act" means Act No. 106 of the Public Acts of 1985, being S207.621 et seq. of the Michigan Compiled Laws.

(b) "Department" means the department of treasury.

(2) A term defined in the act has the same meaning when used in these rules.

History

History: 1987 AACS.

Mich. Admin. Code R 207.102 Exemption listed in Act 94 of 1937 not applicable to act {#sec-r-207.102 omnilex-key=us-mi-regs-official--dept-treasury--R 207.102}

Rule 2. Exemptions listed in Act No. 94 of the Public Acts of 1937, as amended, being S205.91 et seq. of the Michigan Compiled Laws, are not applicable to the act.

History

History: 1987 AACS.

Mich. Admin. Code R 207.103 Tax included in gross {#sec-r-207.103 omnilex-key=us-mi-regs-official--dept-treasury--R 207.103}

Rule 3. The state convention facility development tax is imposed on the operator of a convention hotel. The room charges shall be separately itemized on the customer's receipt; otherwise, tax shall apply on the total charge. The act prohibits the including of such charges as a part of the gross rental receipts.

History

History: 1987 AACS.

Mich. Admin. Code R 207.104 Qualifying local government entities {#sec-r-207.104 omnilex-key=us-mi-regs-official--dept-treasury--R 207.104}

Rule 4. (1) As of October 1, 1985, the city of Detroit is a qualified local government entity. Pursuant to the act, other local government entities may qualify at a later date.

(2) As of October 1, 1985, the counties of Wayne, outside of the city of Detroit;

Oakland; and Macomb are qualified local government entities. Pursuant to the act, other counties may qualify at a later date.

History

History: 1987 AACS.

Mich. Admin. Code R 207.105 Tax returns; remittances {#sec-r-207.105 omnilex-key=us-mi-regs-official--dept-treasury--R 207.105}

Rule 5. (1) The state convention facility development tax is a personal obligation of the operator.

(2) The tax is due and payable before the fifteenth day of the month following the month in which the tax accrued.

(3) The operator shall make out a tax return for the preceding month on form C- 3096.

(4) The operator shall sign and mail the return to the Michigan Department of Treasury, P.O. Box 12216, Lansing, MI 48901. The return shall include a remittance for the amount of the tax and shall be made payable to the State of Michigan. All remittances of the state convention facility development tax shall be made to the department by bank draft, check, cashier's check, money order, certificate of deposit, or cash. A remittance shall not be a final discharge of the liability for the tax unless it has been paid in cash.

History

History: 1987 AACS.

Mich. Admin. Code R 207.106 Credits or refunds for cancellations {#sec-r-207.106 omnilex-key=us-mi-regs-official--dept-treasury--R 207.106}

Rule 6. Credits or refunds for cancellations of the room rentals which have been subject to the tax may be deducted only if an entire refund of the room charge, including all taxes, or full credit is given.

History

History: 1987 AACS.

Mich. Admin. Code R 207.107 Tax penalties and interest {#sec-r-207.107 omnilex-key=us-mi-regs-official--dept-treasury--R 207.107}

Rule 7. Tax penalties and interest are imposed pursuant to the provisions of Act No. 122 of the Public Acts of 1941, as amended, being S205.1 et seq. of the Michigan Compiled Laws.

History

History: 1987 AACS.

Mich. Admin. Code R 207.108 Discounts {#sec-r-207.108 omnilex-key=us-mi-regs-official--dept-treasury--R 207.108}

Rule 8. (1) Cash, trade, and quantity discounts to customers are deductible in arriving at the net room charge which is taxable. Such discounts shall appear on the invoices, records, and accounts of the convention hotel and be substantiated to the satisfaction of the department.

(2) Trade and quantity discounts are usually known and available to the purchaser at the time of the room charge and are deductible immediately on the invoice before determining the tax.

(3) A cash discount is usually offered by the convention hotel as an inducement for payment within a specified time and shall not be deducted by the operator of the convention hotel until it has been given to the purchaser. Such discounts will be allowed as a deduction on the convention hotel's return when there is sufficient evidence in the records of the operator to indicate that such discounts have been the regular policy of the convention hotel and have been given to the purchaser.

History

History: 1987 AACS.

Mich. Admin. Code R 207.109 Records {#sec-r-207.109 omnilex-key=us-mi-regs-official--dept-treasury--R 207.109}

Rule 9. (1) The department, through its field auditors and other employees, may examine the books, records, and papers of anyone liable for payment of the state convention facility development tax. The department may issue a subpoena requiring an operator to appear for examination and produce any books, records, or papers within the scope of the inquiry.

(2) It is the duty of an operator subject to the tax to keep and preserve suitable and adequate records of the business to enable the operator, as well as the state, to determine the correct amount of the tax for which the operator is liable.

(3) Failure to produce and keep records for the purpose of examination by the department will be considered willful noncompliance with the act and shall subject an operator to the penalties of the act. In the absence of sufficient records, the department may determine the amount of tax due the state by using any information available, whether obtained at the operator's place of business or from other sources, and assess the operator for any deficiencies, plus penalties and interest.

(4) An operator is required to keep complete and accurate daily records of all room charges, whether for cash, credit, barter, or trade. The operator is also required to keep complete and accurate records of daily room charges, records, receipts, invoices, and all other pertinent documents pertaining to the business.

(5) Records and files shall be kept on the premises of the place of business and maintained in a legible manner. They shall also be kept clean and, as much as possible, free from deterioration. All invoices, receipts, bank statements, and cancelled checks shall be kept in chronological order so as to be balanced within the records to which they pertain.

History

History: 1987 AACS.

Mich. Admin. Code R 207.110 Beginning and expiration dates of tax {#sec-r-207.110 omnilex-key=us-mi-regs-official--dept-treasury--R 207.110}

Rule 10. The state convention facility development tax was certified by the treasurer of the state of Michigan pursuant to the act. The tax became effective on October 1, 1985. The tax imposed by the act shall be in effect until December 31, 2015.

History

History: 1987 AACS.

R 207.121 to R 207.130 Airport Parking Tax

Mich. Admin. Code R 207.121 Definitions {#sec-r-207.121 omnilex-key=us-mi-regs-official--dept-treasury--R 207.121}

DEPARTMENT OF TREASURY

SALES, USE, AND WITHHOLDING TAXES DIVISION

AIRPORT PARKING TAX

(By authority conferred on the bureau of revenue, department of treasury, by section 3 of 1941 PA 122, MCL 205.3)

Rule 1. (1) As used in these rules:

(a) "Act" means Act No. 248 of the Public Acts of 1987, being S207.371 et seq. of the Michigan Compiled Laws, and known as the airport parking tax act.

(b) "Administrator" means the administrator within the bureau of revenue of the department who is responsible for the administration of the excise tax.

(d) "Charge for a transaction" means the amount imposed upon a transaction, after any discount allowed under these rules, by a person engaged in the business of providing an airport parking facility.

(e) "Department" means the department of treasury.

(f) "Excise tax" means the tax imposed by the act.

(g) "Quantity discount" means a discount allowed a customer for frequent or numerous transactions.

(h) "Trade discount" means a price reduction given to a particular class of customer, such as a discount given to a travel agency or its customers.

(2) As used in the act and these rules, "person engaged in the business of providing an airport parking facility" means a person who provides an airport parking facility for persons who use or intend to use a regional airport facility during the time a motor vehicle is parked in an airport parking facility.

(3) A term defined in the act has the same meaning when used in these rules.

(4) As used and defined in the act, "motor vehicle" includes a vehicle that is disabled or abandoned in an airport parking facility.

History

History: 1989 AACS.

Mich. Admin. Code R 207.122 Validated parking {#sec-r-207.122 omnilex-key=us-mi-regs-official--dept-treasury--R 207.122}

Rule 2. A charge for a transaction that is paid by an entity other than the person for whom the parking was provided, such as a hotel, restaurant, or retail store, is subject to the excise tax. The person engaged in the business of providing an airport parking facility may reimburse himself or herself for the tax imposed upon the charge for the transaction paid by another from the person who pays the validated parking.

History

History: 1989 AACS.

Mich. Admin. Code R 207.123 Rescinded {#sec-r-207.123 omnilex-key=us-mi-regs-official--dept-treasury--R 207.123}

History

History: 1989 AACS; 2001 AACS.

Mich. Admin. Code R 207.124 Tax determination; discounts {#sec-r-207.124 omnilex-key=us-mi-regs-official--dept-treasury--R 207.124}

Rule 4. (1) A cash, trade, or quantity discount shall be deductible in arriving at the charge for the transaction subject to the excise tax. Such a discount shall appear on the invoices, records, and accounts of the person engaged in the business of providing an airport parking facility and shall be substantiated to the satisfaction of the department. Such a discount may be allowed as a deduction on a return filed with the department when there is sufficient evidence in the business records to indicate that such a discount has been a regular policy and has been given to a customer.

(2) A trade or a quantity discount shall be deductible immediately on the invoice before determining the tax.

(3) A cash discount shall not be deducted by the person engaged in the business of providing an airport parking facility until the customer has received the discount and paid for the transaction.

History

History: 1989 AACS.

Mich. Admin. Code R 207.125 Deduction allowed for full credit or refund arising from cancellation of charge for transaction {#sec-r-207.125 omnilex-key=us-mi-regs-official--dept-treasury--R 207.125}

Rule 5. (1) The department shall allow a deduction on the return for a credit or refund issued by a person engaged in the business of providing an airport parking facility to a customer for a cancellation of the charge for the transaction only when the person engaged in the business of providing an airport parking facility gives a credit or refund for the full amount of the charge for the transaction and the reimbursement of the excise tax.

(2) The department shall not allow a deduction for a partial credit or partial refund of the charge for the transaction and reimbursement of the excise tax.

History

History: 1989 AACS.

Mich. Admin. Code R 207.126 Excise tax as personal obligation; officer and successor liability; registration requirement {#sec-r-207.126 omnilex-key=us-mi-regs-official--dept-treasury--R 207.126}

Rule 6. (1) The excise tax, including penalty and interest, if any, is a personal obligation of the person engaged in the business of providing an airport parking facility.

(2) Officer liability and successor liability shall be governed by the provisions of Act No. 122 of the Public Acts of 1941, as amended, being S205.1 et seq. of the Michigan Compiled Laws.

(3) Every person engaged in the business of providing an airport parking facility shall register with the department and give the name and address of each location used as an airport parking facility and any other information the department may require with respect to matters pertinent to the enforcement of the act.

History

History: 1989 AACS.

Mich. Admin. Code R 207.127 Tax returns; remittances {#sec-r-207.127 omnilex-key=us-mi-regs-official--dept-treasury--R 207.127}

Rule 7. (1) The excise tax is due and payable on or before the fifteenth day of the month following the month in which the tax accrued. The revenue commissioner may require the filing of returns on other than a monthly basis.

(2) A person engaged in the business of providing an airport parking facility shall make out and sign a tax return for the preceding month on form C-3099 and shall send the return to the department at P.O. Box 12216, Lansing, MI 48901. At the same time, the person engaged in the business of providing an airport parking facility shall mail a remittance for the amount of the tax, which shall be made payable to the "State of Michigan."

(3) All remittances of the excise tax shall be made to the department by any of the following:

(a) Bank draft.

(b) Check.

(d) Money order.

(e) Certified check.

(f) Cash.

A remittance other than cash shall not be a final discharge of liability for the tax unless and until it has been paid in cash.

History

History: 1989 AACS.

Mich. Admin. Code R 207.128 Penalty and interest {#sec-r-207.128 omnilex-key=us-mi-regs-official--dept-treasury--R 207.128}

Rule 8. The penalty and interest on any unpaid amount of the excise tax shall be imposed pursuant to the provisions of Act No. 122 of the Public Acts of 1941, as amended, being S205.1 et seq. of the Michigan Compiled Laws.

History

History: 1989 AACS.

Mich. Admin. Code R 207.129 Records {#sec-r-207.129 omnilex-key=us-mi-regs-official--dept-treasury--R 207.129}

Rule 9. The provisions of Act No. 94 of the Public Acts of 1937, as amended, being S205.91 et seq. of the Michigan Compiled Laws, and the administrative rules promulgated thereunder shall govern the failure to register with the department and the requirements related to the maintenance and production of records.

History

History: 1989 AACS.

Mich. Admin. Code R 207.130 Deduction or exemption authorized by use tax act {#sec-r-207.130 omnilex-key=us-mi-regs-official--dept-treasury--R 207.130}

Rule 10. A deduction or an exemption authorized by the use tax act, being Act No. 94 of the Public Acts of 1937, as amended, being S205.91 et seq. of the Michigan Compiled Laws, shall not apply to the act.

History

History: 1989 AACS.

Bureau of Local Government Services Bureau of Local Government Services

R 209.1 to R 209.155 State Tax Commission General Rules

Mich. Admin. Code R 209.1 Definitions {#sec-r-209.1 omnilex-key=us-mi-regs-official--dept-treasury--R 209.1}

DEPARTMENT OF TREASURY

STATE TAX COMMISSION

GENERAL RULES

(By authority conferred on the state tax commission by sections 9, 84, 85, and 86 of 1965 PA 380, MCL 16.109, 16.184, 16.185, and 16.186; section 150 of 1893 PA 206, MCL 211.150; sections 1 and 3 of 1927 PA 360, MCL 209.101 and 209.103; section 18 of 1974 PA 198, MCL 207.568; section 12 of 1976 PA 438, MCL 207.612; and section 33 of 1969 PA 306, MCL 24.233; and Executive Order No. 2009-51.)

PART 1. GENERAL PROVISIONS

Rule 1. As used in these rules:

(a) "Act" means 1893 PA 206, MCL 211.1 to MCL 211.157 known as the general property tax act.

(b) "Assessing officer" includes, in addition to an assessor, an equalization director and employees of a county equalization department.

(d) "Assessor" means an assessing officer of a township or city who is duly elected or appointed and certified by the commission under this act.

(e) "Commission" means the state tax commission created by 1927 PA 360, MCL 209.101 to MCL 209.107.

(f) "Equalization director" means the head of a county equalization department appointed by the county board of commissioners and certified by the state assessor's board under the act and R 211.441(3).

(g) "Equalization study" means a determination of tentative equalized valuations for each class of real and personal property based on comparisons of existing assessed valuations and true cash valuations as prescribed by the state tax commission assessors' manual as amended by state tax commission bulletins, and shall be the beginning point for county and state equalization for the following year.

(h) "Manual" means the assessor's manual prepared and/or approved by the state tax commission in accordance with the provisions of MCL 211.10e.

History

History: 1979 AC; 1982 AACS; 2009 AACS; 2010 AACS; 2013 AACS.

Mich. Admin. Code R 209.3 Rescinded {#sec-r-209.3 omnilex-key=us-mi-regs-official--dept-treasury--R 209.3}

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.5 Rescinded {#sec-r-209.5 omnilex-key=us-mi-regs-official--dept-treasury--R 209.5}

History

History: 1979 AC; 2009 AACS.

Mich. Admin. Code R 209.7 Business hours; commission meetings {#sec-r-209.7 omnilex-key=us-mi-regs-official--dept-treasury--R 209.7}

Rule 7. (1) The office of the commission is in Lansing, Michigan and is open from 8 a.m. to 12 noon and from 1 p.m. to 5 p.m. daily, except Saturdays, Sundays, and legal holidays.

(2) The commission shall meet in regular session in each of 6 months each year and at special meetings at the call of the chairman.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.8 Filing of papers {#sec-r-209.8 omnilex-key=us-mi-regs-official--dept-treasury--R 209.8}

Rule 8. Papers required by statute or rule to be filed with the commission shall be filed with the executive secretary of the commission.

History

History: 1979 AC; 2009 AACS.

Mich. Admin. Code R 209.9 Representation {#sec-r-209.9 omnilex-key=us-mi-regs-official--dept-treasury--R 209.9}

Rule 9. (1) Practice before the commission, except in a matter involving state equalization, shall be by the interested party or the party's personal representative upon presentation of adequate identification evidenced by written authorization.

(2) In a formal hearing, an individual may represent himself or herself and a partnership or corporation may be represented by a partner or officer. In any case, the individual, partnership, or corporation may be represented by an attorney or other authorized representative.

History

History: 1979 AC; 1982 AACS.

Mich. Admin. Code R 209.10 Rescinded {#sec-r-209.10 omnilex-key=us-mi-regs-official--dept-treasury--R 209.10}

History

History: 1979 AC; 1982 AACS.

Mich. Admin. Code R 209.11 Rescinded {#sec-r-209.11 omnilex-key=us-mi-regs-official--dept-treasury--R 209.11}

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.12 Rescinded {#sec-r-209.12 omnilex-key=us-mi-regs-official--dept-treasury--R 209.12}

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.13 Transcripts of meetings {#sec-r-209.13 omnilex-key=us-mi-regs-official--dept-treasury--R 209.13}

Rule 13. (1) The state tax commission shall record the meetings. These recordings shall not be transcribed.

(2) A party who desires to transcribe a meeting, or portion of a meeting, shall furnish a copy of the transcript to the commission without cost.

(3) Copies of tapes of the meetings will be provided upon written request and payment of a fee to be determined by the commission.

History

History: 1979 AC; 1982 AACS; 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.14 Rescinded {#sec-r-209.14 omnilex-key=us-mi-regs-official--dept-treasury--R 209.14}

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.15 Rescinded {#sec-r-209.15 omnilex-key=us-mi-regs-official--dept-treasury--R 209.15}

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.16 Exhibits presented at meetings {#sec-r-209.16 omnilex-key=us-mi-regs-official--dept-treasury--R 209.16}

Rule 16. Documents and papers offered in evidence by the parties at a meeting before the commission shall be submitted to the commission not less than 30 days before the scheduled meeting.

History

History: 1979 AC; 1982 AACS; 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.17 Rescinded {#sec-r-209.17 omnilex-key=us-mi-regs-official--dept-treasury--R 209.17}

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.18 Rescinded {#sec-r-209.18 omnilex-key=us-mi-regs-official--dept-treasury--R 209.18}

History

History: 1979 AC; 2009 AACS.

Mich. Admin. Code R 209.19 Briefs {#sec-r-209.19 omnilex-key=us-mi-regs-official--dept-treasury--R 209.19}

Rule 19. At the request of the commission, parties may file briefs and reply briefs before a meeting within a time frame designated by the commission.

PART 2. LOCAL PROPERTY TAXES

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.21 Rescinded {#sec-r-209.21 omnilex-key=us-mi-regs-official--dept-treasury--R 209.21}

History

History: 1979 AC; 2009 AACS.

Mich. Admin. Code R 209.23 Rescinded {#sec-r-209.23 omnilex-key=us-mi-regs-official--dept-treasury--R 209.23}

History

History: 1979 AC; 2009 AACS.

Mich. Admin. Code R 209.24 Personal property examiner; certification {#sec-r-209.24 omnilex-key=us-mi-regs-official--dept-treasury--R 209.24}

Rule 24. (1) An application for certification as a personal property examiner shall provide a complete background of education and experience in property tax administration and shall be filed with the commission.

(2) The commission shall certify as qualified any applicant for a personal property examiner certificate who has successfully passed an examination conducted by the commission.

(3) A certificate shall be surrendered to the commission by any holder who is not employed by or is under contract with an assessor's office, county equalization department, or the commission.

(4) If a person whose certificate was surrendered reenters employment of, or contracts with, an assessor's office, county equalization department, or the commission during the term of the certificate, his or her certificate shall be restored.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.25 Appraisal manuals {#sec-r-209.25 omnilex-key=us-mi-regs-official--dept-treasury--R 209.25}

Rule 25. (1) Two copies of an appraisal manual, other than the current assessors' manual, which is to be used by an independent appraisal firm in Michigan, shall be submitted to the commission for approval. Any appraisal manual previously approved by the commission shall be resubmitted to the commission every 5 years for reapproval.

(2) The commission shall maintain a list of approved appraisal manuals.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.26 Assessors; preparation of assessment roll {#sec-r-209.26 omnilex-key=us-mi-regs-official--dept-treasury--R 209.26}

Rule 26. (1) An assessing officer shall prepare an assessment roll for the unit of government for which he or she is the duly elected or appointed assessing officer.

All assessment records, market analysis studies, assessment and tax rolls, and computer databases used by the assessing officer are the property of the assessing unit and are to be available to the state tax commission and the county equalization department for the purpose of county and state equalization.

(2) The assessment roll shall be prepared in accordance with the general property tax law at the legislatively prescribed level of valuation as set forth in section 27 of the act and Const 1963, art IX, §3.

(3) The assessor shall prepare the roll using the assessors' manual or a manual approved by the commission.

(4) All entries in the annual assessment roll prepared by the assessor shall be machine-printed or handwritten in permanent ink.

(5) When a nonresident taxpayer requests, in writing, information regarding the amount of the assessment against his or her property, the assessor shall reply within a reasonable time.

(6) An assessor shall file both of the following reports:

(a) A report on form L4021 for real property shall be filed with the county equalization department immediately following adjournment of the board of review.

(b) A report detailing all of the information required on form L4022 shall be filed with the equalization department and the commission immediately following adjournment of the board of review.

(7) In presenting a plan for a real estate index number system, provided for by section 25a of the act, to the commission for approval, the assessing officer shall conform to the provisions set forth in chapter 2 of the assessors' manual.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.27 Commission assessment; conditions {#sec-r-209.27 omnilex-key=us-mi-regs-official--dept-treasury--R 209.27}

Rule 27. The commission shall assess all the property in an assessing unit under the following conditions:

(a) Where the assessment roll was not prepared by a certified assessor, in which case the commission shall consult with the equalization department considering the contemporary resources of both the county and the commission. The commission has jurisdiction to direct the county equalization department to prepare the assessment roll.

(b) Where there is an admitted illegal assessment roll.

History

History: 1982 AACS.

Mich. Admin. Code R 209.28 Board of review; procedure {#sec-r-209.28 omnilex-key=us-mi-regs-official--dept-treasury--R 209.28}

Rule 28. (1) The secretary of the board of review shall make a record of the proceedings of the board of review. The proceedings shall consist of the minutes of the proceedings of the board of review, which, together with the petitions for review, shall constitute the record of the board of review.

(2) The commission shall prescribe the minimum requirements for the record through its bulletins.

(a) A sample form for taxpayer petition to the board of review shall be furnished by the commission.

(3) The record, as prescribed by the commission, may be expanded, but shall not be less than prescribed.

(4) Each action of the board of review to change the valuation, either upon its own motion or upon petition filed by a property owner, shall be by roll call vote and shall be entered in the minutes of the board and entered by the board in permanent ink in a separate column of the assessment roll being reviewed.

PART 3. ASSESSMENT OF OMITTED OR INCORRECTLY REPORTED

PROPERTY

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.31 General policy statement {#sec-r-209.31 omnilex-key=us-mi-regs-official--dept-treasury--R 209.31}

Rule 31. (1) The commission does not have jurisdiction to hear a taxpayer request to remove personal property from the roll when the taxpayer fails to file or fails to timely file a personal property statement.

(2) In addition to the authority to add real property to the roll, the commission has jurisdiction to remove real property from the roll. Examples include, but are not limited to the following:

(a) Incorrect measurement.

(b) Errors of inclusion, for example, pole barn not built or placed on an incorrect parcel.

(3) The commission does not have jurisdiction to add or remove property for a period before the last change of ownership of the property.

(4) All required information shall be provided to the commission at the time a petition is filed. This includes fully filling out the form with all required information and providing a record card or applicable personal property statement or statements and any other information requested by staff. A violation of this subrule shall result in dismissal of the petition.

(5) An assessor shall file a petition under MCL 211.154 with the commission to remove real or personal property upon discovery that a correction needs to be made and when the commission has jurisdiction. For example, if a taxpayer timely filed personal property statements and an audit results in 2 years of underpayment by the taxpayer and 1 year of overpayment, then the assessor shall file for all 3 years.

(6) In subrule (5) of this rule, the assessor shall not “net out” the overpayment and underpayment, all 3 years shall be filed.

(7) The commission will not accept jurisdiction of a petition that is a dispute over classification. For example, the commission will not accept jurisdiction over petitions that indicate property was incorrectly reported as industrial real when it should be industrial personal. This dispute should be addressed through the filing of a classification appeal and not through the filing of any MCL 211.154 petition.

History

History: 1979 AC; 1982 AACS; 2009 AACS; 2013 AACS.

Mich. Admin. Code R 209.32 Notification of omitted or erroneously reported property {#sec-r-209.32 omnilex-key=us-mi-regs-official--dept-treasury--R 209.32}

Rule 32. (1) Any person may notify the commission, as provided in section 154 of the act, that property liable to taxation has been omitted from the assessment roll or that property has been incorrectly reported for the current year or 1 or both of the 2 immediately preceding years.

(2) If the notice is from a property owner that an erroneous property statement was timely filed with the assessing officer for the tax year, then the property owner shall file the notification on form L-4155 prescribed by the commission.

(3) If the notice is from an assessor or county equalization director that property liable to taxation has been incorrectly reported or omitted from an assessment roll, then he or she shall file the notification on form L-4154 as prescribed by the commission.

(4) If the notification is from a person other than a person listed in subrules (2) and (3) of this rule, the commission shall investigate the allegation.

(5) The commission shall prescribe the forms to be filed.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.33 Notification of omitted or erroneously reported property from assessor or county equalization director {#sec-r-209.33 omnilex-key=us-mi-regs-official--dept-treasury--R 209.33}

Rule 33. (1) A notification of omitted or erroneously reported property from an assessor or county equalization director shall contain the requested correct assessed valuation.

(2) An assessor or county equalization director shall seek concurrence of the property owner in the requested correct assessed valuation on form L4154. Form L4154 may be sent to the commission at the same time as it is sent to the property owner in order to preserve jurisdiction over an assessment year. The commission shall order an assessment, which in its judgment is proper, to be placed on the current assessment roll.

The commission shall certify to the treasurer the amount of the taxes due for each year except the current year.

(3) If the property owner disagrees with the requested assessment, the commission shall inform the property owner and assessor, in writing, of the time and place of the meeting at which the commission shall determine an assessment.

(4) The commission shall order an assessment, which in its judgment is proper, to be placed on the appropriate assessment roll. The commission shall certify to the treasurer the amount of the taxes due for each year except the current year.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.34 Notification of omitted or incorrectly reported property from owner {#sec-r-209.34 omnilex-key=us-mi-regs-official--dept-treasury--R 209.34}

Rule 34. (1) A notification from a property owner of omitted or incorrectly reported property shall be initiated by submission of an L4155 form.

(2) The completed form, which shall include the requested assessment, shall be submitted to the commission, together with all of the following, if applicable:

(a) A copy of the property statement, which was filed timely for the year in question.

(b) A revised property statement.

(3) The property owner shall seek concurrence of the assessor in the requested assessment on form L4155. Form L4155 may be sent to the commission at the same time as it is sent to the assessor to preserve jurisdiction over an assessment year.

(4) If both the property owner and assessor concur, the commission may order an assessment which in its judgment is proper, to be placed on the current assessments roll. The commission shall certify to the treasurer the amount of the taxes due for each year except the current year.

(5) If the assessor disagrees with the proposed revised assessed valuation, the commission shall inform the property owner and assessor, in writing, of the recommendation and of the time and place of the meeting at which the commission shall determine an assessment.

(6) If both the property owner and assessor concur, the commission shall order an assessment, which in its judgment is proper, to be placed on the appropriate assessment roll. The commission shall certify to the treasurer the amount of the taxes due for each year except the current year.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.35 Rescinded {#sec-r-209.35 omnilex-key=us-mi-regs-official--dept-treasury--R 209.35}

History

History: 1979 AC; 2009 AACS.

Mich. Admin. Code R 209.36 Rescinded {#sec-r-209.36 omnilex-key=us-mi-regs-official--dept-treasury--R 209.36}

History

History: 1979 AC; 2009 AACS.

Mich. Admin. Code R 209.37 Notification of omitted or incorrectly reported property from other than owner, assessor, or county equalization director {#sec-r-209.37 omnilex-key=us-mi-regs-official--dept-treasury--R 209.37}

Rule 37. (1) If a notification is received from a person other than a property owner, an assessor, or a county equalization director that property liable to taxation has been incorrectly reported or omitted from an assessment roll for the current year or either of the 2 immediately preceding years, the commission shall investigate the allegation.

(2) Upon completion of the investigation, the commission shall transmit to the property owner and assessor the recommended assessed valuation and seek concurrence on form L-4156. The commission shall notify the property owner and assessor of the time and place of the meeting at which the commission shall determine an assessment.

(3) The commission shall order an assessment, which in its judgment is proper, to be placed on the appropriate assessment roll. The commission shall certify to the treasurer the amount of the taxes due for each year except the current year.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.38 Case record; availability to tax tribunal {#sec-r-209.38 omnilex-key=us-mi-regs-official--dept-treasury--R 209.38}

Rule 38. The record in each case shall be available to the Michigan tax tribunal for subsequent proceedings as provided in section 154(4) of the act.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.39 Rescinded {#sec-r-209.39 omnilex-key=us-mi-regs-official--dept-treasury--R 209.39}

PART 4. EQUALIZATION AND UTILITY ASSESSMENTS

History

History: 1979 AC; 1982 AACS.

Mich. Admin. Code R 209.41 Department of equalization; establishment; duties of director {#sec-r-209.41 omnilex-key=us-mi-regs-official--dept-treasury--R 209.41}

Rule 41. (1) The county board of commissioners of each county shall establish a department of equalization and shall appoint a director of the department as provided in section 34 of the act.

(2) The equalization director shall make an equalization study of the assessed valuations and true cash value of each class of real estate and of personal property in each assessment district in the county each year for the purpose of determining the total value of the county and the valuation of each assessing district, township, and city, for county and state equalization purposes.

(3) In conducting an equalization study, the equalization director shall use only the methods and procedures prescribed by the commission in chapter 16 of the manual, as amended. Reports filed shall be on forms prescribed by, and in accordance with instructions furnished by, the commission.

(4) The equalization director shall file an interim status report with the commission not later than June 30 of each year. The report shall be on a form prescribed by the commission.

(5) The equalization director shall prepare, in duplicate, the report of the equalization study and shall submit 1 copy to the county board of commissioners and 1 copy to the commission not later than December 31.

(6) The equalization director of each county shall prepare a report each year which shall recommend the equalized value of each class of real property and of personal property for each township and city in the county and shall present it to the county board of commissioners not later than the second Monday in April of each year. The equalization director shall file form L4023 for each unit in the county with the commission not later than the third Monday in April of each year.

(7) The report required in subrule (8) of this rule shall be based on the equalization study presented to the commission on the immediately preceding December 31, updated to include any further equalization study information, and the audited reports submitted by each assessing officer on forms L4021, L4022, and L4023.

(8) The equalization director of each county shall file with the commission the tabular statement of county equalization adopted by the county board of commissioners on form L4024 prescribed and furnished by the commission.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.42 Equalization; commission responsibilities {#sec-r-209.42 omnilex-key=us-mi-regs-official--dept-treasury--R 209.42}

Rule 42. (1) In assisting the equalization departments in the conduct of the county equalization study, the commission staff shall do all of the following:

(a) Review sales information.

(b) Review appraisal methods.

(d) Review tentative forms L4030, L4031, and L4032 and provide a report to the commission by November 1.

(e) Review preliminary forms L4030, L4031, and L4032 and provide a report to the commission by February 1.

(f) Make a final report on forms L4030, L4031, and L4032 to the commission after the adoption of the equalization report by the county board of commissioners.

(2) Upon receipt by the commission of a report setting forth the methods being employed by a county equalization department will not produce an accurate determination of true cash value for a county, the commission shall promptly advise the chairperson of the county board of commissioners and the equalization director by certified mail.

(3) The reports to the commission on forms L4030, L4031, and L4032, after having been reviewed by the commission, shall be available to equalization directors for examination and copying upon request.

History

History: 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.43 State equalization procedure {#sec-r-209.43 omnilex-key=us-mi-regs-official--dept-treasury--R 209.43}

Rule 43. (1) The commission shall convene on the second Monday in May for the purpose of receiving recommended state equalized valuation for each county.

(2) The commission shall give notice of the time and place of the meeting to each county. The notice shall be by first-class mail.

(3) The commission shall cause a copy of preliminary recommended valuations to be distributed to the representatives of each county in attendance.

(4) The commission shall hear the equalization director of each county or its duly authorized representative who desires to address the commission.

(5) The commission shall inform the county boards of commissioners of its availability for discussion with representatives of the county during the period between the second and fourth Mondays in May.

(6) The commission shall cause to be prepared and printed a tabular statement showing, by county in an aggregate amount and by county for personal property and each classification of real property, all of the following:

(a) The total assessed valuation.

(b) The valuation as equalized by the county board of commissioners for the current year.

(d) The equalized valuation recommended by the state tax commission.

(e) The executive secretary shall forward a copy of such statement to the clerk of each county in the state.

(7) The commission shall hold a formal hearing on the fourth Monday in May, unless the day is a holiday, in which case the hearing shall be on the Tuesday after the fourth Monday.

(8) Upon conclusion of the hearing, the commission shall adopt, by roll call vote, the final state equalized valuation report.

(9) The executive secretary of the commission, after the determination of the commission has been filed in his or her office, shall send a certified transcript of the determination to the treasurer of each county.

History

History: 1979 AC; 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.44 Assessment of utilities {#sec-r-209.44 omnilex-key=us-mi-regs-official--dept-treasury--R 209.44}

Rule 44. (1) The annual reports of a state assessed utility shall be filed in a manner and on forms prescribed by the commission.

(2) Reports required to be filed by local governing officials listing valuation and taxes levied shall be on forms and in the manner as prescribed by the commission.

(3) The annual meeting of the commission for the annual assessment of state assessed utilities shall be conducted pursuant to MCL 207.11.

History

History: 2009 AACS.

Mich. Admin. Code R 209.45 Assessment of utilities {#sec-r-209.45 omnilex-key=us-mi-regs-official--dept-treasury--R 209.45}

Rule 45. (1) The annual reports of a state assessed utility shall be filed in a manner and on forms prescribed by the state board of assessors.

(2) Reports required to be filed by local governing officials listing valuation and taxes levied shall be on forms and in the manner as prescribed by the board.

(3) Hearings at the annual meeting of the state board of assessors shall be conducted pursuant to section 11 of Act No. 282 of the Public Acts of 1905, as amended, being S207.11 of the Michigan Compiled Laws.

PART 5. INDUSTRIAL FACILITIES EXEMPTION CERTIFICATE

History

History: 1979 AC.

Mich. Admin. Code R 209.51 Certificate application {#sec-r-209.51 omnilex-key=us-mi-regs-official--dept-treasury--R 209.51}

Rule 51. An application for an industrial facilities exemption certificate for a facility to be situated in a previously established plant rehabilitation district or industrial development district shall be made on a form prescribed by and furnished by the commission. A completed application and required documents shall be filed with the commission. A local legislative body shall not approve an application or portion of an application unless it meets the requirements of 1974 PA 198, MCL 207.551 to 207.572.

History

History: 1982 AACS; 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.52 Notice of project abandonment or construction delay {#sec-r-209.52 omnilex-key=us-mi-regs-official--dept-treasury--R 209.52}

Rule 52. The holder of an industrial facilities exemption certificate shall notify the local unit and the commission, when a project for which the certificate was issued is abandoned and request revocation.

History

History: 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.53 Extension of time to complete project; request {#sec-r-209.53 omnilex-key=us-mi-regs-official--dept-treasury--R 209.53}

Rule 53. (1) A request for an extension of time for completion of a project, not to exceed 1 year, including the installation of all tangible personal property, provided for in section 15(2) 1974 PA 198, MCL 207.565(2), shall be filed with the local unit of government within the final year of the 2-year construction period.

(2) Upon receipt of a request for extension, the local unit may do any of the following:

(a) Deny the request.

(b) Approve the request with no change in the ending date of the certificate that was issued.

(c) Approve the extension of time for the completion of the project and a revised ending date on the certificate, not to exceed 1 year.

(3) A request for an extension of time for the completion of a project shall be filed with the commission by the certificate holder and shall be accompanied by a resolution of approval adopted by the local governmental unit.

History

History: 1982 AACS; 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.54 Revision of final project cost; approval; request for revised certificate {#sec-r-209.54 omnilex-key=us-mi-regs-official--dept-treasury--R 209.54}

Rule 54. (1) If the final cost of a project, either the real or tangible personal property components, will exceed 10% of the estimated amount indicated on the original application form, a certificate holder shall request in writing that the local governmental unit approve the additional cost. Upon receipt of a request, the clerk of the local governmental unit shall notify in writing the assessor and the legislative body of each taxing unit and shall afford the applicant, the assessor, and a representative of the affected taxing units an opportunity for a hearing.

(2) If the scope of the project increases by either additional real and/or tangible personal property components, the certificate holder shall file an amended application and revised list of improvements with the clerk of the local unit. Upon receipt of an amended application, the clerk of the local governmental unit shall notify in writing the assessor and the legislative body of each taxing unit and shall afford the applicant, the assessor, and a representative of the affected taxing units an opportunity for a hearing.

(3) If a local unit of government approves a revised cost or revised scope under subrule (1) or (2) of this rule, the clerk of the local unit shall forward a copy of the amended application, revised list of improvements, and resolution of approval to the commission.

History

History: 1982 AACS; 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.55 Notification certification of date of project completion; filing of final cost {#sec-r-209.55 omnilex-key=us-mi-regs-official--dept-treasury--R 209.55}

Rule 55. (1) The holder of an industrial facilities exemption certificate shall notify the assessing officer of the local unit and the commission of the date of completion and final investment cost of a project.

(2) The notification of completion shall be in writing and shall be within 30 days of completion.

(3) The final cost of the project shall be in writing and shall be filed with the assessing officer and the commission within 90 days after completion.

History

History: 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.56 Certificate duration; extension of expiration date {#sec-r-209.56 omnilex-key=us-mi-regs-official--dept-treasury--R 209.56}

Rule 56. The commission shall not grant a certificate for real property covered under an industrial facilities tax exemption certificate that is leased unless the lessee is responsible for the property tax liability of the property for the length of the certificate.

History

History: 1982 AACS; 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.57 Consideration of application or request of revocation {#sec-r-209.57 omnilex-key=us-mi-regs-official--dept-treasury--R 209.57}

Rule 57. All complete applications or requests of revocation for industrial facilities exemption certificates received through October 31 shall receive consideration and action by the commission before December 31. An application or request of revocation received on or after November 1 shall be considered by the commission contingent upon staff availability.

History

History: 1982 AACS; 2010 AACS.

Mich. Admin. Code R 209.58 Simultaneous exemptions {#sec-r-209.58 omnilex-key=us-mi-regs-official--dept-treasury--R 209.58}

Rule 58. The commission shall not issue an industrial facilities exemption certificate for a property that is already included on another specific tax roll. Property covered under an industrial facilities exemption certificate may not be included on any other specific tax roll while receiving the industrial facilities exemption.

History

History: 2010 AACS.

Mich. Admin. Code R 209.61 Rescinded {#sec-r-209.61 omnilex-key=us-mi-regs-official--dept-treasury--R 209.61}

History

History: 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.62 Rescinded {#sec-r-209.62 omnilex-key=us-mi-regs-official--dept-treasury--R 209.62}

PART 6. HEARINGS

History

History: 1982 AACS; 2009 AACS.

Mich. Admin. Code R 209.63 Representation {#sec-r-209.63 omnilex-key=us-mi-regs-official--dept-treasury--R 209.63}

Rule 63. In a formal hearing before the commission, an individual may represent himself or herself, and a partnership or corporation may be represented by a partner or officer. In any case, the individual, partnership, or corporation may be represented by an attorney or other authorized representative.

History

History: 2009 AACS.

Mich. Admin. Code R 209.64 Notice of hearings {#sec-r-209.64 omnilex-key=us-mi-regs-official--dept-treasury--R 209.64}

Rule 64. When a matter is placed on the calendar for hearing, the commission's executive secretary shall notify the parties of the time and place of hearing not less than the required statutory notice period before the day of the hearing, which shall be not less than 14 days before the day of the hearing.

History

History: 2009 AACS.

Mich. Admin. Code R 209.65 Hearings {#sec-r-209.65 omnilex-key=us-mi-regs-official--dept-treasury--R 209.65}

Rule 65. (1) A hearing before the commission shall be conducted pursuant to 1976 PA 267, MCL 15.261. Hearings regarding revocation or suspension of an assessor's certification shall be conducted under 1969 PA 306, MCL 24.201.

(2) Hearings shall be conducted informally but shall be recorded. Copies of recordings of the hearing will be provided upon written request at a fee to be determined by the commission.

History

History: 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.66 Failure to appear {#sec-r-209.66 omnilex-key=us-mi-regs-official--dept-treasury--R 209.66}

Rule 66. A continuance shall not be granted due to the unexcused absence of a party, a party's representative, or a party's attorney at the time and place set for the hearing before the commission. The hearing shall proceed and the case shall be regarded as submitted on the part of the absent party.

History

History: 2009 AACS.

Mich. Admin. Code R 209.67 Evidence {#sec-r-209.67 omnilex-key=us-mi-regs-official--dept-treasury--R 209.67}

Rule 67. (1) The commission shall take official notice, without further identification, of the contents of original records and documents in possession of the commission when duly certified copies are offered in evidence and made a part of the record. The commission may receive other documentary evidence in the form of copies or excerpts or that which is incorporated by reference.

(2) None of the following constitute evidence:

(a) Statements of counsel.

(b) Unidentified and unauthenticated documents and letters.

(d) Briefs and arguments.

History

History: 2009 AACS.

Mich. Admin. Code R 209.68 Exhibits {#sec-r-209.68 omnilex-key=us-mi-regs-official--dept-treasury--R 209.68}

Rule 68. (1) Documents and papers offered in evidence by the parties at a hearing before the commission shall be marked as exhibits. Exhibits offered by a taxpayer shall be marked "Taxpayer's Exhibit No. ___" and shall be consecutively numbered.

Exhibits offered by any other party shall be marked "(type of party) Exhibit No." and shall be consecutively numbered.Exhibits offered by the commission or its representative shall be marked "Commission Exhibit No." and shall be consecutively numbered.

(2) Qualified exhibits which are submitted at a hearing shall remain with the commission until 60 days after an official order is rendered, after which they shall be returned to the party that offered them in evidence, if the party so requests.

History

History: 2009 AACS.

Mich. Admin. Code R 209.71 Rescinded {#sec-r-209.71 omnilex-key=us-mi-regs-official--dept-treasury--R 209.71}

History

History: 1984 AACS; 2009 AACS.

Mich. Admin. Code R 209.72 Rescinded {#sec-r-209.72 omnilex-key=us-mi-regs-official--dept-treasury--R 209.72}

History

History: 1984 AACS; 2009 AACS.

Mich. Admin. Code R 209.73 Rescinded {#sec-r-209.73 omnilex-key=us-mi-regs-official--dept-treasury--R 209.73}

History

History: 1984 AACS; 2009 AACS.

Mich. Admin. Code R 209.74 Rescinded {#sec-r-209.74 omnilex-key=us-mi-regs-official--dept-treasury--R 209.74}

History

History: 1984 AACS; 2009 AACS.

Mich. Admin. Code R 209.75 Rescinded {#sec-r-209.75 omnilex-key=us-mi-regs-official--dept-treasury--R 209.75}

PART 7. WATER POLLUTION CONTROL EXEMPTION CERTIFICATE

History

History: 1984 AACS; 2009 AACS.

Mich. Admin. Code R 209.76 Water pollution control exemption certificate {#sec-r-209.76 omnilex-key=us-mi-regs-official--dept-treasury--R 209.76}

Rule 76. (1) An applicant shall apply for a water pollution control exemption certificate on a form prescribed by and furnished by the commission. The applicant shall file a complete application and required documents with the commission. A preliminary review will be performed by staff. Complete water pollution applications shall be forwarded to the department of natural resources and environment for review and they will make a recommendation of approval, partial approval, or denial. The commission shall not approve an application, or portion of an application unless it meets the requirements of 1994 PA 451, MCL 324.3701 to 324.3708.

(2) Complete pollution control applications requesting exemption for new improvements, amendments, or transfers received through June 15 shall receive consideration and action by the commission before December 31. An application received on or after June 16 shall be considered by the commission contingent upon staff availability.

(3) An owner of facilities replacing equipment previously exempted under a pollution control certificate may request the adjustment of costs by application to the commission on or before October 31. Requests received on or after November 1 shall receive consideration and action by the commission contingent upon staff availability.

(4) All objections to the department of natural resources and environment application review must be received in writing by the commission within 21 days of the date of the letter informing the applicant and local unit of the recommendation of the department of natural resources and environment. Written objections received after the 21-day period will be considered untimely filed.

(5) All requests of revocation for pollution control certificates received through October 31 shall receive consideration and action by the commission before December 31. A request of revocation received on or after November 1 shall be considered by the commission contingent upon staff availability.

PART 8. AIR POLLUTION CONTROL EXEMPTION CERTIFICATE

History

History: 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.81 Air pollution control exemption certificate {#sec-r-209.81 omnilex-key=us-mi-regs-official--dept-treasury--R 209.81}

Rule 81. (1) An applicant shall apply for an air pollution control exemption certificate shall be made on a form prescribed by and furnished by the commission. The applicant shall file a complete application and required documents with the commission.

A preliminary review will be performed by staff. A complete air pollution application shall be forwarded to the department of natural resources and environment for review and they will make a recommendation of approval, partial approval, or denial.

An application, or portion of an application, shall not be approved unless it meets the requirements of 1994 PA 451, MCL 324.5901 to 324.5908.

(2) A complete pollution control applications requesting exemption for new improvements, amendments, or transfers received through June 15 shall receive consideration and action by the commission before December 31. An application received on or after June 16 shall be considered by the commission contingent up staff availability.

PART 9. OBSOLETE PROPERTY REHABILITATION EXEMPTION

CERTIFICATE

History

History: 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.91 Obsolete property rehabilitation exemption certificate {#sec-r-209.91 omnilex-key=us-mi-regs-official--dept-treasury--R 209.91}

Rule 91. (1) An applicant shall apply for obsolete property rehabilitation exemption certificate on a form prescribed by and furnished by the commission. The applicant shall file a complete application and any explanatory documents as determined by the commission with the commission. A local legislative body shall not approve an application unless it meets the requirements of 2000 PA 146, MCL 125.2781 to 125.2797.

(2) All complete applications for obsolete property rehabilitation act exemption received through October 31 shall receive consideration and action by the commission before December 31. An application received on or after November 1 shall be considered by the commission contingent upon staff availability.

(3) All obsolete property rehabilitation act applications submitted to the commission must include a statement from the assessor of the local unit indicating the type and amount of obsolescence for the facility requesting consideration of exemption.

(4) All obsolete property rehabilitation act applications submitted to the commission must indicate the prior year's actual taxable value. If the prior year's taxable value was zero ($0) based on a prior year's tax exempt status, the local governmental unit's assessor shall determine the property's prior year actual taxable value as if the property had not been tax exempt. An obsolete property rehabilitation exemption certificate will not be issued or frozen at a zero taxable value that is the result of a prior year's tax exempt status.

(5) The commission shall not issue an obsolete property rehabilitation exemption certificate for a property that is already included on another specific tax roll.

Property covered under an obsolete property rehabilitation exemption certificate may not be included on any other specific tax roll while receiving the obsolete property rehabilitation act exemption.

PART 10. NEW PERSONAL PROPERTY EXEMPTION

History

History: 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.101 New personal property exemption {#sec-r-209.101 omnilex-key=us-mi-regs-official--dept-treasury--R 209.101}

Rule 101. (1) An applicant shall apply for new personal property tax exemption shall be made on a form prescribed by and furnished by the commission. A complete application and any explanatory documents as determined by the commission shall be filed with the commission. A local legislative body shall not approve an application unless it meets the requirements of 1998 PA 328, MCL 211.9f.

(2) An exemption for new personal property issued by the commission shall relate to all new personal property placed within the eligible district after the date of the resolution approved by the local jurisdiction.

(3) A new personal property exemption will not be issued for a property that is already included on another specific tax roll. Property covered under a new personal property exemption may not be included on any other specific tax roll while receiving the new personal property exemption.

PART 11. COMMERCIAL REHABILITATION EXEMPTION

CERTIFICATE

History

History: 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.111 Commercial rehabilitation exemption certificate {#sec-r-209.111 omnilex-key=us-mi-regs-official--dept-treasury--R 209.111}

Rule 111. (1) An applicant shall apply for commercial rehabilitation tax exemption certificates on a form prescribed by and furnished by the commission. An applicant shall file a complete application and any explanatory documents as determined by the commission with the commission.

A local legislative body shall not approve an application unless it meets the requirements of 2005 PA 210, MCL 207.841 to 207.856.

(2) All complete applications for commercial rehabilitation exemption certificates received through October 31 shall receive consideration and action by the commission before December 31. An application received on or after November 1 shall be considered by the commission contingent upon staff availability.

(3) All commercial rehabilitation exemption applications submitted to the commission must indicate the prior year's actual taxable value. If the prior year's taxable value was zero ($0) based on a prior year's tax exempt status, the local governmental unit's assessor shall determine the property's prior year actual taxable value as if the property had not been tax exempt. A commercial rehabilitation exemption certificate will not be issued or frozen at a zero taxable value that is the result of a prior year's tax exempt status.

(4) A commercial rehabilitation exemption certificate will not be issued for a property that is already included on another specific tax roll. Property covered under a commercial rehabilitation exemption certificate may not be included on any other specific tax roll while receiving the commercial rehabilitation exemption.

PART 12. NEIGHBORHOOD ENTERPRISE ZONE EXEMPTION

CERTIFICATE

History

History: 2009 AACS; 2010 AACS.

Mich. Admin. Code R 209.112 Neighborhood enterprise zone exemption certificate {#sec-r-209.112 omnilex-key=us-mi-regs-official--dept-treasury--R 209.112}

Rule 112. (1) An applicant shall apply for new or rehabilitation neighborhood enterprise zone exemption certificates on a form prescribed by and furnished by the commission. A complete new or rehabilitation application and any explanatory documents as determined by the commission shall be filed with the commission. A local legislative body shall not approve an application unless it meets the requirements of 1992 PA 147, MCL 207.771 to 207.787.

(2) An application for homestead neighborhood enterprise zone exemption certificates shall be made on a form prescribed by and furnished by the commission.

A complete homestead application and required documents as determined by the commission shall be filed with the assessor of the local governmental unit. A local legislative body shall not approve an application unless it meets the requirements of 1992 PA 147, MCL 207.771 to 207.787.

(3) All complete applications or requests of revocation for new or rehabilitation neighborhood enterprise zone exemption certificates received through October 31 shall receive consideration and action by the commission before December 31. An application or request of revocation received on or after November 1 shall be considered by the commission contingent upon staff availability.

(4) All rehabilitation neighborhood enterprise zone exemption applications submitted to the commission must indicate the prior year's actual taxable value. If the prior year's taxable value was zero ($0) based on a prior year's tax exempt status, the local governmental unit's assessor shall determine the property's prior year actual taxable value as if the property had not been tax exempt. A rehabilitation neighborhood enterprise zone exemption certificate will not be issued or frozen at a zero taxable value that is the result of a prior year's tax exempt status.

(5) A neighborhood enterprise zone exemption certificate will not be issued for a property that is already included on another specific tax roll. Property covered under a neighborhood enterprise zone exemption certificate may not be included on any other specific tax roll while receiving the neighborhood enterprise zone exemption.

PART 13. COMMERCIAL FACILITIES EXEMPTION CERTIFICATE

History

History: 2010 AACS.

Mich. Admin. Code R 209.113 Commercial facilities exemption certificate {#sec-r-209.113 omnilex-key=us-mi-regs-official--dept-treasury--R 209.113}

Rule 113. (1) An applicant shall apply for commercial facilities exemption certificates on a form prescribed by and furnished by the commission. An applicant shall file a complete application and any explanatory documents as determined by the commission with the clerk of the local governmental unit. A local legislative body shall not approve an application unless it meets the requirements of 1978 PA 255, MCL 207.651 to 207.668.

(2) The clerk of the local governmental unit shall file with the commission a copy of the commercial facilities exemption certificate and the commission shall maintain a record of all certificates filed.

(3) All commercial facilities exemption applications submitted to the commission must indicate the prior year's actual taxable value. If the prior year's taxable value was zero ($0) based on a prior year's tax exempt status, the local governmental unit's assessor shall determine the property's prior year actual taxable value as if the property had not been tax exempt. A commercial facilities exemption certificate will not be issued or frozen at a zero taxable value that is the result of a prior year's tax exempt status.

(4) A commercial facilities exemption certificate will not be issued for a property that is already included on another specific tax roll. Property covered under a commercial facilities exemption certificate may not be included on any other specific tax roll while receiving the commercial facilities exemption.

PART 14. TRAINING PROGRAMS AND EDUCATION

History

History: 2010 AACS.

Mich. Admin. Code R 209.114 Education institution information {#sec-r-209.114 omnilex-key=us-mi-regs-official--dept-treasury--R 209.114}

Rule 114. (1) An educational institution, organization, or individual who seeks to have an assessor training program, course, or class approved shall submit a syllabus of the program course or class to the commission.

(2) The syllabus shall include all of the following information:

(a) An outline of the course or classes offered.

(b) The number of hours for each course.

(d) Reference and text material.

(e) Any other pertinent information.

PART 15. RATING AND CERTIFICATION

History

History: 2010 AACS.

Mich. Admin. Code R 209.115 Rating of assessing units {#sec-r-209.115 omnilex-key=us-mi-regs-official--dept-treasury--R 209.115}

Rule 115. An assessing unit shall be rated as to the level of certification that is required to assess or equalize the entire unit. An individual may qualify at a level higher than the level assigned to his or her unit. Ratings are subject to review and revision on an annual basis. Factors to be considered by the commission include, but are not limited to, the following:

(a) Total state equalized value.

(b) Percentage of value for all commercial and industrial properties.

(d) The equivalent state equalized value of property taxed pursuant to 1974 PA 198, MCL 207.551, and 1978 PA 255, MCL 207.651.

(e) The number of residential and agricultural parcels in the local unit.

History

History: 2010 AACS.

Mich. Admin. Code R 209.125 Certification of individuals by level {#sec-r-209.125 omnilex-key=us-mi-regs-official--dept-treasury--R 209.125}

Rule 125. (1) An application for certification of an individual shall be on the form prescribed by the commission. The application form shall be accompanied by a fee that is not refundable.

(2) An individual shall be certified by examination. An individual must complete in order, all levels of certification and meet all experience and education requirements as determined by the commission. Notification of examination results shall be provided pass/fail only.

(3) An individual shall assess only the properties covered by his or her certification level, unless conditional certification is granted by the commission.

(4) An individual assessing officer shall not assess, in total, property with state equalized values in excess of that which is annually determined to be the maximum equalized values, or in excess of other factors determined by the commission to be the maximum, for their level of certification.

History

History: 2010 AACS.

Mich. Admin. Code R 209.135 Certification of appraisal firm personnel {#sec-r-209.135 omnilex-key=us-mi-regs-official--dept-treasury--R 209.135}

Rule 135. An appraisal firm or an individual doing business in this state and employed to make appraisals for assessment purposes shall employ a project supervisor who is certified at the level required of the assessing unit. The certification level shall be equal to the highest designated certification necessary for the units of government where the firm or individual will be conducting business. This rule shall not apply to an appraiser who is retained to prepare an appraisal for litigation purposes.

History

History: 2010 AACS.

Mich. Admin. Code R 209.145 Renewal of certification {#sec-r-209.145 omnilex-key=us-mi-regs-official--dept-treasury--R 209.145}

Rule 145. (1) A certification may be renewed upon making application, paying the required fee, and providing evidence of attendance for the required number of hours of continuing education. The commission will issue a bulletin annually in accordance with MCL 211.150 and 209.104, which defines the number of continuing education hours, and any policies regarding renewal of certification. Assessors will be notified on their annual renewal application that this bulletin is available on the state tax commission website or can be mailed to them upon request. It is the responsibility of the certified individual to keep the commission informed of his or her current mailing address. Failure to receive notice by first-class mail does not nullify the annual requirement.

History

History: 2010 AACS.

Mich. Admin. Code R 209.155 Revocation or suspension of certification {#sec-r-209.155 omnilex-key=us-mi-regs-official--dept-treasury--R 209.155}

Rule 155. A certification may be suspended or revoked for malfeasance of duties imposed by law, misfeasance of duties imposed by law, nonfeasance of duties imposed by law, falsification or plagiarism of an examination or an appraisal report submitted to the commission by an applicant or holder of a certification issued by the commission.

History

History: 2010 AACS.

Bureau of State and Authority Finance Bureau of State and Authority Finance

R 388.1 to R 388.22 School Bond Qualification, Approval, and Loan Rules

Mich. Admin. Code R 388.1 Definitions {#sec-r-388.1 omnilex-key=us-mi-regs-official--dept-treasury--R 388.1}

DEPARTMENT OF TREASURY

STATE TREASURER

SCHOOL BOND QUALIFICATION, APPROVAL, AND LOAN RULES

(By authority conferred on the state treasurer by section 11 of the school bond qualification, approval, and loan act, 2005 PA 92, MCL 388.1931, and section 33 of the administrative procedures act of 1969, 1969 PA 306, MCL 24.233)

PART 1. GENERAL DEFINITIONS

Rule 1. (1) As used in these rules:

(a) "Act" means the school bond qualification, approval, and loan act, 2005 PA 92, MCL 388.1921 to 388.1939.

(b) "Business day" means any day that does not fall on a Saturday, Sunday, or state legal holiday.

(c) "Calendar day" means any day represented on the yearly calendar including Saturday, Sunday, and state legal holidays.

(d) "Debt service” means principal and interest payments on qualified bond issues and associated fees related to those bonds.

(e) "Department" means the Michigan department of treasury.

(f) "Pro forma debt service projection” has the meaning associated with it in section 5 of the act.

(g) "Qualification" means the process of qualifying bonds or loans in accordance with the act.

(h) "Refunding bond" means a bond issued to refund or refinance an existing qualified bond or outstanding qualified loan owed to the state under this act.

(i) “Repayment mode” is the loan status given to a school district whose annual tax collections exceed, or are projected in the next succeeding year to exceed, its annual debt service on qualified bonds, at which point the school district must begin repaying to the state its outstanding qualified loan balances.

(j) "State legal holiday" means those days designated in section 1 of 1865 PA 124, MCL 435.101.

(k) "Treasurer" means the Michigan state treasurer as defined by the act.

(l) All terms not defined in these rules have the same meaning as when used in the act.

PART 2. SCHOOL BOND QUALIFICATION

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.2 Preliminary qualification; application {#sec-r-388.2 omnilex-key=us-mi-regs-official--dept-treasury--R 388.2}

Rule 2. (1) A completed preliminary qualification application shall include a submission to the department that complies with section 5 of the act, MCL 388.1925, any other applicable law, and any other guidance published by the department including, but not limited to, global instructions, policies, procedures, guidelines, or rules. The application shall include the following:

(a) The proposed ballot language to be submitted to the electors shall include all language required by the following statutes:

(i) Section 1361 of the revised school code, 1976 PA 451, MCL 380.1361 (ii) Section 24f of the general property tax act, 1893 PA 206, MCL 211.24f (iii) Section 8 of the act, MCL 388.1928.

(iv) Any other applicable law.

(b) A description of the project or projects to be financed including all of the following:

(i) A cost analysis providing summary totals that can be matched to budget estimates as reported by the school district.

(ii) For new construction, all of the following shall be included:

(A) The estimated number of rooms.

(B) The types of rooms expected to be constructed.

(D) The estimated cost per square foot.

(iii) For remodeling and site work, all of the following shall be included:

(A) The planned use of the space.

(B) The type of work expected to be performed.

(iv) For site acquisitions, the total cost of acquisition shall be included, or if such information is not available, the estimated total cost of acquisition.

(v) For technology, furnishings, and equipment, school districts shall provide detail regarding the types of technology, furnishings, and equipment to be purchased.

(i) That the projected computed millage will be sufficient to repay principal and interest on all of the school district's existing and proposed new qualified bonds plus principal and interest on all existing and anticipated qualified loans related to those bonds not later than the final mandatory repayment date.

(ii) That the school district's projected average growth in taxable value is based on the assumptions required by the act.

(d) The utilization rate for each project included in the preliminary qualification application, which meets the following specifications:

(i) The utilization rate shall be calculated by dividing the projected 5-year enrollment by the standard pupil capacity factor provided by the department.

(ii) The 5-year enrollment projection used in this calculation shall be obtained from an enrollment projection service provider approved by the department.

(e) Evidence that the cost per square foot of the project or projects will be reasonable in light of economic conditions applicable to the geographic area in which the school district is located.

(f) An amortization schedule in accordance with sections 5(2)(k) and 7(1)(d) of the act, MCL 388.1925 and 388.1927.

(2) The department shall determine the reasonableness of cost per square foot by comparing the cost included in the preliminary qualification application to the cost per square foot parameter announced annually by the department. The cost per square foot parameter announced annually by the department shall be calculated from data derived from reputable independent sources, including but not limited to, R.S. Means or such similar entity that provides reliable objective information.

History

History: 2007 AACS; 2014 AACS; 2022 MR 3, Eff. Feb. 15, 2022.

Mich. Admin. Code R 388.3 Qualification of bonds {#sec-r-388.3 omnilex-key=us-mi-regs-official--dept-treasury--R 388.3}

Rule 3. (1) To obtain final qualification of bonds, a school district shall, along with meeting any other requirements of section 7 of the act, MCL 388.1927, submit a final qualification application and supporting documentation in the form prescribed by the department.

(2) Supporting documentation shall include all of the following:

(a) A cover letter from legal counsel indicating the requested approval date and delivery date if known at the time of submission.

(b) The certificate of determination of election results and vote count approving the bonds.

(d) A copy of any adopted resolution authorizing the issuance of bonds.

(e) A copy of any resolution authorizing the sale of bonds if such a resolution is applicable.

(3) Supporting documentation for refunding bond issues shall include additional financial schedules that document net present value savings of the refunding bond issue.

(4) Notwithstanding the repayment requirements of these rules, all bonds qualified under the act and article IX of the state constitution of 1963 shall be considered qualified upon issuance of the order qualifying bonds by the state treasurer until final maturity.

History

History: 2007 AACS; 2014 AACS; 2022 MR 3, Eff. Feb. 15, 2022.

Mich. Admin. Code R 388.4 Debt service payment dates {#sec-r-388.4 omnilex-key=us-mi-regs-official--dept-treasury--R 388.4}

Rule 4. Principal on qualified bonds shall be payable on May 1 and/or November 1, as approved by the department, and interest on qualified bonds shall be payable on May 1 and/or November 1, as approved by the department.

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.5 Department guidance {#sec-r-388.5 omnilex-key=us-mi-regs-official--dept-treasury--R 388.5}

Rule 5. The department may issue any other guidance including, but not limited to, global instructions, policies, procedures, or guidelines, in accordance with the act, these rules and, state law, as needed, to assist school districts with completing prequalification and qualification applications, and otherwise with complying with the act.

PART 3. SCHOOL LOAN REVOLVING FUND LOANS

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.6 Rescinded {#sec-r-388.6 omnilex-key=us-mi-regs-official--dept-treasury--R 388.6}

History

History: 2007 AACS; 2014 AACS; 2022 MR 3, Eff. Feb. 15, 2022.

Mich. Admin. Code R 388.7 Rescinded {#sec-r-388.7 omnilex-key=us-mi-regs-official--dept-treasury--R 388.7}

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.8 Annual loan activity application {#sec-r-388.8 omnilex-key=us-mi-regs-official--dept-treasury--R 388.8}

Rule 8. A completed annual loan activity application shall include submission to the department of all of the following:

(a) A cover transmittal letter.

(b) An annual loan activity application consisting of a certified resolution in the form prescribed by the department providing for all of the following:

(i) Designation and authorization of a school district official to complete all required and necessary documents related to the school loan revolving fund.

(ii) Approval of the estimated amount to be disbursed from or repaid to the school loan revolving fund.

(iii) Certification of the amount of qualified debt millage to be levied.

(iv) Agreement to take actions or refrain from taking actions, as necessary, to maintain the tax-exempt status of any bonds or notes issued by the state in accordance with the state constitution of 1963 or by the Michigan finance authority, or its successor, in accordance with the act.

(d) Copies of reconciled bank statements to support the debt fund balance reported on the annual loan activity worksheet.

(e) Financial analysis confirming that the current computed millage or recalculated computed millage is sufficient to repay principal and interest on all qualified bonds and loans not later than the final mandatory repayment date, unless otherwise provided for in the act.

(f) Any other documentation and information necessary to determine the amount of the disbursement or repayment.

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.9 Worksheet/draw request; compliance with paying agent guidelines {#sec-r-388.9 omnilex-key=us-mi-regs-official--dept-treasury--R 388.9}

Rule 9. (1) A completed draw request shall include submission to the department of all of the following:

(a) A cover transmittal letter.

(b) A worksheet/draw request.

(d) Any other documentation and information necessary to determine the amount of the disbursement.

(2) If the state or the Michigan finance authority, or its successor, issues tax exempt bonds for purposes of funding qualified loans related to qualified bonds, as defined in the act, then school districts that receive proceeds of those tax exempt bonds shall use such proceeds towards the district's qualified debt service within 5 business days of receipt.

(3) School districts participating in the school bond qualification and loan program must assist the department in complying with third party paying agent guidance as they may be called or amended. Those guidelines include, but are not limited to, the following:

(a) Transferring funds to the paying agent not later than 5 business days prior to any payment due date.

(b) Working with paying agents when a school district is notified by a paying agent that it has failed to transfer sufficient funds, which paying agents must do 4 business days prior to the debt service due date.

(c) Agreeing that, 3 business days prior to the debt service due date, paying agents will notify the department that a school district has failed to transfer sufficient funds to it.

(d) Allowing paying agents to work with delinquent school districts to ensure debt service payments are made by the due date, and to keep the department informed of the status of the payments.

(e) Allowing paying agents to coordinate a loan from the state through the school loan revolving fund to ensure timely payment of debt service, if that school district does not timely transfer sufficient funds.

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.10 Rescinded {#sec-r-388.10 omnilex-key=us-mi-regs-official--dept-treasury--R 388.10}

History

History: 2007 AACS; 2014 AACS; 2022 MR 3, Eff. Feb. 15, 2022.

Mich. Admin. Code R 388.11 Interest rates on qualified loans {#sec-r-388.11 omnilex-key=us-mi-regs-official--dept-treasury--R 388.11}

Rule 11. (1) All qualified loans shall bear interest as defined in section 9(8) of the act, MCL 388.1929.

(2) The department shall recalculate the interest rate on all qualified loans at least quarterly.

(3) Interest on all qualified loans shall be compounded annually on September 30.

History

History: 2007 AACS; 2014 AACS; 2022 MR 3, Eff. Feb. 15, 2022.

Mich. Admin. Code R 388.12 Repayment; invoices {#sec-r-388.12 omnilex-key=us-mi-regs-official--dept-treasury--R 388.12}

Rule 12. (1) The department shall issue an invoice to the school district at least once a year when the information contained in a loan activity statement demonstrates that the revenue generated by a school district's levy of the computed millage will exceed the annual debt service on the bonds.

(2) The school district shall remit the amount specified in the invoice to the department not later than the next succeeding May 15 after the dated date of the invoice.

(3) The school district shall promptly submit to the department an explanation of any difference between the invoiced payment due and the payment remitted.

PART 4. NONCOMPLIANCE

History

History: 2007 AACS; 2014 AACS; 2022 MR 3, Eff. Feb. 15, 2022.

Mich. Admin. Code R 388.13 Noncompliance; remedies {#sec-r-388.13 omnilex-key=us-mi-regs-official--dept-treasury--R 388.13}

Rule 13. (1) The following situations constitute noncompliance:

(a) A school district that owes the state loan repayments relating to qualified bonds fails to levy at least the computed millage upon its taxable value for debt retirement purposes for qualified bonds or qualified loans under the act.

(b) A school district fails to honor its agreement to repay a qualified loan or any installment of a qualified loan.

(2) In addition to any other remedies provided by the act or other state law, in the event of noncompliance, the school district shall file or correct the required documentation.

(3) Failure of a school district to comply with application due dates or failure of a school district to process any report, application, confirmation, or repayment as required under the act or in these rules may result in 1 or both of the following:

(a) The department may issue a notification to the school board requiring a written response of remedy.

(b) The department may withhold a school district's state aid funds until the school district complies with all requirements.

(4) None of the following situations constitutes noncompliance:

(a) Taxpayer delinquencies.

(b) Failure of projected pupil or tax base growth rates to meet initial projections.

PART 5. REFUNDING

History

History: 2007 AACS; 2014 AACS; 2022 MR 3, Eff. Feb. 15, 2022.

Mich. Admin. Code R 388.14 Rescinded {#sec-r-388.14 omnilex-key=us-mi-regs-official--dept-treasury--R 388.14}

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.15 Refunding bonds {#sec-r-388.15 omnilex-key=us-mi-regs-official--dept-treasury--R 388.15}

Rule 15. (1) Bonds issued to refund qualified bonds or outstanding qualified loans shall comply with the provisions of the act and the revised municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.

(2) The term of the refunding bond shall be no longer than the term of the original bond issue being refunded.

(3) Qualified bonds issued to refund outstanding qualified loans shall not be issued for a term longer than the projected repayment term of the qualified loans as of the date of the refunding.

(4) The department shall consider requests to issue qualified refunding bonds to refund outstanding qualified loans, despite the school district’s current or prospective computed millage equaling a level greater than the maximum levy permitted by law, and despite the school district’s current inability to comply with its final mandatory repayment date, so long as the issuance of the qualified refunding bonds will not further extend the school district’s anticipated repayment date of its outstanding qualified loan balance, will result in a savings, will improve the district’s projected qualified loan repayment date, and otherwise complies with the act and these rules.

PART 6. VARIABLE INTEREST RATE DEBT

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.16 Variable interest rate, interest rate exchange, swap, hedge, or similar agreements {#sec-r-388.16 omnilex-key=us-mi-regs-official--dept-treasury--R 388.16}

Rule 16. (1) School districts using variable interest rate debt or entering into interest rate exchanges, swaps, hedges or similar agreements shall do all of the following:

(a) Maintain a minimum fund balance within any applicable Internal Revenue Service regulations sufficient to limit borrowing from the school loan revolving fund to the regularly scheduled May and November borrowings.

(b) Provide supplemental schedules with current estimates of debt service payments projected for the upcoming year along with the submission of the annual loan activity application.

(c) Provide written notification to the department if changes are made to the indenture documents. If the department does not respond in writing within 30 days after receipt of the notification, then the parties may proceed with the transaction.

(2) A school district may not borrow from the school loan revolving fund to pay a termination payment or similar payment related to the termination or cancellation of an interest rate exchange or swap, hedge, or other similar agreement entered into or modified after July 20, 2005, pursuant to MCL 388.1923(3)(b).

PART 7. TIME COMPUTATION

History

History: 2007 AACS.

Mich. Admin. Code R 388.17 Business and calendar days {#sec-r-388.17 omnilex-key=us-mi-regs-official--dept-treasury--R 388.17}

Rule 17. (1) Unless otherwise required by these rules, when the act, these rules, or any other guidance published by the department including, but not limited to, global instructions, policies, procedures, or guidelines refer to time periods of 7 days or less, it shall mean business days. Time periods greater than 7 days, shall mean calendar days.

(2) Pursuant to MCL 211.24f(2)(b), “year” means the 12 succeeding months starting upon and including the first anticipated levy.

PART 8. APPEALS

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.18 Appeals {#sec-r-388.18 omnilex-key=us-mi-regs-official--dept-treasury--R 388.18}

Rule 18. (1) A school district may appeal a decision of a designated representative of the department to the state treasurer or his or her program designee directly by submitting a written request for reconsideration by the state treasurer detailing the grounds, legal or otherwise, for the request within 30 calendar days of the decision.

(2) The appeal must clearly state its nature as an appeal pursuant to this rule and must clearly identify which decision is being appealed and the rationale for reconsideration.

(3) A school district may request an appeal conference with the department as part of its request for reconsideration, where it can present and discuss materials supporting its request. Such a conference shall be scheduled within 15 days of receipt of the request.

(4) The state treasurer or his or her program designee shall issue a final determination in writing within 30 calendar days of receipt of the appeal request, or after an appeal conference is held, whichever is later.

(5) Decisions of the state treasurer or his or her program designee are final.

PART 9. ANNUAL COMPUTED MILLAGE WAIVER

History

History: 2007 AACS; 2014 AACS.

Mich. Admin. Code R 388.19 Annual computed millage waiver requests {#sec-r-388.19 omnilex-key=us-mi-regs-official--dept-treasury--R 388.19}

Rule 19. (1) The department shall consider waiver requests to levy a recalculated computed millage that is less than the computed millage stated on the applicant’s most recent order qualifying bonds, but that is not lower than the computed millage rate noted on the applicant’s current loan agreement in effect at the time of the request. For school districts that have issued refunding bonds subsequent to entering into a loan agreement, there may be a higher computed millage rate reflected on the most recent order qualifying bonds than on the loan agreement.

(2) Subject to subrule (3) of this rule, such waivers must be requested annually prior to June 1 each year and may be granted if all of the following statutory conditions are met:

(a) The school board of the school district has applied to the state treasurer for permission to levy a recalculated computed millage as described in subrule (1) of this rule.

(b) The application specifies the number of mills the school district requests permission to levy which shall be equal to the recalculated computed millage.

It is presumed that the recalculated computed millage, despite being lower than the computed millage reflected on the applicant’s most recent order qualifying bonds, but not lower than the computed millage rate reflected on the applicant’s current loan agreement in effect at the time of the request, meets this condition.

(d) The waiver will not reduce the millage levied by the school district to pay principal and interest on qualified bonds and/or qualified loans under the act to less than 7 mills.

(e) The board of the school district, by resolution, will agree to comply with all conditions that the state treasurer has specified in the waiver. Any conditions are anticipated to be only those needed to address any unforeseeable circumstances unique to and presented by individual school districts. The department’s approach to those circumstances will be uniform to the extent possible.

(3) Once a waiver has been approved, for each subsequent consecutive year where the recalculated computed millage is lower than the computed millage stated on the most recent order qualifying bonds for the district, the district may continue to levy the lesser recalculated computed millage as long as it is sufficient to repay all outstanding loans by the final mandatory repayment date. Board acknowledgement of the waiver continuance will be obtained during the annual loan application process required by the act and will satisfy the annual waiver request requirement.

(4) If confirmed taxable value amounts are not available prior to board certification, estimated taxable values may be used in the application. Revised financial schedules with confirmed taxable values must be submitted prior to final department approval. Complete and timely applications shall be processed not later than June 10.

(5) Waiver request forms are available on the department’s website and must be submitted along with current pro forma debt service projections not later than June 1 to the appropriate contact on the department’s website.

PART 10. USE OF REMAINING PROCEEDS

History

History: 2014 AACS.

Mich. Admin. Code R 388.20 Rescinded {#sec-r-388.20 omnilex-key=us-mi-regs-official--dept-treasury--R 388.20}

PART 11. FINAL YEAR OF REPAYMENT

History

History: 2014 AACS; 2022 MR 3, Eff. Feb. 15, 2022.

Mich. Admin. Code R 388.21 Computed millage exception for qualified bonds and qualified loans in final year of repayment {#sec-r-388.21 omnilex-key=us-mi-regs-official--dept-treasury--R 388.21}

Rule 21. If a school district with an outstanding qualified loan balance can demonstrate to the satisfaction of the department that repayment in full of the outstanding qualified loan balance will be achieved in the school district’s next fiscal year by levying a millage that is less than 7 mills, or less than the computed millage stated on the school district’s most recent order qualifying bonds or loan agreement, then the department shall not object to the school district certifying a levy for that supported lesser millage amount.

PART 12. EXTENSION OF FINAL MANDATORY REPAYMENT DATE

History

History: 2014 AACS.

Mich. Admin. Code R 388.22 Permissive mandatory repayment date extensions {#sec-r-388.22 omnilex-key=us-mi-regs-official--dept-treasury--R 388.22}

Rule 22. (1) As permitted by the act, these rules, or any other guidance published by the department including, but not limited to, global instructions, policies, procedures, or guidelines, a school district may request approval from the treasurer for a later final mandatory repayment date.

(2) Requests may be granted only if the following conditions are met:

(a) The school district agrees to levy a higher millage, at a minimum of 2 mills, and as approved by the treasurer, subject to any maximum millage provided by law.

(b) The school district agrees to levy the higher millage described in subdivision (a) of this subrule for so long as the extended final mandatory repayment remains applicable.

(c) The school district agrees to revert back to the original mandatory repayment date if and when projections support that action.

(d) At the time of the request, the school district is at or within 15 years of its mandatory repayment date.

(e) At the time of the request, the school district has not previously requested such an extension for the final mandatory repayment date stated in its current loan agreement.

(f) The extension is necessary for the school district to receive preliminary or final qualification of a new money bond issue.

(g) The school district will enter repayment mode upon completion of the bond issuance described in subdivision (f) of this subrule.

(h) The final mandatory repayment date is not extended by more than 3 years.

(3) Approvals shall be documented in writing either as part of the qualification order for the bonds, or in another written communication with the school district.

History

History: 2014 AACS.

Student Financial Services Board Student Financial Services Board

R 390.1401 to R 390.1491 Guaranteed Loan Program

Mich. Admin. Code R 390.1401 Definitions; A, C {#sec-r-390.1401 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1401}

DEPARTMENT OF TREASURY

MICHIGAN HIGHER EDUCATION ASSISTANCE AUTHORITY

GUARANTEED LOAN PROGRAM

(By authority conferred on the higher education assistance authority by section 5 of Act No. 77 of the Public Acts of 1960, being S390.955 of the Michigan Compiled Laws)

PART 1. GENERAL PROVISIONS

Rule 1. As used in these rules:

(a) "Academic year" means a period of time during which a student borrower progresses from one level of class standing to the next higher level or 7 months.

(b) "Act" means title IV, part B, of the higher education act of 1965, as amended, 20 U.S.C. S1071 et seq.

(c) "Authority" means the Michigan higher education assistance authority as created by Act No. 77 of the Public Acts of 1960, as amended, being S390.951 et seq. of the Michigan Compiled Laws.

(d) "Claim" means the requesting of insurance under the guarantee when the borrower defaults on a loan in accordance with the conditions and requirements of the act and the secretary specified in the provisions of34 C.F.R. SS682.200, 682.402, and 682.411. These provisions are adopted by reference in R 390.1491.

(e) "Cure requirements" means steps to be followed to reinstate the guarantee in accordance with the conditions and requirements of the act and the secretary that are set forth in 34 C.F.R. S682.413 and adopted by reference in R 390.1491, when those conditions and requirements were not properly carried out in the initial administration of the loan.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1402 Definitions; D {#sec-r-390.1402 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1402}

Rule 2. As used in these rules:

(a) "Defaulted loans" means the failure of a borrower to make an installment payment when due or to comply with other terms of the note or other written agreement evidencing a loan in accordance with the conditions and requirements of the act and the secretary specified in the provisions of 34 C.F.R. SS682.200 and 682.412. These provisions are adopted by reference in R 390.1491.

(b) "Disbursement of a loan" means the transfer by a lender of loan proceeds to a borrower. Disbursement shall be made by a check which is payable to the borrower or to the borrower and the school that requires endorsement or by electronic transfer to an account of the school on behalf of a borrower where the account requires the written approval of the borrower for the release of funds from the account.

(c) "Due diligence" means the secretary's requirements, specified in the provisions of 34 C.F.R. SS682.206 to 682.208, for a lender in making, disbursing, servicing, and collecting educational loans. These provisions are adopted by reference in R 390.1491.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1403 Definitions; E {#sec-r-390.1403 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1403}

Rule 3. As used in these rules:

(a) "Educational loans" means loans to student or parent borrowers as authorized by the act.

(b) "Executive director" means the executive director of the Michigan higher education assistance authority.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1404 Definitions; F, G {#sec-r-390.1404 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1404}

Rule 4. As used in these rules:

(a) "Federal interest benefits" means the payment of interest by the secretary on behalf of an eligible borrower as defined in the act.

(b) "Forbearance" means reducing, extending, or delaying payments if scheduled payments will place an undue burden on a borrower which, without relief, will result in default.

(c) "Guarantee" means to insure lenders against loss due to default by a borrower if the lender meets the conditions and requirements of the act and the secretary specified in the provisions of 34 C.F.R. SS682.205 to 682.213 and 682.411 to 682.414, in administering the loan. These provisions are adopted by reference in R 390.1491.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1405 Definitions; L {#sec-r-390.1405 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1405}

Rule 5. As used in these rules:

(a) "Lender" means an eligible lender or holder, as defined by the secretary in the provisions of 34 C.F.R. S682.200, who has entered into a participation agreement with the authority. These provisions are adopted by reference in R 390.1491.

(b) "Limitation" means the continuation of an institution's eligibility subject to compliance with special conditions established by the provisions of R 390.1481 to R 390.1490.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1406 Rescinded {#sec-r-390.1406 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1406}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1407 Definitions; P to T {#sec-r-390.1407 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1407}

Rule 7. As used in these rules:

(a) "Participating school" means an eligible institution which has executed an agreement with the secretary to participate in the educational loan programs.

(b) "Promissory note" means the legal document which is signed by a borrower agreeing to the terms and conditions of the educational loan.

(d) "Secretary" means the secretary of the United States department of education or an official or employee of the education department to whom the secretary has delegated authority.

(e) "Suspension" means the removal of a school's or lender's eligibility for a specified period of time or until the school or lender fulfills certain requirements.

(f) "Termination" means the removal of a school's or lender's eligibility for an indefinite period of time or until reinstatement after termination occurs in accordance with the provisions of R 390.1490.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1409 Primary forms; approval {#sec-r-390.1409 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1409}

Rule 9. The authority shall approve primary forms used in making and servicing educational loans.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1411 Lender or school discrimination based on race, color, creed, sex, national origin, or marital status prohibited {#sec-r-390.1411 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1411}

Rule 11. (1) The educational loans are available to all eligible borrowers without regard to race, color, creed, sex, national origin, or marital status.

(2) A participating school shall not discriminate in the admission and treatment of students because of race, color, creed, sex, national origin, or marital status.

(3) A lender shall not discriminate in making an educational loan to an eligible borrower because of race, color, creed, sex, national origin, or marital status.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1412 Lenders, policies; loan practices {#sec-r-390.1412 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1412}

Rule 12. (1) A lender may determine its own lending policies, except as prescribed by these rules, federal or state legislation, and regulations concerning state and federal banking and credit practices.

(2) A lender shall comply with the secretary's requirements, as set forth in the provisions of 34 C.F.R. SS682.205 to 682.208, in the making, disbursing, and servicing of a loan. These provisions are adopted by reference in R 390.1491.

(3) A lender shall comply with the secretary's due diligence requirements, as specified in the provisions of 34 C.F.R. SS682.208 to 682.213 and 682.411, which are adopted by reference in R 390.1491 in the collection of loans and comply with both of the following provisions:

(a) A lender shall exercise reasonable care and diligence in the collection of loans insured by the authority with regard to borrowers. If the lender has obtained a cosigner, collection effort beyond notifying the cosigner if the loan becomes delinquent is not mandatory. If the loan is subsequently filed with the authority as a default, the cosigner shall be notified and advised that collection shall be pursued by a state agency or private agency.

(b) The due diligence procedures and collection efforts shall be employed and documented by the lender.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1413 Records and reports of lenders {#sec-r-390.1413 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1413}

Rule 13. (1) A lender shall keep such records as may be necessary and as the authority and the law and regulations may require and shall afford access to the records, at any reasonable time, to the authority or the secretary, to assure accuracy and to verify reports and records.

(2) A lender shall maintain complete and accurate records of all educational loan accounts reflecting each transaction, ready identification of each borrower's account, and account status. The records shall contain full and proper documentation to support claims for losses.

(3) A lender shall retain all records pertaining to each applicant to whom an educational loan has been disbursed until the secretary has no further need for such records, but for not less than 60 months after the date the loan is paid in full or has been defaulted and the lender has been reimbursed by the authority. Records retained by the lender may be stored on microform or in computer format. The holder of a promissory note, however, shall retain the actual note until returned to the borrower upon payment in full, after which the lender shall retain a copy of the note for not less than 60 months.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1415 Records of participating schools {#sec-r-390.1415 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1415}

Rule 15. (1) A participating school shall keep necessary records as the authority or the secretary require and afford access thereto at any reasonable time to the authority, the secretary, or a representative of the authority or the secretary to assure accuracy and to verify reports and records.

(2) With respect to each student who receives the benefits of an educational loan, a participating school shall maintain records for not less than 60 months after a student has terminated enrollment regarding academic standing, periods of attendance, courses taken, and the handling of loan funds.

(3) The authority shall require each participating school to verify the enrollment status of student borrowers and students for whom loans have been provided through the parent loan program upon request.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1417 Student transfers {#sec-r-390.1417 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1417}

Rule 17. (1) When a student transfers to another participating school, the original participating school that certified the loan shall continue to have the loan recorded against its total loans until repaid. The participating school to which the student transfers shall furnish periodic reports to the authority concerning the student's continuing loan eligibility.

(2) Where applicable, enrollment in an ineligible school shall not be taken into consideration in the establishment of a loan repayment due date. A due date shall be established based on the student's last date of at least half-time attendance at an eligible participating school.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1419 Rescinded {#sec-r-390.1419 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1419}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1421 Eligibility of applicants {#sec-r-390.1421 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1421}

Rule 21. To be eligible to receive an educational loan, an applicant shall satisfy all requirements of the act, the authority, and the secretary specified in the provisions of 34 C.F.R. SS682.200, 682.201, 682.300, and 682.301. These provisions are adopted by reference in R 390.1491.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1422 Age of applicants {#sec-r-390.1422 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1422}

Rule 22. A person who otherwise qualifies for an educational loan is not disqualified because the person is under age 18. A person who is under age 18 is deemed to have full legal capacity to apply for, receive, and repay a loan and has all the rights, powers, privileges, and obligations of a person who is 18 years of age or older.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1423 Rescinded {#sec-r-390.1423 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1423}

History

History: 1979 AC; 1984 AACS; 1997 AACS.

Mich. Admin. Code R 390.1424 Rescinded {#sec-r-390.1424 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1424}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1425 Rescinded {#sec-r-390.1425 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1425}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1426 Rescinded {#sec-r-390.1426 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1426}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1427 Rescinded {#sec-r-390.1427 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1427}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1429 Cancellation of loans {#sec-r-390.1429 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1429}

Rule 29. The authority shall cancel a loan in full or in part if disbursement does not occur prior to the ending date of the academic period for which the loan was intended. A loan may be disbursed after the academic period for which the loan was intended, if the borrower meets late disbursement requirements as authorized by the authority.

PART 2. LOAN PROVISIONS AND PROCEEDS

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1431 Negotiations and execution of loans; cosigners {#sec-r-390.1431 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1431}

Rule 31. Negotiations and execution of educational loans are limited to lenders and participating schools that deal with eligible students or borrowers and the authority.

The authority shall not require a cosigner on the note. The lender may require a cosigner on the promissory note.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1432 Maximum rate of interest; permissible fees and charges {#sec-r-390.1432 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1432}

Rule 32. (1) The maximum rate of interest that may be charged on educational loans shall not be more than 6% per annum with respect to loans made before August 3, 1968. The interest rate for educational loans made August 3, 1968, and after shall comply with the provisions of the act.

(2) Interest is calculated from the date of disbursement of the funds by the lender to the borrower. A student borrower shall not be required to pay interest to the lender on any portion of the loan that the lender is concurrently receiving federal interest benefit payments from the federal government.

(3) A lender may add accrued interest to the unpaid principal balance, which is referred to as capitalization, under conditions provided by the authority and the secretary in the provisions of 34 C.F.R. S682.202. These provisions are adopted by reference in R 390.1491.

(4) A lender's method of computing interest shall not result in an actual rate that is more than the allowable maximum rate of interest.

(5) An insurance premium payment may be charged by the authority to underwrite loans and to cover costs incurred in the administration of the program. The insurance premiums shall be collected by the lender from the borrower when the loan is disbursed and shall be forwarded to the authority. The amount of the insurance premiums set by the authority shall not exceed the maximum amount permitted by the act. The insurance premium is refundable under conditions established by the secretary as specified in the provisions of 34 C.F.R. SS682.202 and 682.401. These provisions are adopted by reference in R 390.1491. A disbursed loan for which the insurance premium has not been paid by the borrower or for which the check written by the borrower is not honored by the financial institution upon which the check was drawn is subject to cancellation of the guarantee commitment.

(6) Each lender shall charge the borrower, if applicable, an origination fee or other fees as prescribed by the act.

(7) A borrower may be charged for late payments. The amount of the charge shall not be more than the maximum allowable amount as prescribed by the secretary in the provisions of 34 C.F.R. S682.202. These provisions are adopted by reference in R 390.1491.

(8) A borrower may be assessed collection charges as defined by the secretary in the provisions of 34 C.F.R. S682.202. These provisions are adopted by reference in R 390.1491.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1433 Loan amounts {#sec-r-390.1433 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1433}

Rule 33. (1) The annual loan limit, exclusive of interest, shall not be more than that set forth in the act.

(2) The aggregate insured unpaid principal of all loans shall not be more than the aggregate limit as set forth in the act.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1434 Rescinded {#sec-r-390.1434 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1434}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1435 Rescinded {#sec-r-390.1435 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1435}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1436 Disbursement of loan proceeds {#sec-r-390.1436 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1436}

Rule 36. (1) The disbursement of loan proceeds by a lender shall be in compliance with the due diligence requirements for the disbursement of a loan set forth by law.

(2) Loan proceeds shall be disbursed in a manner permitted by law.

(3) Neither a lender nor a school may obtain a borrower's authorization to endorse a disbursement check on behalf of a borrower.

(4) The check, after being presented for payment, shall be retained by the lender either in original form or on microform for the period prescribed by the provisions of R 390.1413.

(5) When a participating school receives loan proceeds from a lender, the school shall process the proceeds based on requirements established by the secretary in the provisions of 34 C.F.R. S682.604. These provisions are adopted by reference in R 390.1491.

(6) A school may only retain loan proceeds as specified by the secretary in the provisions of 34 C.F.R. SS682.604 to 682.607. These provisions are adopted by reference in R 390.1491.

(7) With approval from the authority, a lender may disburse an educational loan during the stated loan period, but after a borrower has ceased to be enrolled on at least a half-time basis or after the expiration of the loan period as indicated in the loan application.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1437 Use of loan proceeds {#sec-r-390.1437 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1437}

Rule 37. Loan funds shall be used to pay only those obligations as specified by the secretary in the provisions of 34 C.F.R. SS682.200 and 682.606. These provisions are adopted by reference in R 390.1491.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1438 Loan purchases {#sec-r-390.1438 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1438}

Rule 38. An educational loan may be purchased by another lender and shall be reported on forms provided by the authority. Notice of a merger of financial institutions on forms prescribed by the authority is sufficient to enable the authority to make proper loan changes.

PART 3. INTEREST ON LOANS

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1441 Eligibility for federal interest benefits {#sec-r-390.1441 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1441}

Rule 41. (1) A borrower who obtained a loan after November 7, 1965, may be eligible for federal interest benefits if the borrower meets the eligibility requirements set forth in the act.

(2) A student loan disbursed before November 8, 1965, is not eligible for federal interest benefits. Interest accruing on such a loan shall be deferred and made a part of the principal when the repayment period begins.

(3) For a loan disbursed before November 8, 1965, a payment of 3% simple interest accrued on a loan before inception of the repayment period shall be made by the authority if the borrower has graduated or completed the originally intended course of study. The borrower shall pay the entire 6% simple interest during the repayment period.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1442 Payment of federal interest benefits {#sec-r-390.1442 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1442}

Rule 42. Loans disbursed to students who are eligible for federal payment of interest benefits shall have interest paid by the secretary during the in-school period, grace period, and periods of authorized deferment in the full amount as authorized for the date on which the loan was disbursed.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1443 Rescinded {#sec-r-390.1443 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1443}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1445 Rescinded {#sec-r-390.1445 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1445}

PART 4. PAYMENTS, EXTENSIONS, AND DEFERMENTS

History

History: 1979 AC; 1984 AACS; 1997 AACS.

Mich. Admin. Code R 390.1451 Repayment terms {#sec-r-390.1451 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1451}

Rule 51. (1) Loan repayment terms shall be established as required by the act and by the secretary in the provisions of 34 C.F.R. SS682.209 to 682.211. These provisions are adopted by reference in R 390.1491.

(2) The loan may be paid in full or in part at any time without penalty to the borrower.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1452 Rescinded {#sec-r-390.1452 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1452}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1453 Rescinded {#sec-r-390.1453 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1453}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1455 Deferment of payments; eligibility {#sec-r-390.1455 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1455}

Rule 55. (1) To qualify for deferment, a borrower shall meet the following deferment conditions:

(a) For loans disbursed before November 8, 1965, a borrower shall meet the deferment conditions established by the authority.

(b) For loans disbursed on November 8, 1965, and after, a borrower shall meet the deferment conditions established by the act and by the secretary as set forth in the provisions of 34 C.F.R. S682.210. These provisions are adopted by reference in R 390.1491.

(2) Deferment of payment on principal is subject to both of the following conditions:

(a) If the loan was disbursed as a result of an application received by the authority before February 28, 1973, a lender may deny the deferment request, except for unemployment deferment requests.

(b) A lender does not have an option to deny a deferment request if the loan was disbursed as a result of an application received by the authority on or after March 1, 1973, unless the borrower is considered in default as defined by the secretary in the provisions of 34 C.F.R. SS682.200, 682.402, and 682.411. These provisions are adopted by reference in R 390.1491.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1456 Deferment of payments; periods {#sec-r-390.1456 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1456}

Rule 56. (1) The period of authorized deferment shall be in compliance with requirements prescribed in the act or by the authority.

(2) Monthly payments shall resume after the deferment condition has ended as specified in the act.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1457 Deferment of payments; effect {#sec-r-390.1457 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1457}

Rule 57. (1) If a borrower is eligible for federal interest benefits, periodic installments of principal need not be paid and interest shall be paid by the federal government.

(2) For loans granted before November 8, 1965, interest shall continue to accrue and become part of the principal when payments are to be resumed. Interest which accrues during an authorized deferment on a loan granted on or after November 8, 1965, that is not eligible for federal interest benefits shall be payable by the borrower in a manner authorized by the secretary and agreed upon by the lender and borrower.

PART 5. DEFAULTED LOANS

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1461 Death, disability, bankruptcy, and delinquency claims {#sec-r-390.1461 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1461}

Rule 61. (1) The lender shall file a claim to the authority with the documentation prescribed by law.

(2) The authority, upon verification that the secretary's requirements have been met, shall purchase the borrower's note or notes. Failure to meet the secretary's requirements set forth in the provisions of 34 C.F.R. S682.413 will result in withdrawal of the guarantee. These provisions are adopted by reference in R 390.1491.

(3) To allow reinstatement of the guarantee, the lender shall meet the cure requirements as prescribed by the secretary in the provisions of 34 C.F.R. S682.413.

These provisions are adopted by reference in R 390.1491.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1462 Rescinded {#sec-r-390.1462 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1462}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1463 Rescinded {#sec-r-390.1463 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1463}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1464 Rescinded {#sec-r-390.1464 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1464}

History

History: 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1465 Rescinded {#sec-r-390.1465 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1465}

History

History: 1979 AC; 1984 AACS; 1990 AACS; 1997 AACS.

Mich. Admin. Code R 390.1466 Reimbursement of lender claim; assignment of notes {#sec-r-390.1466 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1466}

Rule 66. (1) The authority shall reimburse the lending institution at a level that is not less than the authority's level of reimbursement by the secretary specified in the provisions of 34 C.F.R. SS682.404 and 682.405. These provisions are adopted by reference in R 390.1491.

(2) A lender shall assign all of its rights in the note to the authority before claim purchase.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1467 Guaranty reserve fund {#sec-r-390.1467 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1467}

Rule 67. (1) The authority shall hold moneys from all of the following to pay defaulted loans and administrative expenses:

(a) Private contributions.

(b) Deposits by participating schools.

(d) Reinsurance.

(e) Administrative cost allowance.

(f) Insurance premiums.

(g) Investment earnings.

(h) Advances from the federal government.

(2) The guaranty agency shall maintain the guaranty reserve fund as a capital reserve consisting of cash, direct obligations of the United States or the state of Michigan, certificates of deposit, or other investment instruments as permitted by the act and the secretary in the provisions of 34 C.F.R. S682.410. These provisions are adopted by reference in R 390.1491. The fund shall have a market value equal at all times to not less than 2% of the aggregate unpaid principal amount of all loans guaranteed by the authority.

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1468 Rescinded {#sec-r-390.1468 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1468}

PART 6. FORBEARANCE

History

History: 1979 AC; 1984 AACS; 1997 AACS.

Mich. Admin. Code R 390.1471 Agreements and approval {#sec-r-390.1471 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1471}

Rule 71. A lender may enter into a forbearance agreement with a borrower based on terms and conditions prescribed by the act and the secretary as specified in the provisions of 34 C.F.R. S682.211. These provisions are adopted by reference in R 390.1491.

PART 7. LIMITATION, SUSPENSION, OR TERMINATION OF SCHOOL

OR LENDER

PARTICIPATION

History

History: 1979 AC; 1984 AACS; 1990 AACS.

Mich. Admin. Code R 390.1481 Participating school standard of care; effect of failure to properly administer programs; effect of conviction or guilty plea of school owner or chief executive officer for misuse of loan funds {#sec-r-390.1481 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1481}

Rule 81. (1) A participating school shall be subject to the highest standard of care and diligence in administering the educational loan programs and in accounting to the authority for the funds received under those programs.

(2) An institution's failure to properly administer the educational loan programs or to account for the funds it receives under those programs shall constitute grounds for the termination of the eligibility of the school to participate in the programs.

(3) If the owner of a participating school or the chief executive officer is convicted of, or pleads guilty to, a crime involving the unlawful acquisition, use, or expenditure of loan funds provided through the authority's educational loan programs, the authority shall consider that conviction as a violation of the participating school's duty to administer the loan programs with the highest standards of care and diligence and as an automatic ground for terminating the school's eligibility to participate in the authority's educational loan programs.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1482 Emergency action to stop issuance of commitments {#sec-r-390.1482 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1482}

Rule 82. (1) The authority, through a designated official, may take emergency action to stop the issuance of guaranty commitments to a lender or for a participating school for any of the following reasons:

(a) The authority receives information which gives reason to believe that a lender or participating school is in violation of applicable laws, regulations, agreements, or limitations.

(b) The designated official determines that immediate action is necessary to prevent the likelihood of substantial losses by the authority, the federal government, students, or parents.

(c) The designated official determines that the likelihood of loss outweighs the importance of following the procedures for limitation, suspension, or termination.

(2) The designated official shall begin an emergency action by notifying a lender or participating school of the action and the basis for the action.

(3) The effective date of the action shall be the date the notice is mailed to a lender or participating school.

(4) The designated official shall provide a lender or participating school with an opportunity to demonstrate that the emergency action is unwarranted.

(5) An emergency action shall not be for more than 30 days, unless a limitation, suspension, or termination proceeding has begun before that time expires.

(6) If a limitation, suspension, or termination proceeding begins before the expiration of the 30-day period, the emergency action may be extended until completion of the proceeding.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1483 Lender limitation, suspension, or termination proceedings; effect {#sec-r-390.1483 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1483}

Rule 83. (1) Limitation, suspension, or termination proceedings shall not affect a lender's responsibilities or rights to interest benefits, special allowance payments, and claim payments that are based on the lender's prior participation in the educational loan programs, except as provided in subrule (3) of this rule and the provisions of R 390.1488.

(2) A lender limitation may result in any of the following:

(a) A limit on the number or total amount of loans that a lender may make, purchase, or hold.

(b) A limit on the number or total amount of loans that a lender may make to, or on behalf of, students at a particular school.

(3) After the effective date of a suspension of a lender's eligibility, the authority shall not guarantee new loans for that lender during the period of suspension. The authority may also prohibit the lender from making further disbursements on a loan for which a guaranty commitment has already been issued. The period of suspension shall not be for more than 60 days, unless 1 of the following conditions exists:

(a) The lender and the designated official agree to an extension where the lender has not requested a hearing.

(b) The designated official begins a limitation or termination proceeding.

(c) If the designated official begins a limitation or termination proceeding before the suspension period ends, the designated official may extend the suspension period until the completion of that proceeding, including any appeal to the executive director.

(4) After the effective date of a termination of a lender's eligibility, the authority shall not guarantee new loans made by that lender. The authority may also prohibit the lender from making further disbursements on a loan for which a guaranty commitment has already been issued.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1484 Participating school limitation, suspension, or termination; effect {#sec-r-390.1484 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1484}

Rule 84. (1) Limitation, suspension, or termination proceedings shall not affect a participating school's responsibilities or rights that are based on the participating school's prior participation in the educational loan programs, except as provided in subrule (4) of this rule and R 390.1489.

(2) A participating school limitation may result in any of the following:

(a) A limit on the number or percentage of students enrolled in the participating school who may receive educational loans.

(b) A limit, for a stated period of time, on the percentage of a participating school's total receipts from tuition and fees derived from the educational loan programs.

(c) A requirement that a participating school obtain a bond, in a specified amount, to assure its ability to meet its financial obligation to students who received educational loans.

(d) A hearing as required under the provisions of R 390.1487.

(3) A suspension shall remove a participating school's eligibility to participate in the educational loan programs for not more than 60 days, unless 1 of the following occurs:

(a) The participating school and the designated official agree to an extension.

(b) The designated official begins a limitation or termination proceeding.

(c) The designated official begins a limitation or termination proceeding before the suspension period ends. The designated official may extend the suspension period until the completion of that proceeding.

(4) A termination shall result in all of the following:

(a) End a school's eligibility to participate in the educational loan programs.

(b) Prohibit a school from receiving any loan proceeds, or from releasing to a student any loan check or loan proceeds, from a loan for which a guaranty commitment has already been issued.

(d) Prohibit further disbursement by a school that is a lender under the educational loan programs for which guaranty commitments have already been issued by the authority.

(e) Prohibit the authority from increasing any guaranty commitment on a loan for which the guaranty commitment has already been issued.

(f) Prohibit further guaranty commitments by the authority for loans to students to attend that school.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1485 Notice of limitation, suspension, or termination proceeding {#sec-r-390.1485 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1485}

Rule 85. (1) The designated official shall begin a limitation, suspension, or termination proceeding by sending a lender or participating school a notice.

(2) The notice shall include all of the following:

(a) A statement of the designated official's intent to suspend the lender's or the participating school's eligibility for a period of not more than 60 days or limit or terminate the lender's or participating school's eligibility.

(b) A description of the consequences of a limitation, suspension, or termination.

(d) A statement of the limits which may be imposed, in the case of a limitation proceeding.

(e) A statement of the proposed effective date of the limitation, suspension, or termination, which shall not be less than 20 days after the notice is mailed.

(f) Information to the lender or the participating school that the limitation, suspension, or termination shall not take effect on the proposed effective date if the designated official receives, not less than 5 days before that date, a request for a hearing or written material showing why the limitation, suspension, or termination should not take effect.

(g) A request that the lender or participating school correct any alleged violation voluntarily.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1486 Submission of written material by lender or school; action by designated official {#sec-r-390.1486 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1486}

Rule 86. If a lender or participating school does not request a hearing but, submits written material pertaining to the limitation, suspension, or termination, the designated official may consider the material and shall take either of the following actions:

(a) Dismiss the proposed limitation, suspension, or termination.

(b) Notify the lender or participating school of the effective date of the limitation, suspension, or termination.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1487 Hearing {#sec-r-390.1487 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1487}

Rule 87. (1) If a lender or participating school requests a hearing within the required 5 days before the proposed effective date of the limitation, suspension, or termination, the designated official shall schedule a hearing.

(2) The hearing date shall not be less than 15 days after receipt of the request from the lender or the participating school.

(3) A proposed limitation, suspension, or termination shall not take effect until a hearing is held.

(4) The hearing shall be conducted and a decision rendered pursuant to the provisions of chapter 4 of Act No. 306 of the Public Acts of 1969, as amended, being S24.271 et seq. of the Michigan Compiled Laws.

(5) If a termination action is brought against a lender or a participating school and the hearing officer concludes that a limitation is more appropriate, the hearing officer may issue a decision imposing 1 or more limitations on a lender or a participating school rather than terminating the lender's or the participating school's eligibility.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1488 Participating school; corrective action {#sec-r-390.1488 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1488}

Rule 88. (1) As part of a limitation or termination proceeding, the designated official or the executive director may require a participating school to take reasonable corrective action to remedy a violation of applicable laws, regulations, agreements, or limitations.

(2) The corrective action may include payment of any funds to the authority, the federal government, or recipients identified by the designated official. Payment may include interest and special allowance that the lender or the participating school improperly received, withheld, disbursed, or caused to be disbursed.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1489 Request for removal of limitation {#sec-r-390.1489 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1489}

Rule 89. (1) A lender or a participating school may request removal of a limitation imposed under these rules not less than 12 months after the effective date of the limitation.

(2) The request shall be in writing and shall show that the lender or the participating school has corrected any violations on which the limitation was based.

(3) Within 60 days after receiving the request the executive director shall take 1 of the following actions:

(a) Grant the request.

(b) Deny the request.

(4) If the executive director denies the request or establishes other limitations, the executive director shall give the lender or the participating school, upon request, an opportunity to show why all limitations should be removed.

(5) A lender or a participating school shall be eligible to continue to participate in the educational loan programs, subject to any limitation imposed by the executive director under subrule (3)(c) of this rule, pending a decision by the executive director on a request made pursuant to the provisions of subrule (4) of this rule.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1490 Request for reinstatement of eligibility {#sec-r-390.1490 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1490}

Rule 90. (1) A lender or school whose eligibility has been terminated may request reinstatement of its eligibility not less than 18 months after the effective date of termination.

(2) A request shall be in writing and shall demonstrate that both of the following provisions have been complied with:

(a) The lender or the school has corrected any violation on which the termination was based.

(b) The school meets all requirements for eligibility.

(3) Within 60 days after receiving a request for reinstatement, the executive director shall take 1 of the following actions:

(a) Grant the request.

(b) Deny the request.

(4) If the executive director denies the school's request or allows reinstatement subject to limitation, the executive director shall give the lender or school, upon request, an opportunity to show why its eligibility should be reinstated and all limitations removed.

(5) A lender or a school whose eligibility is reinstated subject to limitations imposed by the executive director under the provisions of subrule (3)(c) of this rule shall be eligible to participate, subject to those limitations, pending a decision by the executive director on arequest made pursuant to the provisions of subrule (4) of this rule.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1491 Adoption of federal regulations by reference {#sec-r-390.1491 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1491}

Rule 91. (1) The following provisions of 34 C.F.R. S682 are adopted herein by reference:

Sections 682.200, 682.202, 682.205 to 682.213, 682.300, 682.301, 682.401, 682.402, 682.404, 682.405, 682.410, 682.414, and 682.604 to 682.607.

(2) A copy of these provisions may be inspected at the Lansing office of the Michigan higher education assistance authority of the department of education. A copy may be obtained from the Department of Education, Higher Education Assistance Authority, Michigan Guaranty Agency, P.O. Box 30047, Lansing, Michigan 48909, at no cost. A copy may also be obtained from the United States Department of Education, Guaranteed Student Loan Branch, 400 Maryland Avenue, S.W., Room 4310, ROB 3, Washington, DC 20202, at no cost.

History

History: 1990 AACS.

R 390.1601 to R 390.1611 Federal Family Education Loan Program (FFELP)

Mich. Admin. Code R 390.1601 Definitions; A, E {#sec-r-390.1601 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1601}

DEPARTMENT OF TREASURY

MICHIGAN HIGHER EDUCATION STUDENT LOAN AUTHORITY

FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFELP)

(By authority conferred on the Michigan higher education student loan authority by sections 4, 4a, and 12 of 1975 PA 222, MCL 390.1154, 390.1154a, and 390.1162; and ERO 1995-2 (MCL 12.181)).

Rule 1. (1) As used in these rules:

(a) "Authority" means the Michigan higher education student loan authority created by section 3 of 1975 PA 222, MCL 390.1153.

(b) "Eligible borrower" means a student or parent who meets the criteria of the authority and the secretary for eligibility.

(2) Terms defined in 1975 PA 222, MCL 390.1151, have the same meanings when used in these rules.

History

History: 1979 AC; 1987 AACS; 1990 AACS; 2007 AACS.

Mich. Admin. Code R 390.1602 Definitions; G to S {#sec-r-390.1602 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1602}

Rule 2. As used in these rules:

(a) "Guaranty agency" means the Michigan higher education assistance authority or any entity which is approved by the authority and guarantees student loans under the higher education act of 1965, or other federal law, and has entered into an agreement with the secretary for reinsurance of its guarantees of student loans.

(b) "Participating lender" means a lending institution, which has entered into an agreement with the guaranty agency.

History

History: 1979 AC; 1987 AACS; 1990 AACS; 2007 AACS.

Mich. Admin. Code R 390.1603 Nondiscrimination {#sec-r-390.1603 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1603}

Rule 3. Loans are available to all eligible borrowers without regard to race, color, sex, creed, religion, disability, sexual orientation, national origin, age, or marital status.

History

History: 1979 AC; 1987 AACS; 1990 AACS; 2007 AACS.

Mich. Admin. Code R 390.1604 Documents; records {#sec-r-390.1604 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1604}

Rule 4. (1) The authority shall obtain the required information and documentation from the applicant, eligible institution, and/or current loan holder, as appropriate.

(2) The authority shall maintain records necessary for the administration of the loan programs and as required by the secretary.

History

History: 1979 AC; 1987 AACS; 1990 AACS; 2007 AACS.

Mich. Admin. Code R 390.1605 Eligibility of applicants {#sec-r-390.1605 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1605}

Rule 5. A person shall meet all of the following requirements to be eligible for a loan:

(a) Complete and submit all application forms and documentation required by the authority.

(b) Provide information necessary to assure qualification for applicable federal interest benefits.

History

History: 1979 AC; 1987 AACS; 1990 AACS; 2007 AACS.

Mich. Admin. Code R 390.1606 Procedures; loan denial {#sec-r-390.1606 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1606}

Rule 6. (1) The authority shall develop and maintain procedures necessary to carry out applicable provisions of Title IV, part B, of the higher education act of 1965, and the regulations therefor, and as may be required in the exercise of reasonable care and diligence in the making and collection of loans. If the authority determines that there is sufficient evidence to indicate that the applicant will not exercise reasonable diligence in completing repayment of a loan, the loan request may be denied. In determining that sufficient evidence for denial exists, the authority shall use such ethical methods and practices as are acceptable and proven in the collection of credit information in the commercial banking community.

(2) Evidence that indicates the applicant will not exercise reasonable diligence in completing repayment of a loan may include, but is not limited to, any of the following:

(a) Defaults on previous debts.

(b) Bankruptcy.

(d) Excessive and existing indebtedness beyond present and anticipated means of payment.

(e) Incarceration for a felony.

(f) Physical or mental disability in a degree that employment and repayment may not reasonably be expected.

(3) If a loan application is denied, the applicant shall be advised by the authority, in writing or through an electronic method, if agreed to by the applicant, of the reason for the denial.

History

History: 1979 AC; 2007 AACS.

Mich. Admin. Code R 390.1607 Amount and terms of loan {#sec-r-390.1607 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1607}

Rule 7. (1) The annual maximum loan shall not exceed the maximum prescribed by the secretary.

(2) The maximum aggregate outstanding principal balance of loans shall not exceed the maximum as prescribed by the secretary.

(3) Each loan shall be evidenced by a promissory note and shall bear interest at a rate designated by the secretary.

(4) Terms and conditions for repayment of a loan shall be established by the authority in accordance with regulations of the secretary.

History

History: 1979 AC; 1987 AACS; 1990 AACS; 2007 AACS.

Mich. Admin. Code R 390.1608 Guarantee requirement {#sec-r-390.1608 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1608}

Rule 8. All loans initiated by the authority shall be eligible for guarantee by the guaranty agency.

History

History: 1979 AC; 2007 AACS.

Mich. Admin. Code R 390.1609 Fund disbursement {#sec-r-390.1609 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1609}

Rule 9. (1) Disbursement shall be made in accordance with the requirements of the secretary.

(2) A loan shall be declared due and payable immediately if a student does not attend school for the loan period for which the loan is disbursed.

History

History: 1979 AC; 1987 AACS; 1990 AACS; 2007 AACS.

Mich. Admin. Code R 390.1610 Interest benefit requirement {#sec-r-390.1610 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1610}

Rule 10. All loans initiated by the authority shall be eligible for applicable federal interest benefits as prescribed by the higher education act of 1965, 20 U.S.C. § 1070 et seq.

History

History: 1979 AC; 1990 AACS; 2007 AACS.

Mich. Admin. Code R 390.1611 Delegation of authority {#sec-r-390.1611 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1611}

Rule 11. (1) The executive director of the authority shall have authority and responsibility for administration of the loan programs as prescribed in these rules, Michigan statutes, and applicable federal laws and regulations.

(2) The executive director's authority shall include, but not be limited to, all of the following:

(a) Issuance of public information relative to the programs.

(b) Design of necessary forms.

(d) Prescription of procedures and terms for the collection and repayment of loans, including the purchase of other individual loans for consolidation purposes.

(e) Prescription of terms, conditions, and agreements with participating lenders for purposes of a secondary market activity.

(f) Approval or disapproval of loan applications.

(g) Establishment of policies and practices deemed necessary for the effective administration of the loan programs as prescribed by law and by these rules.

History

History: 1979 AC; 1990 AACS; 2007 AACS.

R 390.1621 to R 390.1636 Michigan Alternative Student Loan Program

Mich. Admin. Code R 390.1621 Definitions; A to D {#sec-r-390.1621 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1621}

DEPARTMENT OF TREASURY

MICHIGAN HIGHER EDUCATION STUDENT LOAN AUTHORITY

MICHIGAN ALTERNATIVE STUDENT LOAN PROGRAM

(By authority conferred on the Michigan higher education student loan authority by sections 4, 4a, and 12 of 1975 PA 222, MCL 390.1154, 390.1154a, and 390.1162)

Rule 1. As used in these rules:

(a) "Academic year" means a period of not less than 7 months that represents the traditional academic year.

(b) "Application fee" means a nonrefundable fee which is established by the authority and which is paid by the borrower to the authority at the time an application is submitted.

(c) "Application period" means the period of time designated by the authority during which applications may be submitted for processing.

(d) "Authority" means the Michigan higher education student loan authority as authorized by 1975 PA 222, MCL 390.1151 et seq.

(e) "Bankruptcy" means a judicial action in which a person is declared insolvent and in which the individual's assets, if any, are taken under court administration.

(f) "Borrower" means a student or parent.

(g) "Cosigner" means a parent, legal guardian, or other responsible individual who is jointly and separately responsible for payment of the loan. Two persons may be cosigners if they reside in the same household and jointly meet the credit standards.

A cosigner shall meet all of the following conditions:

(i) Be not less than 18 years of age.

(ii) Meet the credit standards.

(iii) Not be currently in default on federal or state educational loans.

(iv) Be a United States citizen or a permanent resident.

(h) "Cost of attendance" means the cost of tuition and fees and other expenses related to attendance as determined by an eligible school for the loan period. An eligible school shall include only those costs that are permissible under the guaranteed student loan programs pursuant to title IV, part B, of the higher education act of 1965, as amended, 20 U.S.C. §1070 et seq.

(i) "Credit standards" means a credit evaluation process established by the authority, which shall include an evaluation of all of the following:

(i) Income.

(ii) Debt.

(iii) Employment history.

(iv) Credit history.

(j) "Default" means the condition that exists when the borrower and cosigner or cosigners fail to perform any of the conditions of the promissory note or the authority has determined that the borrower or cosigner or cosigners made false representation to secure a loan.

(k) "Disbursed" means the date that funds are issued for the loan.

History

History: 1990 AACS; 1995 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1622 Definitions; E, F {#sec-r-390.1622 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1622}

Rule 2. As used in these rules:

(a) "Eligible school" means a degree-granting college or university that is located in this state and that is approved by the state board of education and by the United States secretary of education for purposes of the federal family education loan program.

(b) "Estimated financial aid" means the estimated amount of assistance for which the borrower may be eligible, excluding loans under section 428B(a) of the higher education act of 1965, as amended, 20 U.S.C.§1078-2, relating to parent loans, and subpart I of part D of title VII of the public health service act of 1944, as amended, 42 U.S.C. §294 et seq., relating to training in certain health professions.

(c) "Forbearance" means a delay in the repayment of principal or principal and interest for a period of time as authorized by the authority.

History

History: 1990 AACS; 1995 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1623 Definitions; I to T {#sec-r-390.1623 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1623}

Rule 3. As used in these rules:

(a) "Interest" means the percentage of an amount of money that is paid for its use for a specified time.

(b) "Loan" means loans authorized under section 4a of 1975 PA 222, MCL 390.1154a.

(c) "Loan period" means a period of time the student expects to be enrolled and for which loan assistance is being requested. A loan period shall not be more than 12 months.

(d) "Michigan resident" means a person who is accepted for enrollment or enrolled in an eligible school located in this state or a person whose primary residence is in this state.

(e) "Promissory note" means a note which is developed by the authority, which cites the terms and conditions of a loan, and which identifies the responsibilities of the borrower and cosigner or cosigners.

(f) "Reserve fee" means a fee as established by the authority and paid by the borrower to the authority to establish a reserve.

(g) "School student loan eligibility criteria" means a school evaluation process established by the authority, which may include the following:

(i) Graduation rate.

(ii) Federal cohort default rate.

(iii) Borrower credit readiness.

(h) "Totally and permanently disabled" means the inability to work and earn money or attend school because of an impairment that is expected to continue indefinitely or to result in death.

History

History: 1990 AACS; 1995 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1624 Terms defined in Act No. 222 of 1975 {#sec-r-390.1624 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1624}

Rule 4. Terms defined in Act No. 222 of the Public Acts of 1975, as amended, being S390.1151 et seq. of the Michigan Compiled Laws, have the same meanings when used in these rules.

History

History: 1990 AACS.

Mich. Admin. Code R 390.1625 Nondiscrimination {#sec-r-390.1625 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1625}

Rule 5. Loans are available to all eligible borrowers without regard to race, color, sex, religion, national origin, age, or marital status.

History

History: 1990 AACS; 1995 AACS.

Mich. Admin. Code R 390.1626 Eligibility for loans {#sec-r-390.1626 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1626}

Rule 6. To be eligible for a loan, all of the following requirements shall be met:

(a) A borrower or the student shall be a Michigan resident.

(b) The student shall have been accepted for enrollment or shall be currently in attendance at an eligible school and be making satisfactory academic progress as determined by the eligible school.

(d) A borrower shall be a United States citizen or permanent resident.

(e) A borrower shall be not less than 18 years old or an emancipated minor, pursuant to the provisions of section 4 of 1968 PA 293, MCL 722.4.

(f) One of the following loan criteria shall be met:

(1) A borrower or cosigner or cosigners shall meet the credit standards.

(2) The eligible school and borrower shall meet specific student loan eligibility criteria as determined by the authority.

(g) The student shall demonstrate eligibility based on the cost of attendance less estimated financial aid.

(h) A borrower or the student shall not currently be in default on any federal or state educational loans.

History

History: 1990 AACS; 1995 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1627 Rescinded {#sec-r-390.1627 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1627}

History

History: 1990 AACS; 1995 AACS.

Mich. Admin. Code R 390.1628 Loan; information and documentation; written credit denial {#sec-r-390.1628 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1628}

Rule 8. (1) The authority shall obtain the required information and documentation from the applicant and from the school and shall assess borrower eligibility.

(2) If an applicant does not qualify for a loan, the authority shall issue a written credit denial within 30 days of the date that all materials were available for assessment.

History

History: 1990 AACS; 1995 AACS.

Mich. Admin. Code R 390.1629 Loan terms {#sec-r-390.1629 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1629}

Rule 9. (1) Loans made to eligible borrowers are subject to all of the following conditions:

(a) The minimum loan amount shall not be less than the amount established by the authority.

(b) The maximum loan amount per academic year is the student's cost of attendance minus estimated financial aid and shall not be more than the annual amount established by the authority.

(c) A cumulative outstanding maximum amount to any 1 borrower shall not be more than the amount established by the authority.

(2) The interest rates for loans shall be determined by the authority and shall not exceed the rate permitted by state law. The interest rates may be set at fixed or variable rates and there may be multiple fixed or variable interest rates. Interest shall begin to accrue on the date the loan is disbursed.

(3) An applicant shall pay a nonrefundable application fee payable to the authority when submitting an application, if applicable.

(4) An applicant shall pay a reserve fee that shall be deducted from the loan disbursement, if applicable.

History

History: 1990 AACS; 1995 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1630 Loan disbursement {#sec-r-390.1630 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1630}

Rule 10. (1) Loan proceeds shall not be disbursed more than 1 month before the start of the loan period as specified on the application.

(2) Loans may be disbursed after the loan period has expired if authorized by the authority.

(3) The interest and reserve fee, if applicable, shall be refunded if the disbursed funds are returned to the authority within 30 days of the date of the disbursement.

History

History: 1990 AACS; 1995 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1631 Repayment terms {#sec-r-390.1631 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1631}

Rule 11. (1) Repayment of the loan shall begin within 60 days of the date that the loan is disbursed.

(2) The minimum payment of $50.00 shall be paid by the borrower or cosigner or cosigners each month.

(3) The authority may grant forbearance of principal or principal and interest payments to the borrower or cosigner or cosigners in accordance with conditions established by the authority.

(4) The authority may offer graduated repayments or a modified repayment schedule if the repayment schedule is not in violation of the provisions of subrule (7) of this rule.

(5) The authority may assess a late charge, which shall not be more than 6 cents for each dollar of each late installment, for a payment that is delinquent for more than 10 days.

(6) There shall be no penalty for prepayment of a loan.

(7) A loan shall be repaid in full within the time established by the authority.

History

History: 1990 AACS; 1995 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1632 Authority responsibilities for loan collection {#sec-r-390.1632 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1632}

Rule 12. (1) The authority shall be responsible for the collection of the loan.

(2) The authority shall make periodic reports on the borrower and cosigner or cosigners to 1 or more national credit bureaus.

(3) The authority may accelerate payment of the loan and demand payment in full of all outstanding principal, accrued interest, and late charges if either of the following conditions occurs:

(a) A borrower and cosigner or cosigners default.

(b) A borrower or cosigner or cosigners provided false information to obtain the loan.

(4) The authority may exercise all legal options to collect the loan.

History

History: 1990 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1633 Default {#sec-r-390.1633 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1633}

Rule 13. (1) If a borrower and a cosigner or cosigners do not comply with the provisions of the promissory note for a period of 120 days or more, then the loan shall be declared in default.

(2) Collection costs incurred by the authority in the collection of defaulted loans may be charged to the account of a defaulted borrower and cosigner or cosigners.

History

History: 1990 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1634 Death of student; effect {#sec-r-390.1634 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1634}

Rule 14. (1) The balance on a loan shall be canceled upon the death of the student.

The authority shall not attempt to collect on the loan after the authority has received a death certificate or other official notification confirming the student's death.

(2) Payments received after the date of the student's death shall be returned to the sender.

History

History: 1990 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1635 Total and permanent disability of student; effect {#sec-r-390.1635 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1635}

Rule 15. (1) If a student is determined to be totally and permanently disabled, then the remaining loan balance shall be canceled.

(2) The student or another party shall provide documentation of the total and permanent disability which is satisfactory to the authority.

(3) A student is not considered totally and permanently disabled on the basis of a condition that existed before he or she applied for the loan, unless the student's condition has substantially deteriorated since submission of the loan application so as to render the student totally and permanently disabled.

(4) The authority shall cease collection on a loan after the authority determines that the student is totally and permanently disabled.

(5) Payments paid after the date the student became totally and permanently disabled shall be returned to the sender.

History

History: 1990 AACS; 1998-2000 AACS.

Mich. Admin. Code R 390.1636 Bankruptcy; effect {#sec-r-390.1636 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1636}

Rule 16. (1) If the authority receives a notice of the first meeting of creditors from a bankruptcy court for a borrower and cosigner or cosigners, then the authority shall proceed as follows:

(a) The authority shall file proof of claim with the bankruptcy court, unless advised otherwise by the court.

(b) If, after the bankruptcy has been concluded, the authority is notified by the bankruptcy court that the loan has been discharged, then the authority shall report the bankruptcy to the credit bureau.

(c) If a payment plan is ordered by the bankruptcy court, then the bankruptcy will be reported to the credit bureau, and the authority will proceed through its collector to collect the payments as ordered by the court. Upon conclusion of the payment plan, the authority shall proceed through its collector to collect the remaining outstanding balance.

(d) If the loan is not discharged, then the authority shall establish the next payment date within 60 days. Payment shall be subject to the full force of the terms and conditions of the promissory note.

(2) If the authority receives a notice of the first meeting of creditors from a bankruptcy court for 1 of the signers of the promissory note, then the authority shall proceed as follows:

(a) The authority shall file proof of claim with the bankruptcy court, unless advised otherwise by the court.

(b) The authority shall cease billing the individual involved in the bankruptcy action.

(c) The authority may continue collections with the other signer or signers of the promissory note, as the other signer or signers remain liable for unpaid principal, interest, and late charges.

History

History: 1990 AACS; 1995 AACS; 1998-2000 AACS.

R 390.1801 to R 390.1821 Michigan Education Trust

Mich. Admin. Code R 390.1801 Definitions {#sec-r-390.1801 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1801}

DEPARTMENT OF TREASURY

BOARD OF DIRECTORS

MICHIGAN EDUCATION TRUST

(By authority conferred on the board of directors of the Michigan education trust by section 11 of 1986 PA 316, MCL 390.1431).

Rule 1. (1) As used in these rules:

(a) "Academic year" means the undergraduate school year consisting of 2 semesters or 3 terms or quarters beginning the first semester, term, or quarter after July 15 of any year.

(b) "Act" means 1986 PA 316, MCL 390.1421 et seq.

(c) "Annual undergraduate tuition cost" means a figure determined by dividing the total in-state, undergraduate tuition collected by a particular state institution of higher education for a year by the total number of in-state, undergraduate, fiscal year equated students at that particular school for that year.

(d) "Application" means a request for acceptance into the trust made on a form, or a duplicate of a form, approved by the trust.

(e) "Application fee" means a fee paid to the trust upon application.

(f) "Average tuition cost" means a figure determined by adding the annual undergraduate tuition cost at each state institution of higher education and dividing that result by the total number of state institutions of higher education.

(g) "Beneficiary" means an individual who is designated as a beneficiary in a contract with the trust. The beneficiary shall be a resident as defined in this rule when the contract is submitted to the trust.

(h) "Community or junior college" means an educational institution described in 1963 Mich. Const., Art. VIII, section 7.

(i) "Contract" means any 1 of the following Michigan education trust contracts:

(i) Full benefits plan contract offered in 1988.

(ii) Limited benefits plan contract offered in 1988.

(iii) Community college plan contract offered in 1988.

(iv) Any other contract to provide educational benefits approved by the board.

(j) "Contract processing fee" means a fee paid for the processing of a contract.

(k) "Disabled" or "disability" means a limitation of an individual's learning ability that results from an injury or disease which renders the individual incapable of participating in higher education.

(l) "Escrow account" means an account called an escrow account in any contract.

(m) "Higher education institution" means a public educational institution, an independent, degree-granting college or university, or an out-of-state institution of higher education.

(n) "Immediate family" has 1 of the following meanings:

(i) For contracts issued in the years 1988 to 1996, the term means any of the following:

(A) The purchaser or any of the following relations of the purchaser:

(1) A spouse.

(2) A child.

(3) A stepchild.

(4) An adopted child.

(5) A grandchild.

(6) A niece or nephew.

(7) A ward.

(B) Any of the following relations of the beneficiary:

(1) A brother or sister.

(2) A stepbrother or stepsister.

(3) A cousin of the first degree.

(4) A mother or father.

(ii) For contracts issued after the year 1996, the term means any of the following relations of the beneficiary:

(A) A spouse.

(B) A mother or father.

(D) A legally adopted brother or sister.

(E) A child.

(F) A legally adopted child.

(G) A spouse's child.

(H) A niece or nephew.

(I) A cousin of the first degree.

(o) "Independent, degree-granting college or university" means either of the following:

(i) For contracts issued in the years 1988 to 1996, the term means a nonpublic, associate or baccalaureate degree-granting institution of higher education approved by the state board of education and located in this state.

(ii) For contracts issued after the year 1996, the term means a nonprofit, nonpublic, associate or baccalaureate degree-granting institution of higher education approved by the state board of education and located in this state.

(p) "In-district tuition rate" means the tuition rate charged a student who meets the in-district residency requirements established by a particular community or junior college.

(q) "In-state tuition rate" means the tuition rate charged a student who meets the in-state residency requirements of a particular state institution of higher education.

(r) "Item" means any of the categories listed and numbered on the signature page of a contract.

(s) "Lowest tuition cost" means the lowest annual tuition rate charged freshmen, sophomores, juniors, or seniors among all annual tuition rates at any state institution of higher education.

(t) "Mandatory fee" means any fee, other than charges for credit hours, room, and board, which an educational institution requires all students to pay.

(u) "New beneficiary" means an individual who is an immediate family member to whom contract rights have been transferred.

(v) "Out-of-state institution of higher education" means 1 of the following:

(i) A nonprofit, baccalaureate degree-granting college or university located outside this state.

(ii) A proprietary baccalaureate degree-granting college or university located outside this state that is eligible to participate in United States department of education student aid programs.

(iii) A community or junior college located outside this state that is eligible to participate in United States department of education student aid programs.

(w) "Person" means an individual who is a resident of the United States or a partnership, trust, association, corporation, or governmental subdivision organized or existing under the laws of the United States or any state of the United States.

(x) "Plan" means any group of contracts so identified by the trust as a plan.

(y) "Prepaid tuition amount" means the dollar amount paid for a contract, but does not include an application fee and any contract processing fee set forth in the contract.

(z) "Public educational institution" means a state institution of higher education or a community or junior college.

(aa) "Purchaser" means the person designated in a contract who makes, or is obligated to make, advance tuition payments pursuant to a contract. The purchaser, if a natural person, shall be 18 years of age or older or a trustee or a designated custodian under the provisions of 1959 PA 172, MCL 554.451 et seq., or be represented by a court-appointed or approved conservator or guardian.

(bb) "Resident" means an individual who is domiciled in, or whose state of legal residence is, this state.

(cc) "Secured loan" means a single-purpose installment payment loan made by a third-party lender to a purchaser for the purpose of making the total contract price.

(dd) "Termination" means a discontinuance of the right to receive educational benefits under the contract.

(ee) "Third-party lender" means a savings institution, bank, credit union, or other party which is under contract with the trust to offer secured loans for the purchase of contracts.

(ff) "Third-party servicer" means a savings institution, bank, credit union, or other party under contract with the trust to service the receipt of contracts and contract payments.

(gg) "Total contract price" means the amount paid for a contract, including any contract processing fee set forth in the contract, but not including an application fee.

(hh) "Transfer" means moving all or a portion of the contract rights from the beneficiary to a new beneficiary.

(ii) "Tuition account" means an account established by the trust in the advance tuition payment fund to hold all monies to provide educational benefits or refunds for plan contracts. This account shall not be subject to a claim for payment by a third-party lender.

(jj) "Tuition charges" means the undergraduate quarter, term, semester, or trimester charges imposed to attend a higher education institution, including mandatory fees.

(kk) "Undergraduate fiscal year equated students" means a figure determined for each state institution of higher education by dividing 1/4 of the number of credit hours necessary to receive a 4-year baccalaureate degree at that state institution of higher education into the number of credit hours for which in-state undergraduate students were enrolled.

(2) Terms defined in the act have the same meanings when used in these rules.

History

History: 1992 AACS; 1997 AACS; 1998-2000 AACS; 2002 AACS; 2003 AACS.

Mich. Admin. Code R 390.1802 Applications; enrollment; denial of authorization to enter into contract {#sec-r-390.1802 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1802}

Rule 2. (1) The board may develop and distribute applications. Applications shall be available from the office of the trust and at other places considered necessary by the executive director. Applications received by the trust shall be date-stamped by the trust as evidence of receipt.

(2) To be complete, an application shall contain all of the information the board determines necessary to properly administer the application and enrollment process.

Upon receipt of a completed application, the trust shall determine the enrollment period in which the applicant may be eligible to enter into a contract with the trust for the proposed beneficiary. The trust shall notify the applicant of the enrollment period for which the application was accepted and provide the applicant with the information necessary to enter into a contract with the trust.

(3) The trust shall make a reasonable effort to assure that not more than the number of credit hours necessary to obtain a 5-year baccalaureate degree is purchased for a particular beneficiary. To this end, to the extent known by the trust, the trust will not allow, in any enrollment period, the purchase of credit hours which, when added to credit hours previously contracted for on behalf of the beneficiary, will provide the beneficiary with more than the number of credit hours necessary to obtain a 5-year baccalaureate degree. If more than 1 applicant has submitted an application for the same proposed beneficiary and all applications submitted or contracts previously entered into total more than the number of credit hours necessary to obtain a 5-year baccalaureate degree, the trust shall authorize applicants to enter into contracts for the proposed beneficiary in the order of the trust's receipt of their applications.

(4) In addition to a denial pursuant to subrule (3) of this rule, the trust may deny an applicant the right to enter into a contract with the trust for any of the following reasons:

(a) The applicant is not legally qualified to enter into the contract.

(b) Entering into the contract with the applicant violates state or federal securities laws.

(d) The board determines it would be advisable, for reasons adopted by the board or because it is necessary to protect the actuarial soundness of the trust, to limit the number of contracts entered into by the trust.

(e) The applicant fails to enter into a contract within the enrollment period specified.

(f) Any other reason determined by resolution of the board.

History

History: 1992 AACS; 2008 AACS.

Mich. Admin. Code R 390.1803 Limiting participation; methods; applicant priority for following year {#sec-r-390.1803 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1803}

Rule 3. (1) If it is determined by the board, at any particular time, that either the total number of participants in the trust, in a specific plan or in a type of contract of the trust, or the number of beneficiaries in specific age groups must be limited to maintain the actuarial soundness of the trust, the board, by resolution, may limit the number of new beneficiaries by 1 or more of the following methods:

(a) The institution of a system whereby applicants with completed applications related by beneficiary age group, filing date, or other classification determined by the board are selected to be eligible to enter into contracts during a specific enrollment period by a method designed to insure fairness. The board shall determine whether applications may be submitted by mail or in person, or both.

(b) The institution of a first-come, first-served process whereby applications for program entry are accepted in the order they are received. The board shall determine whether applications may be submitted by mail or in person, or both.

Locations at which applications will be accepted shall be specified in advance.

(c) The institution of an open application period whereby, for a limited period of time as specified by the board, all completed applications submitted during the specified period shall be accepted by the trust. The board shall determine whether applications may be submitted by mail or in person, or both. If it is determined by the board, as specified by the actuary, that the actuarial soundness of the trust will not be impaired, the board may accept additional applications received after the application period on a first-come, first-served basis or other basis recommended by the actuary.

(d) A combination of any of the methods specified in the provisions of subdivisions (a) to (c) of this subrule.

(e) Any other method for limiting participation, if the method does not adversely affect the financial soundness of the trust.

(2) The board may permit applicants who are not accepted to enter into a contract with the trust during a particular year or enrollment period to receive priority consideration for the following year or enrollment period.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1804 Transferability {#sec-r-390.1804 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1804}

Rule 4. The board or a representative designated by the board shall authorize the transfer of a contract to an individual who is an immediate family member subject to the conditions set forth in the contract.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1805 Rescinded {#sec-r-390.1805 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1805}

History

History: 1992 AACS; 1997 AACS.

Mich. Admin. Code R 390.1806 Terminations and refunds under 1988 full benefits plan contracts {#sec-r-390.1806 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1806}

Rule 6. (1) As used in this rule, "contract" means a full benefits plan contract that was issued during 1988.

(2) A contract may be terminated in the following instances upon a written request to the trust by the beneficiary or by a person who has legal authority to act on behalf of a beneficiary who has died or is disabled:

(a) The beneficiary has reached 18 years of age or has received a high school diploma, certifies that he or she will attend an independent degree-granting college or university, and directs payment of any refund to that independent degree-granting college or university.

(b) The beneficiary has reached 18 years of age or has received a high school diploma and certifies that he or she will attend an out-of-state institution of higher education.

(c) The beneficiary has reached 18 years of age or has received a high school diploma and certifies that he or she will attend a higher education institution under a full-tuition scholarship.

(d) The beneficiary has died or is disabled.

(e) The beneficiary has reached 18 years of age or has received a high school diploma and certifies 1 of the following:

(i) He or she does not plan to attend a higher education institution.

(ii) He or she will attend an independent degree-granting college or university, but does not direct payment of any refund to that independent degree-granting college or university.

(iii) He or she will attend a community or junior college.

(f) The board approves a termination for any other reason.

(3) The amount of the refund for a contract terminated pursuant to the provisions of subrule (2) of this rule shall be as follows:

(a) If a contract is terminated pursuant to the provisions of subrule (2)(a) of this rule, the refund shall be the weighted average tuition cost of state institutions of higher education based upon the last full academic year before the refund payments commence for the number of academic years covered by the contract.

(b) If a contract is terminated pursuant to the provisions of subrule (2)(b) or (c) of this rule, the refund shall be the sum of 4 annual installment payments made pursuant to the provisions of subrule (4)(b) of this rule, less the termination fee. Each installment shall be determined annually according to the following provisions:

(i) If the beneficiary directs payment of the installment to a higher education institution or certifies that he or she will attend a higher education institution under a full-tuition scholarship, an annual amount equal to 1/4 of the average tuition.

(ii) For beneficiaries who are not subject to the provisions of paragraph (i) of this subdivision, an annual amount equal to 1/4 of the lowest tuition.

(iii) The calculation of average tuition and lowest tuition cost for purposes of paragraphs (i) and (ii) of this subdivision shall be based upon the last full academic year before the refund payments commence and for the number of academic years covered by the contract.

(c) If a contract is terminated pursuant to the provisions of subrule (2)(d), (e), or (f) of this rule, the refund shall be the lowest tuition cost based upon the last full academic year before the refund payments commence, and for the number of academic years covered by the contract, less a termination fee.

(d) A refund shall not be less than the prepaid tuition amount.

(4) Refunds under the provisions of subrule (3) of this rule shall be made according to the following schedule:

(a) For a refund for a termination pursuant to the provisions of subrule (2)(a) or (e)(iii) of this rule, the refund amount shall be made to the higher education institution to which it is directed in payments equal to the tuition charges of the higher education institution. However, the total amount transferred to higher education institutions shall not be more than the maximum refund due under the provisions of subrule (3)(a) or (d) of this rule. Any refund amount determined pursuant to the provisions of subrule (3)(a) or (d) of this rule which has not been paid to a higher education institution and is remaining on August 15 of the fourth year following the last full academic year before the refund commences shall be refunded to the person specified in the contract.

(b) For a refund regarding a termination pursuant to the provisions of subrule (2)(b), (c), (e)(i) or (ii), or (f) of this rule, the refund shall be made in 4 annual installments. Each annual installment shall be paid directly to the higher education institution as necessary to pay tuition charges, not including mandatory fees, of the higher education institution or, if the annual installment is made pursuant to the provisions of subrule (2)(b), (c), (e)(i) or (ii), or (f) of this rule, to other than a higher education institution, the annual installment shall be paid not later than August 15 of each year to the person specified in the contract. Any remaining annual installment amount in excess of the tuition charges, not including mandatory fees, for the academic year shall be returned at the end of the academic year to the person specified in the contract. For refunds under the provisions of this subdivision, any refund amount pursuant to the provisions of subrule (3)(d) of this rule which is remaining on August 15 of the fourth year following the last full academic year before the refund commences shall be refunded to the person specified in the contract.

(c) For a refund for a termination pursuant to the provisions of subrule (2)(d) of this rule, a lump-sum refund shall be paid within 60 days after the trust's approval of the requested termination.

(5) If educational benefits have been received under the contract before the contract is terminated, the refund pursuant to subrule (3) of this rule shall be reduced by the amount transferred to a public educational institution to pay for tuition charges for the beneficiary. If the contract is terminated for a reason set forth in subrule (2)(b), (c), (e)(i) or (ii), or (f) of this rule, the reduction shall be made in equal amounts against each annual installment.

(6) If a contract is paid for, in whole or in part, from the proceeds of a secured loan and the trust is required to pay a refund because the contract is terminated due to the death or disability of the beneficiary, termination by the trust for fraud, or termination by the trust due to actuarial unsoundness, the refund shall be reduced by the amounts required to pay off the secured loan, any early withdrawal fee, and the trust's expenses for processing payment on the secured loan.

(7) A beneficiary who requests a refund pursuant to a termination under the provisions of subrule (2)(a), (b), (c), (e), or (f) of this rule shall give the trust written notice by July 15 before the academic year in which the refund payments are to commence. The notice shall be received or postmarked by July 15 or the trust may postpone the commencement of the refund.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1807 Terminations and refunds under 1988 limited benefits plan contracts {#sec-r-390.1807 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1807}

Rule 7. (1) As used in this rule:

(a) "Complete credit public educational institution" means a public educational institution whose in-state or in-district tuition rate is not more than 105% of the weighted average tuition cost of all state institutions of higher education in the academic year in which the beneficiary enrolls at the public educational institution.

(b) "Complete credit state institution of higher education" means a state institution of higher education whose in-state tuition rate is not more than 105% of the weighted average tuition cost of all state institutions of higher education in the academic year in which the beneficiary enrolls at the higher education institution.

(d) "Weighted average tuition cost of complete credit state institutions of higher education" means a figure arrived at as follows:

(i) First, multiply the annual undergraduate tuition cost at each complete credit state institution of higher education by its total number of undergraduate fiscal year equated students.

(ii) Second, add the results of paragraph (i) of this subdivision for all complete credit state institutions of higher education.

(iii) Third, divide the result of paragraph (ii) of this subdivision by the total number of undergraduate fiscal year equated students for all complete credit state institutions of higher education.

(a) The beneficiary has reached 18 years of age or has received a high school diploma and certifies to 1 of the following:

(i) He or she will attend an independent, degree-granting college or university and directs payment of any refund to that independent, degree-granting college or university.

(ii) He or she will attend an out-of-state institution of higher education.

(iii) He or she will attend a higher education institution under a full-tuition scholarship.

(iv) He or she does not plan to attend a higher education institution.

(v) He or she will attend an independent, degree-granting college or university, but does not direct payment of any refund to that independent, degree-granting college or university.

(vi) He or she will attend a community or junior college.

(b) The beneficiary has died or is disabled.

(3) The amount of the refund for a contract terminated pursuant to the provisions of subrule (2) of this rule shall be as follows:

(a) If the contract is terminated pursuant to the provisions of subrule (2)(a)(i) of this rule, the refund shall be the weighted average tuition cost of complete credit state institutions of higher education based upon the last full academic year before the refund payments commence for the number of academic years covered by the contract.

(b) If the contract is terminated pursuant to the provisions of subrule (2)(a)(ii) to (vi), (b), or (c) of this rule, the refund shall be the lowest tuition cost based upon the last full academic year before the refund payments commence, and for the number of years covered by the contract, less a termination fee.

(4) Refunds under the provisions of subrule (3) of this rule shall be made according to the following schedule:

(a) A refund for a termination allowed under the provisions of subrule (2)(a)(i) or (vi) of this rule shall be made to the higher education institution to which it is directed in payments equal to the tuition charges of the higher education institution.

However, the total amount transferred to a higher education institution shall not be more than the maximum refund due. Any refund amount determined pursuant to the provisions of subrule (3) of this rule which has not been paid to a higher education institution and which is remaining on August 15 of the fourth year following the last full academic year before the refund commences shall be refunded to the person specified in the contract.

(b) A refund for a termination allowed under the provisions of subrule (2)(a)(ii), (iii), (iv), or (v) or (c) of this subrule shall be made in 4 annual installments as follows:

(i) If an annual installment is directed to be paid to the higher education institution, the annual installment shall be paid as necessary to cover tuition charges, not including mandatory fees, of the higher education institution. Any remaining annual installment amounts in excess of the tuition charges, not including mandatory fees, for the academic year shall be returned at the end of the academic year to the person specified in the contract.

(ii) If payment is directed to other than a higher education institution, the annual installment will be paid not later than August 15 of each year.

(iii) Any refund amount due under the provisions of subrule (3)(c) of this rule which is remaining on August 15 of the fourth year following the last full academic year before the refund commences shall be refunded to the person specified in the contract.

(c) A refund for a termination allowed under the provisions of subrule (2)(b) of this rule shall be paid in a lump sum within 60 days after the trust's approval of the requested termination.

(5) If educational benefits have been received under the contract before the contract is terminated, the refund pursuant to the provisions of subrule (3) of this rule shall be reduced by the amount transferred to public educational institutions to pay for tuition charges for the beneficiary. If the contract is terminated for a reason set forth in subrule (2)(a)(ii), (iii), (iv), or (v) or (c) of this rule, the reduction shall be made in equal amounts against each annual installment.

(6) If the contract is paid for, in whole or in part, from the proceeds of a secured loan and the trust is required to pay a refund because the contract is terminated due to the death or disability of the beneficiary, termination by the trust for fraud, or termination by the trust due to actuarial unsoundness, the refund shall be reduced by the amounts required to pay off the secured loan, any early withdrawal fee, and the trust's expenses for processing payment on the secured loan.

(7) A beneficiary who requests a refund, except for a refund pursuant to a termination under the provisions of subrule (2)(b) of this rule, shall give the trust written notice by July 15 before the academic year in which the refund payments are to commence. The notice shall be received or postmarked by July 15 or the trust may postpone the commencement of the refund.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1808 Terminations and refunds under 1988 community college plan contracts {#sec-r-390.1808 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1808}

Rule 8. (1) As used in this rule:

(a) "Annual tuition cost" means a figure determined by dividing the total indistrict tuition collected by a particular community or junior college for a year for credit hour courses by the total number of in-district fiscal year equated students at that particular school for that year.

(b) "Average tuition" means a figure determined by adding the annual tuition cost at each community or junior college and dividing that result by the total number of community or junior colleges.

(d) "Fiscal year equated students" means a figure determined for each community or junior college by dividing 1/2 of the number of credit hours necessary to receive a 2-year associate degree at that community or junior college into the number of credit hours for which in-district students were enrolled.

(e) "Higher education institution" means a state institution of higher education, an independent, degree-granting college or university, or an out-of-state institution of higher education.

(f) "Lowest tuition cost" means the lowest annual tuition rate charged at any community or junior college.

(g) "Mandatory fee" means any fee, other than charges for credit hours, room, and board, which a community or junior college requires all students to pay.

(h) "Weighted average tuition cost" means the figure arrived at as follows:

(i) First, multiply the annual tuition cost at each community or junior college by its total number of fiscal year equated students.

(ii) Second, add the results of paragraph (i) of this subdivision for all community or junior colleges.

(iii) Third, divide the result of paragraph (ii) of this subdivision by the total number of fiscal year equated students for all community or junior colleges.

(a) The beneficiary has reached 18 years of age or has received a high school diploma and certifies that he or she will do 1 of the following:

(i) Attend a state institution of higher education or an independent, degreegranting college or university.

(ii) Attend an out-of-state institution of higher education.

(iii) Attend a community or junior college or higher education institution where he or she has received a full-tuition scholarship.

(b) The beneficiary has died or is disabled.

(c) The beneficiary has reached 18 years of age or has received a high school diploma and certifies that he or she will not attend a community or junior college or a higher education institution.

(d) The board approves a termination for any other reason.

(3) The amount of the refund for a contract terminated pursuant to the provisions of subrule (2) of this rule shall be as follows:

(a) If the contract is terminated pursuant to the provisions of subrule (2)(a) of this rule, the refund shall be the sum of 2 annual installment payments. Each installment shall be determined annually as follows:

(i) If the beneficiary directs payment of the annual installment to a state institution of higher education or an independent, degree-granting college or university, an amount equal to 1/2 of the weighted average tuition cost based upon the last full academic year before refund payments commence for the number of academic years covered by the contract, less the termination fee.

(ii) If the beneficiary directs payment of the annual installment to an out-of-state institution of higher education or if the beneficiary will attend a community or junior college or higher education institution in the academic year under a full-tuition scholarship, an amount equal to 1/2 of the average tuition based upon the last full academic year before refund payments commence for the number of academic years covered by the contract, less the termination fee.

(iii) For beneficiaries not covered by the provisions of paragraph (i) or (ii) of this subdivision, an amount equal to 1/2 of the lowest tuition cost based upon the last full academic year before refund payments commence for the number of years covered by the contract, less the termination fee.

(iv) If the sum of the installments under the provisions of paragraphs (i) to (iii) of this subdivision is more or less than that sum determined with installments based upon the academic year in which refund payments commenced, the difference, if any, shall be added to or subtracted from the second year's installment.

(b) If the contract is terminated pursuant to the provisions of subrule (2)(b), (c), or (d) of this rule, the refund shall be 1/2 of the lowest tuition cost based upon the last full academic year before the refund payments commence, and for the number of academic years covered by the contract, less the termination fee.

(4) Refunds under the provisions of subrule (3) of this rule shall be made according to the following schedule:

(a) A refund for a termination allowed under the provisions of subrule (2)(a), (c), or (d) of this rule shall be made in 2 annual installments as follows:

(i) If an annual installment is directed to be paid to the higher education institution, the annual installment shall be paid as necessary to cover the tuition charges of the higher education institution. Any remaining annual installment amounts in excess of the tuition charges for the academic year shall be returned at the end of the academic year to the person specified in the contract.

(ii) If payment is directed to other than a higher education institution, the annual installment will be paid not later than August 15 of each year.

(iii) Any refund amount due under the provisions of subrule (3)(c) of this rule which is remaining on August 15 of the second year following the last full academic year before the refund commences shall be refunded to the person specified in the contract.

(b) A refund for a termination allowed under the provisions of subrule (2)(b) of this rule shall be paid in a lump sum within 60 days after the trust's approval of the requested termination.

(5) If educational benefits have been received under the contract before the contract is terminated, the refund pursuant to the provisions of subrule (3) of this rule shall be reduced by the amount transferred to a community or junior college to pay for tuition charges for the beneficiary. This reduction shall be divided equally between the 2 annual installments.

(6) If a contract is paid for, in whole or in part, from the proceeds of a secured loan and the trust is required to pay a refund because the contract is terminated due to the death or disability of the beneficiary, termination by the trust for fraud, or termination by the trust due to actuarial unsoundness, the refund shall be reduced by the amount required to pay off the secured loan, any early withdrawal fee, and the trust's expenses for processing payment on the secured loan.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1809 Terminations and refunds under all contracts issued after 1988 {#sec-r-390.1809 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1809}

Rule 9. For all contracts issued after 1988, terminations and refunds will be permitted as specified in the contracts.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1810 Terminations by trust upon actuarial unsoundness {#sec-r-390.1810 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1810}

Rule 10. An actuarial review of a plan shall be made on an annual basis.If a determination is made for the trust by a nationally recognized actuary that the plan is not actuarially sound and if the trust determines there are insufficient numbers of new purchasers to insure the actuarial soundness of the plan, the trust shall terminate all contracts in the plan. Upon termination pursuant to the provisions of this rule, the trust shall cease all payments from the plan and pay refunds to the persons specified in the contracts to receive refunds upon termination if the refunds are not directed to a higher education institution. The amount of the refunds shall be as follows:

(a) If funds are being held in an escrow account, funds in the escrow account will be transferred to the third-party lender in an amount necessary to repay the principal and accrued, but unpaid, interest due on the secured loan. Any funds remaining in the escrow account after this transfer will be transferred into the tuition account.

(b) The trust will then calculate the asset value for each contract in the same plan by adding the application fee, any contract processing fee paid to or authorized by the trust, and 1 of the following, less the value of any educational benefits or refunds previously received:

(i) The amount transferred to the tuition account pursuant to the provisions of subdivision (a) of this rule.

(ii) The prepaid tuition amount plus any investment income for a contract purchased without a secured loan.

(iii) The prepaid tuition amount and any investment income for a contract where a secured loan has been previously paid and the money has been transferred to the tuition account pursuant to the contract.

(c) The person entitled to a refund under this rule will receive a refund which is a percentage of the amount of the total plan assets after liquidating all of the plan investments. The percentage is determined by dividing the asset value of a contract by the asset value of all contracts within the same plan.

(d) The refund under this rule shall, at the option of the person entitled to receive the refund, either be applied toward the purposes of the contract for the respective beneficiary or paid to the person entitled to receive the refund upon termination.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1811 Terminations by trust due to fraud {#sec-r-390.1811 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1811}

Rule 11. The trust may terminate a contract and provide a refund in an amount equal to the prepaid tuition amount, less a termination fee and educational benefits used, if any of the following have been fraudulently stated in an application or a contract:

(a) The age of the beneficiary or purchaser.

(b) The grade of the beneficiary.

(d) The residency of the beneficiary or purchaser at the time the contract is submitted to the trust.

(e) Other matters as determined by the board.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1812 Terminations by trust due to lapse of contract {#sec-r-390.1812 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1812}

Rule 12. The board, by resolution, may establish a period of time to be specified in a contract after which the educational benefits and the right to a refund will be terminated; however, the person specified in a contract shall continue to have the right to receive the prepaid tuition amount, less any educational benefits or refund previously paid under a contract. If the trust ceases to exist, the amount due under this rule shall escheat to the state.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1813 Notification of intent to receive educational benefits {#sec-r-390.1813 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1813}

Rule 13. A beneficiary who intends to begin using educational benefits shall submit a written request to receive benefits in the manner set forth in the contract.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1814 Beneficiary ineligible for in-state tuition rate {#sec-r-390.1814 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1814}

Rule 14. A beneficiary who does not meet the in-state residency requirements of his or her chosen state institution of higher education at the time benefits are requested shall receive the number of credit hours contracted for at the instate tuition rate. The trust is not responsible for, and shall not pay, the difference between the in-state and out-of-state tuition rates.

History

History: 1992 AACS; 1993 AACS.

Mich. Admin. Code R 390.1815 Benefits provided at community or junior colleges {#sec-r-390.1815 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1815}

Rule 15. Contracts shall provide for the trust to pay the in-district tuition rate or the out-of-district tuition rate at community or junior colleges in the manner set forth in the contract if the out-of-district tuition rate is not more than the average tuition rate of Michigan's public universities.

History

History: 1992 AACS; 1993 AACS.

Mich. Admin. Code R 390.1816 Other contract options {#sec-r-390.1816 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1816}

Rule 16. The board may offer contracts that provide for in-district tuition rates at community and junior colleges and monthly purchase or payroll deduction contracts. Contracts that are offered pursuant to this rule shall have separate and distinct provisions as determined by the board.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1817 Hearings {#sec-r-390.1817 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1817}

Rule 17. A person, firm, corporation, public body, or agency aggrieved by a decision of the board may request, in writing, that the board hold a hearing in accordance with the provisions of Act No. 306 of the Public Acts of 1969, as amended, being S24.201 et seq. of the Michigan Compiled Laws.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1818 Declaratory rulings {#sec-r-390.1818 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1818}

Rule 18. In accordance with the provisions of section 63 of Act No. 306 of the Public Acts of 1969, as amended, being S24.263 of the Michigan Compiled Laws, an interested person may request a declaratory ruling as to the applicability of a statute administered by the trust or of a rule or order of the trust to an actual set of facts.

Such a request shall be submitted to the trust in writing. The trust shall respond to the request in writing within 90 days after receipt of the written request. Before issuing a declaratory ruling or denying a requested ruling, the trust may ask the requesting party to clarify the request or provide additional information or 1 or more factual situations upon which to formulate a declaratory ruling. The time for the trust to respond to a requested ruling shall be suspended until the requesting party adequately responds to the trust's request for clarification or additional information.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1819 Dissolution {#sec-r-390.1819 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1819}

Rule 19. Upon dissolution of the trust, assets, if any, remaining after all other obligations have been met will be distributed to the state of Michigan for a public purpose.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1820 Credit hours paid for by trust {#sec-r-390.1820 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1820}

Rule 20. (1) Credit hours paid for by the trust for any beneficiary under a contract shall include all of the following:

(a) All credit hours covered by the contract unless the beneficiary, after enrollment, reduces his or her credit hours and the trust receives a 100% refund for the reduced credit hours.

(b) Credit hours for which a beneficiary enrolled but did not receive credit because of incomplete or failing work or the credit hours did not transfer to another public educational institution.

(c) Credit hours for which a public educational institution does not impose additional tuition charges because 1 or more credit hours have been paid for by the trust during a particular quarter, term, or semester.

(d) Any other credit hours deemed necessary by the board.

(2) If a beneficiary, in 1 academic year, is entitled to educational benefits in an amount less than 1/4 of the credit hours needed for a 4-year baccalaureate degree at the beneficiary's public educational institution, the trust will pay the first credit hours for which the beneficiary enrolls during the academic year which are considered credit hours paid for by the trust under subrule (1) of this rule up to the number of credit hours the beneficiary is entitled to receive.

History

History: 1992 AACS.

Mich. Admin. Code R 390.1821 Contract purchaser or beneficiary prohibited from directing investment of contributions {#sec-r-390.1821 omnilex-key=us-mi-regs-official--dept-treasury--R 390.1821}

Rule 21. A purchaser or beneficiary of a contract may not direct the investment of any contributions to the Michigan education trust or any earnings on the trust.

History

History: 1998-2000 AACS.

Michigan Gaming Control Board Michigan Gaming Control Board

R 431.1001 to R 431.5040 Horse Racing General Rules

Mich. Admin. Code R 431.1001 Definitions; A to C {#sec-r-431.1001 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1001}

DEPARTMENT OF TREASURY

MICHIGAN GAMING CONTROL BOARD (MGCB)

OFFICE OF THE EXECUTIVE DIRECTOR

HORSE RACING GENERAL RULES

(By authority conferred on the office of the executive director by section 7 of the horse racing law of 1995, 1995 PA 279, MCL 431.307)

PART 1. GENERAL PROVISIONS

Rule 1001. As used in these rules:

(a) “Act” means the horse racing law of 1995, 1995 PA 279, MCL 431.301 to 431.336.

(b) “Age” means the number of years since a horse was foaled. Age is determined as if the horse were foaled on January 1 of the year in which the horse was foaled.

(c) “Appeal” means a written application to the executive director for review of any decision, order, or ruling of the stewards or for review of any administrative action by the executive director.

(d) “Arrears” means all sums that are due from a licensee, as reflected by the records of the executive director or association, for any of the following:

(i) Fines or forfeitures.

(ii) Subscriptions.

(iii) Entrance money.

(iv) Jockey or driver fees.

(v) Any default incident to these rules.

(e) “Associated person” is the spouse of a disqualified person, or a companion, family member, employer, employee, partner, corporation, or other entity whose financial relationship with a disqualified person would give the appearance that the other person or entity would care for or train a racing animal or perform veterinary services on a racing animal for the benefit, credit, reputation, or satisfaction of the disqualified person.

(f) “Association” means a legal entity that is licensed by the executive director to conduct a race meeting.

(g) “Authorized agent” means a person who is licensed by the executive director to act on behalf of a licensed owner and whose authority to act for and on behalf of the owner is evidenced by an authorized agent application filed with and approved by the executive director. An authorized agent shall not represent more than two owners at any one time.

(h) “Bleeder” means a horse that is determined, by a gross or endoscopic examination that is conducted by a licensed veterinarian or official veterinarian, to have hemorrhaged from within the respiratory tract during a race or workout.

(i) “Claiming race” means a race in which a horse may be claimed pursuant to the rules promulgated under the act.

(j) “Closing” means a designated time when all entries in a race shall be and remain in the race, unless excused by the stewards.

(k) “Coggins test” means a blood test to determine the presence of equine infectious anemia in a horse.

(l) “Complaint” means a written or verbal statement submitted to the stewards or executive director about an issue relating to the conduct of racing.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1005 Definitions; D to F {#sec-r-431.1005 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1005}

Rule 1005. As used in these rules:

(a) “Day” means a period of 24 hours beginning at 12:01 a.m. and ending at midnight.

(b) “Disciplinary action” means an action taken by the stewards or executive director for violation of the act or these rules and may include any of the following:

(i) Suspension of license.

(ii) Revocation of license.

(iii) Ruling off.

(iv) Expulsion.

(v) The assessment of a fine.

(vi) Reprimand.

(vii) Any combination of paragraphs (i) to (vi) of this subdivision.

(d) “Disqualified person” means a person who is ineligible for licensing under the act or a person whose licensed status is such that he or she is temporarily ineligible to participate in racing under these rules or those of any other racing jurisdiction.

(e) “Driver” means a person licensed by the executive director to drive a standardbred horse in harness.

(f) “Entered in a race” means a horse that has been drawn into a specific race.

(g) “Entry” means any of the following:

(i) The act of nominating a horse for a race.

(ii) A horse entered in a race.

(iii) Two or more horses which are entered in a race and which are coupled as a mutuel entry or joined in the mutuel field pursuant to rules promulgated under the act.

(h) “Executive director” means the executive director of the Michigan gaming control board under the authority granted in Executive Reorganization Order No. 2009-31, MCL 324.99919.

(i) “Expulsion” means the exclusion from any participation, either directly or indirectly, in the privileges and uses of the grounds.

(j) “Forfeit” means any of the following:

(i) Money due from a licensee because of his or her error, fault, neglect of duty, or breach of contract.

(ii) The loss or return of purse money resulting from a ruling of the stewards or executive director.

(iii) A fine assessed a licensee by the stewards or executive director.

(k) “Futurity” means a stake in which the dam of the competing horse is nominated either when in foal or during the year of foaling.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1010 Definitions; G to N {#sec-r-431.1010 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1010}

Rule 1010. As used in these rules:

(a) “Grounds” means the entire premises under the control of an association, including appurtenant parking areas and spectator areas.

(b) “Horse” means an equine belonging to a breed eligible to race under these rules and, when used in this part, designates any equine irrespective of these rules and irrespective of age or sex.

(d) “Inquiry” means an investigation into the conduct of a race which is initiated and conducted by the stewards before making a race official.

(e) “Intended to be entered” means a horse that has its name put into the draw for a specific race.

(f) “Jockey” means a person licensed by the executive director to ride thoroughbred horses, quarter horses, Appaloosa horses, American paint, or Arabian horses in races.

(g) “Legal entity” means a lawful or legally standing association, corporation, partnership, proprietorship, trust, or individual.

(h) “Lessee” means a legal entity who is licensed by the executive director as a horse owner and whose interest in a horse is a leasehold.

(i) “Licensee” means a legal entity holding a currently valid license to participate in or conduct horse racing in this state.

(j) “Michigan-bred preferred race” means a race where Michigan-bred horses have priority for entry and horses that are not Michigan-bred are allowed to enter only if the race does not fill with Michigan-bred horses.

(k) “Michigan gaming control board” or “MGCB” means the Michigan gaming control board that was created under section 4 of the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.204, and that operates under the direction of the executive director of the Michigan gaming control board, to which Executive Reorganization Order No. 2009-31, MCL 324.99919, transferred all of the authority, powers, duties, functions, records, personnel, property, unexpended balances of appropriations, allocations, or other funds of the office of racing commissioner that previously existed under the act and that was abolished by that executive reorganization order.

(l) “Month” means a calendar month.

(m) “Mutuel entry” means 2 or more horses entered in a race which are coupled as a single betting interest because the horses are owned wholly or in part by the same owners or are trained by the same trainer.

(n) “No contest” means a race that was cancelled by the stewards in the best interest of racing due to an unforeseen event.

(o) “Nomination” means the naming of a horse or, in the event of a futurity, the naming of a foal in utero to a certain race or series of races, eligibility of which is conditioned on the payment of a fee at the time of naming and the payment of subsequent sustaining fees or starting fees.

(p) “Nominator” means the person in whose name a horse is nominated for a sweepstakes, futurity, or produce race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1015 Definitions; O, P {#sec-r-431.1015 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1015}

Rule 1015. As used in these rules:

(a) “Objection” means a complaint filed by an owner, trainer, jockey, driver, or authorized agent against a horse, jockey, or driver in the race before the result of a race has been made official.

(b) “Official veterinarian” means a veterinarian employed by the executive director with powers and duties as specified in the act and the rules promulgated under the act and other powers and duties as delegated by the executive director, deputy director, and racing manager.

(c) “Overnight race” means a race for which entries close not more than 4 days nor less than 1 day before the race is to be held. In the absence of conditions or notice to the contrary, all entries in overnight races shall close not later than noon the day preceding the race.

(d) “Owner,” for purposes of these rules and in furtherance of promoting the safety, security, growth, and integrity of all horse racing, means a legal entity with an interest in a horse or horses.

(e) “Place,” when used in the context of a single position in the order of finish in a race, means second. When used in the context of pari-mutuel wagering, a “place” wager is one involving a payoff on a betting interest which finished first or second in a race.

When used in the context of multiple positions in the order of finish in a race, “place” or “placing” means finishing first, second, or third.

(f) “Post” means a station on the race course from which a race is started. In harness racing, the post is where the horses line up behind the mobile starting gate.

(g) “Post position” means a position assigned to a horse for the start of a race.

(h) “Post time” means the time set for the arrival of the horses in a race at the starting post.

(i) “Prize” means the combined total of any cash, premium, trophy, and any other object of value which is awarded to the owners of horses according to the order of finish in a race.

(j) “Protest” means a written statement filed before a race objecting to the eligibility of a horse or person to participate in the race.

(k) “Purse” means the gross cash portion of the prize for which a race is run.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1020 Definitions; R, S {#sec-r-431.1020 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1020}

Rule 1020. As used in these rules:

(a) “Race” means a contest of speed among horses for a prize.

(b) “Race meeting” means the entire period of consecutive days which is granted by the executive director to an association for the conduct of racing.

(c) “Racing official” means all personnel, other than licensed participants, having a direct connection with the running of a race.

(d) “Recognized meeting” means any race meet with regularly scheduled races which is licensed by, and conducted under rules promulgated by, a governmental regulatory body, including race meets in foreign countries held under the sanction of a turf authority whose jurisdiction is acknowledged by the executive director.

(e) “Restricted area” means designated locations on the grounds where admission is limited to persons having a valid occupational license or restricted area pass.

(f) “Ruling off” or “ruled off” means barring a person from the grounds by written order of the executive director pursuant to the act and these rules.

(g) “Scratch” means the withdrawal of a horse entered for a race after the time of closing.

(h) “Scratch time” means a time set by the stewards as a deadline for horsemen to scratch out of a race.

(i) “Stake” means a race in which owners or nominators, or both, of horses entered or engaged for the race contribute to a purse to which money or any other prize may be added.

(j) “Starter” means a horse in front of which the stall doors of the starting gate open when the official starter dispatches the field or, if a starting gate is not used or a mobile starting gate is used, when the official starter gives the word “go.”

(k) “Suspension” means a form of disciplinary action where a licensee is considered temporarily ineligible for participation in racing.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1025 Definitions; T, W {#sec-r-431.1025 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1025}

Rule 1025. As used in these rules:

(a) “Trainer” means a person licensed by the executive director who shall be responsible for, and the absolute insurer of, the proper care, health, training condition, safety, and protection of horses in his or her charge.

(b) “Winner” means a horse whose nose reaches the wire first carrying its jockey or driver, a horse whose nose reaches the wire at the same instant as the nose of a horse sharing first place carrying its jockey or driver, or a horse awarded first place by the stewards or executive director because of the disqualification of an actual first-place finisher.

(d) “Workout” means the training of a horse on a race course during which the horse may merely be exercised or may be tested for speed over a specified distance and the results recorded.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1027 Terms; defined in act {#sec-r-431.1027 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1027}

Rule 1027. Terms defined in the act have the same meanings when used in these rules.

History

History: 1985 AACS.

Mich. Admin. Code R 431.1030 Licensure {#sec-r-431.1030 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1030}

Rule 1030. The executive director may delegate the responsibility of approving or denying occupational licensing to his or her authorized representatives.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1035 Occupational licensing {#sec-r-431.1035 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1035}

Rule 1035. (1) Pari-mutuel horse racing and participation therein in this state are privileges, not rights, granted only by the executive director by license subject to the conditions set forth in subrule (3) of this rule.

(2) The executive director may consider the following in granting, denying, suspending, or revoking, an occupational license or taking disciplinary action against an occupational licensee:

(a) The person's financial history, including, but not limited to, court-imposed financial judgments, failure to honor financial obligations, or the issuance of bank instruments without having sufficient funds on deposit.

(b) The person's current financial status, including, but not limited to, outstanding indebtedness to service and supply vendors in the racing industry.

(d) The person’s history of licensure in any other racing jurisdiction.

(e) The person's competence to hold the occupational license sought measured by standardized written and practical testing and peer review, as required by the executive director.

(f) The person’s general fitness in terms of mental stability, use of drugs, and record of racing violations.

(g) The person's record of criminal convictions, including, but not limited to, offenses related to the integrity and safety of racing and its participants.

(h) Any other information the executive director considers necessary.

(3) Application for an occupational license means consent and agreement by the applicant, upon application and for the duration of the occupational license, if issued, to all of the following conditions:

(a) That all representations on the application filed are complete and correct and are accompanied by fingerprint identification, proof of worker's compensation insurance, or certification of professional licensing when required, and any other information the executive director considers necessary.

(b) That he or she shall abide by all orders of racing officials, rulings and decisions of the stewards, unless reversed or modified by the executive director upon proper appeal, and all rules, regulations, and orders of the executive director, subject to review pursuant to these rules and the act.

(c) That when responsibility is placed upon a licensee, other than a trainer, by the act or these rules, the licensee shall bear the burden of proof to show freedom from negligence in the exercise of a high degree of care in safeguarding horses from tampering.

(d) That he or she shall conduct himself or herself and his or her business at all times in a manner befitting the best interests of racing and shall cooperate in every way with the executive director or his or her authorized representatives during the conduct of an investigation, including responding correctly, to the best of his or her knowledge, to all questions pertaining to racing matters.

(e) That he or she shall disclose to the executive director or his or her authorized representative, in writing, if he or she has been arrested, charged, or convicted of any misdemeanor or felony offenses, not including traffic offenses.

(f) That he or she shall report to the executive director or his or her authorized representative when he or she has been prescribed or is taking any medication that may impair the person’s ability to perform tasks that require a license or that carry this or a similar warning: Do not operate heavy machinery while taking this medication.

(g) That he or she is under a continuing duty to provide any information requested by the executive director or his or her authorized representative.

(h) That he or she shall not interfere with or use abusive or disrespectful language or conduct when addressing a steward, authorized representative of the executive director, racing official, or person serving under a racing official.

(i) That he or she shall not, at any time or place, commit an assault, an assault and battery, threaten bodily injury, or do bodily injury to any person involved in racing.

(4) The executive director may require a person who has been denied a license or has had a license suspended or revoked by another racing jurisdiction to seek reinstatement in the jurisdiction where the license was denied, revoked, or suspended.

(5) A person whose license has been revoked or suspended, whether in this jurisdiction or any other jurisdiction and whether temporarily for investigation or otherwise, for the duration of his or her revocation or suspension, is not permitted, whether acting as an agent or otherwise, to subscribe, enter, or race any horse, either in his or her own name or in the name of another person.

(6) Trainers and vendors operating within restricted areas of the grounds shall ensure that they and their employees are licensed. Additionally, a trainer shall ensure that each owner for whom he or she trains is properly licensed. A horse in a trainer's care shall not be programmed in a race unless at least an application for the owner's license is on file with the executive director.

(7) A person under the age of 18 shall not be granted an occupational license, except upon presentation of proof of age and, if employed by anyone other than a parent or legal guardian, submission of working papers as required by law. The minor child of an owner may, without working papers, be granted an owner's license by the executive director if the parent who is an owner files with the minor's license application an agreement assuming responsibility for all financial, contractual, or other obligations of the minor child relating to racing.

(8) A person under the age of 16 shall not be licensed as a jockey or driver.

(9) The license applications of stable employees, association employees, and employees of vendors operating within restricted areas of the grounds shall be endorsed by their employers.

(10) Exercise riders, pony riders, and any person intending to exercise a horse upon a race course during a race meeting may be required by the stewards to demonstrate their horsemanship.

(11) The trainer shall maintain on file with the executive director an up-to-date stable roster of owners, employees, and any others having access to the trainer's assigned premises. The stable roster shall contain all information considered necessary by the executive director.

(12) Except when a trainer has a 50% or greater ownership interest in his or her horse, there must be a mutually agreed upon written contract between the trainer and owner.

This contract must include, but is not limited to, at least the following terms and conditions:

(a) The financial responsibility of each party.

(b) Specific horse health care requirements.

(13) An individual, other than a licensee, seeking entry into a restricted area shall apply for a restricted area pass from the executive director. A restricted area pass is valid only for the time and place designated on the pass. The stewards shall review and approve or deny all applications for restricted area admission. Restricted area passes shall not be issued for admission to the paddock at a race meeting. However, a spouse of an owner or trainer may have his or her restricted area pass endorsed to permit him or her into the paddock when accompanied by the licensed spouse. Restricted area passes shall not be issued to anyone who would usually require a license.

(14) Each applicant for an occupational license as an owner may be issued only one provisional license good for 1 race day or 2 adjacent days.

(15) In the event of an owner’s death, the trainer may continue to race the horse if a person designated as executor supplies the executive director or his or her authorized representative with verification of his or her status as executor and applies for an owner’s license.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1045 Separate licensure {#sec-r-431.1045 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1045}

Rule 1045. Each type of racing permitted by the act requires a separate and distinct occupational license for participation.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1047 Certified Horsemen's Organizations (CHO) {#sec-r-431.1047 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1047}

Rule 1047. (1) A horsemen's organization must annually register in a manner and form prescribed by the executive director.

(2) Unless otherwise directed by the executive director, a horsemen's organization must file its registration and all supporting materials no later than September 1 of the year preceding the calendar year in which the race meeting would be conducted.

(3) The registration of a horsemen's organization for a calendar year becomes effective upon the approval of the executive director, not upon the filing of the registration.

(4) The registration for an upcoming calendar year must be approved by the executive director before a CHO is entitled to receive or distribute any simulcast purse pool funds, live racing funds, or funds paid into the pari-mutuel horse racing disbursement account.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1050 Rescinded {#sec-r-431.1050 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1050}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1052 Authorization of workouts or qualifying races at training centers {#sec-r-431.1052 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1052}

Rule 1052. (1) Before authorizing workouts or qualifying races at a training center, a legal entity must submit information in a manner and form prescribed by the executive director.

(2) If workouts or qualifying races are authorized by the executive director, the training center agrees to the following terms and conditions:

(a) To be bound by and comply with the act, these rules, executive director orders, public policy of this state, and any other local, state, and federal law.

(b) To conduct timed workouts and qualifier races to the same standards and requirements governing those activities in this state at pari-mutuel race meetings.

(c) To not allow any wagering at the training center and promptly report to the executive director or his or her authorized representative any person who is found to be wagering.

(d) To maintain records regarding the management and operation of the training facility and make the records available to the executive director or his or her authorized representative upon request.

(e) To allow inspections by an authorized representative of the executive director at any time.

(f) To ensure all participants at the training center are licensed under the act and these rules.

(g) To maintain its facility by making necessary improvements, additions, or corrections to the facility, fixtures, equipment, or procedures as required by the executive director.

(3) Failure to comply with the conditions set forth in subrule (2) of this rule may result in withdrawal of authorization to conduct timed workouts and qualifying races.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1055 Rescinded {#sec-r-431.1055 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1055}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1060 Occupational license fees {#sec-r-431.1060 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1060}

Rule 1060. (1) Occupational license fees shall be set by the executive director.

(2) A license fee receipt admits an applicant to restricted areas only during the period designated by the executive director on the face of the receipt.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1065 Ownership {#sec-r-431.1065 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1065}

Rule 1065. (1) Every legal entity having an ownership interest in a horse must be licensed as an owner.

(2) If a legal entity with more than 4 individuals owns interest in a single horse, each individual holding a 5% or greater beneficial interest must be licensed as an owner Individuals owning less than 5% must be eligible for licensure as an owner.

(3) A joint ownership agreement or lease shall accompany the application for an owner's license.

(4) The executive director may deny, suspend, or revoke the license of any owner whose ownership of a horse is qualified or limited in part by the rights or an interest in such horse being held or controlled by any other person or persons who would be ineligible for licensing under these rules.

(5) A corporate or syndicate name, if any, is considered a stable name for the purpose of these rules. The executive director reserves the right to refuse registration of any corporate or syndicate name.

(6) The stewards may grant an owner with less than a 5%ownership or beneficial interest in a horse a license if the owner can establish a bona fide need for the license.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1070 Leases; validity; terms {#sec-r-431.1070 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1070}

Rule 1070. (1) Horses may be raced under a lease if the lease agreement is submitted in a manner and form prescribed by the executive director and is approved by the stewards. For the purposes of racing a horse in this state, the stewards may at any time suspend or revoke their approval of a lease upon a determination that the lease is not in the best interest of racing.

(2) For racing purposes, a lease must not be approved by the stewards unless all of the following provisions are complied with:

(a) The lessee and lessor are licensed as owners.

(b) Each of the signatures of the lessor and lessees on the lease agreement are subscribed and sworn to before a notary public.

(d) Conditions of the lease specify, as to parties to the lease, whether the subject horse may be entered to be claimed. If the lessor agrees that the subject horse may be entered to be claimed, conditions of the lease shall specify the minimum price for which the subject horse can be entered and to whom the claiming price is payable.

(e) Conditions of the lease specify that upon claim of the subject horse, the lease terminates and all rights in and to such horse pass to the claimant as a bona fide purchaser.

(f) The lease completely divests the lessors of further control or direction of the racing performance of such horse while under lease, and the lease ensures that the resultant program listing of the lessee will not mislead the betting public by reason of the absence in the program listing of the name of a person or persons who possess a beneficial interest in such leased horse.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1075 Rescinded {#sec-r-431.1075 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1075}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1080 Rescinded {#sec-r-431.1080 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1080}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1085 Waiver of rules {#sec-r-431.1085 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1085}

Rule 1085. The executive director may waive these rules with respect to any 1 horse owned by any legal entity to permit the horse to participate in a specific race of special interest to the sport and this state.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1090 Rescinded {#sec-r-431.1090 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1090}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1095 Associations; duties {#sec-r-431.1095 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1095}

Rule 1095. (1) Each association licensed by the executive director, and each licensed association's officers, directors, officials, and employees, shall observe and enforce the laws of this state, the rules promulgated under the act, and orders of the executive director at and during race meetings conducted by the association. Each association, and its officers, directors, and employees, shall also honor all written orders of expulsion or ruling off issued by the executive director, and pursuant thereto shall immediately eject and exclude from the grounds any person whom the association, or its officers, directors, or employees, knows to be under expulsion and ruled off pursuant to the written order of the executive director.

(2) Each association shall provide a competent and adequate security force, night and day, in and about the grounds and shall police and maintain order on its grounds so as to reasonably insure the safety of all persons on its grounds and protect and preserve the integrity of racing and pari-mutuel wagering conducted on its grounds.

(3) Each association shall exclude all of the following from its grounds:

(a) Upon written notification of the executive director, all persons whom it knows have been designated by written order of the recognized racing authority in another recognized racing jurisdiction to be under expulsion, ruled off, or otherwise excluded from grounds in such other racing jurisdiction.

(b) All persons whom it knows to be engaged in activities on the grounds to avoid, or aid others in avoiding, compliance with federal or state income tax laws or rules pertaining to gambling winnings derived from pari-mutuel wagering.

(c) All persons whom it knows to be engaged in bookmaking or other illegal wagering or gambling activities on the grounds.

(d) All persons whom it knows to be engaged in touting or the illegal solicitation of bets on the grounds.

(e) All persons whom it knows to be engaged in activities to unlawfully influence or fix the results or outcome of a race conducted on the grounds.

(f) All persons whom it knows have been convicted of crimes involving fraud or deception in the conduct of racing or pari-mutuel wagering.

(g) All persons whose presence and conduct on the grounds reasonably threatens the health and safety of other persons on the grounds or reasonably threatens or undermines public confidence in the integrity of racing or pari-mutuel wagering conducted on the grounds.

(4) Each association shall eject and exclude, from its stable areas, paddock, and other restricted areas, any person not authorized for admission to such areas under these rules.

(5) Each association may, in its sole discretion and on its own volition, eject or exclude from its grounds, or any part thereof, any person, licensed or unlicensed, for any reason it considers appropriate and without giving any reason or cause therefor, if, however, such ejection or exclusion is not based in any way upon the person's sex, race, color, creed, or national origin and is not otherwise in violation of state or federal law.

(6) When any association ejects or excludes any person from its grounds, it shall promptly report such action to the executive director in writing.

(7) The association shall provide the executive director with copies of available police reports pertaining to conduct on the grounds.

(8) The stable area of each licensed track shall be enclosed by a fence or other barrier of reasonable height that will deter entry of unauthorized persons.

(9) The association shall maintain a 24-hour guard at any entrance to the stable area 30 days before and during the live race meeting if horses are stabled on the grounds.

(10) The stable area shall be patrolled by track security officers, who shall pay special attention to the presence of unauthorized personnel, to the enforcement of fire prevention measures, and to the inspection of tack rooms and living quarters for fire hazards and contraband.

(11) An association shall take prompt corrective action on all fire safety deficiencies noted in inspections by local and state fire marshals.

(12) An association shall provide protected sheds for the storage of hay, straw, feed, and other flammable materials.

(13) An association shall at all times maintain its grounds and facilities so as to be neat and clean, painted, and in good repair, with special consideration for the comfort, health, and safety of patrons, employees, and other persons whose business requires attendance, and with special consideration for the health and safety of horses stabled, exercising, entered to race, or racing, at the association's facilities.

(14) An association shall provide and maintain lighting to ensure illumination in the stable, spectator, and parking areas.

(15) An association shall provide and maintain facilities for drivers and jockeys.

Separate toilet and dressing facilities shall be provided for female and male drivers and jockeys.

(16) An association shall provide all of the following:

(a) Training and race course surfaces that are safe and humane.

(b) Proper equipment to maintain race course surfaces.

(c) Sufficient trained personnel to properly operate maintenance equipment and to assess needs in race course maintenance on a day-to-day basis.

(d) Daily records must be kept on the condition and maintenance of each training and racing surface. The records shall be available and submitted to the stewards upon request.

(17) An association shall have in attendance, during all live racing and morning training hours, at least 1 ambulance and 1 horse ambulance with personnel to render first aid and transport injured persons or horses to the most suitable place available for medical or veterinary treatment. A licensed paramedic or licensed EMT may be substituted for an ambulance during training hours with prior approval of the executive director. Ambulances shall be stationed near an entrance to the racing surface.

(18) An association shall equip and maintain adequate first aid facilities with medical personnel in attendance.

(19) An association shall install and maintain in good service a communication system between the stewards' stand and all of the following persons or places:

(a) Pari-mutuel department.

(b) Starting gate.

(d) Clerk of course.

(e) Paddock judge.

(f) Patrol judges.

(g) Official veterinarian.

(h) Detention barn.

(20) For pari-mutuel wagering, an association shall use either a totalisator or another mechanical device which is equal in accuracy and clearness to the totalisator and which is approved by the executive director. No other place or method of betting, pool making, wagering, or gaming shall be used or permitted without the executive director’s approval.

(21) An association conducting racing shall provide photo finish service of a type and quality approved by the executive director as an aid to the stewards, in determining the order of finish. When a photo finish picture is used to determine the order of finish, the picture, or true copies or projections thereof, shall be posted or projected for public inspection as required by the stewards or executive director. Film strips shall be preserved by the association for 1 year.

(22) An association conducting racing shall install an automatic electric timing device in conjunction with the photo finish camera or independent of the photo finish camera for the purpose of accurately recording the timing of all races. This time shall be considered as the official time of each race.

(23) The association shall designate an approved racing official as timer. The final time recorded by the timer on a hand-held watch or device of similar accuracy shall be the official time of a race if the electric timer fails.

(24) An association shall make a visual recording of each race including qualifying races. The recording shall be by videotape or other means approved by the executive director. The equipment necessary to promptly show the recordings to the stewards to assist them in determining questions pertaining to a race shall be provided by the association. The recordings shall in all cases be considered only as aids to the stewards. A visual recording of all views of each race shall be preserved by the association in a secure manner for 90 days after the close of a meeting or for a longer period set by the stewards or executive director. Specific recordings shall be shown to the stewards at any time during the meeting or shall be delivered to the executive director or his or her authorized representative at any time upon request. As the stewards consider necessary, and for the purpose of educating jockeys, drivers, and racing officials, the association may show visual recordings of races to jockeys, drivers, and racing officials on the racing day following the races in question.

(25) The association shall display post time a reasonable time before a race on a clock device provided for that purpose, on the infield results board, or on another prominent structure which is clearly readable from the spectator areas.

(26) An association conducting racing shall maintain a paddock that secures horses preparing to race in the daily program. The paddock shall be entirely enclosed and the gate or gates into the enclosure shall be controlled to exclude unauthorized persons.

(27) During racing hours, the association shall provide the services of a blacksmith and extra equipment in or adjacent to the paddock to ensure the proper conduct of racing without unnecessary delay.

(28) An association shall provide necessary office space with proper conveniences and adequate parking spaces for the executive director and his or her authorized representatives. Identification signifying the bearer as a representative of the executive director shall be honored for entrance to all points on the grounds.

(29) The names and addresses of the racing officials with at least 1 back up for each position shall be submitted to the executive director not less than 30 days before the start of the race meeting and shall thereafter be approved or disapproved by the executive director.

(30) Racing officials subject to the approval of the executive director shall not hold more than 1 official position during a race meeting unless approved by the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1101 Admissions {#sec-r-431.1101 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1101}

Rule 1101. (1) A person required to be licensed by these rules shall not be admitted to the stables or other restricted area of the grounds without a current valid license or restricted area pass in his or her possession. An association may permit a person to enter restricted areas for a period of not more than 10 days after the filing of a license application if the applicant possesses a license fee receipt.

(2) Policemen, firemen, inspectors, and other public officials acting in the performance of their duties; employees of utility firms; or employees of companies doing construction in restricted areas are exempt from the provisions of this rule. However, any exempted person shall identify himself or herself and explain the purpose of his or her visit before admission.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Rule 1105. All licensed persons entering restricted areas of the grounds during other than normal racing and training hours shall sign in upon arrival and check out upon departure. The person's name, occupation, and license plate number shall be recorded.

Exempt persons, other than policemen and firemen in the performance of their duties, shall sign in and out at all times during a race meeting.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1110 Logging entry and departure of horses {#sec-r-431.1110 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1110}

Rule 1110. (1) The identity of all horses entering and leaving the stable area of an association conducting a race meeting shall be logged in and out at the stable area gate.

(2) The log book entry shall include all of the following information:

(a) The date and time in or out.

(b) Name of horse.

(3) A dead horse shall not be removed from the grounds without prior notification of the official veterinarian or the stewards.

(4) Confirmation of a current negative Coggins test and required vaccinations shall be provided for all horses entering the grounds. For horses from another state, a current health certificate is also required.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1115 Reporting violations {#sec-r-431.1115 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1115}

Rule 1115. (1) If a person who is licensed as a participant in racing is approached with any of the following, that person shall report the offer, request, or suggestion to the executive director:

(a) An offer or promise of a gratuity (b) A request or suggestion of any of the following:

(i) A bribe.

(ii) Any improper, corrupt, or fraudulent act or practice in relation to a race or racing.

(iii) That any race be conducted other than in a fair manner and pursuant to the rules.

(2) Failure to report the offer, request, or suggestion under subrule (1) of this rule may result in disciplinary action, which may include suspension or revocation of the person's license.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1120 False statements {#sec-r-431.1120 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1120}

Rule 1120. A licensed person who gives false or misleading statements to the executive director or his or her authorized representative in connection with any investigation pertaining to racing or any person who refuses to appear or testify after proper notice shall be subject to disciplinary action or criminal prosecution, or both.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1125 Best efforts to win {#sec-r-431.1125 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1125}

Rule 1125. A licensee is expected to give his or her best effort to win in all races in which he or she participates. Any instruction or advice to a jockey or driver or any handling of a jockey's or driver's horse other than for the purpose of winning is prohibited. If the stewards are satisfied that a race was ridden or driven in a fraudulent manner or that the jockey or driver was instructed or induced to ride or drive in a fraudulent manner, all persons guilty of connivance in the offense shall be subject to disciplinary action or criminal prosecution, or both.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1130 Expulsion and ruling off by executive director {#sec-r-431.1130 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1130}

Rule 1130. (1) The executive director, deputies, or authorized representative of the executive director may order any person, whether licensed or unlicensed, to be immediately ejected, ruled off, and excluded from the grounds, or any part thereof, by written order of expulsion or ruling off, for any of the following reasons:

(a) The person's violation of the rules promulgated under the act or the act or any successor racing laws enacted after the effective date of these rules.

(b) The person's participation in touting, the illegal solicitation of bets or wagers, bookmaking, or any other illegal wagering or gambling activity.

(c) The person's participation in any plan, scheme, or activity to avoid, or aid another in avoiding compliance with federal or state income tax laws.

(d) The person's conviction for any crime involving fraud or deception in the conduct of racing or pari-mutuel wagering or in the reporting of pari-mutuel gambling winnings to federal or state government tax authorities.

(e) The person's participation in any plan, scheme, or activity to unlawfully influence or fix the results or outcome of a race.

(f) The person's participation in any plan, scheme, or activity to misrepresent the true age, pedigree, identity, ownership, or eligibility of a horse to any of the following:

(i) The jockey club.

(ii) United States Trotting Association.

(iii) American Quarter Horse Association.

(iv) Appaloosa Horse Club.

(v) Arabian breed registry.

(vi) The executive director.

(vii) Any racing official.

(g) The person's participation in any disorderly conduct or public disturbance on the grounds which reasonably threatens the health and safety of other persons or horses.

(h) The person's participation in any plan, scheme, or activity to willfully and knowingly enter or start an unqualified or ineligible horse in a race.

(i) The person's participation in any plan, scheme, or activity to offer or receive any money, benefit, or other consideration for scratching an entry from a race.

(j) The person's participation in any plan, scheme, or activity to offer, promise, or give any gift, gratuity, money, property, or other valuable thing or benefit to any person having official duties in relation to the conduct of racing or pari-mutuel wagering with the intent or purpose of thereby influencing the action, judgment, or decision of such person with respect to any matter or question which may be brought before such person in his or her official capacity. Any person who has official duties in relation to the conduct of racing or pari-mutuel wagering who requests, accepts, or receives, or agrees to accept and receive, any gift, gratuity, money, property, or other valuable thing or benefit as consideration for acting, judging, or deciding a matter or question which is brought before him or her in his or her official capacity shall be ruled off the grounds and removed from his or her official position.

(k) The person's participation in any plan, scheme, or activity involving fraudulent practices in the conduct of racing or pari-mutuel wagering in this or any other country.

(l) The making of a bet with, or on behalf of, any jockey or driver, unless the bet is on a horse the jockey or driver is riding or driving.

(m) If the person is a jockey or driver, the acceptance of a ticket or the making of a bet on any horse other than the one he or she rides or drives; however, a jockey or driver may make a multiple wager if his or her horse is selected to finish first in all instances.

(n) The person's participation in any other activity or conduct which reasonably threatens the health and safety of other persons on the grounds or reasonably threatens or undermines public confidence in the integrity of racing or pari-mutuel wagering in this state.

(2) In all cases where the executive director, deputies, or authorized representatives of the executive director order a person to be ejected, ruled off, and excluded from the grounds, or any part thereof, a written order of expulsion or ruling off shall be issued and served on the person, giving the person notice of his or her expulsion and ruling off from the grounds and the reason for the expulsion or ruling off.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1135 Rescinded {#sec-r-431.1135 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1135}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1140 Electrical devices {#sec-r-431.1140 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1140}

Rule 1140. A person who is on the grounds under the jurisdiction of the executive director or on the grounds where horses which are eligible to race at the licensed track are kept shall not have in his or her possession, in his or her personal effects or vehicle, or in or on premises he or she occupies or controls, a battery, buzzer, prod, or other appliance, either electrical or mechanical, other than the ordinary whip, which is capable of affecting the speed or racing condition of a horse.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1145 Wagering by racing officials or association employees {#sec-r-431.1145 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1145}

Rule 1145. A racing official or association employee or agent who has a direct connection with the running of a race shall not wager money or any other thing of value on the result of a race, and shall not solicit a stake or present from any person racing at the meeting. For the purpose of this subrule, the following persons are also included:

(a) Assistant starters.

(b) Jockeys' or drivers' room custodians.

(d) Outriders, pony riders, and parade marshals.

(e) Paddock employees.

(f) Workout clockers.

(g) An employee of an auditing firm present on behalf of this state.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1150 Ownership prohibition {#sec-r-431.1150 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1150}

Rule 1150. A person approved by the executive director as a racing official, employee of a racing official, or an association employee directly connected with the running of a race or the classification of horses shall not be the owner or part owner of a horse racing at the meeting and shall not participate financially, directly or indirectly, in the purchase or sale of a horse racing at the meeting. Association employees not directly connected with the running of a race may be the owner or part owner of a horse racing at the meeting with the approval of the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1155 Bookmaking prohibited {#sec-r-431.1155 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1155}

Rule 1155. Bookmaking or betting of any kind, other than through the pari-mutuel system, is prohibited. Any person licensed under this act who wagers in any but the prescribed manner faces disciplinary action up to and including license revocation and exclusion from all tracks under the jurisdiction of the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1160 Dissemination of information {#sec-r-431.1160 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1160}

Rule 1160. An association employee or person licensed by the executive director shall not knowingly permit the dissemination of racing information that might be of benefit to bookmakers or others engaged in illegal betting activities. This does not prevent the prompt reporting of racing news by accredited members of the press.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1165 Financial responsibility {#sec-r-431.1165 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1165}

Rule 1165. A licensee shall not willfully and deliberately fail or refuse to pay any monies due and owing for any services or supplies connected with his or her operations as a licensee. Presentation of a legal monetary judgment related to racing operations against a licensee may be a basis for immediate suspension, license denial, or other disciplinary action.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1170 Deduction from winnings {#sec-r-431.1170 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1170}

Rule 1170. A percentage of winnings, except for jockey mount fees, shall not be deducted by an association or horsemen's bookkeeper unless such deduction is at the request of the person to whom such winnings are payable and except that an association may withhold from winnings any arrears due.

History

History: 1985 AACS.

Mich. Admin. Code R 431.1175 Prohibited acts; breathalyzer and drug testing {#sec-r-431.1175 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1175}

Rule 1175. (1) Smoking is prohibited in or around the barn or area where horses are kept.

(2) Possession of or use of controlled substances or concealed weapons in the stable area of any grounds during a live race meeting is prohibited.

(3) A licensee is prohibited from possessing or using alcohol while performing duties licensed under the act.

(4) A person in the stable area who smokes in or around the barn or area where horses are kept, who is in possession of controlled substances, alcohol, or concealed weapons, or who is under the influence of intoxicating liquor or any drug is subject to disciplinary action.

(5) The personal use by licensees of any controlled substance or excessive amount of medicant, stimulant, depressant, narcotic, or hypnotic is prohibited.

(6) Drivers, jockeys, stewards, racing officials, starting gate crew, and outriders that test positive on a breathalyzer test at or below .05% of alcohol in the blood may be relieved of their commitments at the discretion of the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1180 Rescinded {#sec-r-431.1180 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1180}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1185 Rescinded {#sec-r-431.1185 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1185}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1190 Rescinded {#sec-r-431.1190 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1190}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1195 Rescinded {#sec-r-431.1195 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1195}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1200 Horses ruled ineligible; forfeiture of money and prizes {#sec-r-431.1200 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1200}

Rule 1200. (1) Every horse trained or owned wholly or partly by disqualified person or a person who has been expelled or ruled off is ineligible to race unless authorized by the stewards.

(2) If an entry is received from any disqualified person or a person who has been expelled or ruled off or for any ineligible horse, that entry is void and the money paid for the entry, if any, shall be refunded. Any money or prize won by the entry shall be forfeited by the disqualified person or person who has been expelled or ruled off.

(3) A horse or stable entry that is ordered refused at any recognized meeting because of inconsistent racing or other cause shall not be permitted to race at a race meeting under the jurisdiction of the executive director during the continuance of the ruling.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1205 Objections, protests, and complaints {#sec-r-431.1205 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1205}

Rule 1205. (1) Objections or protests against a horse, jockey, or driver participating in a race shall be received only when duly lodged by the owner, trainer, jockey, driver, authorized agent, or the jockey or driver of another horse engaged in the same race whose horse suffered or could suffer because of an alleged rules violation. An objection or protest also may be made by a racing official.

(2) Objections by a jockey or driver to alleged interference or fouls occurring during the running of the race shall be lodged orally with the clerk of scales or patrol judge before dismounting, shall be relayed immediately to the stewards, and shall then be lodged directly with the stewards.

(3) Complaints lodged during a race meeting shall be addressed to the stewards.

Complaints lodged after the termination of a race meeting shall be addressed to the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1210 Protests, objections, or complaints; time {#sec-r-431.1210 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1210}

Rule 1210. (1) Protests, objections, or complaints based on the following rule violations shall be lodged by persons aggrieved within the times prescribed:

(a) At least 1 hour before post time if the protest is based on incorrect weight allowance claimed for a horse entered to race.

(b) Before the race has been posted as official if the objection is based on interference by a horse, improper course covered by a horse, foul riding or driving, or any other matter occurring during or incidental to the running of a race.

(c) Not later than 48 hours after the race was run if the complaint is based on fraudulent or willful misstatement in entry under which a horse has run or any other rule violation.

(2) Licensees who make unreasonable, unwarranted, or frivolous complaints, objections, or protests may be subject to disciplinary action including a fine in an amount offsetting expenses incurred in determining the complaint, objection, or protest.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1215 Disputed races {#sec-r-431.1215 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1215}

Rule 1215. If, after a race has been declared official, the result of a race is placed in dispute by the lodging of a complaint or appeal or by discovery of an alleged violation of the act or rules, all of the following provisions apply, pending determination of the disputed race:

(a) When, in addition to the lodging of a complaint or appeal or the discovery of an alleged violation, a positive laboratory test is reported, the stewards shall order that money from a disputed race be held by the association. The purse money being held shall be deposited in an escrow account established for that purpose. The proceeds, including interest accrued, shall be withdrawn and distributed according to the ruling of the stewards or by the final order of the executive director in a contested case, once the period of judicial review has lapsed. However, any portion of the purse money or other reward, the distribution of which would not be affected by the determination of the dispute or contested case, may be distributed at the discretion of the stewards or executive director.

(b) If purse monies or other rewards have been awarded to a licensee before the lodging of a complaint or appeal or the discovery of an alleged violation of the act or rules which places the outcome of a race in dispute, the monies or reward shall be returned immediately to the association on orders of the stewards.

(c) The horse that crosses the finish line first and any other horse for which the race is authoritatively claimed shall be liable for all penalties attaching to the winner of that race until the matter is finally adjudicated.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1220 Determination of dispute {#sec-r-431.1220 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1220}

Rule 1220. (1) The stewards shall make a determination on all protests, objections, complaints, or alleged violations of the act or rules lodged or discovered after a race has been declared official and shall issue a ruling thereon. If the stewards find that the act or rule was violated, the stewards may take disciplinary action against persons responsible, disqualify any horses in the disputed race, and award the purse money and other rewards pursuant to the determined order of finish in the disputed race.

(2) If a horse is disqualified after a race has been declared official and the disqualification causes a revision of the order of finish of a race, the pari-mutuel payoff shall not be affected.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1225 Stewards' hearings {#sec-r-431.1225 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1225}

Rule 1225. (1) The stewards' hearings may be closed, and the stewards shall cause no public announcement to be made concerning a matter under investigation until conclusion of the hearing.

(2) If at the conclusion of a hearing the stewards find that the act or a rule has been violated, they shall promptly issue a ruling which sets forth all of the following information:

(a) The full name of every person charged with a violation of the act or a rule.

(b) Identification of such persons, if licensed by license classification.

(d) The finding by the stewards as to the violation of the act or rule.

(e) The statement of disciplinary action.

History

History: 1985 AACS.

Mich. Admin. Code R 431.1230 Fines; suspensions {#sec-r-431.1230 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1230}

Rule 1230. (1) A fine imposed by the stewards or executive director is payable within 10 calendar days of proper notice to the licensee fined. A licensee who fails to pay the fine within 10 calendar days of proper notice, if a written appeal has not been filed and a stay of penalty has not been granted, shall be suspended and remain suspended until the fine is paid.

(2) Unless fraud has been committed, all jockeys and drivers temporarily suspended shall be permitted, for 2 days following the temporary suspension, to fulfill all engagements made before the suspension.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1235 Appeals; stays {#sec-r-431.1235 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1235}

Rule 1235. (1) A person aggrieved by any ruling, action, or decision of the stewards, or by any disciplinary action or administrative action taken by the stewards, may have a review of the decision before the executive director.

(2) A licensee may apply to the executive director for a stay of disciplinary action imposed by the stewards pending disposition of the appeal by the executive director.

(3) All appeals shall be filed, in writing, with the executive director within 10 days of proper notice of the penalty or imposition of the discipline.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1240 Final decisions and orders {#sec-r-431.1240 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1240}

Rule 1240. A final decision or order of the executive director shall be made, within a reasonable period, in writing or stated in the record, and shall include findings of fact and conclusions of law. A decision or order shall not be made except upon consideration of the record as a whole or the portion of the record as may be cited by any party to the proceedings and as supported by and in accordance with the competent, material, and substantial evidence. A copy of the decision or order shall be delivered or mailed to each party and to his or her attorney of record, if any.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1245 Declaratory ruling {#sec-r-431.1245 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1245}

Rule 1245. (1) Pursuant to section 63 of the administrative procedures act of 1969, 1969 PA 306, MCL 24.263, any person may request a declaratory ruling as to the applicability to an actual state of facts of a statute, rule, or order administered by the executive director.

(2) A request for a declaratory ruling shall be submitted in writing to the executive director, and shall contain all of the following information:

(a) Specific reference to the statute, rule, or order in question.

(b) A complete account of the facts which actually exist for which the declaratory ruling is sought.

(3) Within 90 calendar days after receiving a submitted request, the executive director shall issue a written notification by regular first-class mail to the petitioner and the petitioner’s legal counsel, if any, stating whether the declaratory ruling will be issued or denied.

(4) The executive director may deny a request for declaratory ruling for any of the following reasons:

(a) The subject matter of the request is frivolous on its face.

(b) The statement of actual facts or issues contained in a request is indefinite, incomplete, or lacks specificity.

(c) The same, or substantially similar, actual state of facts or issue of law is under investigation or is subject to any litigation, pending or resolved.

(d) The issue in question is commonly accepted practice by industry wide standards.

(e) Other reason as determined by the executive director.

(5) After the executive director decides to issue a declaratory ruling under subrule (3) of this rule, the executive director may do any of the following:

(a) Request more information from the person.

(b) Request information from other interested persons.

(d) Request oral or written arguments from interested parties.

(e) Hold a hearing upon proper notice to all interested parties.

(f) Issue a declaratory ruling.

(g) Reconsider the decision to issue a declaratory ruling.

(6) A declaratory ruling shall include a statement or findings of fact, conclusions of law supported by legal authority or reasoned opinion, and the ruling or determination made.

(7) Once issued, a ruling is binding on the executive director and shall not retroactively be changed, but nothing in this rule prohibits the executive director from prospectively changing a ruling.

(8) Upon a written request to the executive director, a person may inspect, copy, or receive a copy of a declaratory ruling.

History

History: 1985 AACS; 2009 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1250 Stewards; duties; majority vote {#sec-r-431.1250 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1250}

Rule 1250. (1) The stewards shall supervise and regulate the conduct of racing at each race meeting.

(2) All questions to be decided by the stewards shall be determined by majority vote.

A dissenting steward may submit a minority report.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1255 Stewards; qualifications {#sec-r-431.1255 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1255}

Rule 1255. (1) Before being appointed or approved by the executive director to serve in the capacity of steward, an applicant shall be certified or become certified by a national organization and have been employed as any of the following at a recognized meet or meetings for a period of not less than 60 racing days a year, during not less than 3 of the 5 preceding calendar years unless approved by the executive director:

(a) Steward.

(b) Racing secretary.

(d) Official Starter.

(e) Placing judge.

(f) Patrol judge.

(g) Paddock judge.

(h) Clerk of scales.

(i) Racing regulatory veterinarian.

(2) If no acceptable applicant possesses the qualifications described in subrule (1) of this rule, a person approved or appointed shall have had prior experience in horse racing, such as an owner, trainer, jockey, or driver, or other related experience as the executive director considers pertinent.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1260 Authority of stewards {#sec-r-431.1260 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1260}

Rule 1260. Stewards are authorized to do all of the following:

(a) Make all findings of fact as to all matters occurring during an incident to the running of a race; determine all objections and inquiries based on the interference by a horse, improper course covered by a horse, foul riding by a jockey, foul driving by a driver, and all other matters occurring during an incident to the running of a race; and determine the extent of disqualification, if any, of horses in a race for a foul committed during the race. The findings of fact and determinations are final, but subject to appeal. In the performance of their duties, stewards have unrestricted access to all areas used and under the jurisdiction of other racing officials and to all areas used by occupational licensees for racing purposes.

(b) Determine all protests, complaints, or objections concerning the conduct of racing which arise during a race meeting and enforce the determinations.

(c) Fine, suspend, or rule off a participant in racing, or order ejected or excluded from the grounds any person, licensed or unlicensed, upon a reasonable belief that a violation of these rules has occurred.

(d) Fine, suspend, or rule off a participant in racing who, in their opinion, has acted to the detriment of racing, and order ejected or excluded from the grounds any other disorderly person.

(e) Interpret and enforce the rules of racing and determine all questions pertaining to a racing matter not specifically covered by these rules in conformity with justice and the best interest of racing, subject to the authority and orders of the executive director.

(f) Issue decisions or rulings pertaining to the conduct of racing which shall supersede orders of the officers, directors, and officials of an association and which shall, if the stewards consider proper, vary any arrangement for the conduct of a race meeting, including without limitation, postponing a race, cancelling a race, or ruling a race as no contest.

(g) Request and receive assistance in the investigation of possible rule infractions from all of the following:

(i) Employees of the executive director.

(ii) Racing officials.

(iii) Track security forces.

(iv) State and local police.

(v) Investigators representing trade groups to which associations may belong.

(h) Conduct hearings on all questions, disputes, protests, complaints, or objections concerning racing matters.

(i) Exclude from any race a horse which is improperly equipped, dangerous, unmanageable, unfit to race, liable to cause accident or injury to another horse or a jockey or driver in a race, or of questionable identity.

(j) Order, at any time, an examination, by the persons as the stewards consider appropriate, of any horse on the grounds or eligible to race at the meeting; order the examination of ownership papers, certificates, documents of eligibility, contracts, or leases pertaining to the horse; and require an affidavit of ownership or interest in any horse.

(k) Refuse, for good cause, the entry to any race of any horse which is ineligible to race and order any horse removed from the grounds.

(l) Order redistribution of race purses when the stewards consider it appropriate.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Rule 1261. (1) When the condition of the race course is in question due to weather, the stewards may consult with the association, outrider, a representative of the certified horsemen’s organization, a representative of the jockey/driver community, or any other individuals considered appropriate by the stewards. The stewards shall determine whether to cancel races for that day.

(2) Upon a decision by the stewards that race course conditions are unsafe for racing, all races for that day must be canceled.

(3) Upon a decision by the stewards that race course conditions are safe for racing, only permitted withdrawals approved by the stewards must be allowed.

History 2021 MR 6, Eff. Mar. 26, 2021..

Mich. Admin. Code R 431.1265 Referral to executive director {#sec-r-431.1265 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1265}

Rule 1265. The stewards may refer any matter within their authority to the executive director, summarily and without hearing, when, in their opinion, a hearing cannot be held under the conditions or in the manner prescribed in these rules, when a hearing is impractical due to the conclusion of the race meeting, or for other good and sufficient cause.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1270 Detention area {#sec-r-431.1270 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1270}

Rule 1270. An association shall provide and maintain on its grounds an enclosure sufficient in size and with sufficient facilities to accommodate the stabling of horses temporarily detained for the taking of sample specimens.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1275 Taking of specimens {#sec-r-431.1275 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1275}

Rule 1275. (1) The stewards or official veterinarian may, at any time, order the taking of blood, urine, or other specimen from any horse under their jurisdiction, pre-race or post-race. In all instances, specimens shall be taken from the official winning horse in a race and any other horse or horses designated by the stewards or official veterinarian.

(2) The stewards or official veterinarian, at any time, may order the taking of blood, urine, or other specimen from any horses entered in a qualifying race, after an official workout, or from any horse that is qualified or has a current timed work in the state.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1280 Specimen collection procedure {#sec-r-431.1280 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1280}

Rule 1280. (1) The official winning horse and any other horse ordered by the stewards or official veterinarian must be taken to the detention area to have sample specimens taken at the direction of the official veterinarian. A person other than the owner, trainer, driver, or horse attendant shall not be admitted into the detention area. No more than 2 licensees per horse are allowed in the detention barn at once.

(2) Stable equipment, other than that necessary for washing and cooling out a horse, is prohibited in the detention area. A licensed veterinarian may attend a horse in the detention area only in the presence of the official veterinarian.

(3) During the taking of specimens from a horse, the owner, trainer, or horse attendant shall be present and witness the taking of the specimen and so signify in writing. In the case of a claimed horse, the original owner, trainer, or horse attendant shall be present.

(4) Urine sample collection procedure must meet all of the following requirements:

(a) All sample containers shall arrive from the testing laboratory with a tamper proof seal. The laboratory seal shall not be broken except in the presence of the person witnessing the specimen collection.

(b) A urine specimen taken from a horse shall be placed in a container and sealed with an identification label affixed. The sample must be placed in the refrigerator of the restricted access detention barn laboratory. One portion of the sample form bearing a printed identification number shall remain with the sealed container, and the other portion of the sample form bearing the same printed identification number shall be detached in the presence of the witness. The official veterinarian or his or her assistant shall, on the sample form, identify the horse from which the specimen was taken, and shall note the race and day and any other information required. The sample form shall be verified by the person witnessing the specimen collection. The sample form must be delivered to the official veterinarian’s office and placed in a secure area. Every precaution shall be taken to ensure that a member of the laboratory staff does not know the identity of the horse from which a specimen was taken before the completion of all testing and reporting thereon.

(c) A horse's identity shall be confirmed by tattoo number or unique microchip. A horse which cannot be properly identified shall be reported immediately to the stewards.

(d) If, after a horse remains a reasonable time in the detention area, a specimen cannot be taken from the horse, the official veterinarian may permit the horse to be returned to its barn and usual surroundings for the taking of a specimen under the supervision of the official veterinarian or his or her assistant. A diuretic to facilitate urination shall not be administered, but an alternate specimen may be taken.

(5) Blood sample collection procedure must meet all of the following requirements:

(a) The official veterinarian shall confirm the blood collection tubes sent from the testing laboratory arrive in a sealed box and the blood collection tubes inside are sealed in a manner to prevent contamination. The expiration date on the blood collection tubes must be checked to confirm the tubes are valid until the end of the race meeting. If the blood collection tubes are not packaged in a manner to prevent contamination or the expiration date is before the end of the race meeting, all boxes of blood collection tubes affected shall be returned to the testing laboratory.

(b) The official veterinarian shall select appropriate blood collection tubes to be used along with a single use needle guard and a sterile single use needle with secure safety seal. The appropriate blood collection tubes must be carried in hand to the horse’s stall.

If needed, the assistant to the official veterinarian may assist. Sample tag information must be verified with the owner, trainer, or horse attendant by having that individual confirm that the horse’s name and identification number on the sample tag is the same as the horse to be sampled.

(c) If in the process of preparing to draw blood or while drawing blood, a tube or needle (even if still encased in the protective cover) falls to the ground, it must be replaced with a new tube or needle.

(d) When the blood draw is complete, all tubes shall be labeled with bar code stickers from the sample tag in the presence of the owner, trainer, or horse attendant.

(e) Once labeled, the tubes must be placed in the restricted access detention barn laboratory.

(f) The trainer shall have a horse attendant present in the detention barn that is capable of restraining the horse for blood collection.

(g) Sample collection may be terminated at the discretion of the official veterinarian if continued attempts at the blood draw pose a risk to the horse, official veterinarian, or his or her assistant.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1285 Rescinded {#sec-r-431.1285 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1285}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1290 Rescinded {#sec-r-431.1290 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1290}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1295 Trainers; responsibilities; positive test presumptions {#sec-r-431.1295 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1295}

Rule 1295. (1) A trainer is responsible at all times for the condition of all horses trained by him or her. A trainer shall not start a horse or permit a horse in his or her custody, care, or control to be started if he or she knows, or, through the exercise of reasonable care, might have known, or has cause to believe, that the horse has received a drug that could result in a finding of a drug. Every trainer shall assure that each horse trained by him or her is protected so as to prevent any horse from receiving a prohibited drug.

(2) When a finding of a drug is reported, the following shall be presumed concerning the horse from which the sample was taken:

(a) If the horse raced, that the drug was present in the horse during its race; or if the horse was scratched, that the drug would have been present in the horse at the time of the race from which scratched.

(b) The drug was administered at such time that the pharmacological effect of the drug remained present in the horse.

(3) Pending the outcome of a stewards’ hearing, the trainer shall remain in good standing, except that a horse identified with the laboratory report shall not be permitted to compete during the investigation and stewards’ hearing. A horse is not immune from resulting disciplinary action.

(4) A trainer shall create and maintain full and accurate electronic or paper records of all treatments given to or performed on a horse in his or her care. The records must include all of the following:

(a) The name of the horse.

(b) The veterinary procedures performed, including when performed and by whom.

(i) The name of the substance or medication.

(ii) Date and time of administration.

(iii) Dosage administered.

(iv) Route of administration.

(5) The records must be maintained 30 days before a live race meeting through the end of that race meeting. Records must be preserved for a minimum of 6 months and be available for inspection by the stewards or official veterinarian on demand.

(6) A trainer must promptly notify the official veterinarian or steward of any reportable disease and any unusual incidence of a communicable illness in any horse in his or her charge.

(7) If a horse participating in a live race meeting is seriously injured or dies, the trainer must promptly report the incident to the stewards or the official veterinarian. As used in this subrule, "participating in a live race meeting" includes 30 days before the live race meeting starts and continues for 30 days after the live race meeting ends.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1301 Drugs and foreign substances {#sec-r-431.1301 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1301}

Rule 1301. (1) It is the intent of these rules to protect the integrity of horse racing, to guard the health of the horse, and to safeguard the interest of the public and the racing participants through the prohibition or control of all drugs and foreign substances.

(2) With the exception of normal feed, electrolytes, vitamins, and water by mouth, no substance may be administered to any horse on race-day before the race in which it is entered, unless such treatment is authorized by the executive director. This includes any substance administered by injection, directly into the mouth, by inhalation, topically, or by any other method of administration.

(3) A drug or foreign substance, as defined by the act, shall not be administered to a horse that is intended to be entered, is entered, or be present in a horse that participates, in a race with wagering by pari-mutuel methods or any nonbetting race or workout.

(4) A drug or foreign substance, as defined by the act, may be administered to a horse that is intended to be entered, is entered, or be present in a horse that participates, in a race with wagering by pari-mutuel methods or any nonbetting race or workout that is conducted at a race meeting in the state only when authorized by the rules or written order of the executive director for use in the care or treatment of the horse.

(5) Leg paints and liniments may be administered externally to a horse by topical application if they can be applied topically without penetrating the skin.

(6) A banned drug, an Association of Racing Commissioners International, Inc.

(ARCI) class 1 drug, or a non-FDA approved drug shall not be present or carried in a horse that is qualified or has a current timed work in the state.

(7) A finding by the executive director’s designated laboratory that a drug or foreign substance, as defined by the act, is present in a urine, blood, or any other type of sample that is obtained by authorized representatives of the executive director from a horse that is intended to be entered, is entered, or participates in a race with wagering by parimutuel methods or any nonbetting race or workout that is conducted at a race meeting or training center is prima facie evidence that such drug or foreign substance was present and carried in the body of the horse after the horse was entered in the race and when the sample was obtained from the horse. Such laboratory finding also constitutes prima facie evidence that the trainer and his or her employees or agents who are responsible for the care or custody of the horse have been negligent in handling, safeguarding, and caring for the horse before, during, and after the race before the test sample was obtained.

(8) A finding by the executive director's designated laboratory that a banned drug, an ARCI class 1 drug, or a non-FDA approved drug is present in a urine, blood, or any other type of sample that is obtained by authorized representatives of the executive director from a horse that is qualified or has a current timed work in the state is prima facie evidence that the banned drug, the ARCI class 1 drug, or the non-FDA approved drug was present and carried in the body of the horse when the sample was obtained from the horse. Such laboratory finding shall also constitute prima facie evidence that the trainer and his or her employees or agents who are responsible for the care or custody of the horse have been negligent in handling, safeguarding, and caring for the horse before the test sample was obtained.

(9) When imposing penalties for a violation of the provisions of this rule, the executive director, deputy directors, or the stewards shall consider all relevant factors, including, but not limited to, all of the following:

(a) The nature of the unauthorized drug or foreign substance or drug paraphernalia that is involved and its effect or potential effect on a horse's racing performance or the outcome of the race.

(b) The purpose or reason for the violator's possession or use of the unauthorized drug, foreign substance, or drug paraphernalia.

(c) The availability of the drug, that is, can it be purchased over the counter, only with a prescription, or only with a license for controlled substances, or otherwise legally purchased and possessed in this country.

(d) The experience of the violator.

(e) Whether the violator has a past record of drug-related violations in this or any other jurisdiction.

(f) What action, if any, was taken by the violator of the rules to avoid such violation.

(g) The past performance lines of the horse in question in relation to its performance and reasonably expected performance in the questioned race.

(10) The stewards are not required to articulate any of the factors listed in subrule (9) of this rule in their ruling, nor shall ignorance of the rules be considered a mitigating factor.

History

History: 1985 AACS; 2009 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1302 Possession and use of drugs and foreign substances {#sec-r-431.1302 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1302}

Rule 1302. (1) A licensed veterinarian shall maintain veterinary records, in a manner approved by the executive director which accurately record all services rendered and medication prescribed and which include the name of the horse treated, date of the treatment, and name of the trainer. Such records shall be made available to the executive director or his or her authorized representative on demand.

(2) A licensed veterinarian shall report to the official veterinarian or to the stewards internal medication given by the licensed veterinarian, or given at his or her direction, to a horse known by him or her to be entered in a race. The trainer shall also make such report to the official veterinarian or to the stewards. If a drug is to be administered internally before scratch time to a horse which is entered to race, such fact shall be reported by the trainer or the licensed veterinarian to the stewards or an authorized representative of the executive director before scratch time and before treatment. If administration of a drug is to be made after scratch time, it shall be reported to the stewards or an authorized representative of the executive director immediately and before treatment unless in the opinion of the licensed veterinarian, humane concerns indicate immediate treatment is required.

(3) A licensed veterinarian shall report to the official veterinarian or to the stewards any racehorse in training that he or she euthanizes 30 days or less before the race meeting starts or that has raced at a race meeting within the previous 30 days.

(4) Neither a licensee nor any other person other than the official veterinarian shall have, in his or her possession, on the grounds, any banned drug, ARCI class 1 drug, or non-FDA approved drug.

(5) A person, other than a licensed veterinarian, official veterinarian, or a person with written permission from a steward, shall not have, in his or her possession, in his or her personal effects or vehicle, or in or upon premises he or she occupies or controls on the grounds, any drug or foreign substance, as defined by the act, for hypodermic administration or any hypodermic needle or syringe or other equipment for administration of a drug or foreign substance.

(6) Notwithstanding the provision of subrule (5) of this rule, a person may have, in his or her possession, on the grounds of a race meeting, any drug or foreign substance, as defined by the act, for administration to his or her own person, if such possession is otherwise permitted under state or federal law. If state or federal law prohibits the dispensing of the drug or foreign substance without a prescription, then the person who is in possession of the drug or foreign substance shall also have, in his or her possession, documentary evidence that a valid prescription for the drug or foreign substance was issued to him or her. If the drug or foreign substance is classified or acts as a stimulant, depressant, anesthetic, tranquilizer, painkiller, or narcotic, then the person shall not possess or use the drug or foreign substance on his or her own person on the grounds of a race meeting unless he or she first obtains specific written permission from a steward for such possession and use on the grounds.

(7) Notwithstanding the provisions of subrule (5) of this rule, a person may possess, on the grounds, hypodermic needles and syringes and suppositories and equipment for rectal infusion for the purpose of administering a prescribed drug or foreign substance to himself or herself if he or she has first notified a steward of his or her possession of the hypodermic needles, syringes, suppositories, or rectal infusion equipment and the drug or foreign substance to be administered and has received specific written permission from a steward to possess and use the hypodermic needles, syringes, suppositories, or rectal infusion equipment and the drug or foreign substance on himself or herself while on grounds.

(8) A licensed veterinarian may possess, on the grounds of a race meeting, any equipment and any drugs or foreign substances, as defined by the act, which are recognized and accepted in veterinary medicine for use in the veterinary care and treatment of horses and which are not otherwise prohibited by the executive director or under state or federal law. A licensed veterinarian shall not sell, give, or provide a hypodermic needle or syringe or any substance for hypodermic administration to any licensee on the grounds.

(9) A licensee, other than a veterinarian, may have, in his or her possession within the confines of an off–track stable, shed, building, or grounds where horses are kept which are eligible to race in the state, therapeutic medications and equipment for the administration of a drug or foreign substance under the following conditions:

(a) None of the medications may be banned drugs, ARCI class 1 drugs, or non-FDA approved drugs or be in violation of Michigan and federal compounding regulations.

(b) Any drug or medication which, by federal or state law, requires a prescription must be validly prescribed by a veterinarian, and in compliance with Michigan statutes.

All such allowable medications must have a prescription label that is securely attached and clearly ascribed to show all of the following:

(i) The name of the product and active ingredients.

(ii) The name, address and telephone number of the veterinarian prescribing or dispensing the product.

(iii) The name of each horse for whom the product is intended/prescribed.

(iv) The date the drug was dispensed.

(v) The dose, dosage, duration of treatment, and expiration date of the prescribed/dispensed product.

(vi) Withholding/withdrawal times.

(vii) The name of the trainer to whom the product was dispensed.

(10) Any non-injectable drug or medication that is used or kept on the grounds and which, by federal or state law, requires a prescription must have been validly prescribed by a veterinarian, and in compliance with the applicable state statutes. All such allowable medications must have a prescription label which is securely attached and clearly ascribed to show the information in subrule (9)(b) of this rule.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1303 Veterinarian’s list {#sec-r-431.1303 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1303}

Rule 1303. (1) The official veterinarian shall maintain the veterinarian’s list of all horses that are determined to be unfit to compete in a race due to illness, positive test or overage, physical distress, unsoundness, infirmity, or any other medical condition.

Horses so listed are ineligible to race in any jurisdiction until released by an official veterinarian or a racing regulatory veterinarian.

(2) A horse may be removed from the veterinarian's list when, in the opinion of the official veterinarian, the condition which caused the horse to be placed on the veterinarian’s list is resolved and the horse’s status is returned to that of racing soundness.

(3) The official veterinarian may require a horse to successfully qualify or perform a timed workout at a distance and time of his or her choosing as a condition for release from the veterinarian’s list.

(4) Horses qualifying or working to be released from the veterinarian’s list must comply with racing medication standards and are subject to post-work biologic sample collection for laboratory confirmation of compliance.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1304 Denerving and shock wave therapy {#sec-r-431.1304 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1304}

Rule 1304. (1) A horse shall not be intended to enter, entered, or race in a race with wagering by pari-mutuel methods or any nonbetting race or workout that is conducted at a race meeting in this state if the horse has been denerved, neurectimized, desensitized, or anesthetized, at or above the ankle, by surgery, cryosurgery, chemical block, or any other means. A horse that has been subjected to any of the procedures stated in this subrule is not eligible to race until the official veterinarian has determined that sensation has returned. A licensee who performs or orders one of the procedures stated in this subrule shall be subject to disciplinary action.

(2) A horse on which any neurectomy has been performed below the ankle must be permitted to race if such fact is reported to the official veterinarian and designated on its registration certificate, electronic eligibility, or racing permit as applicable by breed.

(3) A list of all denerved horses shall be posted in the race office. A person shall not report a horse as having a neurectomy when in fact a horse has not.

(4) The use of extracorporeal shock wave therapy or radial pulse wave therapy is not permitted unless all of the following conditions are met:

(a) Any extracorporeal shock wave therapy or radial pulse wave therapy machine, whether in operating condition or not, must be registered with and approved by the executive director, or his or her authorized representative before such machine is brought to or possessed on any grounds or stable within the jurisdiction of the executive director.

(b) The use of extracorporeal shock wave therapy or radial pulse wave therapy within the jurisdiction must meet all of the following requirements:

(i) Be limited to licensed veterinarians.

(ii) Only be performed with machines that are both of the following:

(A) Registered and approved for use by the executive director.

(B) Used at a previously-disclosed location that is approved by the executive director.

(iii) Be reported within 24-hours before treatment on the prescribed form to the official veterinarian.

(c) Any treated horse shall not be permitted to race or perform a time workout for a minimum of 10 days following treatment.

(d) Any horse treated with extracorporeal shock wave therapy or radial pulse wave therapy shall be added to the veterinarian’s list. This list shall be kept in the race office, be accessible to the jockeys and their agents during normal business hours, and be made available to other regulatory jurisdictions.

(e) A horse that receives any such treatment without full compliance with this rule and similar rules in any other jurisdiction in which the horse was treated shall be placed on the veterinarian’s list.

(f) Any person participating in the use of extracorporeal shock wave therapy or the possession of the extracorporeal shock wave therapy machines, or both, in violation of this rule shall be subject to disciplinary action.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1325 Bleeders {#sec-r-431.1325 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1325}

Rule 1325. (1) A horse that is examined and determined to be a bleeder shall be placed on the veterinarian’s list for not less than 14 days and shall not be permitted to race until the horse is examined by an official veterinarian. The veterinarian’s list shall be kept and maintained by the official veterinarians.

(2) A horse that is observed and determined to have bled from within the respiratory tract for a second time in a 12-month time period shall again be placed on the stewards' list and is not eligible to participate in racing for a minimum of 30 days.

(3) A horse that is observed and determined to have bled from within the respiratory tract for a third time in a 12-month time period shall again be placed on the stewards' list and is not eligible to participate in racing for a minimum of 180 days.

(4) A horse that is observed and determined to have bled from within the respiratory tract for a fourth time in a 12-month time period shall again be placed on the stewards' list and is not eligible to participate in racing for a minimum of 365 days.

(5) After the expiration of the minimum period of ineligibility set forth in subrules (2), (3), and (4) of this rule, the subject horse shall not start again until examined by the official veterinarian and released from the veterinarian’s list.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1330 Nullification of records {#sec-r-431.1330 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1330}

Rule 1330. If a horse establishes a record in a race and later laboratory analysis of the sample taken indicates the presence of a drug or foreign substance which could affect the racing conditions or performance of a horse in a race, the record is null and void.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1335 Destruction of injured horse; euthanasia permitted {#sec-r-431.1335 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1335}

Rule 1335. Upon a determination of the official veterinarian that a horse injured in a workout or a race is injured to the extent that the horse must be destroyed, the official veterinarian may perform humane euthanasia after receiving written permission from the trainer or his or her representative on a form prescribed by the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1340 Postmortem of horses {#sec-r-431.1340 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1340}

Rule 1340. (1) A horse that dies on the grounds or on a premise related to a licensee’s participation in a live race meeting shall not be removed before notification of the official veterinarian and before permission is obtained. At the discretion of the official veterinarian, a postmortem may be required and the cost of the postmortem shall be paid by the owner, including the cost of transportation and examination. As used in this section, "a licensee’s participation in a live race meeting" includes 30 days before the live race meeting starts and continues for 30 days after the live race meeting ends.

(2) The postmortem examination may include, but is not limited to, the submission of blood, urine, other bodily fluid specimens, or other tissue specimens for analysis.

Upon completion of the postmortem examination, the carcass will be returned to the owner or disposed of at the owner's option.

(3) The presence of a prohibited drug or foreign substance in a specimen collected during the postmortem examination may subject the licensee to disciplinary action.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.1999 Rescinded {#sec-r-431.1999 omnilex-key=us-mi-regs-official--dept-treasury--R 431.1999}

PART 2. MUTUELS

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2001 Definitions {#sec-r-431.2001 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2001}

Rule 2001. As used in this part:

(a) “Betting interest” means a single horse, or more than 1 horse joined as a mutuel entry or joined in the mutuel field, on which a single pari-mutuel wager may be placed.

(b) “Breakage” means the sum totaled from the amount wagered after takeout, payout, and refunds are subtracted. This sum may yield a positive or negative figure.

(c) “Mutuel field” means a single betting interest which involves more than 1 horse and which is formed, when the number of horses starting in a race exceeds the number capacity of the totalisator, by grouping the highest numbered horse within the numbering capacity of the totalisator and all horses of a higher number.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2005 Rescinded {#sec-r-431.2005 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2005}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2010 Pari-mutuel ticket sales payoffs {#sec-r-431.2010 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2010}

Rule 2010. (1) Pari-mutuel tickets shall be sold only at either regular ticket windows which are properly designated by signs or through authorized systems. Parimutuel tickets shall not be exchanged.

(2) Wagers shall be paid when a race is declared official by the stewards. A race is official when an official sign is purposely displayed or an official announcement is made.

Any subsequent ruling of the executive director or stewards with regard to the award of purse money shall have no bearing on the mutuel payoff.

(3) Payment on winning pari-mutuel tickets shall be made only upon presentation and surrender of such tickets.

(4) All winning pari-mutuel tickets may be presented for payment to the association concerned within 60 days after the last day of the race meeting pursuant to section 2 of 1951 PA 90, MCL 431.252.

(5) Tickets altered or mutilated in any way are void and worthless. Torn tickets, if properly identifiable, must be honored by the association. The responsibility for identifying tickets rests with the association.

(6) If there is any error in calculation where the public is underpaid, the amount of the underpayment shall be added to the same pool on the next race. If such an error results in the public being overpaid, the amount of the overpayment is chargeable against the funds of the association.

(7) Payments must be made only on the first 3 horses passing the finish line according to the official order of finish, except in the case of a dead heat, in which case payments must be made on all win, place and show finishers.

(8) If a horse is excused from racing for any reason after the betting thereon has begun, or if a horse becomes locked in the starting gate, the money bet on that horse shall be refunded, except that when the horse is part of an entry or a mutuel field, there shall be no refund if the entry or the mutuel field, as the case may be, has at least 1 actual starter, or if the particular wager assigns the post time favorite in place of a scratched horse.

(9) The association shall require positive identification of a winning ticket holder before payment when, in the stewards' discretion, circumstances warrant the action.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2015 Emergencies; errors {#sec-r-431.2015 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2015}

Rule 2015. (1) If any emergency arises in connection with the operation of the mutuel department and the emergency is not covered by these rules and an immediate decision is necessary, the mutuel manager shall make the decision, and a prompt report of the facts shall be made to the stewards and the executive director.

(2) If an error is made in posting the odds or payoff figures on the public board, it shall be corrected promptly and only the correct amounts shall be used in the payoff, irrespective of the error that may have appeared on the public board. If, because of mechanical failure, it is impossible to promptly correct the posted payoff, a statement shall be made over the public address system stating the facts and corrections.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2020 Program requirements {#sec-r-431.2020 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2020}

Rule 2020. (1) R 431.2001 to R 431.2015 shall be printed in not less than 6-point type in the daily program sold by each association. R 431.2001 to R 431.2015 shall be posted for the benefit of the public in not less than 2 places in the betting area of each racing association and in not less than 4 places in those racing associations providing a clubhouse area.

(2) Mutuel department rules printed in the program or posted for the public shall be preceded by the following statement: “All payoffs by the pari-mutuel departments of associations licensed by the executive director are subject to the regulations of the United States Government, the Internal Revenue Service, and applicable statutes of the State of Michigan.”

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2025 Mutuel windows {#sec-r-431.2025 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2025}

Rule 2025. Mutuel windows shall open not less than 30 minutes before the first race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2030 Machine locking {#sec-r-431.2030 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2030}

Rule 2030. (1) The pari-mutuel machines shall be locked by a steward immediately upon the start of the race through an electrical control in the stewards' stand or before the start of a race through a method subject to the approval of the executive director.

(2) If the start of the race is delayed beyond the official post time, as shown on the results board, without adequate reason or explanation, the stewards may, at their discretion, lock the pari-mutuel machines.

(3) An association is not responsible for ticket sales which are not completed before the machines are locked.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2035 Totalisators {#sec-r-431.2035 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2035}

Rule 2035. (1) Pursuant to section 17(2) of the act, MCL 431.317, each association shall use a totalisator or other mechanical device which is equal in accuracy and clearness to a totalisator and which is approved by the executive director. The odds board of the totalisator or other mechanical device shall be placed in full view of the patrons.

(2) No other method of betting, pool-making, wagering, or gaming shall be used or permitted.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2036 Breakage {#sec-r-431.2036 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2036}

Rule 2036. All breakage retained by the association must be paid to the city or township in which the racetrack is located on a monthly basis. Breakage calculations that result in a negative figure may be carried over.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2040 Rescinded {#sec-r-431.2040 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2040}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2045 Rescinded {#sec-r-431.2045 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2045}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2050 Betting interests; straight wagering {#sec-r-431.2050 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2050}

Rule 2050. (1) In all races with 5 or more separate interests which start, associations shall provide win, place, and show betting. In all races with 4 separate interests which start, associations shall provide win and place betting. In races of 3 or 2 separate interests which start, associations shall provide only win betting. At the request of the association, the stewards may cancel place or show wagering, or both, at their discretion.

(2) If, through accident or otherwise, a horse or horses are withdrawn and the starting field is reduced to a point where it is necessary to cancel the show or place pool, the pool must be refunded. However, holders of combined tickets shall have valid wagers for that portion of the ticket not cancelled and a refund on the portion cancelled.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2055 Betting interests; multiple wagering {#sec-r-431.2055 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2055}

Rule 2055. (1) There shall be no trifecta wagering on any race with less than 5 separate betting interests.

(2) Perfecta wagering shall not be scheduled on a race unless not less than 5 separate betting interests are programmed. In the event of a late scratch, perfecta wagering on a race in which 4 separate betting interests remain is permitted if perfecta wagering on that particular race had commenced before the late scratch.

(3) There shall be no perfecta wagering on any race with less than 4 separate betting interests.

(4) Superfecta wagering shall not be scheduled on a race unless not less than 7 separate betting interests are programmed. In the event of a scratch, superfecta wagering on a race in which 6 separate betting interests remain is permissible.

(5) There shall be no superfecta wagering on any race with less than 6 separate betting interests.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2060 Race cancellations {#sec-r-431.2060 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2060}

Rule 2060. If a race is cancelled by the stewards after wagering begins on that race, or if a race is declared no contest by the stewards in the public interest, all monies wagered shall be refunded upon presentation and surrender of a valid ticket.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2061 Rescinded {#sec-r-431.2061 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2061}

History

History: 2003 AACS.

Mich. Admin. Code R 431.2065 Pool calculations; straight wagering {#sec-r-431.2065 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2065}

Rule 2065. Straight wagering pari-mutuel pools shall be calculated and distributed as follows:

(a) In any race, the win, place, and show pools and payoffs are treated separately and calculated independently of each other.

(b) In all pools, the net amount for distribution shall be all sums deposited in the pari-mutuel pool less the track's commission and the breaks as defined in the act.

(c) Win pool. The amount wagered on the horse or betting interest which finished first is deducted from the net pool and the balance which remains is profit. The profit is divided by the amount wagered on the horse or betting interest finishing first, such quotient being the profit per dollar wagered to win. Payoff includes return of the amount wagered and the profit thereon. In addition, the following provisions apply to win pools:

(i) If there is a dead heat for first involving horses of 2 different betting interests, the win pool is distributed as if a place pool. If the dead heat involves horses of 3 different betting interests, the win pool is distributed as if a show pool.

(ii) If no win ticket is sold on the horse which finishes first, the net win pool is distributed to holders of win tickets on the horse finishing second.

(d) Place pool. The amounts wagered to place on the first 2 horses to finish are deducted from the net pool to determine the profit. The profit is divided into 2 equal amounts. One half of the profit is divided by the amount wagered to place on the first finisher, such quotient being the profit per dollar wagered to place on the first finisher, and 1/2 of the profit is divided by the amount wagered to place on the second finisher, such quotient being the profit per dollar wagered to place on such second finisher. Payoffs include return of the amount wagered and the profit thereon as to each of the first 2 finishers. In addition, the following provisions apply to place pools:

(i) If there is a dead heat for first between horses representing the same betting interest, the place pool is distributed as if a win pool. If the dead heat is between horses representing 2 different betting interests, the place pool is distributed as if 1 betting interest finished first and the other finished second. If the dead heat is between horses representing 3 different betting interests, the place pool is distributed as if a show pool.

(ii) If there is a dead heat for second between horses representing the same betting interest, the place pool is distributed as if no dead heat occurred. If the dead heat for second is between horses representing 2 or more different betting interests, the profit is divided in half, with 1/2 allocated for wagers to place on the horse which finished first and the other 1/2 divided equally so as to allocate 1/4 of the profit on the net place pool for wagers to place on each of 2 horses finishing in a dead heat for second, or 1/6 of the profit for wagers to place on each of 3 horses finishing in a dead heat for second.

(iii) If the first and second finishers comprise a single betting interest, the place pool is distributed as if a win pool.

(iv) If no place ticket is sold on a horse which finishes first or second, then the horse which finished third shall replace that horse in the distribution of wagers in the place pool.

(e) Show pool. The amounts wagered to show on the first 3 horses to finish are deducted from the net pool to determine the profit. The profit is divided into 3 equal amounts. One third of the profit is divided by the amount wagered to show on the first finisher, such quotient being the profit per dollar wagered to show on such first finisher; 1/3 of the profit is divided by the amount wagered to show on the second finisher, such quotient being the profit per dollar wagered to show on such second finisher; and 1/3 of the profit is divided by the amount wagered to show on the third finisher, such quotient being the profit per dollar wagered to show on such third finisher. Payoffs include return of the amount wagered and the profit thereon as to each of the first 3 finishers. In addition, the following provisions apply to show pools:

(i) If there is a dead heat for first between 2 horses involving different betting interests, or 3 horses involving 3 different betting interests, the show pool is distributed as if no dead heat occurred. If the dead heat for first is between 2 horses involving the same betting interest, 2/3 of the profit is allocated to wagers to show on the coupled betting interest and 1/3 of the profit is allocated to wagers to show on the other horse among the first 3 finishers. If the dead heat for first is between 3 horses involving 1 betting interest, the show pool is distributed as if a win pool.

(ii) If there is a dead heat for second between 2 horses involving 2 different betting interests, the show pool is distributed as if no dead heat occurred. If the dead heat for second is between horses involving the same betting interest, 2/3 of the profit shall be allocated to wagers to show on the coupled betting interest and 1/3 of the profit shall be allocated to wagers to show on the horse finishing first; if the dead heat for second is between 3 horses involving 2 or 3 betting interests, 1/3 of the profit is allocated to wagers to show on the horse finishing first and the remaining 2/3 of the profit is divided equally by the number of betting interests finishing in a dead heat for second for proportionate distribution on wagers to show for each such betting interest finishing in a dead heat for second.

(iii) If there is a dead heat for third between horses involving the same betting interests, the show pool is distributed as if no dead heat occurred. If the dead heat for third is between horses involving 2 or more betting interests, 2/3 of the profit shall be allocated to wagers to show on the first 2 finishers and the remaining 1/3 of the profit is divided equally by the number of betting interests finishing in a dead heat for third for proportionate distribution on wagers to show for each such betting interest finishing in a dead heat for third.

(iv) If the first 3 horses to finish comprise 1 betting interest, the show pool shall be distributed as a win pool. If 2 horses coupled as a single betting interest finish first and second, or first and third, or second and third, 2/3 of the profit shall be allocated to wagers to show on the single betting interest and 1/3 of the profit shall be allocated to wagers to show on the other horse among the first 3 finishers.

(v) In the event 1 horse coupled in the betting by reason of being in the mutuel field or part of a mutuel entry finishes first or second and another horse included in the same betting interest finishes in a dead heat for third, the allocation of the show pool profit shall be as follows:

(A) One half of the profit shall be allocated to the wagers on such field or entry, 1/3 of the profit for the horse finishing first or second and 1/6 of the profit for the horse finishing in a dead heat for third.

(B) One third of the profit for the horse finishing first or second which was not part of the mutuel field or entry.

(vi) If only 2 horses finish, the show pool, if any, shall be distributed as if a place pool. If only 1 horse finishes, the place and show pools, if any, shall be distributed as if a win pool; if no horse finishes, all money wagered on such race shall be refunded upon presentation and surrender of pari-mutuel tickets sold thereon. If no show ticket is sold on a horse which finishes first, second, or third, then the horse which finished fourth shall replace that horse in the distribution of wagers in the show pool.

Editor's note: R 431.1001 to R 431.4290 were originally filed on June 20, 1985. The rules were withdrawn and refiled on June 26, 1985.

History

History: 1985 AACS.

Mich. Admin. Code R 431.2070 Wagering format {#sec-r-431.2070 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2070}

Rule 2070. All forms or variations of pari-mutuel wagering shall not be offered at a licensed track in this state without written permission of the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2075 Daily double {#sec-r-431.2075 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2075}

Rule 2075. (1) The daily double is not a parlay and has no connection with or relation to straight wagering. All tickets on the daily double must be calculated in an entirely separate pool.

(2) To win a daily double, it is necessary for the purchaser of a daily double ticket to select the winners of each of the 2 races specified for the daily double. If either of his or her selections fails to win, his or her ticket is voided, except as otherwise provided.

(3) With respect to a daily double pool, the amount wagered on the winning combination, such being the horse or betting interest which finishes first in the first race coupled with the horse finishing first in the second race of the daily double, is deducted from the net pool to determine the profit. The profit is divided by the amount wagered on the winning combination, such quotient being the profit per dollar wagered on the winning daily double. Payoff includes return of the amount wagered and the profit thereon. In addition, the following provisions apply to daily double pools:

(a) If there is a dead heat for first involving 2 different betting interests in 1 of the 2 daily double races, the daily double pool is distributed as if it were a place pool, with 1/2 of the profit allocated to wagers combining the single winner of 1 daily double race and 1 of the betting interests involved in the dead heat in the other daily double race and with the other 1/2 of the profit allocated to wagers combining the single winner of 1 daily double race and the other betting interest involved in the dead heat in the other daily double race.

(b) If there are dead heats for first involving different betting interests in each of the daily double races which result in winning combinations, the profit shall be allocated equally to the winning combinations after first deducting from the net pool the amount wagered on all winning combinations for proportionate allocation for each such winning daily double wager.

(c) If no daily double ticket is sold combining the horse or betting interest which finishes first in 1 of the daily double races, the daily double pool is distributed as if a win pool, with the profit allocated to wagering combinations which include the horse or betting interest which finished first in 1 of the daily double races.

(d) If no daily double ticket is sold combining the horses or betting interests which finished first in both the first and second race of the daily double, then the winning combination for distribution of the daily double profit shall be that combining the horses or betting interests which finished second in each of the daily double races.

(e) If, after daily double wagering has commenced, a horse not coupled with another as a betting interest in the first race of the daily double is excused by the stewards or is prevented from racing because of failure of the starting gate to open properly, then daily double wagers combining such horse shall be deducted from the daily double pool and shall be refunded upon presentation and surrender of daily double tickets thereon.

(f) If, after the first race of the daily double has been run, a horse not coupled with another as a betting interest in the second race of the daily double is excused by the stewards or prevented from racing because of failure of the starting gate door to open properly, then daily double wagers combining the winner of the first daily double race with such horses prevented from racing in the second daily double race shall be allocated consolation payoffs.

(g) Consolation daily double payoffs shall be determined by dividing the net daily double pool by the amount wagered combining the winner of the first daily double race with every horse or betting interest scheduled to start in the second daily double race, such quotient being the consolation payoff per dollar wagered combining the winner of the first daily double race with such horse prevented from racing in the second daily double race. Payoff includes return of the amount wagered and the profit thereon.

(h) If for any reason the first race of the daily double is cancelled and declared no contest a full and complete refund shall be made of the daily double pool.

(i) If for any reason the second race of the daily double is cancelled and declared no contest the net daily double pool shall be paid to the holders of daily double tickets which include the winner of the first race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2080 Rescinded {#sec-r-431.2080 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2080}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2085 Perfecta {#sec-r-431.2085 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2085}

Rule 2085. (1) The perfecta is a contract by the purchaser of a ticket to select the 2 horses that will finish first and second in the race. Payment of the ticket shall be made only to the purchaser who has selected the same order of finish as officially posted.

The perfecta will be calculated as an entirely separate pool.

(2) Perfecta pool. The amount wagered on the winning combination, such being the horse finshing first and the horse finishing second, in exact order, is the amount to be deducted from the net pool to determine the profit. The profit is divided by the amount wagered on the winning combination, such quotient being the profit per dollar wagered on the winning perfecta combination. Payoff includes the amount wagered and profit thereon. In addition, the following provisions apply to perfecta pools:

(a) If no ticket is sold on the winning combination of a perfecta pool, the net pool shall be distributed equally between holders of tickets selecting the winning horse to finish first and holders of tickets selecting the second place horse to finish second.

(b) If there is a dead heat between 2 horses for first place, the net perfecta pool shall be calculated and distributed as a place pool, 1/2 of the profit to be paid to each of the holders of tickets selecting each of the horses in the dead heat to finish first with the other horse to finish second to holders of tickets of the winning combinations. In case of a dead heat between 2 horses for second place, the perfecta pool shall be figured as a place pool, and the holders of tickets combining the winning horse and the 2 horses finishing second shall participate in the payoff.

(c) If there is a dead heat for second place and if no ticket is sold on 1 of the 2 winning combinations, the entire net pool shall be calculated as a win pool and distributed to bettors holding tickets on the other winning combination. If no tickets combine the winning horse with either of the place horses in the dead heat, the perfecta pool shall be calculated and distributed as a place pool, 1/2 of the profit allocated to the horse finishing first combined with all other betting interests to finish second and 1/4 of the profit to each of the horses finishing in a dead heat for second combined with all other betting interests to finish first.

(d) If an entry finishes first and second, or mutuel field horses finish first and second, the net perfecta pool shall be distributed to holders of tickets selecting the entry to win combined with the horse having finished third.

(e) If no ticket is sold that would require distribution of a perfecta pool, the association shall make a complete and full refund of the perfecta pool.

(3) If a horse is scratched or declared a nonstarter, no further perfecta tickets shall be issued designating such horse, and all perfecta tickets previously issued designating such horse shall be refunded and deducted from the gross pool.

Editor's note: R 431.1001 to R 431.4290 were originally filed on June 20, 1985. The rules were withdrawn and refiled on June 26, 1985.

History

History: 1985 AACS.

Mich. Admin. Code R 431.2090 Trifecta {#sec-r-431.2090 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2090}

Rule 2090. (1) The trifecta is a contract by the purchaser of a ticket to select the 3 horses that will finish first, second, and third in the race. The trifecta must be calculated as an entirely separate pool.

(2) With respect to a trifecta pool, the amount wagered on the winning combination, such being the horse finishing first, the horse finishing second, and the horse finishing third, in exact order, is deducted from the net pool to determine the profit. The profit is divided by the amount wagered on the winning combination, such quotient being the profit per dollar wagered on the winning trifecta combination. Payoff includes the amount wagered and profit thereon. In addition, the following provisions apply to trifecta pools:

(a) If no ticket is sold designating, in order, the first 3 horses, the net pool shall be distributed equally among holders of tickets designating the first 2 horses in order.

(b) If no ticket is sold designating, in order, the first 2 horses, the net pool shall be distributed equally among holders of tickets designating the first horse to win.

(c) If no ticket is sold designating the first horse to win, the net pool shall be distributed equally among holders of tickets designating the second and third horses in order.

(d) If less than 3 horses finish, the payoff shall be made on tickets selecting the actual finishing horses in order, ignoring the balance of the selection.

(e) If there is a dead heat, all trifecta tickets selecting the correct order of finish, counting a horse in a dead heat as finishing in either position involved in the dead heat, shall be winning tickets. The payoff must be calculated as a place pool.

(f) If no ticket is sold that would require distribution of a trifecta pool, the association shall make a complete and full refund of the trifecta pool.

(3) If a horse is scratched or declared a non-starter, all trifecta tickets previously issued designating such horse shall be refunded and deducted from the gross pool.

History

History: 1985 AACS; 2007 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2094 Pick Three {#sec-r-431.2094 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2094}

Rule 2094. (1) The pick three requires selection of the first-place finisher in each of 3 consecutive contests.

(2) The net pick three pool shall be distributed to winning wagers in the following precedence, based upon the official order of finish:

(a) As a single price pool to those whose selection finished first in each of the 3 contests.

(b) If there are no wagers described in subdivision (a) of this subrule, as a single price pool to those who selected the first-place finisher in any 2 of the 3 contests.

(c) If there are no wagers described in subdivision (a) or (b) of this subrule, as a single price pool to those who selected the first-place finisher in any 1 of the 3 contests.

(d) If there are no wagers described in subdivision (a), (b), or (c) of this subrule, the entire pool shall be refunded on pick 3 wagers for those contests.

(3) If there is a dead heat for first in any of the 3 contests, the pick three pool must be distributed as follows:

(a) If contestants represent the same betting interest, the pick three pool shall be distributed as if no dead heat occurred.

(b) If contestants represent 2 or more betting interests, the pick three pool shall be distributed as follows:

(i) As a profit split to those whose selections finished first in each of the 3 contests.

(ii) If there are no wagers described in paragraph (i) of this subdivision, as a single price pool to those who selected the first place finisher in any 2 of the 3 contests.

(iii) If there are no wagers described in paragraph (i) or (ii) of this subdivision, as a single price pool to those who selected the first place finisher in any 1 of the 3 contests.

(iv) If there are no wagers described in paragraph (i), (ii), or (iii) of this subdivision, the entire pick three pool shall be refunded.

(4) If a wagering interest is scratched for a pick three contest, or is designated to run for purse money only, the association shall substitute the actual favorite, as evidenced by total amounts wagered in the win pool at the host association for the contest at the close of wagering on that contest, for the scratched betting interest for all purposes, including pool calculations. If the win pool total for 2 or more favorites is identical, the substitute selection shall be the betting interest with the lowest program number. The totalisator shall produce reports showing each of the wagering combinations with substituted betting interests which became winners as a result of the substitution, in addition to the normal winning combination.

(5) If all 3 pick three contests are cancelled or declared no contest, the entire pool shall be refunded on pick three wagers for those contests.

(6) If 1 or 2 of the pick three contests are cancelled or declared no contest, the pick three pool remains valid and shall be distributed pursuant to subrule (2) of this rule.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2095 Rescinded {#sec-r-431.2095 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2095}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2096 Pick Four {#sec-r-431.2096 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2096}

Rule 2096. (1) The pick four requires selection of the first place finisher in each of 4 consecutive contests.

(2) The net pick four pool shall be distributed to winning wagers in the following precedence, based upon the official order of finish:

(a) As a single price pool to those whose selection finished first in each of the 4 contests.

(b) If there are no wagers described in subdivision (a) of this subrule, as a single price pool to those who selected the first-place finisher in any 3 of the 4 contests.

(c) If there are no wagers described in subdivision (a) or (b) of this subrule, as a single price pool to those who selected the first-place finisher in any 2 of the 4 contests.

(d) If there are no wagers described in subdivision (a), (b), or (c) of this subrule, as a single price pool to those who selected the first-place finisher in any 1 of the 4 contests.

(e) If there are no wagers described in subdivision (a), (b), (c), or (d) of this subrule, the entire pool shall be refunded on pick four wagers for those contests.

(3) If there is a dead heat for first in any of the pick four contests, the pick four pool must be distributed as follows:

(a) If contestants represent the same betting interest, the pick four pool shall be distributed as if no dead heat occurred.

(b) If contestants representing 2 or more betting interests, the pick four pool shall be distributed as a single price pool with each winning wager receiving an equal share of the profit.

(4) If a wagering interest is scratched for a pick four contest, or is designated to run for purse money only, the association shall substitute the actual favorite, as evidenced by total amounts wagered in the win pool at the host association for the contest at the close of wagering on that contest, for the scratched betting interest for all purposes, including pool calculations. If the win pool total for 2 or more favorites is identical, the substitute selection shall be the betting interest with the lowest program number. The totalisator shall produce reports showing each of the wagering combinations with substituted betting interests which became winners as a result of the substitution, in addition to the normal winning combination.

(5) The pick four pool shall be cancelled and all pick four wagers for the individual performance shall be refunded, if at least 3 contests included as part of a pick four are cancelled or declared no contest.

(6) If at least 1 contest included as part of a pick four is cancelled or declared no contest, but not more than 2 contests, the net pool shall be distributed as a single price pool to those whose selection finished first in the greatest number of pick four contests for that performance.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2100 Rescinded {#sec-r-431.2100 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2100}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2105 Rescinded {#sec-r-431.2105 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2105}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2110 Rescinded {#sec-r-431.2110 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2110}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2115 Rescinded {#sec-r-431.2115 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2115}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.2120 Superfecta {#sec-r-431.2120 omnilex-key=us-mi-regs-official--dept-treasury--R 431.2120}

Rule 2120. (1) The superfecta is a contract by the purchaser of a ticket to select, in order, the first, second, third, and fourth place horses in the designated superfecta race, as designated by the association with the approval of the executive director. Payment of winning tickets shall be made only to the holders of the tickets who have selected the same order of finish as officially posted, except if there is a scratch or as otherwise provided in these rules.

(2) Superfecta wagering has no connection with, or relation to, the win, place, and show betting pools and shall be calculated as an entirely separate pool. The ticket shall be labeled a superfecta ticket.

(3) If a horse is scratched or excused from racing, additional tickets shall not be sold designating such horse, and all tickets previously sold designating such horse shall be refunded and the money deducted from the gross pool.

(4) If no ticket is sold designating, in order, the first 4 horses, or if only 3 horses finish, the net pool shall be distributed equally among holders of tickets designating, in order, the first 3 horses. If no ticket is sold designating, in order, the first 3 horses, or if only 2 horses finish, the net pool shall be distributed equally among holders of tickets designating, in order, the first 2 horses. If no tickets are sold designating, in order, the first 2 horses, the net pool shall be distributed equally among holders of tickets designating the winner.

(5) If no ticket is sold designating the winner to win, the superfecta shall be declared off and the gross pool refunded.

(6) If there is a dead heat or dead heats, all tickets designating the correct order of finish, crediting each horse in a dead heat as finishing in either position involved in the dead heat, shall be winning tickets, and the aggregate number of winning tickets shall be divided into the net pool for the purpose of determining the payoff.

PART 3. THOROUGHBRED RACING

History

History: 1985 AACS; 2007 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3001 Definitions; A to E {#sec-r-431.3001 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3001}

Rule 3001. As used in this part:

(a) “Added money” means cash, exclusive of a trophy or other award, added by the association to stakes fees paid by subscribers to form the total purse for a stakes race.

(b) “Breeder” means the owner of the dam of a horse when such horse was foaled. A horse is bred at the place of its foaling. A registered Michigan-bred horse is defined by R 285.810.1.

(c) “Closing” means the time designated when all entries in a race must be and remain in the race, unless excused by the stewards.

(d) “Declaration” means the withdrawal of a horse that was entered in a race before time of closing.

(e) “Equipment” means accouterments other than the ordinary saddle, girth, pad, saddle cloth, and bridle carried by a horse and includes, but is not limited to, all of the following:

(i) Riding crop.

(ii) Blinkers.

(iii) Tongue strap.

(iv) Muzzle.

(v) Hood.

(vi) Noseband.

(vii) Bit.

(viii) Shadow roll.

(ix) Martingale.

(x) Breastplate.

(xi) Bandages.

(xii) Boots.

(xiii) Racing plates or shoes.

(f) “Exhibition race” means a race between horses of diverse ownership for which a purse is offered but on which pari-mutuel wagering is not permitted.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3005 Definitions; H to M {#sec-r-431.3005 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3005}

Rule 3005. As used in this part:

(a) “Handicap” means a race in which weights are assigned to the horses by the handicapper for the purpose of equalizing their chances of winning.

(b) “Horse” means an equine registered as such with the appropriate breed registry and designates any thoroughbred, quarter horse, Appaloosa, Arabian, and American paint horse irrespective of age or sex designation.

(c) “Ineligible” means that a horse or a person is not qualified under these rules or the conditions of a race to participate in a specified racing activity.

(d) “Maiden” means a horse that has never won a race on the flat at a recognized meeting in any country. A maiden that was disqualified after finishing first remains a maiden. Race conditions referring to maidens shall be interpreted as meaning maidens at the time of starting.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3010 Definitions; O to S {#sec-r-431.3010 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3010}

Rule 3010. As used in this part:

(a) “Optional claiming race” means a race that is restricted to horses which are entered to be claimed for a stated price or less and horses which are entered not to be claimed by the option designated in the conditions of the race. Where horses are entered to be claimed, the race shall be considered a claiming race, and where horses are entered under the option, the race shall be considered an allowance or purse race.

(b) “Produce race” or “futurity” means a race that is to be contested by the produce of horses which are named or identified before the closing time of nominations.

(d) “Starter race” means an overnight race under allowance or handicap conditions which is restricted to horses that have previously started for the designated claiming price or less, as stated in the conditions of the race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3015 Rescinded {#sec-r-431.3015 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3015}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3020 Racing officials {#sec-r-431.3020 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3020}

Rule 3020. (1) The following positions at a race meeting are designated as officials:

(a) Stewards.

(b) Placing judges.

(d) Paddock judge.

(e) Official starter.

(f) Racing secretary.

(g) Assistant racing secretary.

(h) Timer.

(i) Official veterinarian.

(j) Horse identifier.

(k) Jockey room custodian.

(2) In case of emergency, the association may provide a substitute steward, with the approval of the executive director, to act as the steward for the remainder of any program.

(3) A person, other than the stewards or the placing judges, shall not be allowed in the stewards' and placing judges' stands during the running of a race, except with permission of the stewards.

(4) A person, other than a steward, shall not be in the stewards' stand when a decision is being made on a foul claim or stewards' inquiry.

(5) A racing official shall not be the owner or part owner of a horse racing at a track where the official is serving.

(6) Racing officials serving in the capacity of steward, placing or patrol judges, clerk of scales, official starter, or horse identifier may be required to take and satisfactorily pass an optical examination at the request of the executive director. The examination shall evidence a minimum corrected vision of 20/30 and an ability to distinguish colors correctly.

(7) All racing officials, with the exception of those representing the executive director, shall be nominated by the association, subject to the approval of the executive director. The executive director reserves the right to demand a change of racing officials for what he or she considers to be good and sufficient reason. The successor of a racing official so replaced shall also be subject to the approval of the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3025 Stewards; duties and responsibilities; complaints against officials {#sec-r-431.3025 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3025}

Rule 3025. (1) In addition to the general powers specified in these rules, the stewards shall have all of the following specific duties and responsibilities:

(a) Taking cognizance of all misconduct or rule infractions, whether reported or not, and investigating all instances of possible rule infractions. They shall take action as they consider necessary to prevent a rule infraction.

(b) At least 1 steward shall be on the grounds from scratch time, or, if not a racing day, when entries are first taken, until entries are closed. At least 1 steward shall be present for the regular showing of racing films or videotapes. All 3 stewards shall be on the grounds for a continuous period beginning 2 hours before post time for the first race and ending at the conclusion of the last race. All 3 stewards shall be present when contemplating disciplinary action.

(c) Inspecting all applications for licenses to participate in racing and administering, or causing to be administered by qualified persons, examinations of all first-time applicants for a trainer's license and jockey agent's license. The stewards may make recommendations to the executive director as to the qualifications of all applicants for licenses to participate in racing.

(d) Reviewing registration certificates, contracts, papers, and other documents pertaining to any of the following:

(i) The sale or ownership of a horse.

(ii) Payment of purse money.

(iii) Jockey and apprentice jockey contracts.

(iv) Appointment of agents.

(v) Adoption of assumed names by stable owners.

(vi) Determining the eligibility and appropriateness for participation in racing.

(e) Requiring proof of eligibility of a horse or person to participate in a race if it is in question. In the absence of sufficient proof to establish eligibility, the stewards may rule the horse or person ineligible.

(f) Supervising the taking of entries, receiving all declarations and scratches, and determining all questions arising from and pertaining to such entries, declarations, and scratches. The stewards may refuse the entry of any horse by a person, may refuse to permit a declaration or scratch, or may limit entries.

(g) Assuring that the “inquiry” sign is posted on the infield odds board immediately after the horses have crossed the finish line in a race if any steward or patrol judge doubts the fairness of the running of the race. The stewards shall cause the “objection” sign to be posted on the infield odds board when an objection is lodged and shall cause the “official” sign to be posted on the infield odds board after determining the official order of finish for purposes of the pari-mutuel payoff.

(h) Maintaining a stewards’ report in the manner and form prescribed by the executive director and reporting all actions of the stewards that arise during a race day.

(i) Making periodic inspections of the barn area, checking track security, and making visits to the jockeys' room to observe and check security at the weighing out. The inspections and observations made shall be noted in the steward's report.

(2) The stewards may review the video recordings of each day's races before commencement of the successive day's races and compile a list of riders who they feel should review films for instructional purposes. If a list is compiled, the stewards shall assure that the list is posted in the jockeys' room.

(3) In the performance of their duties, the stewards shall have unrestricted access to all areas and grounds of the association.

(4) A complaint against a racing official may be made to the stewards or to the executive director. Complaints made directly to the stewards shall be reported to the executive director, in writing, together with any action taken by the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3030 Stewards; reversals of form; review of films; disciplinary action {#sec-r-431.3030 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3030}

Rule 3030. (1) The stewards shall take cognizance of marked reversal of form of all horses and shall, at their discretion, conduct inquiries. During inquiries, the stewards may take into consideration the betting action on the horse in question and films of the horse's previous races, and shall consider all other facts they consider relevant toward making a determination as to whether the horse being evaluated was deliberately restrained in any way by any means in previous races so as not to win or finish as near as possible to first.

If after review the stewards make a determination that there is a reasonable probability that the horse in question was deliberately restrained in any way by any means in previous races so as not to win or finish as near as possible to first, the stewards may take disciplinary action against a person found to have contributed to the restraining of the horse.

(2) If the stewards find that a horse has been deliberately restrained in any way by any means in previous races so as not to win or finish as near as possible to first, these findings may be forwarded by the executive director to law enforcement authorities.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3035 Racing secretary; responsibilities and duties {#sec-r-431.3035 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3035}

Rule 3035. (1) The racing secretary is responsible for all of the following:

(a) The programming of races during the race meeting.

(b) Compiling and publishing condition books.

(d) Receiving all entries, subscriptions, declarations, and scratches.

(2) Duties for which the racing secretary and his or her staff are responsible include, but are not limited to, all of the following:

(a) Safekeeping of registration certifications and racing permits for horses, recording information required thereon, and returning them to owners, or trainers if authorized by the owners, at the conclusion of the race meeting.

(b) Maintaining a record of all stakes fees received and all arrearages, jockeys' fees, purchase money in claiming races, and any other money received incident to the race meeting, and paying over such monies to persons entitled thereto.

(d) Daily posting of entries as soon as possible after the entries have been closed and declarations have been made.

(e) Assigning stall applicants stabling as the racing secretary considers proper, and maintaining a record of the arrival and departure of all horses stabled on the grounds.

(f) Publishing the official daily program and insuring the accuracy of the information contained therein.

(3) The published racing program shall contain all of the following information:

(a) The sequence of races to be run and the post time for the first race.

(b) The purse, conditions, and distance for each race and the current track record for such distance.

(d) The full name of the trainer and the jockey named for each horse, together with the weight to be carried.

(e) The saddle cloth number or designation for each horse, and the post position for each horse if there is a variance with the saddle cloth designation.

(f) Identification of each horse by name, color, sex, age, sire, and dam, which shall correspond to the foal certificate.

(g) A description of the racing colors to be carried and other information as may be requested by the association or the executive director.

(h) A stable name with the name of at least 1 owner. If the stable represents more than 1 owner, the joint ownership shall be indicated by the use of the name of 1 owner and the words “et al.”

(4) A horse shall not appear in any official program in more than 1 race on the same day, except for stakes races or handicaps.

(5) The racing secretary shall designate the price spread and the distances and shall publish a daily up-to-date list of horses having preference and the price spread and distances of the races to which the preference pertains.

(6) The racing secretary or handicapper shall append to the weights for every handicap the day and hour from which winners will be liable to a penalty. Alterations shall not be made after publication of the program, except in case of omission, through clerical error or oversight, of the name and weight of a horse duly entered. Where there is an omission, the omission may, with the permission of the stewards, be rectified by the racing secretary or handicapper.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3040 Paddock judge; duties {#sec-r-431.3040 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3040}

Rule 3040. The paddock judge shall have general supervision over the paddock and be responsible for all of the following:

(a) Keeping accurate records of all equipment a horse carried in the horse's previous race. Change in the equipment is permitted only with the consent of the stewards.

(b) Assembling the horses and jockeys in the paddock not less than 15 minutes before the scheduled post time for the race, unless otherwise determined by the stewards.

(c) Assuring that the saddling of all horses is orderly, open to public view where possible, and free from interference, and assuring that horses are mounted at the same time and leave the paddock for the post in proper sequence.

(d) Reporting to assigned security guards the presence of any unauthorized persons in the paddock.

(e) Promptly reporting all rule violations to the stewards.

(f) Inspecting the bandages of a horse.

(g) Inspecting the feet of a horse.

(h) Paddock schooling and the paddock schooling list.

(i) The presence or absence of trainers in the paddock as required.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3045 Placing judges; duties {#sec-r-431.3045 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3045}

Rule 3045. If required by the executive director, 3 racing officials shall serve as placing judges and shall be in a stand directly above the finish line during the running of each race. The placing judges shall take special note of racing colors and distinguishing equipment carried by each horse. The placing judges shall determine the order of the horses as they cross the finish line by considering the location of the respective noses of such horses. The placing judges shall cause the numbers of the first 4 horses to cross the finish line to be flashed on the result board. A photo finish camera approved by the executive director shall be used as an aid by the placing judges in determining the order of the horses as they cross the finish line. Placing judges may request a photo to assist in determining margins of less than a 1/2 however, the camera and any photographic reproduction are merely aids to the placing judges.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3050 Rescinded {#sec-r-431.3050 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3050}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3055 Clerk of scales; duties; jockey weights {#sec-r-431.3055 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3055}

Rule 3055. (1) The clerk of scales shall secure, regulate, and control the jockeys' room, the equipment therein, and the personnel permitted access thereto. The clerk of scales shall weigh all jockeys out and weigh in not less than the first 4 finishers. The clerk of scales shall accurately record and publish a scratch, overweight, change of jockey, and any change of weight or racing colors from what is stated in the official program and shall promptly supply all racing officials and the mutuel department with all pertinent changes.

(2) After each race, the clerk of scales shall report to the racing secretary or his or her representative the weights carried by each horse, with the name of each horse's jockey and the overweight, if any. The clerk of scales shall also report the post time and running time in each race and shall report any other information which may from time to time be required.

(3) The clerk of scales shall promptly report an infraction of the rules with respect to weight, weighing, or riding equipment to the stewards.

(4) A jockey's weight shall include all of the following:

(a) Clothing.

(b) Boots.

(d) Saddle cloth.

(e) Other equipment required by the stewards.

(5) A jockey's weight shall not include any of the following:

(a) Riding crop.

(b) Head number.

(d) Bridle.

(e) Safety helmet and goggles.

(6) The clerk of scales, with the consent of the stewards, may permit clothing allowances for inclement weather.

(7) Seven pounds is the limit of overweight any horse is allowed to carry. If the weight of a rider exceeds the weight the horse is published to carry, the jockey shall declare the amount of overweight to the clerk of scales at the time designated by the stewards, and the clerk of scales shall have the overweight posted and announced immediately. A trainer has the pre-post time option of removing a jockey from a horse if the jockey is under his or her training and is carrying more than 2 pounds overweight.

Such removal shall be without penalty to the trainer. The failure of a jockey to comply with this rule shall be reported to the stewards.

(8) The clerk of scales shall maintain a record of the winning races of an apprentice jockey. At the close of the race meeting, or on departure of the jockey, the record sheet shall be attached to the rider's copy of his or her contract or shall be written into his or her certificate and shall be released to the rider. The clerk of scales shall inform the stewards of the expiration date of the apprentice jockey's apprentice allowance.

History

History: 1985 AACS; 2009 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3060 Official starter; duties {#sec-r-431.3060 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3060}

Rule 3060. (1) The official starter shall be responsible for the fair and equal start of all horses at the scheduled starting time by utilizing a starting gate and bell or other device activated by his or her signal. So far as is practical, the official starter shall cause all horses to be loaded in order of post position, but the official starter may, with the permission of the stewards, load an unruly horse out of order. By permission of the stewards, a race may be started without a starting gate.

(2) The official starter may employ assistant starters as he or she considers necessary and shall change the gate position of each assistant starter daily, without notice to the assistant starters, until the field for the first race enters the race course.

(3) A horse shall not be permitted to start in a race unless approval is given by the official starter. The official starter shall maintain a schooling list, which shall be posted in the race office, of the names of all horses ineligible to start for want of adequate training leaving the gate. Horses shall be schooled under the supervision of the official starter or his or her assistants.

(4) The official starter shall report to the stewards any disobedience of his or her orders or attempts to take unfair advantage at the starting gate and shall recommend penalties for offenders.

(5) An assistant starter shall not handle a horse until instructed to do so by the official starter. An assistant starter shall not strike a jockey or use abusive language when addressing a jockey.

(6) An official starter or assistant starter shall not accept any gratuity or payment other than his or her regular salary, directly or indirectly, for services in starting a race.

An official starter or assistant starter shall not wager on a race.

(7) The official starter shall maintain a written record showing the names of all starters during the day and the names of the assistant starters who handled each horse.

Such record shall be made available to the stewards upon request.

(8) The official starter shall have radio or telephone communication with the stewards from the time the horses leave the paddock until the field is dispatched.

(9) The official starter may recommend to the stewards that disciplinary action be taken against any jockey, outrider, pony rider, or other personnel under the official starter's control.

(10) Horses shall be schooled under the supervision of the official starter or his or her assistant. The official starter shall report horses that are sufficiently schooled to start to the racing secretary. Unruly horses shall be placed on the schooling list and shall not start until approved by the official starter. The schooling list shall be respected in all cases.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3065 Official veterinarians; duties {#sec-r-431.3065 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3065}

Rule 3065. (1) The official veterinarian shall examine horses the stewards request him or her to examine and reexamine. The official veterinarian is responsible for approving for release from the veterinarian's list all horses that have been placed on the list because of lameness, sickness, or injury before they may be entered to race again.

(2) An official veterinarian shall not, during the period of his or her employment, for compensation or otherwise, treat or prescribe for a racing horse, except in case of emergency. In an emergency, a full and complete treatment report shall be made to the stewards. An owner or trainer shall not employ or pay compensation to an official veterinarian, either directly or indirectly, during the period for which he or she is so employed by the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3070 Pre-race examination {#sec-r-431.3070 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3070}

Rule 3070. (1) The official veterinarian shall examine each horse listed in the overnight entries to determine its eligibility and fitness to race. The time of the examination is at the discretion of the official veterinarian on the day of the race. The trainer shall have an attendant present and the horse’s legs must be free from bandages and topical substances when the official veterinarian comes to his or her stable to make a pre-race examination.

(2) The pre-race examination shall include, but not be limited to, examination of the horse's eyes and legs and observation of the horse while at rest and in motion, either at a walk or while jogging, at the discretion of the examiner.

(3) The official veterinarian shall be in the paddock for inspection of the horses before a race. If, in the opinion of the official veterinarian, a horse is not fit to race, that fact shall be reported to the stewards immediately with a recommendation that the horse be scratched.

(4) The official veterinarian shall be stationed at the starting gate to observe the fitness of horses as the horses warm up for the race. Any horse that breaks through the starting gate or runs off without effective control shall be examined by the official veterinarian. If, in the opinion of the official veterinarian, any horse scheduled to start is not fit to race, that fact shall be reported to the stewards immediately with a recommendation that the horse be scratched.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3075 Workout clockers; clocking {#sec-r-431.3075 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3075}

Rule 3075. (1) The executive director shall employ a steward as clocker. The clocker shall make a record of all morning workouts or any morning trials on the race course of a race meeting or training center race course. A record of all workouts and trials must be provided to the racing secretary.

(2) Every occupational licensee who exercises a horse shall correctly identify to the clockers the horse he or she is exercising and shall state the distance over which the horse is to be worked and the point at which the workout is intended to begin.

(3) Horses working between races shall also be identified and their times announced.

A horse shall not be permitted to work between races without the permission of the stewards and notification to necessary racing officials to ensure safety.

(4) A horse that has not started for 45 days is ineligible to race until it has completed 1 or more timed workouts satisfactory to the stewards before the day of the race in which the horse is entered. If such workouts do not appear in the daily racing form, they shall be published, where possible, in the track program the day of the race in which the horse is entered or shall be posted in 3 places in the racing plant for public inspection.

(5) A horse that has never started shall have not less than 2 published workouts, 1 being from the starting gate. The gate workout must be approved by the official starter.

(6) The stewards may scratch a horse whose recent workouts have not been properly recorded.

History

History: 1985 AACS; 2007 AACS; 2009 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3080 Horses; registration {#sec-r-431.3080 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3080}

Rule 3080. (1) A horse shall not be entered or raced in this state unless duly registered and named in the appropriate breed registry and unless the registration certificate or racing permit issued by the breed registry for such horse is on file with the racing secretary. However, the stewards may, for good cause, waive this requirement if the horse is otherwise correctly identified to the stewards' satisfaction.

(2) A horse shall not be registered for racing in this state unless the endorsement of the foal certificate indicates the current owner.

(3) A horse shall not be entered or raced in this state which is designated by a name other than the name under which such horse is currently registered with the appropriate breed registry. If a horse's name is changed by the breed registry, such horse's former name shall be shown parenthetically in the daily race program the first 3 times the horse races after the name change.

(4) A person shall not at any time cause or permit the correct identity of a horse to be concealed or altered and shall not refuse to reveal, to a racing official, the correct identity of a horse he or she owns or has in his or her care.

(5) A horse shall not race in this state until properly identified by natural markings and shall not race without a legible lip tattoo number or unique microchip applied by agents of the Thoroughbred Racing Protective Bureau or other recognized agencies.

(6) A horse shall not be entered or raced in this state if previously involved in either of the following situations involving misidentification:

(a) A person having control of a horse knowingly entered or raced such horse while designated by a name other than the name under which such horse was registered with the appropriate breed registry.

(b) A person having control of a horse participated in or assisted in the entry or racing of some other horse under the name registered as belonging to the horse in question.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3085 Rescinded {#sec-r-431.3085 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3085}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3090 Horses; training hours; removal; age; breeding {#sec-r-431.3090 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3090}

Rule 3090. (1) A horse shall not be schooled in the paddock or taken onto a race course for training or workout, other than during normal training hours posted by the association, without the permission of the stewards.

(2) During a race meeting, a horse shall not be removed from the grounds without notifying the stewards and unless released by the racing secretary. A dead or sick horse shall not be removed from the grounds without the prior approval of the official veterinarian or the stewards.

(3) A maiden 7 years of age or older shall not be entered or start unless it has less than 6 lifetime starts.

(4) The name of a filly or mare that has been covered by a stallion shall be so reported to the racing secretary before being entered in a race. A list of all fillies and mares so reported, showing the names of the stallions to which they have been bred, shall be posted in the race office.

History

History: 1985 AACS; 2009 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3095 Horses prohibited from entry or racing {#sec-r-431.3095 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3095}

Rule 3095. A horse shall not be entered or raced in any of the following situations:

(a) The horse is not in sound racing condition.

(b) The horse is posted on a stewards' list or starter's list or is suspended in any racing jurisdiction.

(d) The horse is not correctly identified to the satisfaction of the stewards.

(e) The horse is owned wholly or in part by, or is trained by, an ineligible or associated person.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3101 Horses; equipment; sex alteration {#sec-r-431.3101 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3101}

Rule 3101. (1) Blinkers shall be used in a consistent manner on a horse. Permission to change any equipment used on a horse from its last previous start shall be obtained from the stewards. A horse's tongue may be tied down during a race with a clean bandage or gauze. A horse's bridle shall not weigh more than 2 pounds. War bridles are prohibited. A horse shall not race in ordinary training shoes. Bar shoes may be used for racing. Toe grabs on thoroughbred and Arabian front shoes are permitted up to 2 millimeters in length only.

(2) Any alteration of the sex of a horse shall be promptly reported by the horse's trainer to the racing secretary. The racing secretary shall note the alteration on the horse's registration certificate.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3105 Entries; procedures {#sec-r-431.3105 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3105}

Rule 3105. (1) A horse shall not start in a race unless the horse has been and continues to be qualified to be entered in the race. Unless otherwise specified in the conditions of a race or disqualified by violation of these rules, a horse eligible at the time of entry shall continue to be qualified, except in an overnight race, in which it shall also be eligible at the time of start.

(2) Entries, subscriptions, declarations, and scratches shall be reported to the racing secretary, who shall maintain a record of the time and receipt of such entries, subscriptions, declarations, and scratches.

(3) Any entry shall be in the name of the horse's owner, as completely disclosed and registered with the racing secretary under these rules, and made by the owner, trainer, or the authorized agent of the owner.

(4) Any entry shall either be in writing, by telephone, or transmitted by other electronic means as approved by the executive director.

(5) An entry shall clearly designate the horse entered. When entered for the first time during a race meeting, every horse shall be designated by name, age, color, sex, sire, dam, and broodmare sire, as reflected by such horse's registration certificate.

(6) An alteration shall not be made on an entry after the closing of entries, but an error may be corrected with permission of the stewards.

(7) A horse shall not be entered at more than 1 race track when the races are to be conducted on the same day.

(8) In naming an entry for a produce race or futurity, the produce is entered by specifying the dam and the sire or sires.

(9) A horse may be entered while on the veterinarian’s list if the horse will be eligible at the time of the race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3110 Mutuel entries; common ties {#sec-r-431.3110 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3110}

Rule 3110. (1) Not more than 2 horses that have common ties requiring a mutuel entry shall be entered in a race. A preference for 1 of the horses shall be made when making a double entry. Either may be scratched up to 1 hour before post time for the first race. Two horses that have common ties requiring a mutuel entry shall not start in a race to the exclusion of a single betting interest.

(2) Horses that have common ties through ownership or training may be uncoupled in a race as separate betting interests when approved by the stewards.

History

History: 1985 AACS; 2007 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3115 Subscriptions {#sec-r-431.3115 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3115}

Rule 3115. (1) Nominations to or entry of a horse in a stakes race is a subscription.

Any subscriber to a stakes race may transfer or declare such subscriptions before closing.

(2) Joint subscriptions and entries may be made by any 1 of the owners of a horse, and each owner is jointly and severally liable for all payments due thereon.

(3) Death of a horse or an error in its entry when the horse is eligible does not release the subscriber or transferee from liability for all stakes fees due thereon. Fees paid into a subscription to a stakes race that is run shall not be refunded, except as otherwise stated in the conditions of a stakes race.

(4) Death of a nominator or original subscriber to a stakes race does not render void any subscription, entry, or right of entry. All rights, privileges, and obligations shall attach to the successor owner, including the legal representatives of the decedent.

(5) When a horse is sold privately or at public auction or is claimed, stakes engagements for such horse transfer automatically with the horse to its new owner; except that if the horse is transferred to an ineligible person, then the subscriptions are void as of the date of the transfer.

(6) All stakes fees paid toward a stakes race shall be allocated to the winner thereof unless otherwise provided by the conditions for such stakes race. If a stakes race is not run for any reason, all the subscriptions and fees shall be refunded.

(7) The stewards shall be given a true copy of the conditions of a stakes race before the trials for such race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3120 Closings {#sec-r-431.3120 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3120}

Rule 3120. (1) Entries for purse races and subscriptions to stakes races shall close at the time designated by the association in previously published conditions for such races.

If a race is split, an entry, subscription, or declaration shall not be accepted after such closing time; except that if there is an emergency or if a purse race fails to fill, then the racing secretary may extend such closing time.

(2) If the hour of closing is not specified for stakes races, then subscriptions and declarations may be accepted until midnight of the day of closing if they are received in time for compliance with every other condition of such race.

(3) Entries that have closed shall be compiled without delay by the racing secretary and, together with declarations, shall be posted.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3125 Number of starters in a race {#sec-r-431.3125 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3125}

Rule 3125. (1) The maximum number of starters in a race shall be limited by the number of horses which, in the opinion of the stewards, considering the safety of the horses and riders and the distance from the start to the first turn, can be afforded a fair and equal start.

(2) In all stakes races that draw excessive entries the race shall be split into 2 or more races.

(3) At race courses measuring less than a mile in circumference, not more than 10 horses may start in any race without the consent of the stewards, and not more than 12 horses may start under any circumstance.

(4) A claiming race in the printed condition book for which 8 or more horses representing different betting interests are entered shall be run. All other purse races in the printed condition book for which 6 or more horses representing different betting interests are entered shall be run.

(5) If a purse race in the printed condition book fails to fill with the minimum number of entries required by subrule (4) of this rule to be run, then the association may cancel or declare off the race. The names of all horses entered shall be made available upon request.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3130 Split or divided races {#sec-r-431.3130 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3130}

Rule 3130. (1) If a race is cancelled or declared off, the association may split any race programmed for the same day and which may previously have been closed. Races printed in the condition book shall be filled before substitute and extra races.

(2) When a purse race is split and it results in 2 or more separate races, the racing secretary shall give notice thereof not less than 15 minutes before such races are closed to grant time for the making of additional entries to such split races.

(3) Division of entries upon the splitting of any race shall be made pursuant to the conditions under which entries and subscriptions thereof were made. In the absence of specific conditions, the following provisions apply:

(a) Horses originally joined as a mutuel entry may be placed in different divisions of a split race unless the person making the multiple entry, at the time of entry, indicates the uncoupling is not desired if a race is split.

(b) Division of entries in any split stakes race may be made according to age or sex, or both.

(c) Entries for a split race not divided by any method provided in subdivisions (a) and (b) of this subrule shall be divided by lot to provide a number of betting interests as near equal as possible for each division of a split race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3135 Post positions {#sec-r-431.3135 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3135}

Rule 3135. Post positions for all races shall be determined by lot drawn in the presence of those making the entries for the race. Post positions in split races also shall be redetermined by lot in the presence of those making the entries for a split race. The racing secretary shall assign pari-mutuel numbers for each starter to conform with the post position drawn, except when a race includes 2 or more horses coupled as a single betting interest.

Editor's note: R 431.1001 to R 431.4290 were originally filed on June 20, 1985. The rules were withdrawn and refiled on June 26, 1985.

History

History: 1985 AACS.

Mich. Admin. Code R 431.3140 Also-eligible list {#sec-r-431.3140 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3140}

Rule 3140. (1) If the number of entries for a purse race exceeds the number of horses permitted to start in a race as provided by R 431.3125, then the names of as many as 4 horses entered but not drawn into a race as starters shall be posted on the entry sheet as “also-eligible” to start.

(2) If any horse is scratched from a race for which an also-eligible list was created, a replacement horse shall be drawn from the also-eligible list into the race in order of preference. If none is preferred, a horse shall be drawn into the race from the also-eligible list by public lot.

(3) A horse that draws into a straightaway race from the also-eligible list shall start from the post position vacated by the scratched horse.

(4) A horse that draws into a non-straightaway race from the also-eligible list shall start from the outermost post position.

(5) The owner or trainer of a horse on the also-eligible list who does not wish to start the horse in the race shall so notify the racing secretary before scratch time for such race.

(6) A horse that is on an also-eligible list and that also has been drawn into a race as a starter for the succeeding day shall not be given an opportunity to be drawn into the earlier race for which the horse had been listed as also-eligible.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3145 Preference {#sec-r-431.3145 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3145}

Rule 3145. (1) Horses entered that are eliminated from races programmed in the printed condition book either by overfilling or failure to fill shall be listed by the racing secretary and given preference in subsequent races of similar distance and conditions.

(2) Preference shall be given in all races, except handicaps and stakes, according to a horse's last previous race during the current race meeting. The preference date on a horse that has drawn to race and has been scratched is the date of the race from which the horse was scratched. When a horse is racing for the first time in the current meet, the date of the first entry shall be considered the horse's last racing date and preference shall be applied accordingly.

(3) The preference date shall be claimed at the time of entry by indicating the date on the entry with the word “preferred.”

(4) Horses that are drawn into races and those on the also-eligible list that draw into races must receive a running date corresponding to the date on which they are to run and must lose all dates previously held.

(5) Horses on the veterinarian's list, stewards' list, or starter's list cannot establish a preference date.

(6) Preference dates remain the same regardless of a change of ownership or trainer.

(7) Horses that have established a preference date at the current race meeting lose that preference date if they race elsewhere. The reentry of such horses reestablishes the preference dates.

(8) Horses entered in the wrong race by an owner, trainer, or authorized agent lose their preference dates.

(9) There are no special preference dates for Michigan-bred horses.

(10) Preference dates must not be carried for a period of more than 45 days. The stewards shall make a final determination in a matter of interpretation of preference dates.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3150 Arrearage of fees {#sec-r-431.3150 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3150}

Rule 3150. Except by joint approval of the racing secretary and the stewards, a horse shall not be entered or raced if the owner is in arrears in stakes fees due.

Editor's note: R 431.1001 to R 431.4290 were originally filed on June 20, 1985. The rules were withdrawn and refiled on June 26, 1985.

History

History: 1985 AACS.

Mich. Admin. Code R 431.3155 Declarations {#sec-r-431.3155 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3155}

Rule 3155. Withdrawal of a horse from a race before closing by the owner, trainer, or authorized agent shall be made in the same manner as to form, time, and procedure as provided for the making of entries. Declarations are irrevocable. An association shall not require a declaration fee.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3160 Scratches {#sec-r-431.3160 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3160}

Rule 3160. Withdrawal of a horse from a race after closing by the owner, trainer, or authorized agent is permitted only under the following conditions:

(a) A horse may be scratched from a stakes race for any reason up until 45 minutes before post time for the race by filing, in writing, an intention to scratch with the clerk of scales.

(b) A horse shall not be scratched from a purse race without approval of the stewards and unless the intention to scratch has been filed, in writing, with the racing secretary at or before the time conspicuously posted as scratch time. A scratch of 1 horse coupled in a mutuel entry in a purse race is permitted up to 1 hour before post time for the first race.

(c) In purse races, horses that are physically disabled shall be excused first. If more than 10 interests remain in the 2 daily double races or trifecta races or more than 8 interests remain in the remainder of the races, owners or trainers may scratch to those limits by the specified scratch time of the day of the race. The privilege to scratch will be determined by lot when necessary.

(d) Scratches are irrevocable.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3165 Eligibility; allowances; penalties {#sec-r-431.3165 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3165}

Rule 3165. (1) In determining eligibility, allowances, and penalties, only reports, records, and statistics as published by the official database of racing information and statistics, a corresponding publication of a foreign country, or sworn statements as specified in subrule (2) of this rule shall be considered, unless otherwise provided by the published conditions of the race. Interpretations of the conditions of a race when in dispute, shall be made by the racing secretary with approval of the stewards.

(2) If during the previous calendar year, or if at any time for a maiden race, a horse has started in a race which is not reported by the official database of racing information and statistics, the horse shall not be entered to race until the owner has furnished the racing secretary, not less than 48 hours before the entry, performance records showing all of the following information:

(a) Where and when the horse raced.

(b) The distance.

(d) Amount earned.

(e) The horse's finishing position and time.

(f) The sworn statement and signature of the owner of the horse.

(3) Penalties and allowances are not cumulative unless so declared by the conditions of the race and shall take effect at the time of starting, except that in overnight races, a horse shall have only the allowance it was entitled to at the time of entry.

(4) Penalties are obligatory. Allowances are optional except filly and mare weight allowances. As to all or any part of the allowance thereof, and, in overnight races, allowances shall be claimed at the time of entry.

(5) Allowances to the produce of untried horses shall be claimed before the expiration of the time of the naming and shall not be lost by winning after that time.

(6) A horse shall not receive allowances of weight or be relieved from extra weight for having been beaten in 1 or more races, but this rule does not prohibit maiden allowances or allowances to horses that have not won a race within a specified period or a race of a specified value.

(7) When a race is in dispute, both the horse that finished first and any horse for which the race is authoritatively claimed are liable to all penalties attached to the winning of that race until the matter is decided.

(8) When winners of claiming races are exempt from penalties, the exemption shall apply to the winners of optional claiming races only if such winner was entered to be claimed.

(9) For every handicap, the handicapper shall append to the weights the day and hour from which winners will be liable to a penalty, if any, and an alteration shall not be made after publication, except in case of omission through error of the name or weight of a horse entered. In case of such omission, and by permission of the stewards, the omission may be rectified by the handicapper.

(10) Penalties shall not be recognized against horses, except maidens, or apply to jockeys in respect to the apprentice allowance, for winning races on minor tracks. In determining which tracks are minor tracks, the executive director may consider tracks that are not reported in the daily racing form or a corresponding publication of a foreign country.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3170 Michigan-bred races; preference {#sec-r-431.3170 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3170}

Rule 3170. (1) Michigan-bred horses shall be allowed 5 pounds in all overnight races. A Michigan-bred horse, for purposes of weight allowances, breeders' awards, and state supplements, is defined by R 285.810.1.

(2) Horses winning races at recognized county, district, or state fairs in Michigan shall not be penalized for such winnings in races run hereafter under the jurisdiction of the executive director. The maiden allowance, however, shall be lost by winning a race at any fair recognized by the Michigan department of agriculture and rural development.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3175 Winnings; computation {#sec-r-431.3175 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3175}

Rule 3175. (1) Winnings include all prizes for finishing first up to the time appointed for the start and shall apply to all races, but do not include the value of any prize which is not money or which is not paid in money. Winnings during the year shall be reckoned from the preceding January 1.

(2) A horse shall not be penalized for having been beaten in a race.

(3) The winnings of a horse in a stake race shall be computed in the value of the gross earnings.

(4) In determining the value of a series of races in which an extra sum of money is won by winning 2 or more races of the series, the extra amount shall be added to the purse of the last race by which the money was finally won.

(5) If there is a dead heat, each horse shall be a winner only of the amount received by the owner.

(6) Foreign winnings shall be calculated on the basis of the official rate of exchange on the day of winning.

(7) If a race is not run or is declared no contest, stakes, forfeit, and entrance money shall be returned.

(8) A race may be declared no contest if no qualified horse covers the course according to rule.

(9) Purse money, prize money, or an award of any kind may be distributed by the association unless a hold is placed on the funds by the stewards. The stewards shall notify the association in writing if further delay is necessary.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3180 Claiming races generally {#sec-r-431.3180 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3180}

Rule 3180. (1) The primary purpose of claiming races is the classification of horses.

(2) In a claiming race, a horse is subject to claim for its entered price by any owner in good standing who is properly licensed in this state. An owner may claim out of his or her initial race.

(3) A legal entity that seeks to make a claim and that otherwise is not eligible as set forth in these rules may do so, after filing proper license application, and by complying with all of the following provisions:

(a) Depositing an amount not less than the minimum claiming price at the race meeting with the horsemen's bookkeeper. Such amount shall remain on account until a claim is made or permission to claim has expired. If withdrawal of such amount occurs, any permit issued pursuant to this rule is automatically revoked and terminated.

(b) Submitting to the stewards, in writing, the name of a trainer whose Michigan license is currently in full force and effect and who will represent the legal entity that desires to make a claim once the claim is made.

(c) Securing from the stewards a written claiming permit which is in full force and effect when a claim is made by the legal entity or a trainer or authorized agent representing the legal entity.

(4) Before issuing a claiming permit, the stewards shall determine that an individual qualifies for an occupational license and permit by the standards of occupational licensing. A claiming permit shall take effect upon issue and shall not be issued for more than 30 days.

(5) A claim may be made on behalf of an owner by an authorized agent or trainer, but an authorized agent or trainer may claim only for the account of those for whom he or she is licensed as agent, and the name of the authorized agent as well as the name of the owner for whom the claim is being made shall appear on the claim slip.

(6) A licensee shall not claim his or her own horse or cause his or her own horse to be claimed, directly or indirectly, for his or her own account.

(7) A person shall not claim more than 1 horse from any 1 race. An authorized agent, although representing more than 1 owner, shall not submit more than 1 claim for any 1 race. When a stable consists of horses owned by more than 1 person and trained by the same trainer, not more than 1 claim may be entered on behalf of such stable in any 1 race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3195 Claiming price {#sec-r-431.3195 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3195}

Rule 3195. The claiming price of each horse in a claiming race shall be printed in the official program and a claim for the horse shall be for the amount so designated.

Editor's note: R 431.1001 to R 431.4290 were originally filed on June 20, 1985. The rules were withdrawn and refiled on June 26, 1985.

History

History: 1985 AACS.

Mich. Admin. Code R 431.3201 Claiming; form; accuracy; time of deposit; voiding a claim {#sec-r-431.3201 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3201}

Rule 3201. (1) A claim shall be made in writing on a form in an envelope furnished by the association and approved by the executive director. Both form and envelope shall be filled out completely and shall accurately identify the claim. A form and envelope that are not filled out completely or that do not accurately identify the claim render the claim void.

(2) A claim shall be deposited in the claim box not less than 15 minutes before post time of the race to which the claim pertains. The claim box shall be removed from the counter of the office not less than 15 minutes before post time of the race, as determined by the official track clock showing post time.

(3) Money or its equivalent shall not be put in the claim box. For a claim to be valid, the person making the claim shall have a credit balance in his or her account with the horsemen's bookkeeper of not less than the amount of the claim.

(4) A claim is irrevocable except as allowed under these rules.

(5) The stewards or their designated representative shall open the claim envelopes for each race as soon as, but not until, the horses for the race enter the race course on the way from the paddock to post.

(6) An official or other employee of an association shall not give any information as to the filing of claims except as is necessary for processing of the claims until the race has been run.

(7) Title to a claimed horse shall be vested in the successful claimant when the horse becomes a starter. A horse is a starter when the stall doors of the starting gate open in front of the horse at the time the official starter dispatches the horses.

(8) A claimed horse shall run in the interest and for the account of the owner who entered it.

(9) The stewards shall be the judges of the validity of a claim. A claim that is not made in compliance with these rules is void.

(10) If a claimed horse is excused by the stewards before the start of the race, a claim for such horse is void.

(11) All claimed horses must be post-race drug tested whereby the horse must be taken to the detention area and remains under control of the original trainer, until released from the detention area. The claimant shall present written authorization for the claim from the racing secretary. Any person who refuses to deliver a horse legally claimed out of a claiming race shall be suspended together with the horse until delivery is made.

(12) If more than 1 valid claim is filed for the same horse, title to the horse shall be determined by lot under the supervision of 1 or more of the stewards. Claimants shall be allowed to inspect claim forms apparatus used in the drawing of lot and be present for the draw.

(13) Notwithstanding any incorrect designation of sex or age appearing in the racing program or in any racing publication, the claimant of a horse shall be solely responsible for determining the age or sex of the horse claimed.

(14) Should the analysis of a post-race blood, urine, or other sample taken from a claimed horse result in a post-race positive test, or if the test results of a previous race have not been cleared by the date of the claim and result in a post-race positive test, the claimant’s trainer shall be promptly notified by the stewards and the claimant shall have the option to void the claim within 3 days of such notice by the claimant’s trainer. If the claimed horse starts in a race for the claimant, this rule may not be used to void the claim.

An election to void a claim shall be submitted in writing to the stewards by the claimant or the claimant’s trainer. If the claim is voided, the horse shall be returned to the owner of the horse who subjected the horse to claiming in the race from which the positive test resulted.

(15) A claim is void for any horse that dies during a race or is euthanized on the race course following a race.

(16) A claim is voidable at the discretion of the new owner, for a horse that is placed on the veterinarian’s list before leaving the detention barn following the race from which it is claimed. An election to void the claim must be made in writing to the stewards by the claimant or the claimant’s trainer within one hour after verbal notification by the official veterinarian that the horse has been placed on the veterinarian’s list following the race from which it is claimed.

(17) If a horse is claimed, a blood sample may be taken by a licensed veterinarian and tested for equine infectious anemia. The sample shall be forwarded within 24 hours to an approved laboratory. Pending the receipt of a negative test for equine infectious anemia, the money paid for the claimed horse shall be held by the association. If the test is positive for equine infectious anemia, the ownership of the claimed horse shall revert to the owner from whom the horse was claimed, and the claiming monies shall be returned to the person or persons who claimed the horse. The cost of the test is to be borne by the claimant.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3205 Claiming; reentry; additional restrictions {#sec-r-431.3205 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3205}

Rule 3205. (1) A claimed horse is not eligible to race in any other jurisdiction other than Michigan for a period of 60 days from the date of claim or until after the close of the live race meeting at which it was claimed.

(2) A claimed horse shall not be sold or transferred, wholly or in part, to anyone within 30 days after the day it was claimed, except in another claiming race.

(3) A claimed horse shall not remain in the same stable or under the care or management of the owner or trainer from whom the horse was claimed.

(4) When a horse is claimed, its engagements are included.

(5) A person who enters or who allows to be entered, in a claiming race, a horse against which claim is held by mortgage, bill of sale, or lien of any kind is subject to disciplinary action, unless, when or before entering the horse, the written consent of the holder of the mortgage, bill of sale, or lien is filed with the racing secretary.

(6) A person shall not enter a horse in a claiming race without disclosing the horse's true ownership.

(7) A person shall not enter into or offer to enter into an agreement not to claim, or attempt to prevent another person from claiming, any horse in a claiming race. A person shall not attempt, by intimidation or otherwise, to prevent anyone from running a horse in any claiming race. An owner, trainer, or authorized agent shall not make an agreement with another owner, trainer, or authorized agent for the protection of each other's horses in a claiming race.

(8) If a stable registered at a meeting is eliminated by sale or removal from the grounds, the right to claim is void. When a stable has been eliminated by claiming, the owner so affected is entitled to claim during the next 30 racing days at any live race meeting in this state. Stables eliminated by fire and other hazards may also be permitted by the stewards to claim under this rule.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3210 Dead heats {#sec-r-431.3210 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3210}

Rule 3210. (1) If a dead heat is declared, regardless of the number of horses running a dead heat, they shall divide the dead heated finishers' prize money equally.

(2) If the dividing owners cannot agree which owner is to have a cup or other prize which cannot be divided, the question shall be determined by the stewards by lot.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3215 Weights {#sec-r-431.3215 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3215}

Rule 3215. (1) When the conditions of a race do not state to the contrary, the weights set up by the jockey club are adopted as weights by the executive director.

(2) For a race in which horses are 2 years old, the weight is 122 pounds and for 3 year olds or 4 year olds, 126 pounds.

(3) Fillies 2 years old are allowed 3 pounds and mares 3 years old or over are allowed 5 pounds before, and 3 pounds after, September 1, except in handicaps and in races where the conditions expressly state otherwise.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3220 Jockeys; probationary mounts {#sec-r-431.3220 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3220}

Rule 3220. Any person who wishes to participate as a jockey and who has never previously ridden in a race may be required to ride in 5 races before being granted a license upgrade by the stewards. A person may only ride in the required probationary races if all of the following conditions have been satisfied:

(a) A trainer certifies, in writing, to the stewards that such person has demonstrated sufficient horsemanship to be permitted such probationary mounts.

(b) The official starter has schooled such person in breaking from the starting gate with other horses and approves such person as capable of starting a horse properly from the starting gate in a race.

(c) The stewards, in their sole discretion, are satisfied such person intends to become a licensed jockey, possesses the physical ability, and has demonstrated sufficient horsemanship to ride in a race without jeopardizing the safety of horses or other riders in such race. A person shall not be permitted to ride in any such probationary races without prior approval of the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3225 Jockeys; licensing qualifications {#sec-r-431.3225 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3225}

Rule 3225. In addition to rules applicable to licensees in part 1 of these rules, a holder of a license as a jockey or apprentice jockey shall comply with all of the following provisions:

(a) Be 16 years of age or older.

(b) Be licensed under his or her legal name, which shall be listed in the daily race program.

(d) When required by the stewards, provide a medical affidavit certifying that the applicant is physically and mentally capable of performing the activities and duties of a licensed jockey.

(e) Be under contract or have an apprentice certificate.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3230 Apprentice allowance and contract {#sec-r-431.3230 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3230}

Rule 3230. (1) Any person 16 years of age or older who has never been previously licensed as a jockey in any country and who is qualified under the provisions of R 431.3225 may claim in all purse races, except stakes and handicaps, the following weight allowances:

(a) Except as otherwise provided in this subrule, five pounds. This allowance shall continue for 1 year from the date of the apprentice jockey's fifth win. If the apprentice has not ridden 40 winners in the 1-year period, the allowance shall continue for a period of not more than 3 years from the date of the apprentice's first win until he or she has ridden 40 winners. Wins at recognized meetings where the rules do not permit apprentice allowances shall not count as wins with respect to this subdivision.

(b) After completion of the conditions specified in subdivision (a) of this subrule, a contracted apprentice, for 1 year, may claim 3 pounds when riding horses owned or trained by his or her original contract employer. The holder of the contract when an apprentice rides his or her first winner shall be considered the original contract employer.

(2) An apprentice jockey may enter into a contract with an owner or trainer qualified under R 431.3235 for a period of not less than 3, nor more than 5, years. Such contracts shall be approved by the stewards and filed with the executive director. Such contracts shall be binding in all respects on the signatories thereof. An apprentice who is not contracted shall be given an apprentice jockey certificate on a form furnished by the executive director.

(3) If an apprentice is unable to ride for a period of 14 consecutive days or more because of service in the Armed Forces of the United States, physical disablement, or restrictions on racing, the stewards, after consultation with the racing authority which first approved the original apprentice contract or certificate, may extend the time during which such apprentice weight allowance may be claimed for a period not longer than the period such apprentice jockey was unable to ride.

(4) After satisfying the conditions specified in subrule (1) of this rule, a rider shall be issued a license as a jockey before accepting subsequent mounts. Under these circumstances, the executive director may waive collection of an additional license fee.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3235 Jockey contracts {#sec-r-431.3235 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3235}

Rule 3235. A contract between an owner or trainer and an employee jockey is subject to the rules of racing. All riding contracts for terms longer than 30 days, as well as any amendments thereto or cancellation or transfer thereof, shall be in writing and shall contain notarized signatures of all parties to the contracts. A contract shall be approved by the stewards and filed with the executive director. The stewards may approve a riding contract and permit persons to participate in racing in this state if the stewards find that all of the following provisions are satisfied:

(a) The contract employer is an owner or trainer who owns or trains not less than 3 horses which are eligible to race at the time of execution of such contract.

(b) The contract employer possesses the character, ability, facilities, and financial responsibility conducive to developing a competent race jockey.

(c) The contract provides fair remuneration, adequate medical care, and an option equally available to both employer and jockey to cancel such contract after 2 years from date of execution.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3240 Rescinded {#sec-r-431.3240 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3240}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3245 Calls and engagements {#sec-r-431.3245 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3245}

Rule 3245. (1) Any jockey who is not prohibited by prior contract may agree to give first or second call on his or her racing-riding services to any owner or trainer. Such agreements, if for terms of more than 30 days, shall be in writing, approved by the stewards, and filed with the executive director.

(2) A jockey employed by a racing stable on a regular salaried basis shall not ride against the stable which employs him or her. An owner or trainer shall not employ or engage a jockey to prevent him or her from riding another horse.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3250 Jockeys' room; reporting {#sec-r-431.3250 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3250}

Rule 3250. (1) A jockey who has engagements to ride shall, upon entering the grounds, report directly to the scale room at the time designated by the clerk of scales.

After making weight, a jockey shall not leave the jockeys' room, except to ride in scheduled races, until all of his or her engagements for the day have been filled, except as approved by the stewards. Immediately before mounting, a jockey shall test his or her weights on the scales provided for that purpose. Failure to test his or her weights subjects a jockey to possible disciplinary action.

(2) A jockey shall not reenter the jockeys' room once his or her day's engagements are completed.

(3) A jockey shall wear the colors of the owner of the horse he or she is riding, unless permitted by the stewards to do otherwise.

(4) The association shall make arrangements for valets to attend the jockeys. Valets shall be paid for their services by the association. The valets shall work on a rotation system prepared by the jockeys’ room custodian.

(5) The valets shall be uniformly and neatly attired in uniforms provided by the association and approved by the executive director.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3255 Jockeys' room custodian; duties {#sec-r-431.3255 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3255}

Rule 3255. (1) It is the duty of the association, through the services of the jockeys' room custodian, to assure that order, decorum, and cleanliness are maintained in the jockeys' and scale rooms.

(2) The custodian shall assist the clerk of scales as the clerk desires.

(3) The custodian shall make certain that persons other than racing officials, representatives of the executive director, and the necessary jockeys' room attendants are not admitted to the jockeys' room after the designated time of a race day without the consent of the stewards for each time of entry.

(4) The custodian shall oversee the care and storage of all racing colors.

(5) The custodian shall oversee the jockey valets.

(6) The custodian shall report any irregularities to the clerk of scales that occur in his or her presence.

(7) The custodian shall make certain that jockeys are neat in appearance when they leave, with the approval of stewards, to observe the running of a race. Gambling and games of chance are not permitted in the jockeys' room.

(8) A person employed in the jockeys' room shall not make a bet for himself or herself or place a bet for another on any race under penalty of disciplinary action, including license revocation.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3260 Racing and safety equipment {#sec-r-431.3260 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3260}

Rule 3260. (1) Any person mounted on a horse or stable pony on the grounds must wear a properly secured safety helmet at all times. Additionally, all members of the starting gate crew must adhere to this rule at all times while performing their duties or handling a horse.

(2) Any person mounted on a horse or stable pony on the grounds must wear a properly-secured safety vest at all times. Additionally, all members of the starting gate crew must also adhere to this rule at all times while performing their duties or handling a horse.

(3) The association shall make available for use approved helmets, safety vests, and any other safety equipment as required by the executive director for association employees mounted on a horse or stable pony or members of the starting gate crew.

(4) A safety helmet or a safety vest must not be altered in any manner and the product marking must not be removed or defaced.

(5) A riding crop, number cloth, or blinkers are not allowed on the scales. A bridle or safety helmet approved by the executive director must not be weighed.

(6) The use of spurs is prohibited.

(7) As used in this rule, "member of the starting gate crew" means any person licensed as an assistant starter or any person who handles a horse in the starting gate.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3265 Wagering; attire; film review {#sec-r-431.3265 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3265}

Rule 3265. (1) A jockey shall not place a wager, cause the placement of a wager placed on his or her behalf, or accept any ticket or winnings from a wager on any race, except on his or her own mount and except through the owner or trainer of the horse he or she is riding.

(2) A jockey who is proven, to the satisfaction of the executive director, to have engaged in any forbidden wagering transaction or to have received any remuneration, gratuities, or incentive in connection with a horse race from persons other than the owner or trainer of a horse ridden by such jockey shall be subject to disciplinary action.

(3) Upon leaving the jockeys' room, until all of their engagements for the day have been filled, a jockey shall be neat and clean in appearance and wear the traditional jockey silks with all jacket buttons and catches fastened. A jockey shall wear the cap and jacket racing colors registered in the name of the owner of the horse he or she is to ride, stock tie, white breeches, top boots, safety helmet approved by the executive director, and a number on his or her right shoulder corresponding to his or her mount's number shown on the saddle cloth and in the daily racing program. In an emergency, an association may provide substitute colors.

(4) A jockey shall check the film list posted by the stewards in the jockeys' room the day after riding in a race. The posting of the list is notice to all riders whose names are listed thereon to present themselves at the time designated by the stewards to view the patrol films or videotapes of races.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3270 Jockey fees {#sec-r-431.3270 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3270}

Rule 3270. (1) A dispute as to whether or not the jockey has earned his or her fee after he or she has weighed out for the race must be determined by the stewards according to the circumstances in each case.

(2) When a jockey weighs out and does not ride in a race for which he or she has been engaged because an owner or trainer engaged more than 1 rider for the same race, the owner or trainer may be required to pay an appropriate fee to each rider engaged for such race. A jockey shall honor his or her contractual agreements.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3275 Jockey agents; restrictions {#sec-r-431.3275 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3275}

Rule 3275. (1) Jockeys may make their own engagements or the engagements may be made by a licensed jockey agent or contract employer. A jockey agent may act for 2 jockeys and 1 apprentice jockey.

(2) A jockey agent shall not be allowed in the paddock or jockeys' room at any time.

(3) A jockey agent shall maintain separate and accurate records of all engagements contracted for jockeys he or she represents and shall, at all times, have these records available for examination by the executive director or his or her authorized representative.

(4) Inaccuracies or the failure to maintain records may result in disciplinary action, including license revocation.

(5) When a jockey dismisses a jockey agent, the jockey shall give immediate notice to the stewards in writing. Failure of the jockey to give written notice to the stewards may result in disciplinary action.

(6) A jockey agent shall not enter a horse in any race unless he or she has given first or second call to the owner or trainer. A jockey agent's license is invalid if he or she is not representing a jockey currently participating at the race meeting.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3280 Fulfilling engagements {#sec-r-431.3280 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3280}

Rule 3280. Every jockey shall fulfill his or her scheduled riding engagements, unless excused by the stewards. A jockey shall not be forced to ride a horse he or she believes to be unsafe, but if the stewards find that a jockey's refusal to fulfill a riding engagement is based on a personal belief unwarranted by the facts and circumstances, such jockey may be subject to disciplinary action.

History

History: 1985 AACS.

Mich. Admin. Code R 431.3285 Temporary suspensions {#sec-r-431.3285 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3285}

Rule 3285. The stewards, in their discretion, may permit a suspended jockey to fulfill, on the 2 days following the issuance of the suspension, all engagements made for the 2 days before the suspension.

History

History: 1985 AACS.

Mich. Admin. Code R 431.3290 Paddock to post {#sec-r-431.3290 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3290}

Rule 3290. (1) A horse shall not start unless the trainer and the owner are licensed by the executive director. A trainer who is absent from his or her stable or from the grounds where his or her horses are racing for more than 2 consecutive racing days, and whose horses are entered or are to be entered, shall provide a trainer to assume complete responsibility for the horses being entered or running. Such trainer shall sign, in the presence of the stewards, a form furnished by the executive director accepting complete responsibility for the horses entered or running.

(2) Every horse entering the paddock to race shall be inspected as to its shoeing, if any. An unshod horse may race with permission of the stewards and must be noted on the program or announced to the public.

(3) All horses shall parade and carry their weight from the paddock to the starting post. A horse that fails to do so may be disqualified by the stewards.

(4) After entering the race course, not more than 12 minutes shall elapse in the parade of horses to the post, except in cases of unavoidable delay. After passing the stand once, horses are allowed to break formation and canter, warm up, or go as they please to the post. When horses have reached the post, they shall be started without unnecessary delay.

(5) Each association shall employ not less than 2 outriders to escort starters to the post and to assist in the returning of all horses to the unsaddling area. An outrider shall not lead any horse unless it has demonstrated unruly behavior, but shall assist in the control of any horse which might cause injury to a jockey or others. Outriders are required to be present on the race course, mounted, and ready to assist in the control of any unruly horse or to recapture any loose horse at all times horses are permitted on the race course for exercising or racing.

(6) The horses are under the control of the official starter after they leave the paddock until the start and are not entitled to further care from their attendants, except that, in case of an accident, the official starter may permit jockeys to dismount and may permit horses to be cared for during the delay. Other than this exception, a jockey shall not dismount.

Unruly horses shall be placed on the schooling list.

(7) The official starter is required to load horses in the starting gate in order of post position. Any exception to this must be approved by the stewards.

(8) An owner or trainer who desires that his or her horse not be tailed or tonged at the starting gate shall make, at time of entry, a written request to the official starter and the horse shall not be tailed or tonged.

(9) Horses shall be schooled under the supervision of the official starter or his or her assistant. The official starter shall report horses that are sufficiently schooled to start to the racing secretary. Unruly horses shall be placed on the schooling list and shall not start until approved by the official starter. The schooling list shall be respected in all cases.

(10) Before becoming a starter, a horse may be excused by the stewards because of physical disability, incorrigibility, or because of having been improperly entered in the race.

(11) If a horse is excused by the stewards before becoming a starter, or if the doors at the front of the stall gate do not open when the official starter dispatches the field, which causes a horse to be left, or if any horse is disqualified for bringing in underweight, the money bet on any horse or horses thus eliminated shall be deducted from the pool and refunded to the purchasers of tickets on such horse or horses. However, if 1 horse of an entry or 1 of the horses grouped in the field leaves the stall gate and brings in proper weight, there shall not be a refund on the entry or on the field.

(12) When a loose horse leaves the race course the horse shall be scratched.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3295 Disqualification {#sec-r-431.3295 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3295}

Rule 3295. (1) A leading horse is entitled to any part of the race course, but if any horse swerves or is ridden to either side so as to interfere with or impede another horse, it is a foul and the horse may be disqualified at the discretion of the stewards. If the stewards determine the foul was intentional or due to careless riding, they shall take disciplinary action against the offending jockey.

(2) The stewards may determine the extent of disqualification in case of fouls. The stewards may place the offending horse behind the horses which, in their judgment, it interfered with or the stewards may place the offending horse last.

(3) When a horse is disqualified under this rule, the stewards may disqualify a horse in the same race belonging wholly or partly to the same owner or trained by the same trainer.

(4) The stewards shall take cognizance of foul riding, whether or not an objection is made.

(5) A person shall not assist a jockey in taking his or her equipment off his or her horse, except with permission of the stewards.

(6) A person shall not throw any covering over any horse at the place of dismounting until the horse's equipment is removed.

(7) A jockey shall weigh in at the same weight as that which he or she weighed out. If short of the weigh-out weight by 2 pounds or more, the jockey's mount may be disqualified and a refund of wagers on the horse may be ordered.

(8) A horse that does not carry its jockey across the finish line is disqualified.

(9) A jockey who willfully strikes another jockey or horse with his or her riding crop or who grabs the clothing, equipment, or person of another jockey or horse may be subject to disciplinary action and his or her mount may be disqualified.

History

History: 1985 AACS; 2009 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3300 Riding crops {#sec-r-431.3300 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3300}

Rule 3300. (1) All riding crops are subject to inspection and approval by the stewards and the clerk of scales. Riding crops must meet all of the following requirements:

(a) Riding crops shall have a shaft and a flap and shall be allowed in flat racing, including training, only if all of the following specifications are met:

(i) Maximum weight of eight ounces.

(ii) Maximum length, including flap, of 30 inches.

(iii) Minimum diameter of the shaft of 3/8 inch.

(iv) Smooth shaft contact area with no protrusions or raised surface, and covered by shock absorbing material that gives a compression factor of at least 1 millimeter throughout its circumference.

(b) The flap is the only allowable attachment to the shaft and must meet all of the following specifications:

(i) Length beyond the end of the shaft a maximum of 1 inch.

(ii) Width a minimum of 0.8 inch and a maximum of 1.6 inches.

(iii) No reinforcements or additions beyond the end of the shaft.

(iv) No binding within 7 inches of the end of the shaft.

(v) Shock absorbing characteristics similar to those of the contact area of the shaft.

(2) Use of riding crop is subject to all of the following requirements:

(a) Although the use of a riding crop is not required, any jockey who uses a riding crop during a race shall do so only in a manner consistent with exerting his or her best efforts to win.

(b) In all races where a jockey will ride without a riding crop, an announcement of such fact shall be made over the public address system.

(c) No electrical or mechanical device or other expedient designed to increase or retard the speed of a horse, other than the riding crop approved by the stewards, shall be possessed by anyone, or applied by anyone to the horse at any time on the grounds of the association during the race meeting, whether in a race or otherwise.

(d) Riding crops shall not be used on two-year-old horses before April 1 of each year.

(e) The riding crop shall only be used for safety, correction, and encouragement.

(f) All riders should comply with the following when using a riding crop:

(i) Showing the horse the riding crop and giving it time to respond before hitting it.

(ii) Having used the riding crop, giving the horse a chance to respond before using it again.

(iii) Using the riding crop in rhythm with the horse’s stride.

(g) Prohibited uses of the riding crop include, but are not limited to, striking a horse in any of the following manners:

(i) On the head, flanks, or on any other part of its body other than the shoulders or hind quarters except when necessary to control a horse.

(ii) During the post parade or after the finish of the race except when necessary to control the horse.

(iii) Excessively or brutally causing welts or breaks in the skin.

(iv) When the horse is clearly out of the race or has obtained its maximum placing.

(v) Persistently even though the horse is showing no response under the riding crop.

(h) The riding crop may not be used to strike another rider or other horse.

(3) After the race, horses are subject to inspection by the official veterinarian looking for cuts, welts, or bruises in the skin. Any adverse findings shall be reported to the stewards.

(4) The giving of instructions by any licensee that if obeyed would lead to a violation of this rule may result in disciplinary action also being taken against the licensee who gave such instructions.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3301 Jockey’s best effort to win and diligence in riding {#sec-r-431.3301 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3301}

Rule 3301. (1) A jockey shall give his or her best effort to win in all races in which he or she participates and shall exercise due diligence in riding a race. If, in the opinion of the stewards, a jockey does not put forth his or her best effort to win or does not use due diligence in the riding of a race, the jockey shall be subject to disciplinary action.

(2) Every horse in every race shall be ridden so as to win or finish as near as possible to first and demonstrate the best and fastest performance of which it is capable at the time. A horse shall not be eased up without adequate cause, even if it has no apparent chance to earn a portion of the purse money. A jockey who unnecessarily causes a horse to shorten stride may be subject to disciplinary action at the discretion of the stewards.

Stewards shall take cognizance of marked reversal of form of all horses and shall conduct inquiries of the owner, trainer, and all other persons connected with such horse suspected of unusual racing. If the stewards find that such horse was deliberately restrained or impeded in any way by any means so as not to win or finish as near as possible to first, any person found to have contributed to such circumstances may be subject to disciplinary action at the discretion of the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3305 Scheduling of races for Michigan-bred horses {#sec-r-431.3305 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3305}

Rule 3305. (1) At least 1 race for Michigan-bred horses shall be scheduled on each full thoroughbred program.

(2) Entries may be accepted from non-Michigan-bred horses into the race for Michigan-bred horses creating a pool of entries for a Michigan-bred preferred race.

(3) If an approved Michigan-bred horse race does not fill by a time agreed upon by the racing secretary and designated CHO representative, then the Michigan-bred preferred race may be substituted by the racing secretary with the approval of the designated CHO representative.

(4) Michigan-bred supplements may be awarded in Michigan-bred preferred races to those Michigan-bred horses finishing first, second, or third with the approval of the director of the Michigan department of agriculture and rural development or his or her designated representative.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.3310 Mixed thoroughbred breed horse and quarter horse breed horse races {#sec-r-431.3310 omnilex-key=us-mi-regs-official--dept-treasury--R 431.3310}

Rule 3310. Upon proper application, the stewards may approve races under the thoroughbred rules in which both thoroughbred and quarter horses compete in the same race. Charted wins are valid records.

PART 4. STANDARDBRED RACING

History

History: 1989 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4001 Definitions; C to E {#sec-r-431.4001 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4001}

Rule 4001. As used in this part:

(a) “Classified race” means a race in which, regardless of the eligibility of horses, entries are selected on the basis of ability or performance.

(b) “Conditioned race” means an overnight race to which eligibility is determined according to specified qualifications. Such qualifications may be based upon the following:

(i) Money winnings in a specified number of previous races or during a specified period of time.

(ii) Finishing position in a specified number of previous races or during a specified period of time.

(iii) Age, sex, or number of starts during a specified period of time.

(iv) Special qualifications for foreign horses that do not have a representative number of starts in the United States or Canada.

(v) Any combination of the qualifications listed in this subdivision.

(c) “Current charted line” means written documentation of a horse's performance recorded on the horse's electronic eligibility by a licensed charter or licensed clerk of the course, within 45 days of the date of the race for which the horse is entered. A current charted line shall include all of the following information and the symbols for freelegged, breaks, and park outs shall be used where appropriate:

(i) Date of race.

(ii) Location.

(iii) Race course size, if other than 1/2 mile.

(iv) Race course condition.

(v) Type of race.

(vi) Distance of race.

(vii) Fractional times of the leading horse, including race time.

(viii) Post position.

(ix) Position at first quarter.

(x) Position at half.

(xi) Position at three-quarters.

(xii) Position at head of stretch with lengths behind leader.

(xiii) Position at finish with lengths behind leader.

(xiv) Individual race time of horse.

(xv) Closing dollar odds.

(xvi) Name of driver.

(xvii) Dead heats.

(d) “Dash” means a race decided in a single trial. Dashes may be given in a series of 2 or 3 governed by 1 entry fee for the series, in which event a horse shall start in all dashes.

Positions may be drawn for each dash.

(e) “Declaration” means the naming of a particular horse to a particular race as a starter. Declarations shall be taken not more than 4 days in advance for all races, except those for which qualifying dashes are provided.

(f) “Early closing race” means a race for a definite purse to which entries close not less than 6 weeks preceding the race. The entrance fee may be on the installment plan or otherwise and all payments are forfeits. Payments on 2-year-olds in early closing races are not permissible before February fifteenth of the year in which the horse is a 2-yearold.

(g) “Elimination heats” means heats of a race split according to these rules which qualify the contestants for a final heat.

(h) “Exercise driver” means a person licensed as such, hired to warm up a horse participating on a given day.

History

History: 1985 AACS; 2007 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4005 Definitions; H to M {#sec-r-431.4005 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4005}

Rule 4005. As used in this part:

(a) “Handicap” means a race in which performance, sex, or distance allowance is made and in which post positions may be assigned or, in the case of a handicap claiming race, determined by claiming price.

(b) “Heat” means a single trial in a race 2 in 3 or 3-heat plan.

(c) “Horse” means a standardbred horse registered as such with the United States Trotting Association (USTA), and is a term used in these rules to designate any standardbred irrespective of age or sex designation.

(d) “Kick” means any contact between the driver’s foot and the horse.

(e) “Late closing race” means a race for a fixed amount to which entries close less than 6 weeks, but more than 3 days, before the race is to be held.

(f) “Maiden” means a horse that has never won a heat or race at the gait at which it is entered to start and for which a purse is offered. Races or purse money awarded to a horse after the “official” sign has been posted shall not be considered winning performances or affect a horse's status as a maiden.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4010 Definitions; R to S {#sec-r-431.4010 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4010}

Rule 4010. As used in this part:

(a) “Record” means the fastest time made by a horse in a heat or dash which the horse won or is a performance against time. A standard record is a record of 2:20 or faster for 2-year-olds and 2:15 or faster for all other ages.

(b) “Sulky” means a dual-shaft, dual-wheel racing vehicle. The use of any sulky in competition at any harness race track shall be subject to the approval of the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4015 Racing officials {#sec-r-431.4015 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4015}

Rule 4015. (1) The following positions at a race meeting are designated as officials:

(a) Stewards (b) Patrol judges.

(d) Official starter.

(e) Clerk of course.

(f) Timer/photo finish operator.

(g) Horse identifier.

(h) Racing secretary, and such assistants as he or she may require.

(i) Official veterinarian.

(2) In case of an emergency, the association may provide a substitute steward, with the approval of the executive director, to act as the steward for the remainder of any program.

(3) A person, other than the stewards, shall not be allowed in the stewards' stands during the running of a race, except with permission of the stewards.

(4) A person, other than the stewards, shall not be in the stewards' stand when a decision is being made on a foul claim or stewards’ inquiry.

(5) Racing officials serving in the capacity of steward, patrol judges, clerk of course, official starter, and horse identifier may be required to take and satisfactorily pass an optical examination at the request of the executive director. The examination shall evidence a minimum corrected vision of 20/30 and an ability to distinguish colors correctly.

(6) All racing officials, with the exception of those representing the executive director, shall be nominated by the association. All of the racing officials are subject to the approval of the executive director. The executive director reserves the right to demand a change of racing officials for what he or she considers good and sufficient reason. The successors of a racing official so replaced shall also be subject to the approval of the executive director.

(7) A racing official shall not be the owner or part owner of a horse racing at a track where the official is serving.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4020 Stewards; duties and responsibilities {#sec-r-431.4020 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4020}

Rule 4020. (1) In addition to the general powers specified in these rules, the stewards shall have the following specific duties and responsibilities:

(a) Exclude from the race any horse that, in their opinion, is improperly equipped, dangerous, or unfit to race.

(b) Investigate any act of cruelty seen by them or reported to them, whether a horse subjected to the alleged cruelty is stabled on or off the grounds.

(d) Closely observe the performance of the drivers and the horses to ascertain if there are any violations of racing rules, particularly interference, helping, or inconsistent racing, and exhaust all means possible to safeguard the contestants and the public.

(e) Notify a summoned party of a hearing as soon as possible.

(f) Be in the stand 15 minutes before the first race.

(g) Observe the preliminary warming up of horses and scoring, noting all of the following:

(i) Behavior of horses.

(ii) Lameness.

(iii) Equipment.

(iv) Conduct of the drivers.

(v) Changes in odds.

(vi) Any unusual incidents pertaining to horses or drivers participating in races.

(h) Designate 1 steward to lock the pari-mutuel machines immediately upon the horses reaching the official starting point.

(i) Be in communication with the patrol judges, by use of patrol phones or radio, from the time the official starter picks up the horses until the finish of the race. A recording may be made and preserved of all communications between the patrol judges and the stewards' stand.

(j) Cause the “objection” sign or “inquiry” sign to be posted in the case of an objection or possible rule violation, and immediately notify the announcer of the objection and the horse or horses involved. In addition, the stewards shall cause the “inquiry” sign to be posted when there has been an accident during the race. As soon as the stewards have made a decision, the posted sign shall be removed, the correct placing displayed, the “official” sign flashed, the announcer provided with an explanation of the decision for announcement, and a video displayed on racetrack monitors.

(k) Display the “photo” sign if the order of finish among the contending horses is less than 1/2 length or a contending horse is on a break at the finish. After the photo has been examined and a decision made, true copies shall be made and posted or projected for public inspection.

(l) May review the video recordings of the races conducted the previous race day and, in instances of a possible rule infraction or for instructional purposes, show and explain such films to drivers on a daily basis at a time designated by the stewards.

(m) Maintain a daily stewards’ report in the manner and form prescribed by the executive director and report all actions of the stewards that arise during a race day.

(2) In the performance of their duties, the stewards shall have unrestricted access to all areas and grounds of an association.

(3) A complaint against a racing official may be made to the stewards or to the executive director. Complaints made directly to the stewards shall be reported to the executive director, in writing, together with any action which has been taken by the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4025 Reversals of form {#sec-r-431.4025 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4025}

Rule 4025. (1) The stewards shall take cognizance of any marked reversal of form of all horses and shall, in their discretion, conduct inquiries. During inquiries, the stewards may take into consideration the betting action on the horse in question and films of the horse's previous races, and shall consider all other facts they consider relevant toward making a determination as to whether the horse being evaluated was deliberately restrained in any way by any means in previous races so as not to win or finish as near as possible to first. If after such review the stewards make a determination that there is a reasonable probability that the horse in question was deliberately restrained in any way by any means in previous races so as not to win or finish as near as possible to first, the stewards may take disciplinary action against a person found to have contributed to the restraining of the horse.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4030 Patrol judges; duties {#sec-r-431.4030 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4030}

Rule 4030. (1) A patrol judge shall take a position designated by the stewards. He or she shall report all fouls and improper conduct immediately by phone or radio. The result of a heat or dash shall not be announced until sufficient time has elapsed to receive the reports of the patrol judges. Where there is a patrol car, only 1 patrol judge is required.

(2) The stewards may require a patrol judge to submit to the stewards a daily written report of his or her observations.

(3) In the absence of a patrol judge, the official starter shall assume the patrol judge duties.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4035 Official starter; duties {#sec-r-431.4035 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4035}

Rule 4035. The official starter shall be in the starting gate 15 minutes before the first race. He or she shall have control over horses and shall have authority to recommend penalties to the stewards for any violation of the rules from the formation of the parade until the word “go” is given.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4040 Clerk of course; duties {#sec-r-431.4040 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4040}

Rule 4040. The clerk of the course has the following duties:

(a) At request of the stewards, assist in drawing positions.

(b) Record in the stewards’ book all of the following information:

(i) All horses entered and their electronic eligibility numbers.

(ii) Names of owners and drivers and drivers' United States Trotting Association license numbers.

(iii) The charted lines.

(iv) The money won by horses at that track.

(v) Drawn or ruled out horses.

(vi) Each horse's time in minutes, seconds, and fifths of seconds.

(c) Check electronic eligibility before and after the race, and enter all information provided for thereon, including the horse's position in the race.

(d) Verify the correctness of the stewards' book, including race time, placing and money winnings, and reasons for disqualifications, if any, and see that the book is properly signed.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4045 Timer/photo finish operator; duties {#sec-r-431.4045 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4045}

Rule 4045. (1) The timer/photo finish operator shall verify the correctness of the electric timing device. All times shall be announced and recorded in fifths of seconds.

(2) The timer/photo finish operator shall be in the stand 15 minutes before the first heat or dash is to be held. The timer/photo finish operator shall start his or her watch when the first horse leaves the point from which the distance of the race is measured. The time of the leading horse at the quarter, half, three-quarters, and finish shall be taken. If odd distances are raced, the fractions shall be noted accordingly.

(3) The timer/photo finish operator shall record images of all horses as they cross the finish line and provide those images to the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4050 Paddock judge; duties {#sec-r-431.4050 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4050}

Rule 4050. The paddock judge shall have general supervision over the paddock and be responsible for all of the following:

(a) Getting the fields on the race course for post parades pursuant to the schedule given to him or her by the stewards.

(b) Inspection of horses for changes in equipment, broken or faulty equipment, or saddle pads.

(d) Supervising the proper check in and check out of horses and drivers at the times designated and reporting any infractions to the stewards.

(e) Ensuring that the horse identifier checks the identification of all horses coming into the paddock, including the tattoo number, unique microchip, color, and markings.

(f) Direction of the activities of the paddock blacksmith.

(g) Notifying the stewards of anything that could in any way change, delay, or otherwise affect the racing program.

(h) Ensuring that only properly authorized persons are permitted in the paddock.

(i) Ensuring that, except for warm-up trips, no horse leaves the paddock until called to post.

(j) Informing drivers when breathalyzer tests are being conducted.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4055 Racing secretary; duties {#sec-r-431.4055 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4055}

Rule 4055. (1) Duties of the racing secretary include, but are not limited to, all of the following:

(a) Be familiar with the age, class, and competitive ability of all horses racing at the track.

(b) Where the rules require, classify and reclassify horses pursuant to the rules.

(d) Provide for the listing of horses in the daily program and examine all entry blanks and declarations to verify all information set forth therein and select the horses to start and the also-eligible horses from the declarations pursuant to the rules governing these functions.

(e) Examine nominations and declarations in early closing and stake races to verify the eligibility of all declarations and nominations and to compile lists thereof for publication.

(2) The racing secretary may reject the declaration on any horse whose past performance indicates that the horse would be below the competitive level of other horses declared.

(3) A 2-year-old shall not be permitted to start in a dash or heat exceeding 1 mile in distance, and a 2-year-old shall not be permitted to race in more than 2 heats or dashes in any single day.

(4) Races or dashes shall be given at a stated distance in units not shorter than 1/16 of a mile. The length of a race and the number of heats shall be stated in the conditions. If the distance or number of heats is not specified, all races shall be a single mile dash.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4060 Official veterinarians; duties; recordkeeping {#sec-r-431.4060 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4060}

Rule 4060. (1) The official veterinarian shall examine horses the stewards request him or her to examine. The official veterinarian is responsible for approving for release from the veterinarian’s list all horses that have been placed on the list because of lameness, sickness, or injury before they may be entered to race again.

(3) The official veterinarian shall observe the training and warming up of horses on the grounds, shall examine any horse that appears ill or injured, and shall report such information to the stewards.

(4) The official veterinarian shall observe the horses in the paddock and warming up for the racing program, observe the race, and observe the horses pulling up after the race.

They shall investigate and examine such horses that appear to be ill or injured, and shall report such information to the stewards.

(5) The official veterinarian shall examine, where possible, and where not possible to personally examine, shall confirm, the condition of horses intended to be scratched from a race so that such horses will be certified as unfit to race. A horse having been certified as unfit and scratched from a race shall not be entered again until certified as fit by the official veterinarian.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4065 Program director; designation; responsibility {#sec-r-431.4065 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4065}

Rule 4065. The association shall designate a person to be program director. It shall be the responsibility of the person so designated to furnish the public with complete and accurate past performance information.

History

History: 1985 AACS.

Mich. Admin. Code R 431.4070 Program information {#sec-r-431.4070 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4070}

Rule 4070. (1) A printed program shall furnish all of the following information:

(a) Horse's name and sex.

(b) Color and age.

(d) Owner's name.

(e) Driver's name and colors.

(f) In claiming races, the price for which the horse is entered to be claimed, with allowances for age and sex.

(g) Not less than the last 5 performances and accurate chart lines. An accurate chart line shall include all of the following information:

(i) Date of the race and place.

(ii) Size of the race course if other than a half-mile race course.

(iii) Symbol for free-legged paces.

(iv) Symbol for trotting hobbles.

(v) Race course condition plus allowances.

(vi) Type of race.

(vii) Distance.

(viii) The fractional times of the leading horse, including race time.

(ix) Post position.

(x) Position at one quarter; one-half; three quarters; the stretch, with lengths behind the leader; and at the finish, with lengths behind the leader.

(xi) Individual time of the horse.

(xii) Closing dollar odds.

(xiii) Name of the driver.

(xiv) Names of the horses placed first, second, and third by the stewards. The standard symbols for breaks and park-outs shall be used, where applicable.

(h) Identification of drivers racing with a provisional license.

(i) Identification of pacers that are racing without hobbles.

(j) Identification of trotters racing with trotting hobbles.

(k) A summary of the starts in purse races, earnings, and the best win time for the current and preceding year. A horse's best win time may be earned in either a purse or non-purse race.

(l) The name of the trainer.

(m) The consolidated line, which shall carry all of the following information if the race is not at 1 mile:

(i) Date, place, and time of the race.

(ii) Driver finish.

(iii) The race course condition and distance.

(n) A stable name with the name of at least 1 owner. If the stable represents more than 1 owner, the joint ownership shall be indicated by the use of the name of 1 owner and the words “et al.”

(2) Owners, drivers, or others found guilty of providing inaccurate information on a horse's performance or attempting to have misleading information given in a program shall be subject to disciplinary action.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4075 Charting of races {#sec-r-431.4075 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4075}

Rule 4075. The charting of races shall be done by a United States Trotting Association certified person who shall be responsible for providing a complete and accurate chart.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4080 Paddock rules {#sec-r-431.4080 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4080}

Rule 4080. (1) Horses shall be in the paddock at the time prescribed by these rules or by the stewards, but, in any event, at least 1 hour before post time of the race in which the horse is to compete. Except for warm-up trips, a horse shall not leave the paddock until called to the post.

(2) All of the following persons are entitled to admission to the paddock:

(a) Owners of horses competing on the date of the race.

(b) Not more than 2 members of a registered stable, other than the driver, on any 1 racing day.

(d) Drivers of horses competing on the date of the race.

(e) Grooms and caretakers of horses competing on the date of the race.

(f) Officials whose duties require their presence in the paddock.

(g) A licensed horsemen's representative.

(h) Exercise drivers.

(3) A driver, exercise driver, trainer, or groom, once admitted to the paddock, shall not leave the paddock, other than to warm up a horse, without approval from the paddock judge or stewards, until the race or races for which the driver, exercise driver, trainer, or groom was admitted are completed.

(4) A licensee shall not return to the paddock after horses in their stable have completed racing until all races of that program have been completed.

(5) Drivers shall report to the paddock judge 1 hour before post time for the driver's first race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4085 Horse identification {#sec-r-431.4085 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4085}

Rule 4085. (1) A horse shall not be permitted to race unless it is fully identified.

The burden of establishing a horse’s identity rests with the owner or trainer and must be verified by a racing official.

(2) A racing official will rely on the following characteristics to verify a horse’s identity:

(a) Lip or freeze tattoo numbers.

(b) Unique microchip.

(d) Color.

(e) Markings.

(f) Size.

(g) Gait.

(h) Any combination of the factors listed in this subrule. If submitted, an electronic eligibility issued by the United States Trotting Association may be considered as an aid to proper identification.

(3) A horse that has not been tattooed or microchipped shall not start in a race. Any licensee refusing to allow a horse to be tattooed or microchipped by a United States Trotting Association representative may be subject to disciplinary action.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4090 Horse eligibility certification {#sec-r-431.4090 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4090}

Rule 4090. (1) A horse shall not be permitted to start any race unless current electronic eligibility at the proper gait is obtained.

(2) The stewards may permit a horse to start without current electronic eligibility being recorded if they are satisfied that both of the following requirements have been met:

(a) The issuance of the electronic eligibility for the horse is verified.

(b) The eligibility of the horse to the race is established.

(3) Applications for United States Trotting Association electronic eligibility shall state name and address of the owner and the sex, age, and breeding of the horse and shall be accompanied by such other information, membership application, and fees as required by the United States Trotting Association.

(4) Any horse on lease shall race in the name of the lessee. An electronic eligibility shall not be issued to a horse under lease unless a copy of the lease is filed with the United States Trotting Association. The names of both the owner and the lessee shall be noted on the electronic eligibility of leased horses.

(5) If the electronic eligibility is not endorsed to him or her, the new owner or lessee shall apply for an electronic eligibility, pay the regular fee, and send satisfactory information on the starts made by the horse during the current year, which will include all pari-mutuel races, fair races, qualifying races, and matinee races.

(6) A person who enters a chart line on an electronic eligibility when the race has not been charted by a licensed charter or who in any way tampers with an electronic eligibility may be subject to disciplinary action.

(7) Corrections on electronic eligibility may be made only by a representative of the United States Trotting Association or a racing official, who shall place on the electronic eligibility his or her initial and the date of correction.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4095 Electronic eligibility for foreign horses {#sec-r-431.4095 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4095}

Rule 4095. An electronic eligibility shall not be recognized on a horse coming from a foreign country other than Canada unless all of the following information, certified by the trotting association or governing body of that foreign country from which the horse comes, is furnished:

(a) The number of starts during the preceding year, together with the number of firsts, seconds, and thirds for each horse, and the total amount of money won during this period.

(b) The number of races in which the horse has started during the current year, together with the number of firsts, seconds, and thirds for each horse, and the money won during this period.

(i) The date.

(ii) Place.

(iii) Track.

(iv) Race course condition.

(v) Post position or handicap, if it was a handicap race.

(vi) Distance of the race.

(vii) Position at the finish.

(viii) The time of the race.

(ix) The driver's name.

(x) The first 3 horses in the race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4100 Horse eligibility restrictions {#sec-r-431.4100 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4100}

Rule 4100. (1) If United States Trotting Association registration is properly applied for, a horse may be permitted to race during the current year with an electronic eligibility marked “registration applied for.”

(2) A horse under the age of 2 or over the age of 14 shall not be permitted to race at a race meeting licensed by the executive director.

(3) A licensee withholding a registration certificate from the owner or lessee of a horse, after notification by the stewards has been made for the return thereof, may be suspended until the certificate is returned.

(4) A horse that is owned wholly or in part by, or is trained by, an ineligible or associated person is prohibited from racing.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4105 Racing eligibility; conflicting published conditions; standards to determine horse qualification in overnight races; condition books at extended parimutuel meetings {#sec-r-431.4105 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4105}

Rule 4105. (1) For purposes of eligibility, a race season or a racing year shall be the calendar year. In recording winnings, gross winnings must be used and odd cents must be dropped and disregarded.

(2) Time records or bars shall not be used as an element of eligibility.

(3) Horses shall be eligible when entries close.

(4) If there are conflicting published conditions and neither is withdrawn by the track, the published conditions more favorable to the nominator shall govern.

(5) The racing secretary shall prescribe standards to determine whether a horse is qualified to race in overnight races at a race meeting. Where time standards are established at a race meeting for both trotters and pacers, trotters shall be given a minimum of a 2-second allowance in relation to pacers.

(6) At extended pari-mutuel meetings, condition books and sheets shall be prepared, and races may be divided or substituted races may be used only where regularly scheduled races fail to fill. Condition sheets or books containing not less than 1 week of a racing program shall be available to horsemen not less than 24 hours before closing on any race program contained therein. The racing secretary shall forward copies of each condition book and overnight sheet to the United States Trotting Association as soon as they are available to the horsemen.

(7) Any race conducted under a race meeting license where pari-mutuel wagering is offered shall be considered extended pari-mutuel for the purpose of eligibility.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4110 Types of races {#sec-r-431.4110 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4110}

Rule 4110. (1) In presenting a program of racing, the racing secretary shall use exclusively the following types of races:

(a) Stakes and futurities.

(b) Early closing and late closing races.

(d) Claiming races.

(e) Preferred races limited to the fastest horses at the race meeting. These may be free-for-all races, junior free-for-all races, open races, preferred races, or invitationals.

Horses to be used in the races shall be posted in the racing office. Horses so posted shall not be eligible for conditioned overnight races unless the conditions specifically include horses on the preferred list.

(2) A 2-year-old or 3-year-old horse is not eligible to be placed on the preferred or invitational list to race against older horses until it has won 7 races, unless requested by the owner or authorized agent. The owner or authorized agent may withdraw the request at his or her discretion. Where a race meeting is in progress in December and continues in January of the subsequent year, races and earnings won at that race meeting may be computed in determining whether a horse may be placed on the preferred list.

(3) Classified races are permitted when authorized by the executive director.

(4) Conditions shall not be written in a way that any horse is deprived of an opportunity to race in the normal preference cycle. Where the word “preferred” is used in a condition, it shall not supersede the date preference. Not more than 3 also-eligible conditions shall be used in writing the conditions for any overnight race.

(5) Any dash or any heat shall be considered as a separate race for the purposes of conditioned racing.

(6) Named races are not permitted, except for preferred races for the fastest horses at a race meeting as set forth in subrule (1)(e) of this rule.

(7) Substitute races may be provided for each day's program and shall be so designated. Entries in races not filling shall be posted. A substitute race or a race divided into 2 divisions shall be used only if regularly scheduled races fail to fill.

(8) A fair and reasonable racing opportunity shall be afforded both trotters and pacers in reasonable proportion from horses available and qualified to race.

(9) The term “start,” in any type of condition, unless specifically so stated means only those performances in a purse race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4115 Drawings; posting of horses {#sec-r-431.4115 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4115}

Rule 4115. (1) For all overnight races, starters and also-eligibles shall be drawn by lot from those properly declared in. When conditions have not been filled, the racing secretary may split races to fill a card. Where necessary to fill a card, not more than 2 conditioned races per day may be divided into divisions after preference has been applied. The divisions may be selected by the racing secretary. For all other overnight races that are divided, the division shall be by lot unless the conditions provide for a division based on performance, earnings, or sex.

(2) The names of all horses on the grounds whose electronic eligibility are recorded and are ready to race shall be posted by gait in the racing office, together with all the pertinent information concerning the horses which may be required to determine the eligibility of the horses to conditioned races offered at the race meeting. There shall be a separate posting of 2-, 3-, and 4-year-olds.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4120 Claiming races; purpose {#sec-r-431.4120 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4120}

Rule 4120. The primary purpose of claiming races is the classification of horses.

History

History: 1985 AACS.

Mich. Admin. Code R 431.4125 Claiming; eligibility {#sec-r-431.4125 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4125}

Rule 4125. (1) In a claiming race, a horse is subject to claim for its entered price, after allowances, by a legal entity in good standing who is currently licensed as an owner in this state. An owner may claim out of his or her initial race.

(2) A legal entity that decides to make a claim and that otherwise is not eligible as set forth in these rules may do so, after filing proper license application, and by complying with all of the following provisions:

(a) Depositing an amount not less than the minimum claiming price at the race meeting, plus the requisite transfer fees, with the horsemen's bookkeeper. The amount shall remain on account until a claim is in fact made or permission to claim has expired.

If withdrawal of the amount occurs, any permit issued pursuant to this rule is automatically revoked and terminated.

(b) Sending to the stewards the written name of a trainer whose Michigan license is currently in full force and effect and who will represent the legal entity that desires to make a claim once the claim is made.

(c) Securing from the stewards a written claiming permit which is in full force and effect when a claim is made by the legal entity or a trainer or authorized agent representing the legal entity.

(3) Before issuing a claiming permit, the stewards shall determine that an individual qualifies for an occupational license and permit by the standards of occupational license.

A claiming permit shall take effect upon issue and shall not be valid for more than 30 days.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4130 Claiming; prohibitions {#sec-r-431.4130 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4130}

Rule 4130. (1) A person shall not claim his or her own horse and shall not claim a horse trained or driven by him or her.

(2) A qualified owner or his or her agent shall not claim a horse for another person.

(3) An owner shall not cause his or her horse to be claimed, directly or indirectly, for his or her own account.

(4) A person shall not offer, or enter into an agreement, to claim or not to claim, or attempt to prevent another person from claiming, any horse in a claiming race.

(5) A person shall not enter a horse against which there is a mortgage, bill of sale, or lien of any kind, unless the written consent of the holder thereof is filed with the clerk of the course and the association conducting the claiming race.

(6) An entry in a claiming race which has been declared for a subsequent race, if claimed, may be withdrawn from the subsequent race without penalty.

(7) A mare known to be in foal shall not be declared into a claiming race.

(8) A person shall not claim more than 1 horse from any 1 race. No authorized agent shall submit more than 1 claim for the same horse in a race, even if the authorized agent represents several owners. When a stable consists of horses owned by more than 1 person and trained by the same trainer, not more than 1 claim may be entered on behalf of the stable in any 1 race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4135 Claiming; procedure {#sec-r-431.4135 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4135}

Rule 4135. (1) To claim, an owner shall have, to his or her credit with the track giving the race, an amount equivalent to the specified claiming price plus the requisite fees for transfer of registration.

(2) A declaration into a claiming race shall not be accepted unless written permission of the owner is filed with the racing secretary at the time of declaration.

(3) The basic claiming price for which each horse is entered shall be printed on the program, but all claims shall be for the adjusted price after the prescribed allowances made for sex or age have been added to the basic claiming price.

(4) All claims shall be in writing on a form approved by the executive director, and presented to the clerk of the course not less than 15 minutes before the time scheduled for the race to begin.

(5) An official or other employee of an association shall not give any information on claims filed until after the race except as is necessary for processing of the claim.

Immediately after the race, the claims, if any, shall be examined by the stewards.

(6) A claimed horse must be taken to the detention barn for post-race drug testing and remains under control of the original trainer until the horse is released from the detention barn. The claimant shall present written authorization for the claim from the racing secretary.

(7) Any person who refuses to deliver a horse legally claimed out of a claiming race shall be suspended together with the horse until delivery is made.

(8) A claim is irrevocable except as allowed under these rules. If more than 1 valid claim is filed for the same horse, title to the horse shall be determined by lot under the supervision of 1 or more of the stewards. Claimants shall be allowed to inspect claim forms apparatus used in the drawing of lot and be present for the draw.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4140 Claiming; title transfer {#sec-r-431.4140 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4140}

Rule 4140. (1) A horse claimed shall race in all heats or dashes of the race in the interest and for the account of the owner who declared it in the race, but title to the claimed horse shall be vested in the successful claimant from the time when the word “go” is given in the first heat or dash except as provided in these rules.

(2) The stewards shall require a person making a claim for a horse to file an affidavit that he or she is claiming the horse for his or her own account or as authorized agent and not for any other person. Any person who files a false affidavit shall be subjected to disciplinary action.

(3) A claimed horse shall not be sold or transferred, wholly or in part, to anyone within 30 days after the day it was claimed, except in another claiming race.

(4) If a horse in a claiming race is scratched by the stewards for any reason, including being declared a non-starter, any claims on that horse are void. However, that horse in its next start, regardless of the condition of the race entered, may be claimed for the same price as the race from which it was scratched. This subrule applies from the date of the scratch or declaration of a non-starter until the last day of the final harness race meeting licensed by the executive director that year. This subrule does not include horses scratched due to entry error or ineligibility, which is verified by the race office in writing.

Any horse scratched from a claiming race and taken out of state to race shall upon its return to Michigan be bound by this subrule within the same year.

(5) If the analysis of a post-race blood or urine sample taken from a claimed horse results in a post-race positive test for an ARCI class 1 drug, the claimant’s trainer shall be promptly notified by the stewards and the claimant shall have the option to void the claim within 3 days of the notice by the claimant’s trainer. An election to void a claim shall be submitted in writing to the stewards by the claimant or the claimant’s trainer. If the claim is voided, the horse shall be returned to the owner of the horse who subjected the horse to claiming in the race from which the positive test resulted.

(6) If a horse is claimed, a blood sample may be taken by a licensed veterinarian to be tested for equine infectious anemia. The sample shall be forwarded within 24 hours to an approved laboratory. Pending the receipt of a negative test for equine infectious anemia, the money paid for the claimed horse shall be held by the association. If the test is positive for equine infectious anemia, the ownership of the claimed horse shall revert to the owner from whom the horse was claimed, and the claiming monies shall be returned to the person or persons who claimed the horse. The cost of the test is to be borne by the claimant.

(7) A claimed horse is not eligible to race in any other jurisdiction other than Michigan for a period of 30 days from the date of claim or until after the close of the live race meeting at which it was claimed, whichever period of time is the less.

(8) The stewards shall be the judges of the validity of a claim.

(9) A claim not filled out completely or that does not accurately identify the claim renders the claim void.

(10) Notwithstanding any incorrect designation of sex or age appearing in the racing publication, the claimant of a horse shall be solely responsible for determining the age or sex of the horse claimed.

(11) A person shall not enter a horse in a claiming race without disclosing the horse’s true ownership. When a horse is claimed, the change of ownership of a horse entered in a claiming race by someone who does not have undisputed possession of the horse shall not be considered after closing time for claims of that race.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4145 Claiming; price; conditions {#sec-r-431.4145 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4145}

Rule 4145. (1) Subject to the approval of the stewards and compliance with the association’s release of funds policy, the association will pay the claiming price to the owner of the horse that was claimed when the registration certificate or transfer of claim is delivered.

(2) Aside from the claiming price, conditions and allowances in claiming races may be based only on age and sex. When possible, claiming races shall be written to separate horses 5 years old and up from young horses and to separate males from females. If sexes are mixed, mares shall be given a price allowance if there is no price allowance given to a spayed mare racing in a claiming race.

(3) A horse owner shall not be prohibited from determining the price for which his or her horse shall be entered.

(4) If the stewards determine that the declaration of any horse to a claiming race is fraudulent on the part of the declarer, they may void the claim and may, at the option of the claimant, order the horse returned to the person declaring it in. If the stewards determine that any claim of a horse is fraudulent on the part of the person making the claim, they may void the claim and may, at the option of the person declaring it in, return the horse to the person declaring it in.

(5) claiming authorization form signed by the registered owner or owners and indicating the minimum amount for which the horse may be entered to be claimed shall be on file at the racing office. To facilitate transfer of claimed horses, a steward may sign the transfer if the steward then sends the registration certificate and claiming authorization to the registrar for transfer.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4150 Stakes and futurities {#sec-r-431.4150 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4150}

Rule 4150. (1) An association presenting stakes and futurities shall, in addition to meeting United States Trotting Association notification requirements, set the nominating date and the dates for all sustaining payments on the fifteenth day of the month. There shall be no payments on yearlings, except for a nomination payment, which shall be due not later than August 15. Before taking any sustaining payment during the year the race is to be held, the date and place of the race shall be stated. A stake or futurity sustaining fee on 2-year-olds is not due before March 15, and for all other ages before February 15, of any year. There shall be no conditions that call for payments in stakes or futurities to become due after August 15 and before February 15 of the following year. No more than 1 sustaining payment of 2-year-olds in stakes and futurities that do not have a 2-year-old division is permitted. No more than 2 sustaining payments on any horse of any age in any calendar year, with the exception of the starting fee, shall be approved. The date for closing of nominations of yearlings to stakes shall be July 15.

(2) An association shall, where date schedules permit, advertise the week and place the stake or futurity will be held before taking nominations.

(3) An estimated purse shall not be advertised or published in excess of the actual purse paid or distributed during the previous year, unless increased by guaranteed added money. A stake or futurity shall not be raced for less than 75% of the average estimated purse.

(4) Conditions shall not be written so as to provide for a filly division of a race with less added money than the colt division of a race, unless authorized by the executive director.

(5) Added money shall be not less than 30% of the purse. If a stake or futurity is split into divisions, the added money for each division shall be not less than 20% of all nomination, sustaining, and starting fees paid into the stake or futurity.

(6) Failure to make any payment required by the conditions constitutes an automatic withdrawal from the race.

(7) If a mare nominated to a futurity fails to have a live foal, the nominator may substitute a foal if the conditions so provide.

(8) A deduction, voluntary or involuntary, shall not be made from any purse or stake or futurity, except that, if the conditions specifically so provide, reasonable deductions may be made for clerical, printing, postage, and surety bond expenses specifically related to the purse, stake, or futurity.

(9) Unless otherwise specified in the conditions of a stake or futurity, the money division shall be as follows:

(a) Five or more starters: 50-25-12-8-5%.

(b) Four starters only: 50-25-15-10%.

(d) Two starters only: 65-35%.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4155 Entries or declarations for stakes and futurities {#sec-r-431.4155 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4155}

Rule 4155. (1) An entry or declaration shall comply with all of the following provisions:

(a) Be made by any means established by the association, including telephone, electronic, or on paper in the entry box.

(b) List all of the following information:

(i) The names of the owner or authorized agent, trainer, and the registered stable name or lessee.

(ii) The name, color, sex, sire, and dam of the horse.

(iii) The race or races in which the horse is to be entered.

(iv) The identity of the driver.

(2) A starting fee shall be due and payable with the declaration to start and shall not be refunded if the horse fails to start, unless the horse dies between the time of declaration to start and the start of the race. As used in this rule “starting fee” means the payment required with the declaration to start.

(3) Noncompliance with any of the requirements of subrules (1) and (2) of this rule or the false stating of facts for the purpose of deception subjects a person filing the entry to disciplinary action.

(4) Nominations and sustaining payments not actually received at the hour of closing shall be ineligible, except for those sent by letter bearing a postmark not later than the following day, excluding Sunday, or those sent electronically at or before the hour of closing and stating the color, sex, name of horse, the class to be entered, the name and residence of the owner, and the person making the nomination or sustaining payment.

When a nomination or sustaining payment in a stake, futurity, early closing race, or late closing race becomes payable on a Sunday or legal holiday that falls on Saturday, the payment is to be due on the following Monday, and, if made by mail, the envelope shall be postmarked on or before the following Tuesday. If a payment falls on a Monday that is a legal holiday, the payment is due on Tuesday, and, if made by mail, shall be postmarked on or before the following Wednesday. The provisions of this section do not apply to declarations to start.

(5) Where an entry is received by letter bearing the postage meter date without any postmark placed thereon by the post office department, the postage meter date shall be considered to be a postmark for the purposes of this rule if the letter is actually received within 7 days following the closing date of the race. Receipt after this time of an entry by letter bearing the metered postmark date is not a valid entry or payment to any race. The meter date shall conform to the postmarked date as set forth in this subrule to be valid.

(6) Entries and payments not governed by published conditions are void. Any nominator who is allowed privileges which are not in accordance with the published conditions of the race or which are in conflict with these rules shall be barred from winning any portion of the purse, and the nominator and any person who allowed the privileges shall be considered to have been parties to fraud.

(7) A nominator is required to guarantee the identity and eligibility of his or her nominations and declarations, and, if given incorrectly, the nominator may be subject to disciplinary action and any winnings shall be forfeited and redistributed to eligible entries. A person obtaining a purse or money through fraud or error shall surrender the purse or money or, together with the parties implicated in the incident and the horse or horses, shall be suspended until the demand is complied with. However, where any horse is ineligible as a result of the negligence of the racing secretary, the track shall reimburse the owner for the resultant loss of winnings.

(8) A horse entered in a race to which it is ineligible may be transferred to any race to which it is eligible at the same gait.

(9) Associations presenting early closing and late closing races shall state the place and day the race will be held. A change in date, program, races, or conditions cannot be made after the nominations have been taken without the written consent of the owners or trainers of all horses eligible at the time the conditions are changed. All nominations and payments, other than starting fees, in early closing races shall be advertised to fall on the fifteenth day of the month. If the race does not fill, each nominator shall be notified within 10 days and a refund of the nomination fees shall accompany the notice. If conditions published for early closing race allow a transfer for change of gait, the transfer shall be to the slowest class the horse is eligible for at the adopted gait, eligibility to be determined at the time of closing of entries. The race to which a transfer may be made shall be the race nearest the date of the race originally entered. Two-year-olds, 3-yearolds, or 4-year-olds entered in classes for their age may only transfer to classes for the same age group at the adopted gait to the race nearest the date of the race originally entered, with entry fees to be adjusted. A complete list of nominations to any early closing race shall be published within 45 days after the closing date or after the date of the last sustaining payment. The list shall be mailed to the owners or authorized agents of all eligible horses.

(10) Conditions of early closing races or late closing races that will eliminate horses nominated to a race or add horses that have not been nominated to a race by reason of the performance of the horses at an earlier meeting held the same season are invalid. Early closing races and late closing races shall have not more than 2 also-eligible conditions.

(11) In early closing races, late closing races, and overnight races requiring entry fees, all money paid in by the nominators in excess of 85% of the advertised purse shall be added to the advertised purse, and the total shall then be considered to be the minimum purse. If the race is split and raced in divisions, the provisions of R 431.4160(5) apply.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4160 Entries and starters required {#sec-r-431.4160 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4160}

Rule 4160. (1) An association shall specify how many entries are required for overnight races. After the condition is fulfilled, the race shall be held.

(2) In early closing races or late closing races, if 5 or more interests are declared in to start, the race shall be held. Stakes and futurities shall be raced if 1 or more horses are declared in to start.

(3) In an early closing race, if less interests are declared in than are required to start, and if all declarers are immediately so notified, the interests declared in and ready to race shall be entitled to all the entrance money and any forfeits for each horse named.

(4) In all racing events, not more than one trailer shall be permitted, regardless of the size of the track except with the approval of the executive director. At least 8 feet per horse must be provided to the starters in the front tier. Trailers are not permitted where the race course has room to score all horses abreast.

(5) The following apply to added money races:

(a) If more horses are declared to start than allowed in one field, the race will be conducted in divisions or eliminations, as specified in the conditions.

(b) Where a race other than a stake or futurity is divided, each division must race for not less than 75 percent of the advertised purse.

Unless conditions provide otherwise, 60 percent of the total purse must be divided equally among the elimination heats. The final heat must be contested for 40 percent of the total purse. Elimination heats and the final heat must not be raced on the same day except with the approval of the executive director. The winner of the final heat is the winner of the race.

(d) Unless the conditions for the added money race provide otherwise, the stewards shall draw the post positions for the final heat in elimination races by lot.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4165 Rescinded {#sec-r-431.4165 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4165}

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4170 Declaration to start; drawing {#sec-r-431.4170 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4170}

Rule 4170. (1) Unless otherwise specified in the conditions, the declaration time is at the discretion of the stewards.

(2) A horse shall not be permitted to enter in more than 1 race on any 1 racing day.

Races decided by more than 1 heat are considered a single race.

(3) To avoid confusion and misunderstanding, the time when declarations close is considered to be local time at the track where the race is being held.

(4) The association shall provide a locked box with an aperture through which declarations may be deposited. The entry box shall be in the charge of the stewards. Just before opening the box at meetings where futurities, stakes, early closing races, or late closing races are on the program, the steward present shall check with the racing secretary to ascertain if any declarations made by mail, or otherwise are in the race office and not deposited in the entry box, and the steward shall see that they are declared and drawn in the proper race.

(5) The entry box shall be opened at the advertised time by the steward and, if present, an official representative of the horsemen’s organization. An owner or authorized agent for a horse with a declaration in the entry box shall not be denied the privilege of being present.

(6) Under the supervision of the steward, the entry box shall be unlocked, declarations found therein shall be sorted and listed, the eligibility verified, preference ascertained, starters selected, and post positions drawn. If it is necessary to reopen any race, a public announcement shall be made at least twice and the box reopened. A daily record shall be kept in the stewards' book showing the name of the steward who performed the functions specified in this subrule.

(7) In races with a duration of more than 1 dash or heat, the stewards may draw post positions from the stand for succeeding dashes or heats.

(8) Declarations made by any means established by the association, including telephone, electronic, or on paper in the entry box, and which are actually received and for which evidence thereof is deposited in the box before the time specified to declare in shall be drawn in the same manner as other declarations. The drawings are final. Mail, telephone, or electronic declarations shall state all of the following information:

(a) The name and address of the owner or lessee.

(b) The name, color, sex, sire, and dam of the horse.

(d) The date and place of the last start.

(e) A current summary, including the number of starts, firsts, seconds, thirds, earnings, and the best winning time for the current year.

(f) The race or races in which the horse is to be entered.

(9) When an association requires a horse to be declared at a stated time, failure to declare as required is considered a withdrawal from the race.

(10) After declaration to start has been made, a horse shall not be withdrawn, except by permission of the stewards. Persons violating this subrule are subject to disciplinary action.

(11) If a person making the declaration fails to honor it and there is no opportunity for a hearing by the stewards, the matter shall be referred to the executive director.

(12) Drawings are final unless there is conclusive evidence that a horse properly declared was omitted from the race through the error of an association or its agent or employee, in which event the horse shall be added to the race and shall take the place of an ineligible horse, considering preference, if the error is discovered before either scratch time or the printing of the program, whichever is sooner. In claiming handicap races, a horse moving into the race must be placed on the outside of the horses of that base claiming price. However, in the case of early closers of more than $10,000.00, a stake, a handicap, and futurity races, the race shall be redrawn.

(13) When drawing post positions for handicapped races on a ½ mile race course, 1- 2-3-9 are considered inside post positions.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4175 Qualifying races {#sec-r-431.4175 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4175}

Rule 4175. At all race meetings, entries cannot be accepted without at least 1 satisfactory current charted line on the electronic eligibility. When an association determines a race will be nonbetting, entries may be accepted on a horse without a current charted line. Declarations for overnight races shall be governed by the following qualifier provisions:

(a) The association, in conjunction with the horsemen's association, shall establish the qualifying standards for a race meeting. Horses unable to show a performance to qualify for races at the race meeting may be placed on the stewards' list, but this action shall not be recorded on electronic eligibility. Placing a horse on the stewards' list does not affect its right to compete in a stake, futurity, early closing race, or late closing race, unless the horse is placed on the list for unmanageability or dangerousness.

(b) To provide complete and accurate chart information on time and beaten lengths, a standard photo finish shall be in use.

(c) When a horse has raced at a charted meeting during the current season and then gone to meetings where the races are not charted, the information from the uncharted races may be summarized, including each start, and consolidated. The consolidated line shall carry all of the following information if the race is not at 1 mile:

(i) Date.

(ii) Place.

(iii) Time.

(iv) Driver.

(v) Finish.

(vi) Race course condition.

(vii) Distance.

(d) The stewards may require any horse that has been on the stewards' list to race in a qualifying race. If a horse has raced an individual time not meeting the qualifying standard for that class of horse, the horse shall be required to race in a qualifying race, except as provided in subdivision (a) of this rule. A horse placed on the list for choking or bleeding during a race shall requalify.

(e) The stewards may permit a horse to qualify by means of a timed workout.

(f) The identifier shall fully examine a horse starting in a qualifying race or official workout.

(g) Qualifying races shall be scheduled at least once a week during live racing including the week before the opening day of the meet. The number of qualifying races per day may be limited by the stewards.

(h) Horses in qualifying races may be subject to specimen collection and testing.

(i) Qualifying races must be recorded by the association.

(j) Qualifying races cancelled due to weather may be carried over to the following day. Alternative scheduling or the decision not to reschedule the cancelled qualifying races may be authorized by the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4180 Mutuel entries; common ties {#sec-r-431.4180 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4180}

Rule 4180. (1) Not more than 2 horses that have common ties so as to be joined as a mutuel entry shall be entered in an overnight race. A preference for 1 of the horses shall be made when making a double entry. Two horses that have common ties by trainer only or those joined as a mutuel entry shall not both start in a race to the exclusion of a single interest.

(2) In races with a purse value of $20,000 or more, horses with common ownership may race as separate betting interests. Horses that are trained or owned by the same person shall be indicated prominently in the program.

(3) Horses having common ties through training only, but which have separate and distinct ownership, may be uncoupled and run in a race as separate betting interests when approved by the stewards.

(4) If the race is split into 2 or more divisions, horses in an entry shall be seeded, insofar as possible, first by owners, then by trainers, and then by stables, but the divisions in which they compete and their post positions shall be drawn by lot. This subrule shall also apply to elimination heats.

(5) In addition to the provisions of subrules (1) to (3) of this rule, horses separately owned or trained may be coupled as an entry when approved by the stewards where it is necessary to do so to protect the public interest for the purpose of pari-mutuel wagering only. However, where this is done, entries shall not be rejected.

History

History: 1985 AACS; 2007 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4185 Also-eligibles {#sec-r-431.4185 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4185}

Rule 4185. (1) Not more than 2 horses may be drawn as also-eligibles for a race. If 1 or more horses are excused by the stewards, the also-eligible horse or horses shall race and take the post position drawn by the horse that it replaces, except in handicap races.

(2) In handicap races, the also-eligible horse shall take the place of the horse that it replaces if the handicap is the same. If the handicap is different, the also-eligible horse shall take the position on the outside of horses with a similar handicap.

(3) A horse shall not be added to a race as an eligible unless the horse was drawn as such at the time declarations closed. A horse shall not be barred from a race to which it is otherwise eligible by reason of its preference due to the fact that it has been drawn as an also-eligible.

(4) A horse moved into the race from the also-eligible list cannot be drawn except by permission of the stewards, but the owner or trainer of the a horse shall be notified that the horse is to race and it shall be posted at the race office. All horses which are on the also-eligible list and which are not moved in to race by 9 a.m. on the day preceding the day of the race shall be released.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4190 Preference {#sec-r-431.4190 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4190}

Rule 4190. (1) Preference shall be given in all overnight races according to a horse's last previous purse race. If 2 or more horses have the same preference date, then a second preference date shall be used. If 2 or more horses have the same first and second preference dates, then the entry must be determined by lot. The preference date on a horse that has drawn to race and been scratched is the date of the race from which the horse was scratched.

(2) When a horse is racing for its first lifetime start, the date of the first successful qualifying race shall be considered its preference date. However, if an overnight race has been reopened because it did not fill, all eligible horses declared in to the race before the reopening shall receive preference over horses subsequently declared, irrespective of the actual preference dates.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4195 Stewards’ list {#sec-r-431.4195 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4195}

Rule 4195. (1) A horse that is unfit to race because it is dangerous, unmanageable, unable to show a performance to qualify at the race meeting, or otherwise unfit to race at the race meeting may be placed on a stewards' list by the stewards, and declarations on the horse shall be refused. The owner or trainer shall be notified of the action, and the reason for refusing declaration shall be clearly stated on the notice.

(2) When any horse is placed on the stewards' list, the clerk of the course shall make a note on the electronic eligibility of the horse, showing the date the horse was put on the stewards' list, the reason therefor, and the date of removal if the horse has been removed.

Horses shall be released from the stewards list by the clerk of the course on the recommendation of the stewards.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4200 Naming drivers {#sec-r-431.4200 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4200}

Rule 4200. Declarations shall state who shall drive the horse. Drivers may be changed until a time specified by the stewards. After such time a driver shall not be changed without permission of the stewards. The stewards shall approve or disapprove the second and third drivers. The trainer shall ensure availability of the driver named.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4205 Rescinded {#sec-r-431.4205 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4205}

History

History: 1985 AACS; 2009 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4210 Starting {#sec-r-431.4210 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4210}

Rule 4210. (1) The official starter shall have control of the horses from the formation of the parade until he or she gives the word “go”.

(2) The official starter shall notify the drivers when to come to the starting gate.

During or before the parade, the drivers shall be informed as to the number of scores permitted.

(3) The horses shall be brought to the starting gate as near a quarter of a mile before the starting line as the race course will permit.

(4) Allowing sufficient time so that the speed of the gate can be increased gradually, the following minimum speeds shall be maintained:

(a) For the first 1/8 mile, not less than 11 miles per hour.

(b) For the next 1/16 of a mile, not less than 18 miles per hour.

(c) From the point specified in subdivision (b) of this subrule to the starting point, the speed shall be gradually increased to maximum speed.

(5) On mile race courses, horses shall be brought to the starting gate at the head of the stretch and the relative speeds mentioned in subrule (4) of this rule shall be maintained.

(6) The starting point shall be a distance of not less than 200 feet from the first turn.

The official starter shall give the word “go” at the starting point.

(7) When a particular speed has been reached in the course of a start, the speed shall not be decreased, except in the case of a recall.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4215 Recall; notice {#sec-r-431.4215 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4215}

Rule 4215. (1) Before giving the word “go,” the official starter shall endeavor to get all horses away in position and on gait.

(2) The official starter may, at any time before the word “go” is given, order a recall for 1 of the following reasons:

(a) A horse scores ahead of the starting gate.

(b) There is interference before the word “go” is given.

(d) A horse falls before the word “go” is given.

(e) A horse refuses to turn or come to the gate.

(3) In case of a recall, a light which is plainly visible to the driver shall be flashed and a recall sounded, but the starting gate shall proceed out of the path of the horses. Where possible, the official starter shall leave the wings of the gate extended and gradually slow the speed of the gate to assist in stopping the field of horses. In an emergency, however, the official starter shall use his or her discretion to close the wings of the gate.

(4) There shall be no recall for a breaking horse.

(5) There shall be no recall after the word “go” has been given, and any horse, regardless of its position or occurrence of an accident, is considered a starter from the formation of the parade, unless dismissed by the official starter.

(6) If any of the reasons noted in subrule (2) of this rule occurs and the official starter fails to sound a recall, for whatever reason, then the offending horse or horses may be considered by the stewards to have had an unfair start and may be disqualified from the race. Wagers on the disqualified horse or horses shall be refunded.

(7) If a second recall is sounded for the same horse or horses for any occurrences noted in subrule (2) of this rule in the same race, that horse or those horses shall be ordered dismissed and wagers on that horse or those horses shall be refunded.

(8) Any horse scratched because of causing 2 recalls shall have to re-qualify 2 consecutive times and must be schooled behind the starting gate.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4220 Penalties to drivers {#sec-r-431.4220 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4220}

Rule 4220. The official starter may recommend to the stewards that a driver be penalized for any of the following reasons:

(a) Delaying the start.

(b) Failure to obey the official starter’s instruction.

(d) Coming to the starting gate out of position.

(e) Crossing over before reaching the starting point.

(f) Interference with another driver during the start.

(g) Failure to come up into position and on the gate.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4225 Gate restrictions {#sec-r-431.4225 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4225}

Rule 4225. (1) A person, other than the official starter, his or her assistant, and a patrol judge, shall not be allowed to ride in the starting gate unless permission has been granted by the stewards.

(2) Use of a mechanical loudspeaker for any purpose other than to give instructions to drivers is prohibited. The volume shall not be higher than is necessary to carry the voice of the official starter to the drivers.

(3) If there are 2 tiers of horses, the withdrawing of a horse that has drawn or earned a position in the front tier shall not affect the position of the horses that have drawn or earned positions in the second tier. When a horse is drawn from any tier, horses on the outside shall move in to fill up the vacancy. When a horse has drawn a post position in the second tier, the driver of the horse may elect to score out behind any horse in the first tier if he or she does not thereby interfere with another trailing horse or deprive another trailing horse of a drawn position.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4230 Starting without gates {#sec-r-431.4230 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4230}

Rule 4230. (1) An association shall provide a backup starting gate. In the event of an extraordinary occurrence, however, horses may be started without a gate.

(2) When horses are started without a gate, the official starter shall have control of the horses from the formation of the parade until he or she gives the word “go”. The official starter shall be located at the wire or other point on the race course from which the word “go” shall be given. A driver shall not cause unnecessary delay after the horses are called.

(3) The driver of any horse refusing or failing to follow instructions of the official starter as to the parade or scoring ahead of the pole horse may be set down for the heat in which the offense occurs or for another period as the official starter shall recommend and may be subject to disciplinary action. When a driver is taken down, the substitute shall be permitted to score the horse once. A horse delaying the race may be started regardless of its position or gait, and there shall not be a recall on account of a bad actor.

(4) If the word “go” is not given, all the horses in the race shall immediately turn at the tap of the bell or other signal and shall jog back to their parade positions for a fresh start. There shall be no recall after the word “go” has been given.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4235 Starters {#sec-r-431.4235 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4235}

Rule 4235. The horses shall be deemed to have started when the word "go" is given by the starter, and all of the horses shall go the course, except where there is an accident in which, in the opinion of the stewards, it is impossible to go the course.

History

History: 1985 AACS.

Mich. Admin. Code R 431.4240 Unmanageable horses {#sec-r-431.4240 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4240}

Rule 4240. If, in the opinion of the stewards or the official starter, a horse is unmanageable or liable to cause accidents or injury to any other horse or to any driver, it may be scratched. When this action is taken by the official starter, the stewards must be notified and the stewards must notify the public. When this action is taken by the stewards, the stewards must notify the official starter and the stewards must notify the public.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4245 Post positions; heat racing {#sec-r-431.4245 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4245}

Rule 4245. The horse winning a heat shall take the pole the succeeding heat, unless otherwise specified in the published conditions, and all others shall take their positions in the order they were placed the last heat. When 2 or more horses have finished in a dead heat, their positions shall be settled by lot.

History

History: 1985 AACS.

Mich. Admin. Code R 431.4250 Gate arm shields {#sec-r-431.4250 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4250}

Rule 4250. The arms of all starting gates shall be provided with a screen or a shield in front of the position for each horse, and such arms shall be perpendicular to the rail.

History

History: 1985 AACS.

Mich. Admin. Code R 431.4255 Drivers; licensing {#sec-r-431.4255 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4255}

Rule 4255. (1) A person who desires to drive a harness horse at a race meeting licensed by the executive director is required to obtain a license from the executive director, upon the recommendation of the stewards, whether or not the person possesses any other license.

(2) Every applicant for a driver's license shall satisfy the stewards in a manner prescribed by the stewards, that he or she meets all of the following qualifications:

(a) Has had at least 1 year's training experience and has demonstrated the ability to drive.

(b) Is physically and mentally competent to drive.

(d) Is familiar with the rules of racing.

(e) Has a minimum of 20/40 corrected vision in both eyes or, if the individual is blind in 1 eye, not less than 20/30 corrected vision in the other eye, as certified by a licensed optometrist, oculist, or ophthalmologist.

(f) Is not less than 16 years of age.

(g) Is the holder of a currently valid A (full), V (probationary), P (provisional) or Q (qualifier) license issued by the United States Trotting Association, or comparable licensing issued by Standardbred Canada.

(3) Proper licensing notwithstanding, the stewards at any race meeting may refuse to permit any driver to compete in a race if, in their judgment, he or she is unfit, unqualified, or too inexperienced to drive. The driver may be required to submit to a physical examination under conditions specified by the stewards.

(4) A person aspiring to become a driver may, after successfully completing a written exam administered by the United States Trotting Association or Standardbred Canada, apply for licensing to drive in qualifying races and nonbetting races only. Persons granted Q licenses shall be not less than 16 years of age and have the approval of the stewards.

All persons driving in races on a track licensed by the executive director shall do so under the scrutiny of the stewards and, where instituted, a horsemen's advisory committee, which shall present its observations to the stewards in writing. To aid in making a determination on the ability and qualifications of the holder of a Q license, the stewards may require the driver to go a rated mile, with the times for the mile and the quarters thereof to be declared beforehand by the driver. The holder of a Q license shall perform not less than 12 satisfactory qualifying drives before being advanced to a P license.

(5) A driver holding a P license shall not be considered for advancement to an A license by the stewards until he or she has qualified pursuant to 1 of the following provisions:

(a) Had at least 1 year's driving experience while holding a P license, plus 25 satisfactory pari-mutuel starts in the calendar year before application.

(b) Had less than 1 year's driving experience while holding a P license, but had not less than 50 satisfactory pari-mutuel starts and the written approval from the stewards at a recognized meet.

(c) Made 25 satisfactory starts at pari-mutuel or grand circuit meetings in the 2 calendar years preceding the date of application if he or she has had not less than 50 satisfactory fair starts.

(6) A driver who presently holds a license and wishes to obtain a license in a higher category and who has not previously submitted to a written test may be required to take a written test before becoming eligible to obtain a license in a higher category.

(7) Repeated rule violations are grounds for refusal to grant, or grounds for revocation of, any driver's license.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4260 Driver restrictions {#sec-r-431.4260 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4260}

Rule 4260. (1) A person who is 60 years of age or older and who has never previously held any type of driver's license shall not be issued a driver's license.

(2) An applicant for a driver's license who is 65 years of age or over may be required to submit annually, together with his or her application for a driver's license, a report of a physical examination. An applicant who has previously held any type of driver's license shall not be subsequently denied a driver's license solely on the basis of age.

(3) If a person is involved in an accident on the race course, the stewards may order the person to submit to a physical examination, and the examination shall be completed before the person drives again.

(4) The following conduct is disorderly and shall subject a driver to disciplinary action:

(a) Failure to obey the stewards' orders.

(b) Failure to drive when programmed, unless excused by the stewards.

(c) Drinking intoxicating beverages within 4 hours of the first post time of the program on which the driver is carded to drive.

(d) Appearing in the paddock in an unfit condition to drive.

(e) Fighting.

(f) Assaults.

(g) Offensive and profane language.

(h) Smoking on the track wearing colors during actual racing hours.

(i) Warming up a horse before racing without wearing colors.

(j) Disturbing the peace.

(k) Refusal to take a breathalyzer test when directed by the stewards.

(l) Using abusive language when addressing, or showing disrespect toward, a racing official or representative of the office of executive director.

(m) Fraternizing with other drivers or patrons during the post parade or warm-ups.

(5) Drivers shall wear distinguishing colors and clean white pants, and shall not be allowed to start in a race or other public performance unless, in the opinion of the stewards, they are properly dressed. A driver shall not drive during the time when colors are required on a race course unless he or she is wearing an approved safety vest and an approved protective helmet with chin strap in place.

(6) A driver wearing colors who appears at a betting window, a bar, or a restaurant dispensing alcoholic beverages may be subject to disciplinary action.

(7) A driver shall not, without good and sufficient reason, decline to be substituted by stewards. Any driver who refuses to be so substituted is subject to disciplinary action.

(8) A driver holding a full license or a driver with a probationary license shall register his or her colors with the United States Trotting Association. A driver may also wear colors registered to stable owners.

(9) A driver shall not drive against a horse in which he or she has a pecuniary interest.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4265 Driving rule violations; complaints; disciplinary action {#sec-r-431.4265 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4265}

Rule 4265. (1) Although a leading horse is entitled to any part of the race course, except after selecting its position in the home stretch, the driver of the first horse or any other driver in the race shall not violate the driving rules by participating in any of the following conduct:

(a) Change either to the right or left during any part of the race when another horse is so near him or her that in altering his or her position the driver compels another horse to shorten its stride or causes the driver of the other horse to pull the horse out of its stride.

(b) Jostle or strike, or hook wheels or interfere with, another horse or driver.

(c) Cross sharply in front of a horse or cross in front of a field of horses in a reckless manner or endanger other drivers.

(d) Swerve in and out or pull up quickly.

(e) Crowd a horse or driver by putting a wheel under him.

(f) Carry a horse out.

(g) Sit down in front of a horse or take up abruptly in front of other horses so as to cause confusion or interference among trailing horses.

(h) Let a horse pass inside needlessly or otherwise help another horse to improve its position in the race.

(i) Commit any act which impedes the progress of another horse or causes it to break.

(j) Change course after selecting a position in the home stretch or swerve in and out, or bear in and out, in a manner as to interfere with another horse or cause it to change course or take back.

(k) Drive in a careless or reckless manner.

(l) Loud shouting or other improper conduct.

(m) Fail to set and maintain a pace which is reasonable for that class of horse.

(2) All objections by drivers of any foul driving or other misconduct during the heat shall be made at the termination of the heat, unless the driver is prevented from doing so by an accident or injury. Any driver desiring to enter a claim of foul or other objection of the rules shall, before dismounting, indicate to the official starter or the patrol judge his or her desire to enter the objection and shall immediately, upon dismounting, proceed to the telephone, where such objection shall be immediately entered. The stewards shall not cause the “official” sign to be displayed until the objection has been entered and considered.

(3) If any violation specified in subrule (1) of this rule is committed by a person driving a horse coupled as an entry in the betting, the stewards shall set the offending horse back.

The horse coupled in the entry with the offending horse shall also be set back if the stewards find that the horse improved its finishing position as a direct result of the offense committed by the offending horse.

(4) In case of interference, collision, or violation of any of the provisions of this rule, the offending horse may be placed back 1 or more positions in that heat or dash. If a collision or interference prevents any horse from finishing the heat or dash, the offending horse may be disqualified from receiving any winnings and the driver may be subject to disciplinary action or, if a horse is set back, it shall be placed behind the horse with which it interfered.

(5) Every heat in a race shall be contested by every horse in the race, and every horse shall be driven to the finish. If the stewards believe that a horse is being driven, or has been driven, with the intent of preventing its winning a heat or dash which it was evidently able to win, or is being raced in an inconsistent manner or to perpetrate or to aid in fraud, they shall consider such driving a violation, and the driver and anyone aiding the driver in effecting the outcome of the race or races may be subject to disciplinary action.

The stewards may substitute a competent and reliable driver at any time. The substituted driver shall be paid at the discretion of the stewards and the driver fee retained from the purse money due the horse, if any.

(6) If a drive is unsatisfactory due to the lack of effort or due to carelessness or is an inconsistent drive, the stewards may impose a penalty under this subrule.

(7) If, in the opinion of the stewards, a driver is for any reason unfit or incompetent to drive, refuses to comply with the directions of the racing officials, or is reckless in his or her conduct and endangers the safety of horses or other drivers in the race, he or she may be removed and another driver substituted at any time after the positions have been assigned in a race, and the offending driver shall be subject to disciplinary action. The substitute driver shall be properly compensated.

(8) If, for any cause, a horse fails to finish after starting in a heat, that horse shall be ruled out.

(9) A driver shall be mounted in his or her sulky at the finish of the race or the horse shall be placed as not finishing.

(10) A driver must do all of the following:

(a) Have control of his or her horse at all times when on the race course.

(b) Keep a line in each hand from the start of the race until the end of the race.

(c) Not move his or her arm or arms in an exaggerated manner, and both lines shall remain reasonably taut during the entire race.

(d) Keep both feet in the stirrups from the time the horses are brought to the starting gate until the race has been completed. A driver may remove a foot from the stirrups during the race solely for the purpose of pulling ear plugs and once the ear plugs have been pulled the foot must be placed back into the stirrup.

(e) Not lean back during any part of the race in any manner that may cause unsafe conditions, alter the position of or impede the progress of trailing horses.

(f) Not use any goading device, chain, or mechanical device or appliance, other than the ordinary whip, upon any horse in any race. The possession of any mechanical or electrical goading device on the grounds of an association is a violation.

(g) Not punch, jab, or kick a horse at any time while on the grounds.

(11) Use of whip must meet all of the following requirements:

(a) Whipping shall be limited to wrist action only with minimal elbow movement, and the whipping hand shall not be raised above shoulder height.

(b) Drivers shall not whip below the level of the shaft or strike any part of the horse under the tail or between the legs.

(c) Drivers shall not strike another horse or driver with a whip or use the whip so as to interfere in any way to another horse in the race.

(d) Drivers shall not whip a horse during the post parade or after the finish of the race.

(e) Excessive, indiscriminate, visibly injurious, or abusive use of the whip is prohibited.

(f) Drivers shall not continue to use the whip on an exhausted horse, or on a horse that is not in contention.

(g) A driver shall not cause visible injury. Welts, cuts, or whip marks on a horse resulting from whipping is prima facie evidence of a violation.

(h) Drivers shall not continue to use the whip without giving the horse time to respond; continuous use of the whip is prohibited.

(12) Drivers are allowed whips that do not exceed 4 feet, 8 inches in length and are allowed snappers that are not longer than 8 inches.

(13) A horse shall not wear hobbles in a race unless it starts in hobbles in the first heat, and having so started, it shall continue to wear hobbles to the finish of the race. Any person found guilty of removing or altering a horse's hobbles during a race or between races for the purpose of fraud shall be subject to disciplinary action, expelled, or ruled off. Any horse which habitually races free-legged or with hobbles shall be required to do so unless requalifying. A horse shall not wear a head pole which protrudes more than 10 inches beyond its nose.

(14) A horse must finish the race on the race course or must be placed as not finishing.

(15) All of the following apply regarding a pylon violation:

(a) A horse while on stride, or part of the horse’s sulky, shall not leave the race course by going inside the pylons which constitutes the inside limits of the race course when not forced to do so as a result of the actions of another driver or horse, or both.

(b) If a horse while on stride, or part of the horse’s sulky, goes inside a pylon and that action gave the horse an unfair advantage over other horses in the race or the action helped improve its position in the race, the offending horse may be fined or placed at the discretion of the stewards.

(c) When an act of interference causes a horse, or part of the horse’s sulky, to cross inside one or more pylons, the stewards may place the offending horse behind the horse with which it interfered.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4270 Breaking {#sec-r-431.4270 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4270}

Rule 4270. (1) When any horse breaks from its gait in trotting or pacing, its driver shall at once, where clearance exists, take the horse to the outside and pull it to its gait.

(2) Any of the following conduct is a violation of this rule:

(a) Failure to properly attempt to pull the horse to its gait.

(b) Failure to take to the outside where clearance exists.

(3) If a contending horse on its gait is lapped on the hind quarter of the breaking horse at the finish, the breaking horse shall be set back.

(4) The stewards may set any horse back 1 or more places if, in their judgment, any of the conduct specified in subrule (2) of this rule has occurred.

(5) If, in the opinion of the stewards, a driver allows his or her horse to break for the purpose of fraudulently losing a heat, the driver shall be subject to disciplinary action.

(6) One of the stewards shall call out every break made, and the clerk shall at once note, in writing, the break and the character of the break.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4275 Right of course; time for accidents, loose horses {#sec-r-431.4275 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4275}

Rule 4275. (1) Horses called for a race have the exclusive right of the course and other horses shall vacate the race course at once, unless permitted to remain by the stewards.

(2) In the case of accidents, only so much time shall be allowed as the stewards consider necessary and proper.

(3) When a loose horse leaves the race course the horse shall be scratched.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4280 Time and records {#sec-r-431.4280 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4280}

Rule 4280. (1) In every race, the time of each heat shall be accurately recorded by an approved electric timing device and placed in the record in minutes, seconds, and fifths of seconds. When each heat has been ruled official by the stewards, the time thereof shall be publicly announced or posted. Unofficial timing shall not be announced or admitted to the record, and when the timers fail to act, times shall not be announced or recorded for that heat.

(2) In any case of alleged error in the record or an error in the announcement or publication of the time made by a horse, the time so questioned shall not be changed to favor the horse or the owner, except upon the sworn statement of the stewards and the timer who officiated in the race.

(3) When requested by the executive director, the distance of a race course licensed by the executive director shall be verified by a certified measurement made wire to wire 3 feet out from the pole or inside hub rail.

(4) The leading horse shall be timed and only its time shall be announced. A horse shall not obtain a win race record by reason of the disqualification of another horse.

(5) In case of a dead heat, the time shall constitute a record for the horses making the dead heat and both shall be considered winners.

(6) The time shall be taken when the first horse leaves the point from which the distance of the race is measured until the winner reaches the wire.

(7) Any person who is guilty of the fraudulent misrepresentation of time or the alteration of the record thereof in any public race shall be subject to disciplinary action and the time declared not a record.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4285 Trainers; licensing {#sec-r-431.4285 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4285}

Rule 4285. (1) An applicant for a trainer's license shall satisfy the stewards, in the manner as they may prescribe, that he or she complies with all of the following requirements:

(a) Has not less than 2 years of experience under a recognized trainer and has demonstrated the ability to train.

(b) Is knowledgeable of, and conversant in, the training of harness horses.

(2) A person applying for a trainer's license shall be 18 years of age and shall submit satisfactory proof of having successfully completed a written United States Trotting Association examination or an examination given by the stewards.

(3) A person applying for a trainer's license for the purpose of training only horses he or she owns or in which he or she has an interest may be issued a trainer's license without being subject to the requirement of having 2 years' experience under a recognized trainer as set forth in subrule (1) of this rule.

(4) A licensed trainer may employ persons other than grooms to assist him or her in the care and training of horses in his or her stable. The assistant trainer shall be licensed and may perform all of the duties of a trainer, except that the trainer remains the absolute insurer of the condition of a horse.

(5) A horse shall not start unless the trainer and the owner are licensed by the executive director. A trainer and assistant trainer who are absent from his or her stable or from the grounds where his or her horses are racing for more than 2 consecutive days, and whose horses are entered or are to be entered, shall provide a licensed trainer to assume complete responsibility for the horses being entered or running. The licensed trainer shall sign, in the presence of the stewards, a form furnished by the executive director accepting complete responsibility for the horses entered or running.

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.4290 Protective nose shield {#sec-r-431.4290 omnilex-key=us-mi-regs-official--dept-treasury--R 431.4290}

Rule 4290. A protective nose shield may be worn by standardbred horses in parimutuel races when the executive director determines that weather conditions warrant the use for humane considerations. The stewards shall approve the type of protective nose shield permitted. Under no circumstance shall the protective nose shield be constructed of material other than that which is transparent. For purposes of photo finishes, the winner of the race shall be the horse whose nose or protective nose shield reaches the wire first.

PART 5. ACCOUNT WAGERING

History

History: 1985 AACS; 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5001 Definitions {#sec-r-431.5001 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5001}

Rule 5001. As used in this part:

(a) "Account" means an account for account wagering with a specific identifiable record of deposits, wagers, and withdrawals established by an account holder and managed by the third-party facilitator (TPF) licensee.

(b) "Account holder" means a person who successfully opens an account.

(c) "Account wagering" means an electronic form of pari-mutuel wagering in which a person has an account with a third-party facilitator and then uses the current balance to pay for live pari-mutuel wagering.

(d) "Account wagering center" means an actual location, equipment, and staff of a thirdparty facilitator licensee or agents, or both, involved in the management, servicing, and operation of account wagering.

(e) “Account wagering system” means a system used for the deposit and withdrawal of funds to make electronic wagers on pari-mutuel races.

(f) "Confidential Information" means:

(i) The amount of money credited to, debited from, withdrawn from, or present in any particular account.

(ii) The amount of money wagered by a particular account holder on any race or series of races.

(iii)The account number and secure personal identification code of a particular account holder.

(iv) The identities of particular entries on which the account holder is wagering or has wagered.

(v) Unless otherwise authorized by the account holder, the name, address, and other information in the possession of the account wagering center and race meeting licensee that would identify the account holder to anyone other than the MGCB, the account wagering center or the race meeting licensee.

(g) "Credits" means all positive inflows of money to an account.

(h) "Debits" means all negative outflow of money from an account.

(i) "Deposit" means a payment of money by cash, check, money order, credit card, debit card, or electronic funds transfer made by an account holder to the account holder's account.

(j) “Joint contract” means a contract to facilitate account wagering with the agreement signed by a TPF applicant or licensee, all race meeting licensees, and certified horsemen’s organizations in this state.

(k) "Principal residence address" means that place where the person submitting an application for an account resides not less than 50% of the time during the calendar year.

(l) "Proper identification" means a form of identification accepted in the normal course of business to establish that the person making a transaction is an account holder.

(m)"Secure personal identification code" means a unique alpha-numeric character code chosen by an account holder as a means by which the third-party facilitator may verify a wager or account transaction of an account holder.

(n) “Third party facilitator” or "TPF" means a person who applies for and is licensed by the executive director to provide race meeting licensees with goods or services for the electronic processing of internet wagers using an account wagering system.

(o) "Withdrawal" means a payment of money from an account by the TPF licensee or race meeting licensee to the account holder when properly requested by the account holder.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5005 Authorization for account wagering {#sec-r-431.5005 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5005}

Rule 5005. (1) A race meeting licensee who is the holder of or applicant for a race meeting license issued under the act and these rules may request permission from the executive director to conduct account wagering pursuant to the act and these rules. As part of the request, the race meeting licensee or a TPF license applicant must submit a joint contract and a proposed plan of operation detailing how its proposed account wagering system would operate; the executive director may require changes in a proposed plan of operations as a condition of granting a request. No subsequent changes in the system's operation may occur unless ordered by the executive director or until approval is obtained from the executive director after it receives a written request.

(2) A race meeting licensee must furnish certification that the race meeting licensee assumes and acknowledges responsibility for all conduct of its TPF.

(3) The TPF or its agents, or both, must establish and maintain an account wagering system and center.

(4) The executive director may require the race meeting licensee or TPF to pay for investigations or inspections.

(5) Account wagers may only be made pursuant to the act and these rules.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5010 Licensure of Third Party Facilitators (TPF) {#sec-r-431.5010 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5010}

Rule 5010. (1) A provider of an account wagering center or systems must be licensed by the executive director as a TPF.

(2) A TPF may apply for a license to operate an account wagering system whereby wagers are debited and payouts are credited to an account held by a TPF on behalf of a person.

(3) A person applying for a TPF’s license and a person required to be qualified as part of the application must complete and submit the application and disclosure forms in the manner and form prescribed by the executive director.

(4) The following nonrefundable TPF license application fees must be submitted to the executive director, together with the required application form or forms:

(a) TPF license: $1,000.00.

(b) Renewal TPF License: $500.00.

(5) The license or renewal application fee must be used by the executive director to conduct an appropriate background investigation of the applicant as prescribed by the executive director, the act, and these rules. No portion of a remitted license application fee shall be refunded.

(6) An additional background investigation charge may be assessed to the extent that the executive director's direct investigative cost exceeds the applicant's application fee.

Unless otherwise determined by the executive director, a license may not be issued until payment of the additional assessed charge for completion of the background investigation is received by the executive director.

(7) A person applying for a TPF license must provide the name, address, and phone number of a representative to act as a liaison to the executive director or his or her designee. The liaison shall assist and cooperate with the executive director or his or her designee.

(8) A TPF is under a continuing duty to promptly disclose in writing any material changes in the information or documentation provided in or with the application, renewal, and disclosure forms submitted to the executive director.

(9) All persons employed by TPFs involved in accepting pari-mutuel wagers, and employees with access to facilities where the wagers are placed, or systems and records relating to account wagering are operated and secured, shall hold an occupational license with a recognized horse racing regulatory agency. The TPF shall provide and maintain with the executive director a current list of the employees.

(10) A licensed TPF must utilize and communicate pari-mutuel wagers to a parimutuel system meeting all requirements for pari-mutuel systems employed by race meeting licensees in this jurisdiction.

(11) A licensed TPF must operate and communicate with the totalisator system in a way as not to provide or facilitate a wagering advantage based on access to information and processing of wagers by TPF account holders relative to persons who wager at race tracks or public off track wagering facilities. The TPF shall have in place an independent real time monitoring system and use approved by the executive director, and use other procedures as needed, to ensure compliance with this requirement.

(12) Failure to provide information requested by the executive director to assist in any investigation, inquiry, hearing, or failure to comply with the act or rules promulgated by the executive director, may result in denial, suspension, or, upon reasonable notice, revocation of a license.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5015 Establishment of accounts {#sec-r-431.5015 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5015}

Rule 5015. (1) A person must establish an account with the TPF before placing an account wager. An account may only be established with a licensed TPF.

(2) Accounts can only be established by natural persons and will not be transferable between persons.

(3) To establish an account, an application must be electronically signed or otherwise expressly authorized by the applicant and must contain the following information:

(a) The applicant's full legal name.

(b) The applicant's principal residence address.

(d) Proper identification or certification demonstrating that the applicant is at least 18 years of age.

(e) Any other information the executive director determines is necessary to carry out its duties under applicable laws and rules.

(4) A TPF may not sell or share an applicant or account holder's confidential information, or use an applicant or account holder's confidential information for any purpose not related to authorized account wagering, except as authorized by the applicant or account holder.

(5) Each application for an account shall be verified with respect to name, principal residence address, and date of birth either by an independent service provider or another means authorized by the executive director to adequately ensure the accuracy of the information.

(6) A TPF must provide the following information to each applicant when an account is established:

(a) The process for funding accounts and making withdrawals from accounts.

(b) Account wagering rules and procedures, methods, timing of crediting and debiting accounts, user fees, and any other information considered necessary by the executive director.

(d) A unique account number.

(e) Notice that an account holder must be at least 18 years of age and that individuals under the age of 18 shall not have access to the account.

(f) Information on responsible wagering and how to obtain assistance with problem gambling, including the contact information for at least one problem gambling assistance program.

(g) Procedures for resolving disputes between the account holder and the TPF.

(h) Any other information considered appropriate by the executive director.

(7) The executive director must approve any changes to the account’s terms and conditions, before implementation by the TPF.

(8) The TPF must notify the account holder when the terms and conditions governing the account are changed. The notification must be before the new procedures are applied to the account. The account holder must have the opportunity to close the account. If the account is not closed, it is presumed the account holder accepted the new terms and conditions of the account.

(9) An account holder is required to supply a secure personal identification code when establishing an account. The account holder is required to supply the code when making deposits or withdrawals from the account and when placing a wager. The account holder has the right to change the code at any time.

(10) Nothing in this chapter prohibits a TPF from refusing to open an account for reasonable business reasons.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5020 Operation of accounts {#sec-r-431.5020 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5020}

Rule 5020. (1) An account holder may make deposits to the account in the following forms:

(a) Cash, which may be deposited at financial or retail outlets designated by the TPF.

(b) Check, money order, or negotiable order of withdrawal sent to the TPF.

(d) Electronic funds transfer by the account holder, in which case the account holder is responsible for any fees imposed by the remitting entity.

(e) Any other method approved by the executive director.

(2) The following credits shall be posted to an account by the TPF as soon as practicable after the race is declared official:

(a) Credit for winnings from wagers.

(b) Credit for all refunded wagers as required by the laws and rules applicable to the host track.

(3) Debits to an account shall be made as follows:

(a) Upon receipt of a wager, the TPF may debit the account in the amount of the wager.

(b) Debits may be made for fees for service or other transaction-related charges by the TPF.

(4) Nothing in this chapter prohibits a TPF from refusing to accept a wager or from suspending or refusing deposits to an account for reasonable business reasons.

(5) Disputes between an account holder and a TPF shall be administered under the dispute resolution procedures contained in the license application approved by the executive director.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5025 Conduct of wagering {#sec-r-431.5025 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5025}

Rule 5025. (1) A TPF may accept wagers in the manner and form approved by the executive director.

(2) For account wagers made by phone, the TPF must make a voice recording of the entire transaction and must not accept any account wager if the voice recording system is inoperable. Voice recordings must be retained for not less than 6 months or another time specified by the executive director. The recordings must be made available to the executive director at his or her request.

(3) Any account wagering system must provide for the account holder's review and finalization of a wager before it is accepted by the TPF. Neither the account holder nor the TPF may change a wager after the account holder has reviewed and finalized the wager and the TPF has accepted the wager. When a wager is made by phone, the voice recording of the transaction is the actual wager, regardless of what was recorded by the account wagering system.

(4) A TPF must not accept account wagers from an account holder in excess of the account balance. No credit shall be extended by a TPF to an account holder. Any account not updated when a transaction is completed is inoperable until the transaction is posted and the account balance updated.

(5) All information about an account is not subject to disclosure except as authorized by the executive director.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5030 Closing of accounts {#sec-r-431.5030 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5030}

Rule 5030. (1) An account holder or the TPF may close an account under the procedure approved by the executive director.

(2) If an account holder dies, unclaimed cash balances in the account must only be released to the decedent's legal representative upon receipt of a copy of a valid death certificate, after which the account must be closed.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5035 Record keeping and reporting {#sec-r-431.5035 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5035}

Rule 5035. (1) A TPF must maintain all of the following information on each account for a minimum of 3 years:

(a) A record of all deposits, credits, and withdrawals.

(b) A record of all wagers made.

(2) Upon request of the account holder, a TPF must provide any records it maintains on the account holder's account under subrule (1) of this rule. Records may be provided in paper or electronic format.

(3) A TPF must make an account holder's current account balance available to the account holder at all times.

(4) A TPF must allow the executive director and its designees to review and audit all records related in any way to its licensure, financial solvency, accounts, and the conduct of wagering by Michigan residents. Information relevant to the review and audit must be made available to the executive director or his or her designees upon request and in a format required by the executive director.

(5) A TPF must provide an annual audited financial statement to the executive director.

(6) A TPF must report to the executive director quarterly all payments made to the parimutuel horse racing disbursement account, the pari-mutuel activity on which the funds were paid, the number of accounts held by Michigan residents at the end of the reporting period, and any other information requested by the executive director.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Mich. Admin. Code R 431.5040 Penalties {#sec-r-431.5040 omnilex-key=us-mi-regs-official--dept-treasury--R 431.5040}

Rule 5040. (1) The executive director may issue a fine, suspend, or revoke a TPF license if any of the following occurs:

(a) The TPF fails to comply with all federal, state, and local laws.

(b) The TPF has knowingly provided false or misleading information to the executive director, withheld information required to be provided, or made material changes in the account wagering system without prior approval of the executive director.

(d) The TPF fails to comply with any conditions on the license imposed by the executive director.

(e) The TPF poses a threat to the public interest or the integrity of racing or wagering in Michigan.

(2) A suspension or revocation of a TPF license may be appealed under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

History

History: 2021 MR 6, Eff. Mar. 26, 2021.

Bureau of State Lottery Bureau of State Lottery

R 432.1 to R 432.38 Lottery Rules

Mich. Admin. Code R 432.1 Definitions {#sec-r-432.1 omnilex-key=us-mi-regs-official--dept-treasury--R 432.1}

DEPARTMENT OF TREASURY

COMMISSIONER OF THE BUREAU OF STATE LOTTERY

LOTTERY

(By authority conferred on the commissioner of Bureau of State Lottery by section 11 of 1972 PA 239, MCL 432.11)

Rule 1. (1) As used in these rules:

(a) "Act" means 1972 PA 239, MCL 432.1 et seq.

(b) "Retailer" means a person who has been licensed to sell lottery tickets under the act and is referenced in the act as an agent.

(d) "Ticket" means a lottery ticket, share, or interest issued by the bureau for sale to the general public.

(2) The terms defined in the act have the same meanings when used in these rules.

History

History: 1979 AC; 1986 AACS; 1998-2000 AACS; 2006 AACS.

Mich. Admin. Code R 432.2 Employees and contractors {#sec-r-432.2 omnilex-key=us-mi-regs-official--dept-treasury--R 432.2}

Rule 2. (1) None of the individuals referred to in section 31 of the act may have any interest, direct or indirect, in dealing in the lottery or in the ownership or leasing of any property or premises used by or for the lottery.

(2) An individual or organization or employees of an organization under contract with the bureau is not eligible to win any prize in any lottery operated by the bureau during the period of the contract if the individual, organization, or employee has access to any of the following that is not open to the general public:

(a) Bureau data.

(b) Books and records.

(d) Systems designs.

(e) Other information.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS; 2013 AACS; 2018 AACS.

Mich. Admin. Code R 432.3 License eligibility; application {#sec-r-432.3 omnilex-key=us-mi-regs-official--dept-treasury--R 432.3}

Rule 3. (1) In addition to the requirements of section 23 of the act, the commissioner shall consider the following additional factors in determining the eligibility of any prospective licensee or renewal of a license as a retailer:

(a) The honesty and integrity of the applicant.

(b) The veracity of the information supplied in the application for lottery retailer's license.

(d) The business experience and general fitness of the applicant.

(2) Licenses shall be issued only to the following:

(a) Residents of this state.

(b) Corporations incorporated in this state or authorized to do business in this state.

(d) Unincorporated businesses or other entities which are authorized to do business in this state.

(3) A person interested in obtaining a license as a retailer shall file an application for a lottery retailer's license with the bureau on application forms which may be obtained from the bureau.

History

History: 1979 AC; 2006 AACS.

Mich. Admin. Code R 432.4 License revocation {#sec-r-432.4 omnilex-key=us-mi-regs-official--dept-treasury--R 432.4}

Rule 4. (1) A license is evidence of an agency that is revocable at will by either the bureau or the retailer. Revocation of the agency is effective 30 days after notice of the revocation has been mailed by the revoking party.

On or before the thirtieth day following notice of revocation, a retailer shall surrender the license to the bureau.

(2) The bureau may immediately suspend, revoke, or not renew a retailer's license for any of the following reasons:

(a) The retailer's application for a license contains false or misleading information.

(b) The retailer violates any of the provisions of the act, these rules, or instructions and directives of the commissioner or bureau.

(d) The retailer commits any act that seriously impairs his or her reputation for honesty and integrity.

(e) The retailer does not display lottery point of sale material in a manner that can be readily seen by the public or fails to make handout materials readily available to the public.

(f) The retailer is delinquent in making required accounting or fails to pay promptly all moneys owed the state.

(g) The retailer has been convicted of a crime other than a traffic offense.

(h) The retailer has been arrested for bookmaking or other forms of illegal gambling, whether or not convicted of bookmaking or other form of illegal gambling in a court of law.

(i) The retailer has been found guilty of any fraud or misrepresentation.

(j) There is reasonable cause to believe that the retailer is engaged in fraud, misrepresentation, or illegal gaming.

(k) The retailer fails to take reasonable security precautions with regard to the handling of lottery tickets and other materials.

(l) The commissioner finds that the retailer's experience, character, and general fitness are such that his or her participation as a retailer is inconsistent with the public interest, convenience, and necessity.

(m) Any other reason within the permissible discretion of the commissioner.

(3) The retailer shall surrender immediately to the appropriate bureau official his or her retailer's license and other lottery materials supplied to him or her by the bureau.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS.

Mich. Admin. Code R 432.5 License fee {#sec-r-432.5 omnilex-key=us-mi-regs-official--dept-treasury--R 432.5}

Rule 5. (1) The commissioner shall determine the fee for a license as a retailer. The fee is payable at the time of license application.

(2) The bureau may charge a license renewal fee annually in an amount determined by the commissioner.

(3) The fees in subrules (1) and (2) of this rule shall not exceed the actual cost to the bureau.

History

History: 1979 AC; 1998-2000 AACS; 2001 AACS; 2006 AACS; 2009 AACS; 2018 AACS.

Mich. Admin. Code R 432.6 Conditions of licensing {#sec-r-432.6 omnilex-key=us-mi-regs-official--dept-treasury--R 432.6}

Rule 6. (1) Upon issuance of a license, the agent shall agree that he or she will do all of the following:

(a) Be bound by and comply with the act, these rules, and instructions and directives of the commissioner or bureau.

(b) Make tickets available for sale to the public during normal business hours.

(d) Maintain authorized displays, notions, drop boxes, and other material used in conjunction with sales in accordance with instructions issued by the bureau.

(e) Act in a fiduciary capacity with respect to all tickets accepted from the bureau or its authorized distributors until payment has been made.

(f) Maintain current and accurate records of all operations in conjunction with sales in conformity with rules, instructions, and directives of the bureau. The agent shall make the records available to representatives of the bureau upon request for inspection and audit.

(g) Ensure that a person under 18 years of age does not sell tickets or pay winning tickets.

(h) Ensure that tickets will not be sold at any price greater than the price stated on the ticket.

(i) Hold the bureau and the state harmless from any liability arising in connection with sales.

(j) Remit funds due for lottery sales and other amounts owing to the bureau at the time and in the manner specified by the bureau.

(k) Validate all winning tickets through the bureau gaming system and pay customers the full prize value of validated winning tickets up to the retailer’s cashing limit as determined by the commissioner.

(2) Subrule (1)(b) of this rule does not apply to retailers who are considered “exempt from taxation” under Section 501(c) of the Internal Revenue Code, 26 U.S.C. §1 et seq., but only to the extent such retailers are restricted from making lottery sales to the general public as a condition of maintaining their status as “exempt from taxation.”

History

History: 1979 AC; 1998-2000 AACS; 2001 AACS; 2006 AACS; 2013 AACS; 2018 AACS.

Mich. Admin. Code R 432.7 Nontransferability of license {#sec-r-432.7 omnilex-key=us-mi-regs-official--dept-treasury--R 432.7}

Rule 7. A license is not assignable or transferable. The commissioner shall be notified, in writing, not less than 20 days before any proposed business change or substantial change in ownership of the business. A substantial change in ownership under this rule means a transfer of 50% or more of the equity of any business licensed under these rules. If the business to which a license is issued changes its business location, then the owner shall submit an application for a license. An owner shall report every change of business location, in writing, to the commissioner not less than 20 days before the change.

History

History: 1979 AC; 1998-2000 AACS.

Mich. Admin. Code R 432.8 Bonding of retailer {#sec-r-432.8 omnilex-key=us-mi-regs-official--dept-treasury--R 432.8}

Rule 8. The bureau may require a bond as specified by the commissioner from any retailer in an amount the bureau determines will prevent any monetary loss to the state because of a retailer's activities in the sale of tickets.The bond is a condition of becoming or continuing as a retailer. The bureau may require a financial statement revealing the financial condition of any person or organization seeking to become or continue as a retailer.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS.

Mich. Admin. Code R 432.9 License expiration and renewal {#sec-r-432.9 omnilex-key=us-mi-regs-official--dept-treasury--R 432.9}

Rule 9. A retailer's license remains in full force and effect until the termination date indicated upon the license, but in no case more than 1 year from the date of issuance of the license. The license may be terminated before the expiration date by the commissioner in accordance with these rules.

History

History: 1979 AC; 2006 AACS.

Mich. Admin. Code R 432.10 Special licenses {#sec-r-432.10 omnilex-key=us-mi-regs-official--dept-treasury--R 432.10}

Rule 10. (1) A special license may be issued subject to such special conditions or limitations as the commissioner deems prudent and determines to be consonant with the dignity of the state, the general welfare of the people and the dignity and integrity of the bureau. These limitations or conditions include, but are not limited to, the following:

(a) License period.

(b) Hours or days of sale.

(d) Specific business or organization which may sell tickets.

(e) Specific sporting, charitable, social, or other special events where lottery tickets may be sold.

(f) Special selling or dispensing methods.

(2) Retailers holding special licenses are subject to all rules promulgated by the bureau.

History

History: 1979 AC; 2006 AACS.

Mich. Admin. Code R 432.11 Sales by bureau directly {#sec-r-432.11 omnilex-key=us-mi-regs-official--dept-treasury--R 432.11}

Rule 11. The bureau may sell tickets at any central or branch office or selling point it establishes in the state.

History

History: 1979 AC.

Mich. Admin. Code R 432.12 Stolen tickets {#sec-r-432.12 omnilex-key=us-mi-regs-official--dept-treasury--R 432.12}

Rule 12. A retailer is responsible for all tickets consigned to him or her. If tickets are stolen, then the retailer shall report the theft to the bureau and to local or state police authorities. The retailer shall pay for the stolen tickets on the settlement date. The retailer shall subsequently file a statement swearing to or affirming, under the penalty of perjury, the facts of the case. The retailer shall furnish to the bureau a copy of the police report covering the theft. Following an investigation by the bureau and police authorities, the bureau may issue a refund to the retailer. Refunds may only be issued if losses to the bureau have been mitigated by retailer's actions in reporting the tickets stolen and the retailer's appropriate accounting of the tickets stolen.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS.

Mich. Admin. Code R 432.13 Sale; inspection; commission; bonus programs; depositories; tickets held in trust for benefit of the bureau; disqualification of retailer representative; direct ticket distribution to retailers {#sec-r-432.13 omnilex-key=us-mi-regs-official--dept-treasury--R 432.13}

Rule 13. (1) A retailer shall sell tickets only on the premises at the specific location named in the license or attachments to the license.

(2) A retailer shall allow inspections of his or her premises at any time upon the reasonable request of authorized inspectors of the bureau. A bureau inspector may make an inspection without prior notice to the retailer.

(3) A retailer is entitled to a commission for tickets sold by him or her in an amount to be determined by the commissioner. The commissioner shall announce changes in the commission amount not less than 60 days before the effective date and shall include the changes in a written communication issued to all retailers.

(4) The commissioner shall provide details of any bonus program for retailers in a written communication issued to all retailers.

(5) A retailer shall deposit, in a manner specified by the commissioner for collection by the state, all moneys received by the retailer from the sale of tickets, less the amount retained as compensation. The retailer shall file with the bureau, or its designated agents, reports of ticket sale receipts and transactions. The bureau shall specify the form of the reports and the information required. In preparing a report, a retailer shall refer to directives and instructions to authorized retailers made available by the bureau.

(6) Until such time as payment has been received by the bureau, all lottery tickets made available to a retailer and any net ticket proceeds shall be deemed to be held in trust for the benefit of the bureau.

(7) The bureau may disqualify any person authorized by the licensed retailer as the retailer's representative.

(8) The bureau may distribute tickets directly to retailers if, in the commissioner's opinion, it is necessary to maintain continued sales activity.

History

History: 1979 AC; 1998-2000 AACS; 2001 AACS; 2006 AACS.

Mich. Admin. Code R 432.14 Rescinded {#sec-r-432.14 omnilex-key=us-mi-regs-official--dept-treasury--R 432.14}

History

History: 1979 AC; 1998-2000 AACS.

Mich. Admin. Code R 432.15 Lottery tickets {#sec-r-432.15 omnilex-key=us-mi-regs-official--dept-treasury--R 432.15}

Rule 15. (1) The bureau shall prepare tickets for sale to the public. The commissioner shall determine the price of a ticket and shall announce the price by directives, advertising, and other means calculated to give reasonable notice to the public.

(2) The commissioner may limit wagering on any particular number or combination of numbers when he or she determines it is in the best interest of the bureau and the state of Michigan.

(3) When a lottery ticket is purchased, the purchaser accepts the terms of the lottery ticket contract. Each lottery ticket provides that all ticket transactions and claims are subject to the laws of the state of Michigan, the rules, regulations, all directives of the Michigan lottery, and any subsequent changes. In questions involving ticket validation, the commissioner's determination is final. In cases of dispute for any reason, the commissioner may at his or her sole discretion, replace the disputed ticket with an unplayed ticket of equal value or refund the retail sales price. The commissioner's decision to replace or refund the ticket is the purchaser's exclusive remedy. The rules governing a particular lottery game are set forth in bureau of state lottery directives. The directives govern the terms and conditions of play.

(4) The sale of a valid lottery ticket is final and a retailer shall not accept ticket returns.

(5) The retailer will be responsible for remitting the balance owed for tickets that are not accounted for by a retailer in a manner as directed by the commissioner.

(6) The commissioner shall establish a procedure for the disposition of unsold tickets.

(7) A retailer shall return tickets printed in error or damaged in any way by the bureau to the bureau for credit.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS.

Mich. Admin. Code R 432.16 Claiming of prizes {#sec-r-432.16 omnilex-key=us-mi-regs-official--dept-treasury--R 432.16}

Rule 16. (1) The commissioner shall designate claim centers for the lottery program and advertise their locations.

(2) The processing of winning tickets must be in accordance with directives and instructions issued by the commissioner. If a special drawoff is required to determine the exact amount won, then the bureau shall notify the claimant when and where to appear for the drawoff and where to present his or her winning ticket for validation.

(3) Mutilated tickets shall be validated only if adequate portions of the ticket remain reasonably intact to ensure the authenticity of the ticket.

(4) A claimant shall fill out a claim form, present the form with the winning ticket, and receive a copy of the claim form as his or her receipt.

(5) A winning ticket may only be claimed by a natural person. Annuitized prize payments may be assigned to a person or entity in accordance with section 25 of the act.

(6) Upon validation of a winning ticket, payment of the amount due shall be forwarded to the claimant in accordance with bureau procedures. If a claim is not validated as proper, then the bureau shall deny the claim and promptly notify the claimant.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS; 2009 AACS; 2018 AACS.

Mich. Admin. Code R 432.17 Ownership of lottery tickets {#sec-r-432.17 omnilex-key=us-mi-regs-official--dept-treasury--R 432.17}

Rule 17. (1) A valid lottery ticket that has been sold by a licensed retailer is presumed to be owned by the person whose name is entered on the claim form, notwithstanding that the name of another person may appear on the ticket face or reverse side. Except as provided in subrule (2) of this rule, the bureau shall pay a prize to the person whose name is entered on the claim form or present the prize to a third party who is authorized, in writing, as the claimant's representative. All liability of the bureau, the state, their employees and agents terminates upon payment.

(2) Upon receipt of information supported by proper evidence that another person is entitled to payment, or upon assertion that the ticket was not legally issued initially, the commissioner may withhold payment pending an investigation. If the ownership of a winning lottery ticket is disputed and the results of the commissioner's investigation are inconclusive, then the commissioner may initiate an appropriate judicial proceeding to determine ownership.

(3) The claimant of a lottery prize shall not assign or sell his or her right to any prize except as provided for by law. The commissioner shall develop policies, procedures, and fee schedules for the disposition of a claimant's rights to future payments.

(4) The prize for a winning ticket must be claimed by the expiration date printed, or as defined, on the ticket.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS; 2018 AACS.

Mich. Admin. Code R 432.18 Payment of prizes {#sec-r-432.18 omnilex-key=us-mi-regs-official--dept-treasury--R 432.18}

Rule 18. (1) The bureau shall make payment of prizes as soon as reasonably possible after the claim has been filed, verified, and the claimant identified to the satisfaction of the commissioner.

(2) The commissioner shall establish a schedule for payment of certain major prizes in installments rather than a lump sum.

(3) The bureau shall make payment of prizes by mail, when applicable, to the claimant at the address that the claimant entered on the claim form.

(4) When a drawing or ceremony is conducted, winners shall receive payment in full, or if applicable, the first installment of a prize, at an appointment scheduled with the bureau as soon as practicable after the drawing. The bureau shall make payment by state treasurer's warrant, special check, or in any other manner determined by the commissioner in advance of the drawing.

(5) The agents, officers, and employees of the state and the bureau are discharged of all liability upon payment of a prize to a claimant.

(6) Upon the death of a prize winner who has not yet collected the full amount of his or her minimum guaranteed prize, the bureau shall continue payment in the manner specified by law. Unless specifically provided for by law, the bureau shall not accelerate payment of prize money before its normal date of payment because of the death of the prize winner. The amount paid will not exceed the minimum prize guarantee as indicated in the game directive.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS; 2009 AACS.

Mich. Admin. Code R 432.19 Disposition of funds from sale of tickets {#sec-r-432.19 omnilex-key=us-mi-regs-official--dept-treasury--R 432.19}

Rule 19. The commissioner shall specify the frequency of the transfer of net revenue to the beneficiaries specified by law.

History

History: 1979 AC; 1998-2000 AACS.

Mich. Admin. Code R 432.20 Drawings {#sec-r-432.20 omnilex-key=us-mi-regs-official--dept-treasury--R 432.20}

Rule 20. (1) The commissioner shall detail the types of drawings and drawing procedures in a directive. All drawings shall be conducted in a public place and the selection of winners shall be based on chance. The commissioner shall include any new drawings or changes in drawing procedures in the directives or directive amendments. The commissioner shall make every attempt to keep the public informed of drawing procedures and changes in the procedures.

(2) The bureau shall provide that all drawings to determine the awarding of prizes are open to the public. The bureau shall make the time and place of drawings known to the public in advance to the extent practicable.

(3) The bureau shall disseminate information regarding the time and place of future drawings, the winning numbers in previous drawings, and other information of public interest, including descriptive information regarding current games, to retailers, interested parties, and the public through brochures, pamphlets, newsletters, reports, and other means to the extent practicable.

(4) If the number of contestants in a drawing is variable, then the commissioner may limit the number of contestants in any particular drawing for administrative or practical reasons.

History

History: 1979 AC; 1998-2000 AACS; 2006 AACS.

Mich. Admin. Code R 432.21 Prize structure {#sec-r-432.21 omnilex-key=us-mi-regs-official--dept-treasury--R 432.21}

Rule 21. (1) The prize structure shall be determined by the commissioner from time to time and shall be consistent with the act. Every attempt shall be made to inform the public, retailers, and interested parties of the existing prize structure of any lottery game, and reasonable notice shall be given before any changes in the prize structure. When possible, the current prize structure shall be listed on the ticket itself or in informational materials available at sales locations.

(2) Periodic bonus promotions offering special prizes shall be detailed in special directives. Information regarding bonuses shall be disseminated to the extent possible through the news media, advertising, point of sale materials and other practicable means. The time of announcement of promotions shall be determined by the commissioner.

(3) The commissioner may award prizes of cash or merchandise as door prizes at drawings or special events. Numbers shall be drawn at random to determine door prize winners according to procedures determined by the commissioner from time to time and announced in appropriate directives.

History

History: 1979 AC; 2006 AACS.

Mich. Admin. Code R 432.22 Rescinded {#sec-r-432.22 omnilex-key=us-mi-regs-official--dept-treasury--R 432.22}

History

History: 1979 AC; 1998-2000 AACS.

Mich. Admin. Code R 432.31 Rescinded {#sec-r-432.31 omnilex-key=us-mi-regs-official--dept-treasury--R 432.31}

History

History: 1986 AACS; 1998-2000 AACS.

Mich. Admin. Code R 432.32 Rescinded {#sec-r-432.32 omnilex-key=us-mi-regs-official--dept-treasury--R 432.32}

History

History: 1986 AACS; 1998-2000 AACS.

Mich. Admin. Code R 432.33 Rescinded {#sec-r-432.33 omnilex-key=us-mi-regs-official--dept-treasury--R 432.33}

History

History: 1986 AACS; 1998-2000 AACS.

Mich. Admin. Code R 432.34 Rescinded {#sec-r-432.34 omnilex-key=us-mi-regs-official--dept-treasury--R 432.34}

History

History: 1986 AACS; 1998-2000 AACS.

Mich. Admin. Code R 432.35 Rescinded {#sec-r-432.35 omnilex-key=us-mi-regs-official--dept-treasury--R 432.35}

History

History: 1986 AACS; 1998-2000 AACS.

Mich. Admin. Code R 432.36 Retailer performance requirements and terms and conditions; disciplinary action; conference {#sec-r-432.36 omnilex-key=us-mi-regs-official--dept-treasury--R 432.36}

Rule 36. (1) A licensee does not have a property interest in the license granted or the on-line lottery terminal.

(2) The commissioner shall establish and provide advance written notice of retailer performance requirements and specific terms and conditions to assure the efficient and effective functioning of the bureau, maintain the bureau's security and integrity, and assure compliance with the act, these rules, contracts with retailers, directives, and other written communications with retailers. The performance requirements and terms and conditions include all of the following:

(a) The weekly minimum sales performance requirement for total game sales shall not be more than a $4,000.00 weekly average.

(b) Reporting changes in ownership and location.

(d) In-store location, installation, and operation of a terminal.

(e) Promotion and marketing requirements, including the use of promotional materials.

(f) Requirements for the prompt settlement of funds due the bureau for lottery sales or other fees.

(g) Hours of operation, customer service requirements, claims processing, and redemption of winning tickets.

(h) Attendance at training sessions.

(i) Compliance with federal, state, and local laws, rules, and regulations.

(j) Prohibiting participation as a retailer for other lotteries.

(k) Requirements necessary to assure compliance with the act and these rules and to assure the security, integrity, and efficient and effective operation of the bureau.

(3) Violation of the performance requirements or terms and conditions shall result in disciplinary action depending on the nature and severity of the violation. Disciplinary action may include any, or a combination of any, of the following:

(a) Counseling.

(b) Suspension of selling privileges.

(d) On-line terminal deactivation.

(e) License revocation.

(4) If the severity of a violation warrants license revocation, then the retailer may request a conference with the commissioner or his or her designee. At the informal conference, the commissioner shall review the alleged violation with the retailer. The retailer shall have the opportunity to refute the alleged violation or to explain the reasons for the violation.After the conference, the commissioner may decide to do any of the following:

(a) Continue the disciplinary action.

(b) Modify or suspend the disciplinary action.

History

History: 1986 AACS; 1998-2000 AACS; 2006 AACS.

Mich. Admin. Code R 432.37 Fees {#sec-r-432.37 omnilex-key=us-mi-regs-official--dept-treasury--R 432.37}

Rule 37 (1) The commissioner shall establish fees for all of the following:

(a) The processing and investigative costs of licensing retailers.

(b) Communications system installation, or relocation, or operation.

(c) Failure of a retailer to promptly settle for any game as required by bureau rules, contracts, directives, or written communications.

(d) Inactive license status.

(2) The fees in subrule (1) of this rule shall not exceed the actual cost to the bureau for the action.

(3) Retailers whose weekly sales fall below the minimum sales performance requirements established under R 432.36 may be assessed a weekly low sales performance fee. The commissioner shall determine the amount of the fee assessed for failure to meet minimum sales performance requirements under R 432.36.

History

History: 1986 AACS; 1998-2000 AACS; 2001 AACS; 2006 AACS.

Mich. Admin. Code R 432.38 Result of invalid rule {#sec-r-432.38 omnilex-key=us-mi-regs-official--dept-treasury--R 432.38}

Rule 38. If any rule or part of a rule is found to be invalid, only that rule or part thereof shall be considered to be invalid.

History

History: 1986 AACS.

Michigan Gaming Control Board Michigan Gaming Control Board

R 432.101 to R 432.410 Millionaire Parties

Mich. Admin. Code R 432.101 Definitions {#sec-r-432.101 omnilex-key=us-mi-regs-official--dept-treasury--R 432.101}

DEPARTMENT OF TREASURY

EXECUTIVE DIRECTOR OF THE MICHIGAN GAMING CONTROL BOARD

MILLIONAIRE PARTIES

(By authority conferred on the executive director of the Michigan gaming control board by section 49 of the Traxler-McCauley-Law-Bowman bingo act, 1972 PA 382, MCL 432.149)

PART 1. GENERAL PROVISIONS

Rule 101. (1) As used in these rules:

(a) “Act” means the Traxler-McCauley-Law-Bowman bingo act, 1972 PA 382, MCL 432.101 to 432.152.

(b) “Administrative procedures act” means the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

(c) “Charitable purpose” means 1 or more of the following causes, deeds, or activities that are beneficial to the general public:

(i) Relief of poverty.

(ii) Advancement of education.

(iii) Advancement of religion.

(iv) Protection of health or relief from disease, suffering, or distress.

(v) Advancement of civic, governmental, or municipal purposes.

(vi) Protection of the environment and conservation of wildlife.

(vii) Defense of human rights and the elimination of prejudice and discrimination.

(viii) Any other purpose that the executive director determines to be beneficial to the general public.

(d) “Compliance meeting” means a meeting as prescribed by the administrative procedures act, conducted by the executive director, where the licensee has an opportunity to show compliance with the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation.

(e) “Compliance meeting notice” means the document issued by the executive director before the compliance meeting to inform a licensee of the date, time, and location of the compliance meeting.

(f) “Contested case hearing” means a formal hearing before a hearing officer conducted as prescribed by the administrative procedures act.

(g) “Contested case hearing notice” means the document issued by the executive director before the contested case hearing to inform a licensee of the date, time, and location of the contested case hearing.

(h) “Day” means the standard 24-hour period, except when referring to the issuance of a millionaire party license, when it means the time period from 8 a.m. of 1 day to 2 a.m. of the following day.

(i) “General public” means society as a whole or any considerable part of society.

(j) “Gross profit” means total revenue less chip redemptions and prizes. Gross profit does not include the license fee.

(k) “Gross revenue” means the monetary value received by the licensee for all fees charged to participate in the millionaire party before any deductions for prizes or other expenses.

(l) “Imitation money or chips” means imitation money or chips that have a nominal value equal to or greater than the value of the currency that they can be exchanged for.

(m) “Informal meeting” means a meeting conducted by the executive director, at his or her discretion, where the executive director discusses the failure of the licensee to comply with the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation.

(n) “License” means a millionaire party or supplier license that is issued by the executive director.

(o) “Millionaire party equipment” means any authorized item used to conduct authorized games at a millionaire party.

(p) “Millionaire party licensee” means the qualified organization that has been issued a license to conduct a millionaire party.

(q) “Privately held corporation” means a corporation that does not trade its stock in a stock exchange or in over-the-counter transactions.

(r) “Probation” means a license status requiring strict compliance with the act, these rules, directives, public policy of this state, and specific conditions established by the executive director.

(s) “Probation violation” means failure to abide by any of the terms of probation.

(t) “Probationary period” means the time interval of probation.

(u) “Terms of probation” means the conditions established at the discretion of the executive director that must be complied with during the probationary period.

(v) “Violation notice” means a document issued by the executive director, at his or her discretion, to a licensee charging a violation of the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation.

(w) “Week” means a period of 7 days beginning with Sunday and ending with Saturday.

(x) “Worker” means an individual who assists or participates in the management, conduct, or operation of a millionaire party. Worker does not include an individual employed by or an agent of a lessor, location owner, or licensed supplier at a licensed millionaire party event.

(2) A term defined in the act has the same meaning when used in these rules.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.102 Rescinded {#sec-r-432.102 omnilex-key=us-mi-regs-official--dept-treasury--R 432.102}

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.103 Permanent dissolution; utilization of assets; report {#sec-r-432.103 omnilex-key=us-mi-regs-official--dept-treasury--R 432.103}

Rule 103. Upon permanent dissolution of a qualified organization, all assets, real property, and personal property must be utilized for the lawful purpose of the qualified organization and must not be distributed to any private individual or shareholder. All remaining assets upon dissolution must be distributed to the local government or another nonprofit organization as stated in the qualified organization's bylaws, constitution, charter, or articles of incorporation. The disbursement of remaining assets must be reported to the executive director in writing.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.104 Restricted use of profits {#sec-r-432.104 omnilex-key=us-mi-regs-official--dept-treasury--R 432.104}

Rule 104. Profits from the millionaire party shall not be used for the benefit of any individual, member, or shareholder of the qualified organization except to directly further the lawful purposes of the qualified organization.

History

History: 2014 AACS.

Mich. Admin. Code R 432.105 Violation notice {#sec-r-432.105 omnilex-key=us-mi-regs-official--dept-treasury--R 432.105}

Rule 105. (1) The executive director may issue a violation notice to a licensee for failure to maintain compliance with the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation.

(2) The licensee shall respond to the violation notice in writing within the time period specified in the notice and inform the executive director what action has been taken to correct the violation cited. The response must be signed by the principal officer of the qualified organization or the owner or owners of the licensed supplier cited for the violation.

(3) The executive director may initiate further administrative action if a response to the notice is not received or the response does not resolve the violation.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.106 Informal meeting {#sec-r-432.106 omnilex-key=us-mi-regs-official--dept-treasury--R 432.106}

Rule 106. (1) The executive director may require the principal officer of the qualified organization or the owner or owners of the licensed supplier to attend an informal meeting to discuss violations of the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation. The purpose of this meeting is to assist the licensee in achieving compliance with the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation.

(2) A licensee may agree to be placed on probation as a result of the meeting described in subrule (1) of this rule.

(3) The purpose of the meeting described in subrule (1) of this rule is to forestall the need to take further action, up to, and including, the conduct of a contested case hearing.

(4) The meeting described in subrule (1) of this rule is not required if the executive director determines that the violations of the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation warrants action prescribed by R 432.108 to R 432.110.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.107 Probation {#sec-r-432.107 omnilex-key=us-mi-regs-official--dept-treasury--R 432.107}

Rule 107. (1) The executive director may place a licensee on probation or may condition the renewal of a license with terms of probation when the licensee has violated the act, these rules, terms of probation, directives, public policy of the state of Michigan, or any other local, state, or federal law or regulation.

(2) The continuation of the probationary license is conditioned upon the strict compliance with the act, these rules, terms of probation, directives, public policy of the state of Michigan, or any other local, state, or federal law or regulation.

(3) Failure of a licensee to comply with the act, these rules, terms of probation, directives, public policy of the state of Michigan, or any other local, state, or federal law or regulation is a probation violation.

(4) The executive director may summarily suspend a probationary license if the licensee violates the act, these rules, terms of probation, directives, public policy of the state of Michigan, or any other local, state, or federal law or regulation as prescribed by R 432.110.

History

History: 2014 AACS.

Mich. Admin. Code R 432.108 License denial {#sec-r-432.108 omnilex-key=us-mi-regs-official--dept-treasury--R 432.108}

Rule 108. (1) If the executive director determines that an applicant, who does not hold a license for which the applicant is applying, is not in compliance with the act, these rules, terms of probation for another license, directives, public policy of the state of Michigan, or any other local, state, or federal law or regulation, then the executive director may refuse to issue a license to the applicant.

(2) The submission of a check in payment of a fee that is not paid by the financial institution on which it is drawn shall be grounds for immediate denial of an application for a license.

(3) The executive director may refuse to issue a license to a qualified organization to conduct a millionaire party if the executive director determines that a location owner or lessor of a location to be used for the conduct of a millionaire party is not in compliance with the requirements of the act, these rules, terms of probation, directives, public policy of the state of Michigan, or any other local, state, or federal law or regulation.

(4) A denial under this rule may be appealed under the administrative procedures act.

History

History: 2014 AACS.

Mich. Admin. Code R 432.109 Suspension or revocation of license; refusal to renew license {#sec-r-432.109 omnilex-key=us-mi-regs-official--dept-treasury--R 432.109}

Rule 109. (1) If the executive director determines that a licensee, location owner, or lessor is not in compliance with the requirements of the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation, then the executive director may suspend or revoke, refuse to renew, or suspend the right to obtain a license of a qualified organization or supplier.

(2) The executive director may suspend or revoke, refuse to renew, or suspend the right to obtain a license in accordance with the administrative procedures act for any of the following reasons:

(a) The failure to ensure full accountability for all gaming assets including, but not limited to, cash, prizes, millionaire party chips or imitation money, and all money derived from the millionaire party.

(b) The lack of honesty and integrity of the licensee, location owner, or lessor.

(d) The indebtedness of the licensee, location owner, or lessor to the federal, state, or local government.

(e) A pending lawsuit or bankruptcy proceeding that involves the licensee, location owner, or lessor and is related to the millionaire party.

(f) The current or past history of compliance of the licensee, location owner, lessor or any of its agents, or owners, shareholders of the privately held corporation, partners, officers, or agent of the licensee with the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation.

(g) Evidence that the licensee, location owner, or lessor possesses illegal gambling equipment, that illegal gambling equipment is on any of its premises, or that illegal gambling has occurred at any of its premises.

(h) The submission of a check in payment of a fee that is not paid by the financial institution that it is drawn from.

(i) The hinderance or obstruction of an authorized representative of the executive director in the performance of official duties.

(j) The use or submission of false or misleading information by any of the following means:

(i) An application for or renewal of a license.

(ii) Any document that is submitted to the executive director.

(iii) All records completed in conjunction with the millionaire party.

(iv) Verbal statements to an authorized representative of the executive director by any owner, shareholder of the privately held corporation, partner, officer, or agent of the licensee, location owner, or lessor.

(k) The failure to submit complete and accurate financial statements.

(l) The failure or refusal to provide an authorized representative of the executive director access to the location.

(m) The failure to promptly produce any book, record, or document as required by the act, these rules, terms of probation, or directives for review by an authorized representative of the executive director.

(n) Allowing any individual who has been convicted of, becomes convicted of, has forfeited bond upon a charge of, or has pled guilty to any of the offenses in R 432.203(f) to work in the operation or management of a millionaire party or to be an officer or agent of the qualified organization.

(o) Allowing any individual who has been convicted of, becomes convicted of, has forfeited bond upon a charge of, or has pled guilty to any of the offenses in R 432.203(f) to work in the operation or management of a licensed supplier, location, or lessor, or to be an owner, shareholder of the privately held corporation, partner, officer, or agent of the licensed supplier, location, or lessor.

(p) The failure to continuously operate as a qualified organization as defined by the act and as represented to the executive director by means of the information submitted to the executive director as required by R 432.201, or the failure to continuously operate as an organization or persons issued a license under section 34 of the act, MCL 432.134.

(q) For activities similar to those enumerated which, at the discretion of the executive director, merit enforcement action.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.110 Summary suspension proceedings {#sec-r-432.110 omnilex-key=us-mi-regs-official--dept-treasury--R 432.110}

Rule 110. (1) To advance the public policy of prohibition against all gambling activities not conducted in strict conformance with expressed legislative exceptions, including the regulatory framework established by the act, the executive director may summarily order the suspension of a license as provided by section 50(1) of the act, MCL 432.150, and in accordance with section 92 of the administrative procedures act, MCL 24.292, on a determination that any 1 or more of the following circumstances exist:

(a) The licensee has obtained the license by fraud, misrepresentation, or concealment.

(b) The decision to issue the license was a product of a material mistake of law or fact.

(c) The licensee, location owner, or lessor has engaged in an act, practice, or course of conduct that would operate as a fraud or deceit on an individual or individuals, or has employed a device, scheme, or artifice to defraud an individual or individuals.

(d) The licensee, location owner, or lessor has repeatedly violated, or repeatedly failed or refused to comply with, any of the provisions, requirements, limitations, or duties imposed by the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation.

(e) The licensee, location owner, lessor, or any owner, shareholder of the privately held corporation, partner, officer, or agent of the licensee, location owner or lessor, has been charged with or convicted of a violation of the act.

(f) The licensee, location owner, or lessor has or there is reasonable cause to believe the licensee, location owner, or lessor has engaged in illegal gambling, or a fraud or larceny offense.

(g) The immediate cessation of the millionaire party by the licensee is necessary for the protection or preservation of the welfare of the community that these activities are being conducted in, or for the protection or preservation of public policy of this state, or any other local, state, or federal law or regulation respecting unlawful gaming activity.

(2) If the executive director summarily suspends a license, then the licensee shall be afforded a prompt hearing before the executive director on the question forming the basis of the suspension of the license.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.111 Compliance meeting {#sec-r-432.111 omnilex-key=us-mi-regs-official--dept-treasury--R 432.111}

Rule 111. (1) A compliance meeting notice shall be issued in accordance with section 92 of the administrative procedures act. The compliance meeting allows the licensee to show compliance before the conduct of a contested case hearing.

(2) If compliance is shown or an agreement regarding future action is reached at the compliance meeting, then the need for a contested case hearing may be negated.

History

History: 2014 AACS.

Mich. Admin. Code R 432.112 Contested case hearing {#sec-r-432.112 omnilex-key=us-mi-regs-official--dept-treasury--R 432.112}

Rule 112. (1) A contested case hearing notice must be issued in accordance with section 71 of the administrative procedures act, MCL 24.271.

(2) The executive director may establish procedures for the conduct of contested case hearings, including the submission of evidence by written interrogatory, deposition, request for admissions, or by other means established by the hearing officer.

(3) There must be no discovery other than that allowed by the administrative procedures act.

(4) When an appearance is made at a contested case hearing, it must be made in person by the principal officer of the qualified organization, the owner, or owners of the licensed supplier, or by counsel.

(5) The person or persons that have been served with a contested case hearing notice may file a written answer before the date set for the contested case hearing or may appear at the contested case hearing and present an oral statement on the charges contained in the contested case hearing notice. If written briefs or arguments are presented, then a copy shall be served on the hearing officer not less than 5 days before the date set for the contested case hearing.

(6) If the person or persons that have been previously served with a contested case hearing notice fail to appear at the contested case hearing, then the hearing officer may proceed with the contested case hearing and may, on the evidence presented, make a decision.

(7) A contested case hearing must not be adjourned or continued except by the hearing officer. All motions and requests for an adjournment or a continuance must be in writing. The motion or request must state concisely the reasons why the requested relief is necessary.

(8) The parties to any contested case hearing may, by stipulation, in writing, and filed with the hearing officer, agree on the facts or any portion of the facts involved in the controversy. The stipulation must be regarded and used as evidence in the contested case hearing. Parties are requested to agree on the facts if practicable.

PART 2. GAMING LICENSING

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.201 Qualification requirements {#sec-r-432.201 omnilex-key=us-mi-regs-official--dept-treasury--R 432.201}

Rule 201. (1) Each applicant applying for a millionaire party license who has not previously qualified shall first submit qualification information as required by the executive director.

(2) Each applicant shall provide proof that its bylaws, constitution, articles of incorporation, or the bylaws or constitution of its parent organization, include a statement of dissolution. The statement of dissolution must state that all assets of the qualifying organization remaining upon dissolution, after satisfying its debts, be distributed to the local government or another nonprofit organization.

(3) The executive director may require a previously qualified organization to submit updated qualification information to assure the organization's continued eligibility under the act.

(4) In addition to the requirements of the act, the executive director shall consider certain factors when determining if an applicant or licensee qualifies as a branch, lodge, or chapter. These factors include, but are not limited to, the following:

(a) Charter or a similar document issued by the national or state organization upon acceptance as a branch, lodge, or chapter.

(b) Conditions established by the national or state organization for the revocation or suspension of the charter or relationship.

(d) Degree of control exerted by the national or state organization over the activities of the branch, lodge, or chapter.

(e) Oversight and control provided by the national or state organization over the financial affairs of the branch, lodge, or chapter, including the audit of financial records of the branch, lodge, or chapter.

(f) Standard bylaws adopted by the branch, lodge, or chapter or bylaws submitted to the national or state organization for approval.

(g) Appointed or elected officers of the branch, lodge, or chapter who are responsible for the activities of the branch, lodge, or chapter.

(h) Ability of the branch, lodge, or chapter to influence activities, normally demonstrated by voting privileges, at the state or national level.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.202 Rescinded {#sec-r-432.202 omnilex-key=us-mi-regs-official--dept-treasury--R 432.202}

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.203 Additional eligibility factors {#sec-r-432.203 omnilex-key=us-mi-regs-official--dept-treasury--R 432.203}

Rule 203. In addition to the requirements of the act, the executive director shall consider the following factors when reviewing a millionaire party license application:

(a) The honesty and integrity of the applicant.

(b) The veracity and accuracy of any information supplied to the executive director by the applicant.

(d) A pending lawsuit or bankruptcy proceeding involving the applicant.

(e) The applicant's current or past history of compliance with the act, these rules, terms of probation, directives, public policy of this state, or any other local, state, or federal law or regulation.

(f) Criminal convictions of the applicant or any individual, officer, or agent of the applicant for any of the following offenses:

(i) A violation of the act.

(ii) A felony.

(iii) A gambling offense.

(iv) Criminal fraud.

(v) Forgery.

(vi) Larceny.

(vii) Filing a false report with a governmental agency.

(g) The executive director may consider whether the organization has raised sufficient funds in the previous calendar year independent and apart from any raised from gaming under the act. Raising $500.00 unrelated to gaming under the act in the previous calendar year will satisfy this requirement. Satisfying this requirement does not entitle the organization to a millionaire party license.

(h) Any other information considered advisable by the executive director.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.204 Millionaire party license; terms and conditions {#sec-r-432.204 omnilex-key=us-mi-regs-official--dept-treasury--R 432.204}

Rule 204. (1) On the issuance of a millionaire party license, the qualified organization shall agree to all of the following:

(a) To be bound by and comply with the terms of probation, directives, public policy of this state, and any other local, state, and federal laws and regulations.

(b)To provide all information requested by the executive director.

(c) To maintain current and accurate records of all operations in conjunction with millionaire parties in conformity with the act, these rules, terms of probation, and directives.

(d) To conduct the millionaire party in accordance with the information submitted on the application approved by the executive director.

(e) To conduct the millionaire party only during the hours and the date or dates stated on the license.

(f) To hold the executive director and the state harmless from any liability, including, but not limited to, taxes and legal expenses.

(2) An individual shall not refuse to cooperate with, hinder, or obstruct in any way, an authorized representative of the executive director while the representative is in the performance of official duties.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.205 Changes to qualification or application information {#sec-r-432.205 omnilex-key=us-mi-regs-official--dept-treasury--R 432.205}

Rule 205. (1) A qualified organization shall immediately report to the executive director in writing any change to the organization's qualification documentation.

(2) A qualified organization shall immediately submit a copy of the appropriate amended document to the executive director if there is a change in any of the following:

(a) Constitution.

(b) Bylaws.

(d) Other qualification documents previously submitted to the executive director.

(e) Internal revenue service tax-exempt status.

(3) Changes to the information provided on or attached to the millionaire party license application must be immediately reported to the executive director in writing.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.206 Request for millionaire party license changes; cancellations {#sec-r-432.206 omnilex-key=us-mi-regs-official--dept-treasury--R 432.206}

Rule 206. (1) To change the location, day, date, dates, or time of a millionaire party, a qualified organization shall submit a request to the executive director in writing not less than 20 days before the proposed change takes effect.

(2) If a millionaire party cannot be held on the date approved by the executive director because of inclement weather or other emergency conditions, the qualified organization may submit a request to the executive director in writing for a new millionaire party date. The qualified organization shall also notify the executive director immediately on event cancellation.

(3) If the qualified organization chooses to cancel a millionaire party, it shall give the executive director written notice of the cancellation not less than 10 days before the scheduled date of the event.

(4) If a millionaire party license application is cancelled or denied, the executive director may retain a portion of the original statutory fee submitted to cover processing costs.

PART 3. MILLIONAIRE PARTY

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.301 Rescinded {#sec-r-432.301 omnilex-key=us-mi-regs-official--dept-treasury--R 432.301}

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.302 Licensing and approval {#sec-r-432.302 omnilex-key=us-mi-regs-official--dept-treasury--R 432.302}

Rule 302. (1) An application for a license under this act and these rules is a request by the applicant for the discretionary license. The license is a revocable privilege and is not a property right. No individual, including a qualified organization, supplier, lessor, or location owner, shall have any expectation that the executive director will issue a license.

(2) The executive director may set a maximum number of licenses that will be issued to qualified organizations and may set a maximum number of days that a millionaire party license may be issued for.

(3) The executive director may stop issuing licenses at any time or for any reason.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.303 Principal officer responsibilities {#sec-r-432.303 omnilex-key=us-mi-regs-official--dept-treasury--R 432.303}

Rule 303. (1) The principal officer of a qualified organization submitting an application shall be 18 years of age or older.

(2)The principal officer of the qualified organization shall be responsible for all of the following:

(a) Ensuring the qualified organization’s full accountability for all gaming assets including, but not limited to, cash, prizes, imitation money or chips, and all funds derived from the millionaire party.

(b) Ensuring the millionaire party is conducted in accordance with the act, these rules, terms of probation, directives, public policy of the state of Michigan and any other local, state, and federal laws or regulations.

(d) Reviewing all reports and correspondence from the executive director.

(e) Signing and ensuring that the financial statement from the millionaire party is submitted to the executive director as prescribed by R 432.321.

(f) Responding in writing to violation notices as prescribed by R 432.105(2).

(g) Ensuring that all workers are qualified to work the millionaire party.

History

History: 2014 AACS.

Mich. Admin. Code R 432.304 Millionaire party chairperson; qualifications and duties {#sec-r-432.304 omnilex-key=us-mi-regs-official--dept-treasury--R 432.304}

Rule 304. (1) The chairperson shall be a worker who is a bona fide member of the qualified organization for not less than 6 months and only serves as a millionaire party chairperson for 1 qualified organization in a calendar year.

(2) The chairperson shall be familiar with the act, these rules, terms of probation, and directives.

(3) The chairperson shall be present on the premises continuously during the occasion.

(4) The chairperson shall be readily identifiable to all millionaire party attendees by wearing a name badge with the word “chairperson” followed by the name of the licensee and the chairperson's name.

(5) The chairperson shall be in charge of the millionaire party, supervise and direct all workers, and be responsible for assuring the proper receipting, recording, and depositing of all money derived from the millionaire party.

(6) The chairperson shall attempt to resolve, in accordance with the act, these rules, and directives, disputes that may occur during the conduct of the millionaire party.

(7) Any change in the chairperson or individuals who are listed on the millionaire party license application must be immediately submitted to the executive director in writing. The notification must be signed by the principal officer of the qualified organization.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.305 Minimum age {#sec-r-432.305 omnilex-key=us-mi-regs-official--dept-treasury--R 432.305}

Rule 305. (1) Individuals under 18 years of age shall not be allowed to participate in the millionaire party as players and shall not be allowed to operate millionaire party games or assist in the conduct of the millionaire party.

(2) Individuals under 18 years of age shall not be allowed to play with, operate, handle, collect, or distribute any kind of millionaire party equipment.

(3) Individuals under 18 years of age shall not be allowed to sell or purchase raffle tickets, charity game tickets, or numeral game tickets.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.306 Raffles {#sec-r-432.306 omnilex-key=us-mi-regs-official--dept-treasury--R 432.306}

Rule 306. Raffles held in conjunction with a millionaire party license must be conducted as prescribed by rules promulgated pursuant to the act.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.307 Equipment {#sec-r-432.307 omnilex-key=us-mi-regs-official--dept-treasury--R 432.307}

Rule 307. (1) Only authorized equipment may be used at a millionaire party.

(2) Authorized equipment used in the conduct of millionaire parties shall be maintained in good repair and sound working condition.

(3) The utilization of equipment and methods of play shall be such that each player is afforded an equal opportunity to win.

(4) The licensee may not obtain millionaire party equipment from the location owner or the lessor.

(5) Unless being used during a millionaire party, authorized equipment must be stored in an inoperable manner when not in use.

History

History: 2014 AACS.

Mich. Admin. Code R 432.308 Rules of the game {#sec-r-432.308 omnilex-key=us-mi-regs-official--dept-treasury--R 432.308}

Rule 308. The executive director shall approve each game and the rules of each game that may be played at a millionaire party. The executive director shall set the rules of the game to include, but not limited to, method of play, odds, types of wagers, bet limits, and pools. The executive director may withdraw approval of a game or change the rules of the game.

History

History: 2014 AACS.

Mich. Admin. Code R 432.309 Imitation money and chips {#sec-r-432.309 omnilex-key=us-mi-regs-official--dept-treasury--R 432.309}

Rule 309. (1) During the conduct of a millionaire party, only imitation money or chips must be used by the participants. Imitation money or chips must be used solely for wagering or redemption purposes.

(2) Imitation money or chips must not be used for tipping or the purchase of food, beverages, raffle tickets, charity game tickets, numeral game tickets, or non-gaming items.

(3) Imitation money or chips must only be sold by the millionaire party licensee.

(4) Imitation money or chips must not be sold by dealers.

(5) Imitation money or chips must only be redeemed at authorized redemption areas.

(6) Only imitation money and chips that have received the executive director’s prior approval may be used at a millionaire party.

(7) The executive director may set the maximum amount of chips or imitation money that a millionaire party licensee may sell to an individual at a millionaire party.

(8) Unless otherwise permitted by law, each millionaire party licensee shall not have more than $20,000.00 in imitation money or chips in a demarcated area.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.310 Millionaire party conduct {#sec-r-432.310 omnilex-key=us-mi-regs-official--dept-treasury--R 432.310}

Rule 310. (1) A millionaire party licensee may conduct only those games approved by the executive director. All games must be conducted pursuant to the rules set by the executive director. If approved by the executive director, only games marked on the application can be conducted at an event.

(2) The qualified organization shall perform the duties concerning the millionaire party as directed by the executive director.

(3) Millionaire parties must only be conducted during the hours and the date or dates stated on the license.

(4) A copy of the current license application and any changes must be onsite and available for review.

(5) Unless approved by the executive director, 2 bona fide members shall be present at all times during an event.

(6) A qualified organization shall provide the names of its bona fide members who will be participating in the millionaire party to the executive director with its license application.

(7) Unless allowed by written authorization of the executive director, only bona fide members of the millionaire party licensee may perform any of the following duties at an event conducted under the license:

(a) Counting, distributing, handling, selling, or redeeming chips.

(b) Receiving, handling, or counting cash.

(d) Paying out cash prizes.

(e) Completing the millionaire party game records and financial statement.

(f) Ensuring only authorized individuals are present in the demarcated area.

(g) Monitoring the games and verifying all games have been conducted in conformance with the rules of the game.

(h) Verifying the age of the players.

(i) Any other duty authorized by the executive director.

(8) Except for disputed prizes, all winners shall be determined, and all prizes must be awarded, within the hours stated on the license.

(9) A location owner or lessor, a partner, member, director, officer, agent, or employee of a location owner or lessor, a shareholder of a privately held corporation that is a location owner or lessor, or an individual residing in the same household as any of these shall not do any of the following:

(a) Be an officer of a qualified organization conducting a millionaire party at the location.

(b) Participate as a player in any event being conducted at the location.

(c) Share in a prize, purchase, play, or accept charity game tickets or numeral game tickets offered for sale at the location by the qualified organization at any time during the day he or she is working or assisting.

(d) Split a prize with a player.

(e) Participate in any aspect of an event conducted at the location, including but not limited to, providing dealers, equipment, or workers, unless all of the following conditions exist:

(i) The location is owned or rented by the qualified organization and used by the qualified organization on a continual basis for the regular use of its members.

(ii) The qualified organization is the millionaire party licensee and is conducting the event.

(iii) The executive director has granted a waiver for the participation.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.311 Hours of operation {#sec-r-432.311 omnilex-key=us-mi-regs-official--dept-treasury--R 432.311}

Rule 311. The executive director has sole discretion to set the permissible hours of the day during which a millionaire party may be conducted.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.312 Limitation on redemptions {#sec-r-432.312 omnilex-key=us-mi-regs-official--dept-treasury--R 432.312}

Rule 312. A licensee shall not redeem imitation money or chips having a total value exceeding the amount sold by the millionaire party licensee for that day. A millionaire party licensee shall not redeem imitation money or chips in an amount exceeding the limitations as prescribed by the act. This limitation does not include the value of prizes won through raffles, charity game tickets, or numeral games.

History

History: 2014 AACS.

Mich. Admin. Code R 432.313 Worker compensation {#sec-r-432.313 omnilex-key=us-mi-regs-official--dept-treasury--R 432.313}

Rule 313. (1) A qualified organization shall not compensate a worker who is a bona fide member at a millionaire party, except that it may give him or her 1 of the following, or both:

(a) Credit for tuition, dues, or similar item of value approved by the executive director.

(b) Food and beverages to consume while working.

(2) The names of the workers and any compensation the workers have received pursuant to subrule (1) of this rule shall be recorded on the workers service record for each day of the millionaire party or as directed in writing by the executive director.

(3) All compensation shall be reported on the financial statement as prescribed by R 432.321.

History

History: 2014 AACS.

Mich. Admin. Code R 432.314 Dealers {#sec-r-432.314 omnilex-key=us-mi-regs-official--dept-treasury--R 432.314}

Rule 314. (1) A dealer shall not be an employee of the location owner or lessor, unless that individual is a bona fide member of the qualified organization and is dealing during an event at that organization’s location.

(2) Only those individuals authorized by the executive director may serve as a dealer at the licensed millionaire party event.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.315 Game records; retention {#sec-r-432.315 omnilex-key=us-mi-regs-official--dept-treasury--R 432.315}

Rule 315. (1) Game records pertaining to the millionaire party must be completed and maintained in a current and accurate manner in accordance with the act, these rules, terms of probation, and directives. A licensee may be required to complete game records on forms prescribed by the executive director.

(2) Game records must include a copy of the current license application and any changes.

(3) Game records and all documents supporting entries made in the records must be available and onsite at the occasion and at other times to authorized representatives of the executive director for review.

(4) Game records and all documents and supporting entries made in the records must be accessed, entered, amended, and submitted by the qualified organization only.

(5) Game records and all documents supporting entries made in the records must be maintained by the qualified organization for at least the current calendar year plus 3 years or as directed in writing by the executive director.

(6) An invoice showing the cost per item for all millionaire party equipment must be available and onsite at the occasion to authorized representatives of the executive director for review.

(7) Game records and all documents supporting entries made in the records may be removed by authorized representatives of the executive director for review.

(8) Game records may be maintained using a computer if they cannot be remotely accessed and are maintained in accordance with the act, these rules, and directives.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.316 Accountability; lawful use of proceeds; reasonable expenditures; deposit of proceeds {#sec-r-432.316 omnilex-key=us-mi-regs-official--dept-treasury--R 432.316}

Rule 316. (1) The millionaire party licensee is accountable for all cash, prizes, imitation money or chips, raffle tickets, charity game tickets, and numeral game tickets.

(2) The entire net proceeds of the millionaire party must be devoted exclusively to the lawful purpose of the qualified organization.

(3) To ensure that all proceeds are used for the lawful purpose of the qualified organization, each qualified organization shall maintain a separate checking account that must be under its exclusive control. The organization shall only deposit its millionaire party proceeds in the account and shall only make expenditures as authorized under the act and these rules.

(4) Each check written from the checking account under the qualified organization’s exclusive control into which proceeds from the millionaire party are deposited must meet all of the following requirements:

(a) Be preprinted with the name of the licensee.

(b) Be signed by an authorized individual or individuals.

(d) Not be made payable to cash or bearer and must not be drawn in blank.

(e) Contain a brief description of the expense on the memo line.

(5) Electronic transfers of funds derived from the conduct of the millionaire party must be done in accordance with directives issued by the executive director.

(6) Cancelled checks written from the checking account under the qualified organization’s exclusive control into which proceeds from the millionaire party are deposited must be returned on a monthly basis to the account holder. Copies of the checks are acceptable, if legible, and if originals can be made available on request by the executive director.

(7) All money derived from the conduct of the millionaire party must be deposited into the checking account under the qualified organization’s exclusive control within 2 business days after the millionaire party or as directed in writing by the executive director.

(8) Checks must not be cashed out of the millionaire party start cash or gross revenue.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.317 Rent and rental location agreement {#sec-r-432.317 omnilex-key=us-mi-regs-official--dept-treasury--R 432.317}

Rule 317. (1) A qualified organization shall not pay a location owner or a lessor more than $250.00 per day to rent a location for a millionaire party. The rental fee must not include any consideration or commission from revenues raised from the millionaire party gaming.

(2) A qualified organization shall not enter into agreements with the location owner or lessor other than those addressed in the written rental agreement approved by the executive director.

(3) A location owner or lessor shall not make any payments to, or accept any payments from, a supplier for anything directly or indirectly related to a millionaire party.

(4) A location owner or lessor shall not make the lease or rental of its demarcated area dependent on the use of a particular supplier or particular dealers and shall not vary the rental or lease fee that it charges based on an organization’s use of a particular supplier or particular dealers.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.318 Security {#sec-r-432.318 omnilex-key=us-mi-regs-official--dept-treasury--R 432.318}

Rule 318. The qualified organization may hire security officers. Any security services the location provides must be included in the rental fee as approved by the executive director.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.319 Advertising {#sec-r-432.319 omnilex-key=us-mi-regs-official--dept-treasury--R 432.319}

Rule 319. (1) Expenditures by the millionaire party licensee for advertising the millionaire party must be necessary and reasonable.

(2) A millionaire party licensee may advertise a millionaire party by using current and accurate information. The advertising must include all of the following:

(a) Name of the millionaire party licensee.

(b) License number.

(d) Date or dates of the millionaire party licensee’s event.

(e) Location name.

(3) Advertising must cease once the millionaire party license has expired.

(4) In an advertisement via the internet, printed matter, signs, or billboards, information in subrule (2)(a-e) of this rule must be prominently displayed in the same size font, or larger, as the largest font of the other information contained in the advertisement (5) Information in subrule (2) of this rule must be continuously visible and readable in television advertising.

(6) The lessor, location owner, or millionaire party licensee shall not advertise the dates or times the location is open for the purpose of conducting a millionaire party or the games that will be played at that location, unless all the information required in subrule (2) of this rule is contained in the advertising.

(7) The following items are not considered advertising:

(a) A message on an answering machine or voicemail by the lessor, location owner, or millionaire party licensee at a location where a millionaire party will occur.

(b) Video, audio, or other means of communication that is broadcast solely within the interior of a location where the millionaire party occurs.

(c) Printed matter contained within the interior of a location where a millionaire party occurs and that is intended to be visible only from the interior of the location where the millionaire party will occur.

(d) An internet webpage that does not mention days, dates, times, specific games played, or program information.

(e) A sign located on the property of a location where a millionaire party occurs that does not mention days, dates, times, specific games played, or game program information.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.320 Millionaire party financial records; retention {#sec-r-432.320 omnilex-key=us-mi-regs-official--dept-treasury--R 432.320}

Rule 320. All of the following financial records shall be available to authorized representatives of the executive director for review and shall be kept for at least the current calendar year plus 3 years or as directed in writing by the executive director:

(a) A copy of the financial statement as prescribed by R 432.321.

(b) Bank validated deposit slips for all proceeds from the millionaire party.

(d) Cancelled checks or copies of checks, as prescribed by R 432. 316(8), from the checking account under the qualified organization’s exclusive control into which proceeds from the millionaire party are deposited.

(e) Invoices or receipts with the date, vendor's name, and a description of the item or service for all expenditures made from the checking account where proceeds from the millionaire party were deposited.

(f) Documents, including, but not limited to, invoices and receipts supporting the preapproved expenditures.

History

History: 2014 AACS.

Mich. Admin. Code R 432.321 Financial statement requirements {#sec-r-432.321 omnilex-key=us-mi-regs-official--dept-treasury--R 432.321}

Rule 321. (1) A millionaire party licensee shall submit a financial statement to the executive director on a form, provided by or approved in writing by the executive director, by the tenth day of the month following the month that the millionaire party was held.

(2) The financial statement shall be signed by the principal officer of the qualified organization certifying that the information on the financial statement is true, correct, and complete to the best of his or her knowledge.

PART 4. SUPPLIERS

History

History: 2014 AACS.

Mich. Admin. Code R 432.401 Supplier license application {#sec-r-432.401 omnilex-key=us-mi-regs-official--dept-treasury--R 432.401}

Rule 401. (1) A written application for a supplier license shall be approved by the executive director before a person sells or rents authorized equipment to a millionaire party licensee.

(2) The supplier license application shall include additional information as directed by the executive director.

(3) The supplier license application shall be accompanied by the appropriate fee.

(4) An applicant shall disclose to the executive director whether any owner, shareholder of the privately held corporation, partner, officer, person residing in the same household as the applicant, or agent of the applicant has ever been convicted or becomes convicted of, or forfeited bond upon a charge of, or pled guilty to any of the following offenses:

( a ) A f e l o n y .

(b) A gambling o ffe nse.

( d ) F o r g e r y .

( e ) L a r c e n y .

(f) Filing a false report with a governmental agency.

(5) Any changes to the information provided on the supplier license application shall be immediately reported to the executive director in writing.

History

History: 2014 AACS.

Mich. Admin. Code R 432.402 Additional eligibility factors {#sec-r-432.402 omnilex-key=us-mi-regs-official--dept-treasury--R 432.402}

Rule 402. In addition to the requirements of the act, the executive director shall consider all of the following factors when reviewing a supplier license application or renewal application:

(a) The honesty and integrity of the applicant.

(b) The veracity and accuracy of any information supplied to the executive director by the applicant.

(d) A pending lawsuit or bankruptcy proceeding involving the applicant or any owner, shareholder of the privately held corporation, partner, or officer of the applicant.

(e) The current or past history of compliance of the applicant or any owner, shareholder of the privately held corporation, partner, officer, person residing in the same household as the applicant, or agent of the applicant with the act, these rules, terms of probation, directives, public policy of the state of Michigan, or any other local, state, or federal laws or regulations.

(f) Criminal convictions of the applicant or any owner, shareholder of the privately held corporation, partner, officer, person residing in the same household as the applicant, or agent of the applicant for any of the following offenses:

(i) A violation of the act.

( i i ) A f e l o n y .

( i i i ) A g a m b l i n g o f f e n s e .

( i v ) C r i m i n a l f r a u d .

( v ) F o r g e r y .

( v i ) L a r c e n y .

(vii) Filing a false report with a governmental agency.

(g) The forfeiture of a bond.

(h) Any other information considered advisable by the executive director.

History

History: 2014 AACS.

Mich. Admin. Code R 432.403 Supplier license renewal; supplier license void on ownership change {#sec-r-432.403 omnilex-key=us-mi-regs-official--dept-treasury--R 432.403}

Rule 403. (1) A supplier license is renewable annually upon the submission of a renewal application, provided by, or approved in writing by the executive director, unless summarily suspended, suspended, denied, or revoked by the executive director.

(2) If the ownership changes or any portion of ownership of the privately held corporation, partnership, or sole proprietorship acting as a licensed supplier changes, except for deletion of owners or changes in percentage of ownership, then the license issued to that privately held corporation, partnership, or sole proprietorship is void and must be returned to the executive director without delay.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.404 Supplier license terms and conditions {#sec-r-432.404 omnilex-key=us-mi-regs-official--dept-treasury--R 432.404}

Rule 404. (1) Upon the issuance of a supplier license, the licensed supplier agrees to all of the following terms and conditions:

(a) To be bound by and comply with the act, these rules, terms of probation, directives, public policy of this state, and any other local, state, and federal laws and regulations.

(b) To not assign or transfer the supplier license. A privately held corporation, partnership, or sole proprietorship acting as a licensed supplier shall not attempt to sell or transfer an interest in the business without the prior written approval of the executive director.

(c) To immediately report to the executive director in writing any change in the information stated on, or attached to, the supplier license application.

(d) To only accept checks from a licensee's account for the payment of equipment or dealers.

(e) To not reveal investigative information to any licensee.

(f) To hold the executive director and this state harmless from any liability, including, but not limited to, taxes and legal expenses.

(2) The location the licensed supplier does business, including supplemental storage locations or where an applicant or licensed supplier intends to do business or store equipment, must be open to inspection by an authorized representative of the executive director during reasonable business hours.

(3) An individual shall not refuse to cooperate with, hinder, or obstruct in any way, an authorized representative of the executive director while the representative is performing official duties.

(4) A licensed supplier shall not require any licensee to enter into an exclusive purchase agreement with that licensed supplier.

(5) A licensed supplier may rent or sell authorized equipment to qualified organizations for a reasonable rate as approved by the executive director.

(6) A licensed supplier may provide dealers to a qualified organization.

(7) A licensed supplier shall not make a payment to, or accept a payment from, either directly or indirectly, a location owner or lessor for anything related to a millionaire party.

(8) Notwithstanding R 432.314(2), if a licensed supplier provides the dealers, the licensed supplier shall be responsible for the actions of the dealers, including compliance with the act, these rules, terms of probation, directives, public policy of this state, and any other local, state, and federal laws and regulations.

(9) The executive director may deny, summarily suspend, suspend, revoke, or refuse to renew a supplier license as prescribed by R 432.108 to R 432.110.

History

History: 2014 AACS; 2023 MR 20, Eff. Oct. 24, 2023.

Mich. Admin. Code R 432.405 Equipment; sale and rental {#sec-r-432.405 omnilex-key=us-mi-regs-official--dept-treasury--R 432.405}

Rule 405. (1) Only equipment authorized in writing by the executive director and in sound working condition may be sold or rented to licensees.

(2) Unless being used during a millionaire party, gaming equipment shall be stored in an inoperable manner when not in use.

History

History: 2014 AACS.

Mich. Admin. Code R 432.406 Authorization to purchase and sell charity game tickets and sell approved numeral game tickets {#sec-r-432.406 omnilex-key=us-mi-regs-official--dept-treasury--R 432.406}

Rule 406. The issuance of a supplier license does not include the authorization to purchase and sell charity game tickets or sell approved numeral game tickets.

History

History: 2014 AACS.

Mich. Admin. Code R 432.407 Prohibitions {#sec-r-432.407 omnilex-key=us-mi-regs-official--dept-treasury--R 432.407}

Rule 407. (1) A licensed supplier or any owner, shareholder of the privately held corporation, partner, officer, person residing in the same household as a licensed supplier, agent, or employee of a licensed supplier shall not be involved with the millionaire party.

This subrule does not apply to the dealers or delivery, repair, and the set up of the millionaire party equipment.

(2) A licensed supplier or any owner, shareholder of the privately held corporation, partner, officer, person residing in the same household as a licensed supplier, agent, or employee of a licensed supplier shall not do any of the following:

(a) Be an officer of a qualified organization conducting a millionaire party for which the supplier is providing equipment or services.

(b) Play millionaire party games at the location where he or she works or assists.

(c) Share in a prize, purchase, play, or accept charity game tickets or numeral game tickets offered for sale by the licensee at any time at the location where he or she is working or assisting.

(d) Split a prize with a player.

History

History: 2014 AACS.

Mich. Admin. Code R 432.408 Invoices for equipment {#sec-r-432.408 omnilex-key=us-mi-regs-official--dept-treasury--R 432.408}

Rule 408. (1) A licensed supplier shall record every sale, rental, return, dealer cost, or any other type of transfer of equipment to or from licensees by completing a sales invoice or credit memo.

(2) All invoices for equipment and dealers shall be sequentially numbered and issued in sequential order or as directed in writing by the executive director.

(3) An invoice for equipment and/or dealers supplied to a licensee shall be given to the licensee before the millionaire party.

(4) The invoice shall contain all of the following:

(a) The amount of each sale.

(b) All credits.

(d) All s ales p remiu ms.

(e) All rebates or discounts.

(f) The net amount of each sale.

(g) Any other information as directed in writing by the executive director.

(5) A licensed supplier shall retain all voided or spoiled invoices for equipment and/or dealers.

History

History: 2014 AACS.

Mich. Admin. Code R 432.409 Supplier records; retention {#sec-r-432.409 omnilex-key=us-mi-regs-official--dept-treasury--R 432.409}

Rule 409. (1) The licensed supplier shall maintain current and accurate records of all operations.

(2) The records and all documents supporting entries made in the records shall be available to the authorized representatives of the executive director for review.

(3) The records and all documents supporting entries made in the records shall be kept for at least the current calendar year plus 3 years or as directed in writing by the executive director.

(4) A licensed supplier shall report to the executive director, on a form provided by or approved in writing by the executive director, the number of and total amount paid to the licensed supplier for dealers and the type and total amount of sales and rentals of authorized equipment.

History

History: 2014 AACS.

Mich. Admin. Code R 432.410 Advertising {#sec-r-432.410 omnilex-key=us-mi-regs-official--dept-treasury--R 432.410}

Rule 410. A licensed supplier shall not advertise a millionaire party.

History

History: 2014 AACS.

R 432.501 to R 432.555 Fantasy Contests

Mich. Admin. Code R 432.511 Definitions {#sec-r-432.511 omnilex-key=us-mi-regs-official--dept-treasury--R 432.511}

DEPARTMENT OF TREASURY

MICHIGAN GAMING CONTROL BOARD

FANTASY CONTEST RULES

(By authority conferred on the Michigan gaming control board by section 10 of the fantasy contests consumer protection act, 2019 PA 157, MCL 432.510)

PART 1. GENERAL PROVISIONS

Rule 511. As used in these rules:

(a) “Act” means the fantasy contests consumer protection act, 2019 PA 157, MCL 432.501 to 432.516.

(b) "Advertisement" means any notice, communication, or other dissemination of information to the public or individuals, whether by broadcasting, digital or online media, a fantasy contest platform, social media, publication, or any other means of dissemination, by or on behalf of a fantasy contest operator or licensed management company that is intended or designed to promote the fantasy contest business of the fantasy contest operator or licensed management company or solicit or entice fantasy contest players to enter or participate in fantasy contests offered by the fantasy contest operator or licensed management company. An advertisement includes a promotion and any promotional giveaways, games, and other similar activities.

(i) A person that is a holding company, as that term is defined in section 2 of the act, MCL 432.502.

(ii) A corporation, firm, partnership, limited partnership, limited liability company, trust, or other form of business organization that is not an individual and that directly or indirectly does either of the following:

(A) Holds an ownership interest of 5% or more, as determined by the board, in a licensed management company or an applicant.

(B) Holds voting rights with the power to vote 5% or more of the outstanding voting rights of a licensed management company or an applicant.

(d) “Affiliate marketer” means a person involved in promoting, marketing, and directing business to a fantasy contest operator’s or licensed management company’s fantasy contest site that is compensated by or on behalf of the fantasy contest operator or licensed management company based on any of the following:

(i) The volume of customer referrals to the fantasy contest site.

(ii) Customer activity, including, but not limited to, number of fantasy contest player account registrations, number of depositing fantasy contest player account registrations, or fantasy contest entry activity.

(iii) Any combination of the compensation methods described in paragraph (i) to (ii) of this subdivision.

(e) “Agent” means any individual who is employed by any agency of this state, other than the board, the state police, or attorney general, and who is assigned to perform fulltime services on behalf of or for the benefit of the board regardless of the title or position held by that individual.

(f)“Applicant” means any person that applies for any license under the act and these rules.

(g) “Application” means all materials and information submitted to the board, including, but not limited to, the instructions, forms, and other documents required by the board, comprising a person’s request for issuance or renewal of a license, approval of a transfer of ownership interest, or any other board action for which an application is required under the act and these rules.

(h) “Authorized script” means a script that is made readily available to all fantasy contest players through a fantasy contest platform and is incorporated as a feature of fantasy contests.

(i) “Auto draft” means a selection method in which a fantasy contest platform automatically selects a fantasy contest team for a fantasy contest player.

(j) “Beginning player” means a fantasy contest player who meets all of the following conditions:

(i) The fantasy contest player has entered fewer than 51 fantasy contests offered by a fantasy contest operator or licensed management company.

(ii) The fantasy contest player does not meet the definition of a highly experienced player.

(iii) The fantasy contest player is not classified as a highly experienced player by a licensed management company under R 432.532a(1).

(k) “Chairperson” means the chairperson of the Michigan gaming control board designated under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.

(l) “Conflict of interest” means a situation, relationship, or association in which the private interest of employees, agents, and contractors of the board may influence the judgment of the employee, agent, or contractor in the performance of his or her public duty under the act.

(m) “Contractor” means any individual not employed by this state who performs services on behalf of or for the benefit of the board and requires unescorted access to board facilities.

(n) “Executive director” means the executive director of the Michigan gaming control board, appointed under section 4 of the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.204.

(o) “Fantasy contest operations” means the conduct of authorized fantasy contests by a fantasy contest operator or licensed management company.

(p) “Fantasy contest operator license” means a license issued by the board to a person to operate, carry on, conduct, maintain, expose, or offer for play fantasy contests and award prizes of value.

(q) “Fantasy contest player account” means an electronic ledger in which all of the following types of transactions relative to a fantasy contest player are recorded:

(i) Deposits and credits.

(ii) Withdrawals.

(iii)Entry fees.

(iv) Monetary value of prizes and awards.

(v) Service and other transaction-related charges authorized by the fantasy contest player, if any.

(vi) Adjustments to the account.

(r) “Fantasy contest player funds” means cash or cash equivalents owned by or owed to fantasy contest players, including all of the following except as otherwise provided in paragraph (iv) of this subdivision:

(i) Amounts held by a fantasy contest operator or licensed management company in fantasy contest player accounts, including pending withdrawals, but not including funds that have been withdrawn successfully by fantasy contest players.

(ii) Amounts accepted by a fantasy contest operator or licensed management company as entry fees for fantasy contests whose outcomes have not yet been determined.

(iii) Amounts owed to fantasy contest players but not yet paid by a fantasy contest operator or licensed management company as prizes or awards through the period established by the fantasy contest operator or licensed management company for honoring winning fantasy contest entries.

(iv) Fantasy contest player funds do not include amounts available to fantasy contest players for entry into fantasy contests that are not redeemable for cash.

(s)“Fantasy contest player session” means the period of time that a fantasy contest player is logged on to a fantasy contest platform.

(t) "Geolocation" means the identification of the real-world geographic location of a fantasy contest player.

(u) “In-state participant" means a participant located in this state at the time of paying an entry fee or otherwise entering a fantasy contest.

(v) “Institutional investor” means a person that is any of the following:

(i) A retirement fund administered by a public agency for the exclusive benefit of federal, state, or local public employees.

(ii) An employee benefit plan or pension fund that is subject to the employee retirement income security act of 1974, Public Law 93-406.

(iii) An investment company registered under the investment company act of 1940, 15 USC 80a-1 to 80a-64.

(iv) A collective investment trust organized by a bank under 12 CFR part 9.

(v) A closed end investment trust.

(vi) A chartered or licensed life insurance company or property and casualty insurance company.

(vii) A chartered or licensed financial institution.

(viii) An investment advisor registered under the investment advisers act of 1940, 15 USC 80b-1 to 80b-21.

(ix) Any other person that the board determines should be considered an institutional investor for reasons consistent with the act and these rules.

(w) “Key person” means any of the following:

(i) An individual who holds a 5% or greater ownership interest in an applicant or licensee or in shares of an applicant or licensee.

(ii) An individual who holds voting rights with the power to vote 5% or more of the outstanding voting rights of an applicant or licensee.

(iii) A director of an applicant or licensee.

(iv) A managerial employee of an applicant or licensee who performs the function of principal executive officer, principal operations officer, principal accounting officer, or an equivalent officer.

(v) An affiliate of an applicant or licensee.

(vi) A director of an affiliate of an applicant or licensee.

(vii) A managerial employee of an affiliate of an applicant or licensee who performs the function of principal executive officer, principal operations officer, principal accounting officer, or an equivalent officer.

(x) “Licensed management company” means a management company that is licensed by the board under the act and these rules.

(y) “Licensee” means a person that holds a fantasy contest operator license or management company license under the act and these rules. Licensee does not include a fantasy contest operator that is exempt from licensure pursuant to section 3(4) of the act, MCL 432.503.

(z) “Management company license” means a license issued by the board to a person to manage the day-to-day fantasy contest operations of a fantasy contest operator.

(aa) “Member” means a board member of the Michigan gaming control board appointed under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.

(bb) “Official” means any individual who officiates an athletic event and is responsible for enforcing the rules of the athletic event, including, but not limited to, a referee, umpire, or judge.

(cc) “Prohibited athletic event” means any of the following:

(i) Any event that is not a real-world professional, collegiate, or nationally recognized sports game, contest, or competition.

(ii) Any event that is or involves any of the following:

(A) A high school or youth sporting event.

(B) A randomized or historical event.

(D) A game or contest ordinarily offered by a horse track or casino for money, credit, or any representative of value, including any races, games, or contests involving horses or that are played with cards or dice.

(E) A slot machine or other mechanical, electromechanical, or electronic device, equipment, or machine, including computers and other cashless wagering systems.

(F) Poker, blackjack, faro, monte, keno, bingo, fan tan, twenty one, seven and a half, Klondike, craps, chuck a luck, Chinese chuck a luck, Wheel of Fortune, Chemin de Fer, Baccarat, Pai Gow, Beat the Banker, Panguingui, roulette, or other banking or percentage games.

(G) Any other game or device authorized by the board under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.

(iii) Any event that does not involve the physical exertion and skill of the participating individual athletes.

(iv) Any event in which any participating individual athlete is not physically present at the location at which the event occurs.

(v) Any event in which the outcome of the event is not directly dependent on the performance of the participating individual athletes.

(vi) Other prohibited athletic events as determined by the board.

(dd) "Prohibited person" means any of the following:

(i) An individual who is less than 18 years of age.

(ii) A self-restricted individual.

(iii) An individual the board has determined must be excluded from participation in fantasy contests under R 432.532c.

(iv) Except as otherwise provided in R 432.513a(9) and R 432.532b(12), a member, the executive director, a board employee, or an agent.

(v) Other prohibited persons as determined by the board.

(ee) "Proposition selection" means a fantasy contest player choosing whether an identified instance or statistical achievement will occur, will be achieved, or will be surpassed.

(ff) “Proxy server” means a computer server or other technology that allows a person to disguise the geolocation of his or her computer or other device when accessing a fantasy contest platform.

(gg) “Publicly traded corporation” means any corporation or other legal entity regulated by the U.S. Securities and Exchange Commission under the securities exchange act of 1934, 15 USC 78a to 78qq, or securities act of 1933, 15 USC 77a to 77aa.

(hh) “Representative” means an individual who acts on behalf of a fantasy contest operator, licensed management company, applicant, or affiliate.

(ii) “Self-restricted individual” means an individual who is subject to an active selfrestriction under R 432.532d.

(jj) “Sports governing body” means an organization that prescribes final rules and enforces codes of conduct for an athletic event and the participants in the athletic event.

(kk) “Strong authentication” means a method that effectively provides higher security than a username and password alone.

(ll) "Suspended account" means a fantasy contest player account that has been temporarily disabled from entering or participating in fantasy contests.

(mm) "Targeted advertisement" means an advertisement disseminated by or on behalf of a fantasy contest operator or licensed management company, or a promotional offer made by or on behalf of a fantasy contest operator or licensed management company, which is directed to an individual on the basis of specific criteria, such as being a member or former member of a rewards club or a participant in social games. Targeted advertisement does not include any of the following:

(i) Mass communication, including mailings or emails, made to an entire area or zip code or targeted list.

(ii) An advertisement that arrives in a packet of 5 or more non-gaming advertisements if the packet of advertisements is addressed to "resident," "occupant," or some similar wording and not to a specific individual.

(iii) Any "pop-up" advertisement that appears on an individual’s computer or mobile device on the basis of his or her Internet Protocol (IP) Address.

(nn) “Third-party provider” means a person, other than a licensed management company, that provides fantasy contest operators or licensed management companies goods or services that directly affect the conduct of fantasy contests under the act.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.512 Terms defined in act {#sec-r-432.512 omnilex-key=us-mi-regs-official--dept-treasury--R 432.512}

Rule 512. Terms defined in the act have the same meaning when used in these rules.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.513 Board duties, jurisdiction, and authority {#sec-r-432.513 omnilex-key=us-mi-regs-official--dept-treasury--R 432.513}

Rule 513. (1) To execute and administer the act for the purpose of licensing, regulating, and enforcing lawful fantasy contests, the board may do all of the following:

(a) Determine its practices and internal policies or procedures.

(b) Delegate to the executive director all powers and authority to act in the name of the board with respect to all reasonable, necessary, and appropriate actions to administer and carry out the administrative and executive functions of the board including, but not limited to, the power to do any of the following:

(i) Execute and enter into contracts on behalf of the board.

(ii) Hire and fire employees of the board and administer oaths.

(iii)Issue subpoenas for the attendance of witnesses and the production of documents.

(iv)Issue and renew licenses.

(v) Conduct investigations, inspections, and audits, share information with law enforcement agencies, conduct hearings, and settle alleged violations of the act and these rules.

(vi)Engage in other functions necessary to the proper administration and enforcement of the act and these rules.

(vii) Grant requests and waivers, answer inquiries, issue interpretations, and otherwise take any action that is reasonably requested by an applicant, licensed management company, or fantasy contest operator in furtherance of, and consistent with, the efficient administration and enforcement of the act and these rules, as determined to be necessary or appropriate by the executive director.

(2) The board may set hiring standards for employees.

(3) The board has general responsibility for the implementation of the act. The board's duties include, but are not limited to, all of the following:

(a) Deciding in a reasonable period of time all license applications.

(b) Investigating applicants for licenses. The board may grant licenses in accordance with the act and these rules.

(d) Investigating alleged violations of the act or these rules and taking appropriate disciplinary action against a fantasy contest operator, licensed management company, or any other person, or instituting appropriate legal action for enforcement, or both.

(e) Conducting investigative and contested case hearings, issuing subpoenas, and administering oaths and affirmations to the witnesses to exercise and discharge the powers and duties of the board under the act.

(f) Revoking or suspending licenses or taking any other action authorized in the act or these rules that the board considers necessary and in compliance with applicable laws of this state.

(g) Imposing fines against persons, fantasy contest operators, and licensed management companies for engaging in a fraudulent practice or behavior, for each violation of the act, these rules, or any resolution or order of the board, or for any other action that the board determines is a detriment or impediment to fantasy contests or fantasy contest operations.

(h) Taking any other action as may be reasonable or appropriate to enforce the act and these rules.

(4) The board may seek and shall receive the cooperation and assistance of other departments and agencies in conducting background investigations and in fulfilling its responsibilities under the act.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.513a Member, executive director, board employee, or agent; conduct generally {#sec-r-432.513a omnilex-key=us-mi-regs-official--dept-treasury--R 432.513a}

Rule 513a. (1) By January 31 of each year, each member, the executive director, and all employees of the board shall file 1 or more board disclosure forms. The board shall determine the contents of the form, but the form must include any information that is necessary to ensure the integrity of fantasy contests and the disclosure of all relevant financial information. The form may be combined with similar forms required by other acts or rules.

(2) If a member, the executive director, a board employee, or an agent negotiates for, or acquires by any means, any interest in a fantasy contest operator, licensed management company, applicant, or affiliate, he or she must immediately provide written notice of the details of the interest to the chairperson. The member, executive director, board employee, or agent must not act on behalf of the board with respect to that fantasy contest operator, licensed management company, applicant, or affiliate.

(3) A member, the executive director, a board employee, or an agent may enter into any negotiations for employment with a fantasy contest operator, licensed management company, applicant, or affiliate. The member, executive director, board employee, agent, fantasy contest operator, licensed management company, applicant, or affiliate must immediately notify the chairperson and the executive director once the invitation to negotiate has been extended. A potential employer asking if an individual would be interested in a position or explaining the nature of a position does not constitute negotiations for employment. Further, an individual completing an employment application does not constitute negotiations for employment. The member, executive director, board employee, or agent must not take any action on behalf of the board with respect to that fantasy contest operator, licensed management company, applicant, or affiliate while the negotiations are ongoing.

(4) All members, the executive director, board employees, agents, and contractors must, to the maximum extent possible, avoid situations, relationships, or associations that may represent or lead to an actual or perceived conflict of interest.

(5) A member, the executive director, a board employee, or an agent or their spouse may not accept any gift, gratuity, compensation, travel, lodging, or anything of value, directly or indirectly, from any fantasy contest operator, licensed management company, applicant, affiliate, or representative, unless the acceptance conforms to a written policy issued by the chairperson or his or her designee. The chairperson or his or her designee may exempt attendance at a reception and food and drink for immediate consumption from this policy.

The policy must be publicly available and shared with all fantasy contest operators, licensed management companies, applicants, and affiliates.

(6) A fantasy contest operator, licensed management company, applicant, affiliate, or representative shall not, directly or indirectly, give or offer to give any gift, gratuity, compensation, travel, lodging, or things of value to any member, the executive director, a board employee, or an agent or their spouse that the member, executive director, board employee, or agent or their spouse is prohibited from accepting under subrule (5) of this rule.

(7) A fantasy contest operator, licensed management company, applicant, affiliate, or representative must not engage in ex parte communications with a member of the board. A member of the board must not engage in any ex parte communications with a fantasy contest operator, licensed management company, applicant, affiliate, or representative.

(8) Any member, fantasy contest operator, licensed management company, applicant, affiliate, or representative who receives any ex parte communication in violation of subrule (7) of this rule, or who is aware of an attempted communication in violation of subrule (7) of this rule, must immediately report details of the communication or attempted communication in writing to the chairperson.

(9) A member, the executive director, a board employee, or an agent must not have a fantasy contest player account or enter or participate in any fantasy contest conducted under the act unless either or both of the following apply:

(a) The member, executive director, board employee, or agent possesses a fantasy contest player account or enters or participates in a fantasy contest as part of the individual’s surveillance, security, or other official duty authorized by the board.

(b) The member, executive director, board employee, or agent possesses a test account or enters or participates in a fantasy contest using a test account in accordance with R 432.532b(12).

(10) Violation of this rule by a fantasy contest operator, licensed management company, applicant, affiliate, or representative may result in denial of an application for licensure, revocation or suspension of a license, or other action by the board.

(11) Violation of this rule does not create a civil cause of action.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.514 Denial or non-renewal hearings {#sec-r-432.514 omnilex-key=us-mi-regs-official--dept-treasury--R 432.514}

Rule 514. (1) A person whose application for a license or a transfer of ownership has been denied, whose license has not been renewed, or who has been denied an approval from the board required in these rules may request a denial or non-renewal hearing. The hearing must be de novo.

(2) The person must submit an original denial or non-renewal hearing request, pleading, or other written document to the board, serve each party or attorney of record, and provide a proof of service on each party or attorney of record.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.514a Denial or non-renewal hearings; request for hearing {#sec-r-432.514a omnilex-key=us-mi-regs-official--dept-treasury--R 432.514a}

Rule 514a. (1) A request for a denial or non-renewal hearing must meet all of the following requirements:

(a) Be in writing.

(b) State the name, current address, and current telephone number of the petitioner.

(c) State in detail the reasons why, and the facts upon which the petitioner will rely to show that, the petitioner's application for a license should not have been denied, the license should have been renewed, the transfer of ownership should have been approved, or approval should have been granted.

(d) Be signed, verified, and dated. A petitioner must have the verification notarized and include a certification stating, "Under the penalty of perjury, the undersigned has examined this request for hearing and to the best of my knowledge and belief, it is true, complete, and correct."

(2) A request for a denial or non-renewal hearing must be submitted within 21 days after service of the notice of denial, notice of non-renewal, or disapproval. A request for a denial or non-renewal hearing submitted by certified mail or overnight express mail is considered submitted in a timely manner if it is postmarked no later than 21 days after service of a notice of denial, notice of non-renewal, or disapproval.

(3) A request for a denial or non-renewal hearing is considered granted unless denied.

(4) A request for a denial or non-renewal hearing may be withdrawn by the petitioner. If the request for a denial or non-renewal hearing is withdrawn, then the initial denial, nonrenewal, or disapproval becomes a final board order.

(5) Unless the board denies a request for a denial or non-renewal hearing, the board shall submit the request for hearing to the appropriate state agency.

(6) Default judgment or dismissal may result at any stage of the proceeding.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.514b Denial or non-renewal hearings; proceedings {#sec-r-432.514b omnilex-key=us-mi-regs-official--dept-treasury--R 432.514b}

Rule 514b. (1) The burden of proof in a denial or non-renewal hearing is at all times on the petitioner. The petitioner has the affirmative responsibility of establishing, by clear and convincing evidence, any of the following:

(a) The petitioner should have been awarded a license.

(b) The license should have been renewed.

(d) Approval should have been granted.

(2) The denial or non-renewal hearing must be conducted in accordance with the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, except as otherwise provided in these rules or the act.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.514c Prohibition on ex parte communication {#sec-r-432.514c omnilex-key=us-mi-regs-official--dept-treasury--R 432.514c}

Rule 514c. A party or the party's attorney must not communicate directly or indirectly with a hearing officer regarding any pending matter, except upon notice and opportunity for all parties to participate. A party that engages in ex parte communication with a hearing officer may be subject to sanctions and penalties.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.514d Denial or non-renewal hearings; sanctions and penalties {#sec-r-432.514d omnilex-key=us-mi-regs-official--dept-treasury--R 432.514d}

Rule 514d. (1) The hearing officer in a denial or non-renewal hearing may recommend sanctions and penalties if the hearing officer finds that a party has failed to appear at a scheduled hearing, has acted in bad faith for the purpose of delay, or has otherwise abused the hearing process. Sanctions and penalties include, but are not limited to, a fine or default judgment or a directed finding on 1 or more issues.

(2) If a petitioner refuses to testify on his or her own behalf with respect to any question propounded to him or her, the hearing officer may infer that the testimony or answer would have been adverse to the case of the petitioner.

(3) If the petitioner or attorney of record fails to answer a subpoena or refuses to testify fully at the request of the board, the failure may be considered independent grounds for a finding that the petitioner should have been denied a license, renewal, transfer of ownership, or approval. The hearing officer may also infer from the failure to answer a subpoena or refusal to testify fully that the testimony would have been adverse to the petitioner.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.514e Recording proceedings; transmittal of record and board action {#sec-r-432.514e omnilex-key=us-mi-regs-official--dept-treasury--R 432.514e}

Rule 514e. (1) Oral proceedings involving contested issues must be recorded to ensure the preservation of the testimony. A party may request a transcript of the proceedings. The requesting party must pay for the transcript.

(2) Unless otherwise specified by the board, within 60 days after the conclusion of the hearing or the submission of post-hearing briefs or proposed findings of fact, the hearing officer shall issue, to the board and to the parties, written findings of fact, conclusions of law, and recommendations. Findings of fact must be based exclusively on testimony, evidence, and matters within the record. The findings of fact must be stated separately.

(3) Unless otherwise agreed to by the parties or as set by the hearing officer, the parties have 21 days after the service of the findings of fact, conclusions of law, and recommendations of the hearing officer to file objections.

(4) Unless otherwise agreed to by the parties or as set by the hearing officer, the parties may file a response to the objections within 21 days after service of the objections.

(5) After the time period for the parties to file objections and responses to those objections, the hearing officer must transmit the entire record to the board.

(6) Before issuing a final order, the board must consider the record as a whole.

(7) After considering the record as a whole, the board may take any of the following actions:

(a) Affirm the written recommendations, findings of fact, and conclusions of law submitted by the hearing officer as the final board order.

(b) Issue a final order modifying the written recommendations, findings of fact, and conclusions of law submitted by the hearing officer.

(c) Issue a final order rejecting the written recommendations, findings of fact, and conclusions of law submitted by the hearing officer.

(d) Issue an order remanding the matter, with instructions, to the hearing officer for further proceedings.

(8) The board must serve copies of its orders on the parties.

(9) A board order becomes effective upon service.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.515 Request for declaratory ruling; form; contents {#sec-r-432.515 omnilex-key=us-mi-regs-official--dept-treasury--R 432.515}

Rule 515. (1) A person that requests a declaratory ruling from the board as to the applicability to an actual set of facts of a statute, rule, resolution, or order administered, promulgated, or issued by the board, must do so in writing.

(2) The written request must contain the relevant and material facts along with a reference to the statute, rule, resolution, or order applicable.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.515a Declaratory ruling; notice of issuance; request for information or arguments; hearing {#sec-r-432.515a omnilex-key=us-mi-regs-official--dept-treasury--R 432.515a}

Rule 515a. (1) Within 90 days after the receipt of a request for a declaratory ruling, the board shall issue a written notification by first-class mail to the petitioner and the petitioner’s legal counsel, if any, stating whether or not a declaratory ruling will be issued.

(2) If the board decides to issue a declaratory ruling, the board may do any of the following:

(a) Request more information from the petitioner.

(b) Request information from other interested parties.

(d) Request oral or written arguments from interested parties.

(e) Hold a hearing upon proper notice to all interested parties.

(f) Decline to issue a declaratory ruling.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.516 Reasons for investigation of, or disciplinary action against, a fantasy contest operator or licensed management company; disciplinary hearing procedure {#sec-r-432.516 omnilex-key=us-mi-regs-official--dept-treasury--R 432.516}

Rule 516. (1) The board may initiate an investigation of or a disciplinary action against, or both, a fantasy contest operator or licensed management company if the board has reason to believe that 1 or more of the following apply:

(a) The licensed fantasy contest operator or licensed management company is not maintaining suitability for licensure as provided by the act.

(b) The licensed fantasy contest operator or licensed management company is not complying with licensure conditions.

(c) The fantasy contest operator or licensed management company is not complying with all laws, rules, orders, and resolutions.

(2) Before initiating disciplinary proceedings, the board must give notice and an opportunity to show compliance under section 92 of the administrative procedures act of 1969, 1969 PA 306, MCL 24.292.

(3) A fantasy contest operator is responsible for the conduct of any licensed management company it uses to conduct fantasy contests under the act. A fantasy contest operator or licensed management company is responsible for the conduct of any third-party provider it uses to conduct fantasy contests under the act. A licensed management company is responsible for its conduct under the act and these rules. Any violation of the act or these rules by the fantasy contest operator in which the licensed management company participated in the action is considered a violation by both the fantasy contest operator and licensed management company, and the board may hold both, or either, accountable for the violation.

(4) The board may initiate a disciplinary proceeding by designating a member or the executive director to conduct a hearing or by initiating proceedings with the appropriate state agency under the contested case provisions of chapter 4 of the administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to 24.288, and the rules promulgated under that chapter.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.516a Disciplinary hearings; hearing officer sanctions and penalties {#sec-r-432.516a omnilex-key=us-mi-regs-official--dept-treasury--R 432.516a}

Rule 516a. (1) A hearing officer in a disciplinary hearing may recommend sanctions and penalties if the hearing officer finds that a party has failed to appear for a scheduled hearing, has acted in bad faith for the purpose of delay, or has otherwise abused the hearing process.

(2) If a respondent fails to testify on the respondent's own behalf with respect to any question propounded to the respondent, the hearing officer may infer that the testimony or answer would have been adverse to the case of the respondent.

(3) If the respondent or attorney of record fails to answer a subpoena or refuses to testify fully at the request of the board, the failure may be considered independent grounds for a finding that the respondent should be disciplined. The hearing officer may also infer that the testimony would have been adverse to the respondent.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.516b Disciplinary hearings; actions available to the board {#sec-r-432.516b omnilex-key=us-mi-regs-official--dept-treasury--R 432.516b}

Rule 516b. The board may take any of the following disciplinary actions against a fantasy contest operator or licensed management company:

(a) Suspend, revoke, restrict, or place conditions on the license of a licensed fantasy contest operator or licensed management company.

(b) Prohibit a fantasy contest operator from continuing to offer fantasy contests under the act.

(d) Require the removal of a third-party provider used by a fantasy contest operator or licensed management company.

(e) Impose a civil penalty of not more than $20,000 for each violation of the act, these rules, an order, or a resolution.

(f) Any other action considered necessary by the board to ensure compliance with the act or these rules.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.517 Special proceedings {#sec-r-432.517 omnilex-key=us-mi-regs-official--dept-treasury--R 432.517}

Rule 517. (1) The board may without notice or hearing suspend a license or otherwise prohibit a fantasy contest operator from continuing to offer fantasy contests under the act if the board determines that the safety or health of persons or employees or the integrity of fantasy contests is jeopardized by continuing fantasy contest operations or that the action is necessary for the immediate preservation of the integrity of fantasy contests, public peace, health, safety, morals, good order, or general welfare.

(2) The suspension or prohibition may remain in effect until the board determines that the cause for the suspension or prohibition has been abated.

(3) Following a hearing, the board may revoke the license upon a determination that satisfactory progress toward abating the hazard has not been made.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.518 Waiver of requirements {#sec-r-432.518 omnilex-key=us-mi-regs-official--dept-treasury--R 432.518}

Rule 518. The board may, in writing, waive, restrict, or alter any requirement or procedure set forth in these rules, if the board determines any of the following:

(a) That the requirement or procedure is impractical or burdensome.

(b) That the waiver, restriction, or alteration is in the best interest of the public and fantasy contests.

(c) That the waiver, restriction, or alteration is not outside the technical requirements necessary to serve the purpose of the requirement or procedure.

PART 2. LICENSING

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521 Required notification of anticipated or actual changes in key persons {#sec-r-432.521 omnilex-key=us-mi-regs-official--dept-treasury--R 432.521}

Rule 521. A licensee or applicant must notify the board within 5 business days of any change in a key person. If the change results in a new key person who was not previously found eligible and suitable as part of the relevant licensee’s license or the relevant applicant’s application, the new key person must file an application and disclosure forms, in the manner and form prescribed by the board, within 30 days of the change. If the board finds that the new key person is ineligible or unsuitable for licensure under the act and these rules, the person must not perform any duties or exercise any powers of the position that resulted in the person’s classification as a key person.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521a Notification by licensees, applicants, and affiliates required {#sec-r-432.521a omnilex-key=us-mi-regs-official--dept-treasury--R 432.521a}

Rule 521a. (1) A licensee, applicant, or affiliate must notify the board, as soon as practicable after it becomes aware that, with regard to the licensee, applicant, or affiliate, any person has any of the following:

(a) Beneficially acquired more than 5% of any class of the licensee’s, applicant’s, or affiliate’s equity securities.

(b) Acquired voting rights with the power to vote 5% or more of the licensee’s, applicant’s, or affiliate’s outstanding voting rights.

(d) The ability to elect 1 or more directors of the licensee, applicant, or affiliate.

(2) To the extent known by the licensee, applicant, or affiliate, the required notification must include the name, business address, phone number, and other personal identification information for each person.

(3) A licensee or applicant must report to the board the election or appointment of a director or officer of that licensee or applicant or an affiliate of that licensee or applicant that is actively and directly engaged in the administration or supervision of the applicant’s or licensee’s fantasy contest operations.

(4) A licensee, applicant, and all other persons covered by this part must file any other document requested by the board to ensure compliance with the act or this part within 30 days after the board requests the document or at another time established by the board.

(5) A publicly traded corporation is considered to have complied with this rule if it has complied with the reporting requirements in R 432.521c.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521b Required notification of formation, dissolution, or transfer of subsidiaries {#sec-r-432.521b omnilex-key=us-mi-regs-official--dept-treasury--R 432.521b}

Rule 521b. (1) A licensee, applicant, or affiliate must report, in writing, to the board, as soon as practicable, the formation or dissolution of, or any transfer of, a nonpublicly traded or publicly traded interest in the licensee, applicant, or affiliate.

(2)A publicly traded corporation is considered to have complied with this rule if it has complied with the reporting requirements in R 432.521c.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521c Publicly traded corporation reporting requirements {#sec-r-432.521c omnilex-key=us-mi-regs-official--dept-treasury--R 432.521c}

Rule 521c. (1) A publicly traded corporation or other person that applies for or holds a license under the act and these rules and is a public reporting company under the securities exchange act of 1934, 15 USC 78a to 78qq, or the securities act of 1933, 15 USC 77a to 77aa, must submit a copy of all submissions required by the U.S. Securities and Exchange Commission to the board in a format prescribed by the board. The submissions are due within 14 days of the filing dates required by the U.S. Securities and Exchange Commission.

(2) If a publicly traded corporation or other person that applies for or holds a license under the act and these rules receives any material document filed with the U.S. Securities and Exchange Commission by any other person relating to the publicly traded corporation, the person must file 1 copy of the document with the board within 14 days after receipt of the document.

(3) A publicly traded corporation or other person that applies for or holds a license under the act and these rules must file a list of record holders of its voting securities with the board annually.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521d Exemption for institutional investors {#sec-r-432.521d omnilex-key=us-mi-regs-official--dept-treasury--R 432.521d}

Rule 521d. (1) An institutional investor who acquires beneficial ownership of a licensee or applicant must notify the board within 14 days after the institutional investor acquires the beneficial ownership or files form 13-D or 13-G with the U.S. Securities and Exchange Commission, or both. The institutional investor must provide additional information and may be subject to a finding of suitability, as required by the board.

(2) An institutional investor who acquires and holds for investment purposes only less than 25% interest in a licensee or applicant may, in a manner and form prescribed by the board, file with the board an exemption form to establish exemption from the eligibility and suitability requirements of the act and these rules.

(3) The licensee or applicant in whom the institutional investor acquires the interest must file an application for approval of the transfer pursuant to the requirements of R 432.521e, if applicable. The institutional investor must file either an exemption form, if the institutional investor holds the interest for investment purposes only, or application and disclosure forms as part of the relevant licensee’s license or the relevant applicant’s application, if the institutional investor does not hold the interest for investment purposes only.

(4) The board may require that any person, including an institutional investor, seeking approval to hold ownership interests subject to this part apply for a finding of suitability in accordance with this rule if the board deems the finding of suitability necessary to ensure compliance with the act and these rules. If the board denies a request for an institutional investor exemption, the institutional investor must, within 30 days, either divest itself of the interest or file application and disclosure forms as part of the relevant licensee’s license or the relevant applicant’s application.

(5) The following activities are considered to be consistent with holding equity securities for investment purposes only under this rule:

(a) Voting, directly or indirectly, through the delivery of a proxy furnished by the board of directors, on all matters voted on by the holders of the voting securities.

(b) Serving as a member of a committee of creditors or security holders formed in connection with a debt restructuring.

(c) Nominating a candidate for election or appointment to the board of directors in connection with a debt restructuring.

(d) Accepting appointment or election as a member of the board of directors in connection with a debt restructuring and serving in that capacity until the conclusion of the board member's term.

(e) Making financial and other inquiries of management of the type normally made by securities analysts for information purposes and not to cause a change in its management, policies, or operations.

(f) Other activities that the board determines to be consistent with the investment intent.

(6) If an institutional investor acquires 25% or more ownership interest of a licensee or applicant, the institutional investor must notify the board within 14 days after acquiring the ownership interest.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521e Transfer of ownership interest; board approval required; exceptions {#sec-r-432.521e omnilex-key=us-mi-regs-official--dept-treasury--R 432.521e}

Rule 521e. (1) An interest in a licensee may only be transferred in accordance with this part.

(2) Except as stated in subrules (4) and (5) of this rule, the following persons must provide notice to the board 30 days before the execution of a transfer:

(a) A person that intends to transfer or acquire greater than a 5% interest in a licensee.

(b) A person that, as a result of an acquisition, will acquire an interest totaling greater than 5% in a licensee.

(3) The board must determine whether the person acquiring the interest is eligible and suitable under the standards set forth in the act and these rules unless the board grants the person an institutional investor exemption under these rules. Once the board determines that the person acquiring the interest is eligible and suitable under the standards set forth in the act and these rules, the executive director may approve the transfer.

(4) A transfer of interest to an institutional investor that acquires or will have acquired, upon completion of the transfer, less than 25% of the equity securities of a licensee may occur without first receiving executive director approval if the equity securities are held for investment purposes only but is subject to other requirements of this part.

(5) A transfer of interest in a licensee may occur if the transfer is between persons the board has found eligible and suitable for licensure during the licensing period in which the transfer occurs. In those cases, approval of the transfer must be requested no later than 30 days after the transfer, and the executive director may decide the application.

(6) If approval of the transfer of interest is denied by the executive director or the person acquiring the interest is found unsuitable by the board, the transferee must divest itself of the interest within 30 days after the date of the order denying approval.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521f Transfer of ownership interest; application {#sec-r-432.521f omnilex-key=us-mi-regs-official--dept-treasury--R 432.521f}

Rule 521f. (1) A person desiring to acquire an ownership interest in a licensee must complete and submit application and disclosure forms, in the manner and form prescribed by the board.

(2) A person desiring to acquire an interest in a licensee must present evidence that the person desiring to acquire the interest is eligible and suitable under the standards and criteria for licensure set forth in the act and these rules.

(3) A licensee that is attempting to transfer an ownership interest must submit any information or documentation considered necessary by the board to ensure compliance with the act and these rules.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521g Transfer of ownership interest; investigative costs and fees {#sec-r-432.521g omnilex-key=us-mi-regs-official--dept-treasury--R 432.521g}

Rule 521g. An investigation fee may be assessed to the extent that there are costs directly associated with the background investigation relating to the person desiring to acquire an interest in a licensee. Unless otherwise determined by the board, approval may be withheld until full payment of the direct background investigation fees.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521h Transfer of ownership interest; denials {#sec-r-432.521h omnilex-key=us-mi-regs-official--dept-treasury--R 432.521h}

Rule 521h. If an application for a transfer of interest is denied, a notice of denial must be issued.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.521i Review of information at licensee’s or applicant’s premises; costs to licensee or applicant {#sec-r-432.521i omnilex-key=us-mi-regs-official--dept-treasury--R 432.521i}

Rule 521i. (1) The board may review, at the premises of the custodian of the information, any information that the act or these rules provide for from any of the following:

(a) A licensee.

(b) An applicant.

(2) If information is reviewed at the premises of the custodian of the information, the licensee or applicant must, as soon as practicable, reimburse the board for all licensure investigation expenses incurred in performing the review at the premises of the custodian of the information, including travel, food, and lodging that exceed the amount of the relevant license fee.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.522 License classifications {#sec-r-432.522 omnilex-key=us-mi-regs-official--dept-treasury--R 432.522}

Rule 522. (1) The following licenses may be issued under the act and these rules:

(a) Fantasy contest operator license.

(b) Management company license.

(2) Except as otherwise provided in sections 3(2) to 3(4) of the act, MCL 432.503, a person must hold a fantasy contest operator license before offering fantasy contests in this state.

(3) A person retained by a fantasy contest operator to manage the day-to-day fantasy contest operations of the fantasy contest operator must hold a management company license.

Unless otherwise determined by the board, an individual who is an employee of a fantasy contest operator does not require a management company license to manage the day-to-day fantasy contest operations of the fantasy contest operator by which the individual is employed.

(4) A person must hold a management company license before managing the day-to-day fantasy contest operations of a fantasy contest operator. Unless otherwise determined by the board, an individual who is an employee of a fantasy contest operator does not require a management company license to manage the day-to-day fantasy contest operations of the fantasy contest operator by which the individual is employed.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.523 Fees, fines, taxes, payments, and assessments {#sec-r-432.523 omnilex-key=us-mi-regs-official--dept-treasury--R 432.523}

Rule 523. (1) All fees, fines, taxes, payments, and assessments provided for under the act and these rules must be timely submitted to the board by a payment method acceptable to the board, which includes, but is not limited to, a certified check, cashier's check, money order made payable to "State of Michigan," or electronic transfer of funds.

(2) The following initial license fees must be submitted to the board, together with the required license application, by an applicant for an initial license under the act and these rules:

(a) Fantasy contest operator initial license fee: $10,000.00.

(b) Management company initial license fee: $5,000.00.

(3) The initial license fee shall be used by the board to conduct an appropriate background investigation of the applicant as prescribed by the board, the act, and these rules. An additional background investigation charge may be assessed to the extent the board's direct investigative costs exceed the applicant's initial license fee. Unless otherwise determined by the board, a license may not be issued until payment of the additional assessed charge for completion of the background investigation is received by the board.

(4) A licensee may also be assessed the board's direct investigative costs arising from a background investigation for renewal of a license to the extent such costs exceed the annual license renewal fee. The board may deny a renewal application if the licensee does not pay the additional assessed costs by a date set by the board.

(5) The following annual license renewal fees must be submitted to the board by a licensee each year at the time the licensee applies to renew its license under the act and these rules:

(a) Fantasy contest operator annual license renewal fee: $5,000.00 (b) Management company annual license renewal fee: $5,000.00.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.524 Deposit of fees, fines, taxes, payments, and assessments {#sec-r-432.524 omnilex-key=us-mi-regs-official--dept-treasury--R 432.524}

Rule 524. Except as provided in section 14(4) of the act, MCL 432.514, all fees, fines, taxes, payments, and assessments imposed by this state under the act and these rules must be deposited into the fantasy contest fund created under section 16 of the act, MCL 432.516.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.525 Investigation process for applicants {#sec-r-432.525 omnilex-key=us-mi-regs-official--dept-treasury--R 432.525}

Rule 525. The board shall conduct a background investigation on an applicant. The board shall also use the information provided in the application and disclosure form or forms as a basis for a background investigation and to evaluate and determine the eligibility and suitability of the applicant to receive a fantasy contest operator license or management company license under the licensing standards and criteria provided in the act and these rules. A misrepresentation or omission in the application may be cause for the denial, suspension, restriction, or revocation of a fantasy contest operator license or management company license by the board.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.525a Persons required to be found eligible and suitable {#sec-r-432.525a omnilex-key=us-mi-regs-official--dept-treasury--R 432.525a}

Rule 525a. (1) The board shall not issue or renew a fantasy contest operator license or management company license unless every person required by the act and these rules as part of the application for issuance or renewal of the license has first been determined by the board to be eligible and suitable in accordance with the relevant licensing standards set forth in the act and these rules.

(2) Unless otherwise prescribed by the board, the following persons are required to be found eligible and suitable as part of the application for the issuance or request for renewal of a fantasy contest operator license or management company license:

(a) A person that is required to apply for a fantasy contest operator license or management company license under the act and these rules.

(b) A person that is a key person.

(3) A person required to be found eligible and suitable as part of the application for issuance or renewal of a fantasy contest operator license or management company license must complete and file with the board an application and required disclosure forms in the manner and form prescribed by the board.

(4) A person that applies for or holds a fantasy contest operator license or management company license must ensure that all persons that are required by the act and these rules to establish their eligibility and suitability as part of the applicant's application for the issuance, or the licensee's maintenance or renewal, of the fantasy contest operator license or management company license have filed, with the board, all required applications, reports, and disclosure forms in the manner and form prescribed by the board.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.525b License issuance by the board; standards and criteria {#sec-r-432.525b omnilex-key=us-mi-regs-official--dept-treasury--R 432.525b}

Rule 525b. (1) Except to the extent the board may require different or additional procedures, an applicant for a fantasy contest operator license or management company license is subject to all of the following before licensing:

(a) Application.

(b) Background investigation.

(2) A person that is required to hold a fantasy contest operator license or management company license under the act and these rules must, before issuance of a fantasy contest operator license or management company license, produce information, documentation, and assurances to establish all of the following by clear and convincing evidence:

(a) Its suitability as to character, reputation, integrity, business probity, and financial ability.

(b) Its willingness to be subject to the jurisdiction of the board.

(c) That the applicant has adequate capitalization and the financial ability and the means to develop, construct, operate, and maintain the applicant’s fantasy contest operator or management company business in accordance with the act and these rules.

(d) That the applicant has adequate capitalization and the financial ability to responsibly pay its secured and unsecured debts in accordance with its financing agreements and other contractual obligations.

(e) That the applicant is in substantial compliance with any gaming-related or fantasy contest-related licensing requirements that are applicable to the applicant in this state or any other jurisdiction.

(f) That the applicant and all other persons required to be found eligible and suitable as part of the application are eligible and suitable for licensure under the licensing standards, criteria, and requirements.

(g) That the applicant, if the applicant is an individual, and all other individuals required to be found eligible and suitable as part of the application are not less than 18 years of age, unless otherwise approved by the board.

(h) That the applicant and all other persons required to be found eligible and suitable as part of the application have not been convicted of any criminal offense involving gaming, theft, dishonesty, or fraud in any jurisdiction. However, the board may waive this requirement if the conviction occurred more than 5 years before the applicant applies for a license and the board is convinced that the applicant does not pose a threat to the integrity of fantasy contests and the applicant otherwise meets the requirements of this rule.

(i) That the applicant and all other persons required to be found eligible and suitable as part of the application do not appear on the exclusion list of any jurisdiction.

(j) That the applicant and all other persons required to be found eligible and suitable as part of the application are in substantial compliance with all local, state, and federal laws.

(3) An applicant must designate at least 1 key employee as a condition for obtaining a license. An applicant is considered to have complied with this subrule if it has identified at least 1 key person who meets the definition of a key employee.

(4) Once licensed, a person must comply with the act and these rules. Failure to comply may result in disciplinary action.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.525c Provisional licenses {#sec-r-432.525c omnilex-key=us-mi-regs-official--dept-treasury--R 432.525c}

Rule 525c. (1) Upon written request of a person applying for a fantasy contest operator license or management company license, the executive director may issue a provisional license to the applicant and allow the applicant to conduct business for which a license is required under the act and these rules, if all of the following conditions are met:

(a) A completed application, an initial license fee, and all required disclosure forms and other required written documentation and materials have been submitted by the applicant.

(b) Preliminary review of the application and a criminal history check does not reveal that the applicant or the applicant’s affiliates or key persons have been convicted of a felony or misdemeanor involving gambling, theft, dishonesty, or fraud or may otherwise be ineligible or unsuitable to allow for licensure under the act or these rules.

(d) If the person is an applicant for a management company license, the applicant has a letter of intent to manage the day-to-day fantasy contest operations of a fantasy contest operator or the applicant shows good cause for being granted a provisional license.

(2) A provisional license issued under this rule expires on the date provided by the board.

(3) If a provisional license issued under this rule expires, or is suspended or revoked, the executive director will forward the applicant’s application for a fantasy contest operator license or management company license to the board at the conclusion of the background investigation for action on the application.

(4) The board may, at its discretion, waive any or all of the provisions listed in subrule (1) of this rule if the applicant is licensed by the board under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226, the lawful internet gaming act, 2019 PA 152, MCL 432.301 to 432.322, or the lawful sports betting act, 2019 PA 149, MCL 432.401 to 432.419.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.526 Denials {#sec-r-432.526 omnilex-key=us-mi-regs-official--dept-treasury--R 432.526}

Rule 526. (1) If the board denies the application for a license, it will direct the executive director to issue a notice of denial.

(2) An applicant that is served with a notice of denial under these rules may request a contested case hearing as set forth in these rules.

(3) The notice of denial is a finding that the person is ineligible or unsuitable for licensure or is otherwise in violation of the licensing requirements of the act or these rules. When the board denies an application for a license, the person is prohibited from conducting business that would otherwise require licensure.

(4) A person whose application for a license has been denied may not reapply for a period of 1 year from the date on which the board voted to deny the application unless otherwise approved by the board.

(5) A person whose application for a license was denied may seek leave of the board to reapply within the 1-year period by addressing the request to the board. The board may require the person to present an oral or written argument outlining why an exception should be made.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.527 Renewal of a license {#sec-r-432.527 omnilex-key=us-mi-regs-official--dept-treasury--R 432.527}

Rule 527. (1) A fantasy contest operator license or management company license when issued is valid for 1 year.

(2) A fantasy contest operator licensee or management company licensee shall renew its license every year after receiving its initial license if it intends to continue conducting business for which the license is required.

(3) To renew a license, a fantasy contest operator licensee or management company licensee must, at least 30 days before expiration of its license, submit the annual license renewal fee and application in the manner and form required by the board.

(4) If the board denies the application for renewal, it will direct the executive director to issue the licensee a notice of nonrenewal.

(5) A fantasy contest operator licensee or management company licensee who is served with a notice of nonrenewal under this rule may request a contested case hearing as set forth in these rules.

(6) The notice of nonrenewal is a finding that the fantasy contest operator licensee or management company licensee is ineligible or unsuitable for licensure or is otherwise in violation of the licensing requirements of the act or these rules. When the board denies an application for renewal, the person is prohibited from conducting business that would otherwise require licensure.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.528 Application explained; applicant to demonstrate eligibility and suitability {#sec-r-432.528 omnilex-key=us-mi-regs-official--dept-treasury--R 432.528}

Rule 528. (1) An application for a license under the act and these rules is a request by the applicant seeking a revocable privilege. A license must be granted by the board if the applicant meets the licensing requirements of the act and these rules.

(2) An applicant for a license under the act and these rules, at all times, has the burden of demonstrating to the board, by clear and convincing evidence, that the applicant is eligible and suitable to be granted and retain the license for which application is made under the applicable licensing standards and requirements of the act and these rules.

(3) A license issued by the board under the act and these rules is a revocable privilege granted by the board. A person that holds a license does not acquire, and must not be considered to have acquired, a vested property right or other right in the license.

(4) An applicant or licensee must accept any risk of adverse publicity, public notice, notoriety, embarrassment, criticism, financial loss, or other unfavorable or harmful consequences that may occur in connection with, or as a result of, the application and licensing process or the public disclosure of information submitted to the board with a license application or at the board's request under the act and these rules.

(5) An applicant or licensee may claim any privilege afforded by the constitution of the United States, federal law, or the laws of this state in refusing to answer questions or provide information requested by the board. However, a claim of privilege with respect to any testimony or evidence pertaining to the eligibility or suitability of an applicant or licensee to be granted or hold a license under the act and these rules may constitute cause for denial, suspension, revocation, or restriction of the license.

(6) An applicant and licensee have a continuing duty to do both of the following:

(a) Notify the board of a material change in the information submitted in the license application submitted by the applicant or licensee or a change in circumstance that may render the applicant or licensee ineligible or unsuitable to hold the license under the licensing standards and requirements of the act and these rules.

(b) Maintain the applicant's or licensee's eligibility and suitability to be issued and hold the license held or applied for under the act and these rules.

(7) A fantasy contest operator, an applicant, and a licensee have a continuing duty to do all of the following:

(a) Provide any information requested by the board relating to licensing or regulation.

(b) Cooperate with the board in investigations, inspections, audits, hearings, and enforcement and disciplinary actions.

(d) Comply with all conditions, restrictions, requirements, orders, and rulings of the board in accordance with the act and these rules.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.528a Duty to disclose violations {#sec-r-432.528a omnilex-key=us-mi-regs-official--dept-treasury--R 432.528a}

Rule 528a. A fantasy contest operator or licensed management company must immediately notify the board, in writing, if it becomes aware that a fantasy contest operator, licensed management company, or third-party provider involved in its fantasy contest operations under the act has acted contrary to the act or these rules.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.528b Contracts {#sec-r-432.528b omnilex-key=us-mi-regs-official--dept-treasury--R 432.528b}

Rule 528b. A fantasy contest operator must maintain all contracts that relate to its Michigan fantasy contest operations for 3 years following their expiration. The board must be allowed access to any contract entered into by a fantasy contest operator upon demand.

The fantasy contest operator may be required by the board to promptly submit copies of any contract upon request of the board.

PART 3. CONDUCT OF FANTASY CONTESTS

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.531 Fantasy contests and athletic events {#sec-r-432.531 omnilex-key=us-mi-regs-official--dept-treasury--R 432.531}

Rule 531. (1) A fantasy contest operator or licensed management company may only offer or conduct a fantasy contest that meets all of the conditions established in section 2(d) of the act, MCL 432.502. A fantasy contest platform must be designed to prevent all of the following:

(a) A fantasy contest player from submitting a fantasy contest team composed of the entire roster of a real-world sports team.

(b) A fantasy contest player from submitting a fantasy contest team composed entirely of individual athletes who are members of the same real-world sports team.

(2) A fantasy contest operator or licensed management company may only offer or conduct a fantasy contest that is based on an athletic event, as that term is defined in section 2 of the act, MCL 432.502. A fantasy contest operator or licensed management company must not offer or conduct a fantasy contest that is based, in whole or in part, on a prohibited athletic event.

(3) Unless otherwise approved by the board, a fantasy contest operator or licensed management company may not offer or allow any of the following:

(a) Any means of fantasy contest team selection or assembly that does not involve the knowledge and skill of a fantasy contest player, including, but not limited to, all of the following:

(i) Auto draft functionality, except in the case of a fantasy contest in which a fantasy contest player is required to exert knowledge and skill to rank, prioritize, or queue athletes prior to the draft or to assemble 1 or more fantasy contest teams from his or her pool of drafted athletes.

(ii) A fantasy contest player choosing from pre-selected fantasy contest teams.

(iii) Any other means of fantasy contest team selection or assembly that does not involve the input or control of a fantasy contest player.

(b) Proposition selection or fantasy contests that have the effect of mimicking proposition selection.

(d) Any fantasy contest in which any statistical results of the performance of any individual athletes that determine the outcome of the fantasy contest have been partially or completely determined and are publicly known at the time any entry is accepted.

(e) Any fantasy contests prohibited by the board or by state or federal law.

(4) A fantasy contest operator or licensed management company shall only offer fantasy contests for which all of the following apply:

(a) All underlying athletic events can be effectively supervised by a sports governing body and are subject to integrity safeguards.

(b) The statistical results of the performance of the individual athletes that are aggregated to determine the outcome of the fantasy contest meet all of the following:

(i) Can be documented and verified.

(ii) Can be generated by a reliable and independent process.

(iii) Are not affected by any fantasy contests or fantasy contest entries.

(iv) Are complete, accurate, reliable, timely, and available.

(5) The board reserves the right to do any of the following to protect the integrity of fantasy contests or for any other reason the board considers appropriate:

(a) Prohibit, limit, restrict, or condition the conduct of any fantasy contest.

(b) Prohibit, limit, restrict, or condition the conduct of fantasy contests based on a particular athletic event or type of athletic event.

(6) A fantasy contest operator or licensed management company must maintain a master list of all fantasy contests it offers fantasy contest players. The master list must contain information sufficient to verify compliance with the definitions of athletic event and fantasy contest under section 2 of the act, MCL 432.502. The fantasy contest operator or licensed management company must provide the master list to the board on request.

(7) If it is determined that a fantasy contest operator or licensed management company offered or offers a fantasy contest that is prohibited by these rules or an applicable state or federal law, the fantasy contest operator or licensed management company must do either of the following:

(a) If none of the underlying athletic events have commenced, the fantasy contest operator or licensed management company must immediately cancel all fantasy contest entries and refund all related entry fees. The fantasy contest operator or licensed management company must promptly notify the board after cancelling the fantasy contest entries and returning the entry fees.

(b) If any of the underlying athletic events are in progress or have been completed, the fantasy contest operator or licensed management company must immediately notify the board and submit proposed corrective action for board review and approval. The proposed corrective action must include, but is not limited to, an explanation of how the fantasy contest operator or licensed management company proposes to address fantasy contest entries and entry fees.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532 Conduct of fantasy contests {#sec-r-432.532 omnilex-key=us-mi-regs-official--dept-treasury--R 432.532}

Rule 532. (1) Available fantasy contests must be clearly displayed on the fantasy contest operator's or licensed management company’s fantasy contest platform. A fantasy contest operator or licensed management company shall not accept fantasy contest entries for a fantasy contest unless the fantasy contest is clearly displayed on the fantasy contest operator's or licensed management company’s fantasy contest platform. For fantasy contests that are open only to certain fantasy contest players, a fantasy contest operator or licensed management company may display the fantasy contests only to fantasy contest players to which the fantasy contests are open.

(2) A fantasy contest operator or licensed management company shall not offer a fantasy contest that is designed, in whole or in part, to ensure that any specific fantasy contest player or players will win a prize or award, unless the fantasy contest or the prize or award, or both, is offered in connection with a promotion conducted in accordance with these rules.

(3) A fantasy contest operator or licensed management company must establish the maximum number of entries a single fantasy contest player may enter in each fantasy contest, subject to both of the following:

(a) The maximum number of entries for a given fantasy contest must be the same for all fantasy contest players.

(b) A fantasy contest operator or licensed management company must clearly and conspicuously notify a fantasy contest player of the maximum number of entries for a fantasy contest before the fantasy contest player pays an entry fee or otherwise enters or participates in the fantasy contest.

(4) Unless otherwise directed by the board, there is no prescribed limitation as to any of the following:

(a) The minimum or maximum entry fee a fantasy contest operator or licensed management company may charge for a fantasy contest.

(b) Subject to subrule (3) of this rule, the minimum or maximum number of entries a fantasy contest operator or licensed management company may allow a single fantasy contest player to enter in a fantasy contest.

(c) The minimum or maximum number of aggregate entries a fantasy contest operator or licensed management company may allow all participating fantasy contest players to enter in a fantasy contest.

(d) The minimum or maximum prize or award a fantasy contest operator or licensed management company may pay to a single winning fantasy contest player or all winning fantasy contest players in a fantasy contest.

(5) Subrule (4) of this rule does not preclude a fantasy contest operator or licensed management company from establishing its own relevant minimums or maximums for reasons considered necessary or appropriate by the fantasy contest operator or licensed management company or as otherwise required by the act and these rules.

(6) Unless otherwise approved by the board, a fantasy contest platform must provide to a fantasy contest player for review and confirmation all fantasy contest entry information, including, but not limited to, fantasy contest team selections, before a fantasy contest entry is accepted.

(7) On acceptance of a fantasy contest entry, an electronic record of the fantasy contest entry must be provided to or made available to the fantasy contest player. Unless otherwise approved by the board, the electronic record must contain the following minimum information:

(a) Unique identification number or other identifier of the fantasy contest.

(b) The date and time the fantasy contest entry was entered.

(d) The date and time the fantasy contest is expected to be settled or a general statement explaining that the fantasy contest will be settled following the completion of all athletic events on which the fantasy contest is based.

(e) Identification of the individual athletes selected by the fantasy contest player to form the fantasy contest team.

(f) Identification of the athletic event or athletic events from which the statistical results of the performance of each individual athlete will be obtained for purposes of determining the fantasy contest outcome.

(g) Any special condition or conditions applying to the fantasy contest entry.

(h) Entry fee paid, including any promotional or bonus credits, if applicable.

(i) Prize or award amounts offered to winning fantasy contest players.

(8) Except as otherwise provided in these rules or applicable state or federal law, a fantasy contest operator or licensed management company must pay winning fantasy contest players following the completion of the athletic events on which the fantasy contest was based and determination of the fantasy contest outcome.

(9)A fantasy contest operator or licensed management company may only cancel an accepted fantasy contest entry if any of the following apply:

(a) If the cancellation is required under these rules, including, but not limited to, R 432.532h.

(b) If the fantasy contest operator or licensed management company determines a particular fantasy contest entry or an entire fantasy contest must be cancelled due to suspicious behavior or a concern regarding the integrity of the fantasy contest identified in accordance with R 432.534a.

(c) If the cancellation is provided for in and executed in accordance with the fantasy contest operator’s or licensed management company’s fantasy contest rules or terms adopted pursuant to R 432.536.

(d) If the cancellation is necessary to resolve a fantasy contest platform, fantasy contest entry, or fantasy contest error or malfunction.

(e) If the fantasy contest operator or licensed management company requests and receives prior written approval of the board to cancel the fantasy contest entry.

(10) A fantasy contest operator or licensed management company must retain records of each fantasy contest it conducts for a minimum of 3 years and must provide the records to the board on request.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532a Beginning players and highly experienced players {#sec-r-432.532a omnilex-key=us-mi-regs-official--dept-treasury--R 432.532a}

Rule 532a. (1) A licensed management company must classify a fantasy contest player as a highly experienced player if the fantasy contest player has done at least 1 of the following:

(a) Entered more than 1,000 fantasy contests offered by the licensed management company.

(b) Won more than three prizes each valued at $1,000.00 or more from the licensed management company.

(2) Once a fantasy contest player is classified as a highly experienced player by a fantasy contest operator or licensed management company, the fantasy contest player must remain classified as a highly experienced player.

(3) A fantasy contest operator or licensed management company must identify each highly experienced player by a symbol attached to the highly experienced player’s username. The symbol must be clear and conspicuous to other fantasy contest players.

(4) A fantasy contest operator or licensed management company must do all of the following:

(a) Offer some fantasy contests that are open only to beginning players.

(b) Prohibit a fantasy contest player who is not a beginning player from entering a fantasy contest open only to beginning players as determined at the time of entry.

(d) Prohibit a highly experienced player from entering a fantasy contest open only to fantasy contest players other than highly experienced players as determined at the time of entry.

(5) A fantasy contest operator or licensed management company must adopt introductory procedures for beginning players that must meet the following minimum conditions:

(a) The introductory procedures must be clearly and conspicuously available to a beginning player.

(b) The introductory procedures must include, but are not limited to, the following information:

(i) Information explaining how fantasy contests are played.

(ii) Information on how to identify highly experienced players.

(c) The introductory procedures must provide information on how to participate in fantasy contests that are open only to beginning players as a learning experience.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532b Persons restricted from entering or participating in fantasy contests {#sec-r-432.532b omnilex-key=us-mi-regs-official--dept-treasury--R 432.532b}

Rule 532b. (1) The following individuals are prohibited from entering or participating in any fantasy contest that is based, in whole or in part, on any athletic event in which the individual participates or with which the individual is otherwise affiliated, or any athletic event overseen by the sports governing body that oversees the athletic events in which the individual participates or with which the individual is otherwise affiliated:

(a) An athlete.

(b) A coach.

(d) An official.

(e) An individual who has the authority or ability to influence the performance of an athlete in an athletic event.

(f) An individual with access to non-public, exclusive information related to an athlete or athletic event.

(2) An employee of a sports governing body or any of its member teams, or a person that holds a 5% or greater ownership interest in a sports governing body or any of its member teams, is prohibited from entering or participating in any fantasy contest that is based, in whole or in part, on an athletic event overseen by the sports governing body or in which any of its member teams participates.

(3) Except as otherwise provided in subrules (11) and (12) of this rule, a fantasy contest operator, its owners, directors, officers, and employees, and any relative of any of these individuals living in the same household, is prohibited from entering or participating in a fantasy contest offered by the fantasy contest operator or a licensed management company that manages the day-to-day operations of the fantasy contest operator.

(4) Except as otherwise provided in subrules (11) and (12) of this rule, a licensed management company, its owners, directors, officers, and employees, and any relative of any of these individuals living in the same household, is prohibited from entering or participating in a fantasy contest offered by the licensed management company or a fantasy contest operator for which the licensed management company manages day-to-day operations.

(5) Except as otherwise provided in R 432.513a(9) and subrule (12) of this rule, a member, the executive director, a board employee, or an agent is prohibited from establishing a fantasy contest player account and from entering or participating in a fantasy contest.

(6) A fantasy contest player is prohibited from allowing another person to access or use his or her fantasy contest player account and from submitting a fantasy contest entry on behalf of another person.

(7) An individual whose fantasy contest player account is in suspended mode under R 432.548 is prohibited from entering or participating in a fantasy contest.

(8) An individual who is less than 18 years of age is prohibited from establishing a fantasy contest player account and from entering or participating in a fantasy contest.

(9) Except as otherwise directed by the board, a person that is determined by the board to be a prohibited person under R 432.511(dd)(v) is prohibited from establishing a fantasy contest player account and from entering or participating in a fantasy contest.

(10) A person is prohibited from entering or participating in a fantasy contest in any manner that violates applicable state, tribal, or federal law.

(11) A fantasy contest operator or licensed management company may offer fantasy contests that are open only to persons described in subrules (3) and (4) of this rule. Except as otherwise provided in subrule (12) of this rule, a person described in subrules (3) and (4) of this rule may only enter or participate in a fantasy contest that is open only to such persons. A person that is not a person described in subrules (3) and (4) of this rule is prohibited from entering or participating in a fantasy contest that is open only to persons described in subrules (3) and (4) of this rule.

(12) A person described in subrules (3) to (5) of this rule may enter or participate in a fantasy contest using a test account established by a fantasy contest operator or licensed management company to test the components or operation of a fantasy contest platform.

Test account activity must not affect the outcome of any fantasy contest entered or participated in by fantasy contest players, the issuance of prizes or awards to fantasy contest players, or the computation of any fantasy contest adjusted revenues. Procedures for establishing and using test accounts must be addressed in the fantasy contest operator’s or licensed management company’s procedures and internal controls.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532c Exclusion of individuals {#sec-r-432.532c omnilex-key=us-mi-regs-official--dept-treasury--R 432.532c}

Rule 532c. (1) A fantasy contest operator or licensed management company must implement commercially reasonable procedures and internal controls to exclude from entry or participation in fantasy contests any individual the board determines must be excluded to protect the integrity of fantasy contests under the act and these rules.

(2) An individual excluded under this rule is prohibited from establishing a fantasy contest player account and from entering or participating in fantasy contests.

(3) If the board determines an individual must be excluded under this rule, the board shall notify the individual. The notification must include the basis for the exclusion and explain that the individual is prohibited from establishing a fantasy contest player account and from entering or participating in fantasy contests offered under the act and these rules.

(4) An individual excluded under this rule may request a hearing as set forth in part 1 of these rules to contest their exclusion from fantasy contests. It is the excluded individual’s responsibility to prove by clear and convincing evidence why he or she should not be excluded.

(5) Exclusion under this rule is permanent unless the board decides to rescind the exclusion. An exclusion shall only be rescinded if the board determines that the individual no longer poses a threat to the integrity of fantasy contests under the act and these rules.

(6) The board shall provide each fantasy contest operator and licensed management company with information the board considers necessary to carry out the purposes of this rule. Fantasy contest operators and licensed management companies may only use the information to exclude individuals as required under this rule. Use of the information for any other purpose may result in disciplinary action by the board against the fantasy contest operator or licensed management company or a civil fine. Nothing in this subrule is intended to preclude the disclosure of the information pursuant to subpoena or other legal process.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532d Fantasy contest self-restriction program {#sec-r-432.532d omnilex-key=us-mi-regs-official--dept-treasury--R 432.532d}

Rule 532d. (1) A fantasy contest operator or licensed management company must establish and operate a self-restriction program as prescribed in the act and these rules and as directed by the board.

(2) A fantasy contest operator or licensed management company must make its selfrestriction program clearly and conspicuously available on its fantasy contest platform.

(3) A fantasy contest operator’s or licensed management company’s self-restriction program must include a means to allow an individual to self-restrict his or her ability to enter or participate in fantasy contests offered by the fantasy contest operator or licensed management company, subject to all of the following conditions:

(a) The means to enable self-restriction must be made available by at least 1 of the following, at a minimum:

(i) Website or fantasy contest platform.

(ii) Telephone.

(iii) Online chat.

(b) An individual must be allowed to select the length of time the self-restriction will be in effect, subject to both of the following conditions:

(i) The time periods offered to or that may be selected or identified by an individual must include, at a minimum, 1 year and 5 years. A fantasy contest operator or licensed management company may offer or allow an individual to select or identify additional time periods that may include, but are not limited to, time periods of less than 1 year and lifetime self-restriction.

(ii) A self-restriction must end and must cease to be effective on the expiration of the time period selected or identified by an individual unless the individual extends or renews the self-restriction or enables a new self-restriction.

(c) Once enabled, a self-restriction must be irrevocable. A fantasy contest operator or licensed management company may allow an individual to increase the length of a selfrestriction but must not allow an individual to decrease the length of or otherwise cancel a self-restriction.

(d) An individual enabling a self-restriction must agree to release all of the following from any harm, monetary or otherwise, that may arise as a consequence of the selfrestriction:

(i) This state.

(ii) The board and its employees and agents.

(iii) The fantasy contest operator or licensed management company, as applicable, and its officers, directors, employees, and agents.

(e) A fantasy contest operator or licensed management company must provide to an individual, before the individual enables a self-restriction, a full explanation of the selfrestriction, which must include, but is not limited to, all of the following information:

(i) The duties of the individual with respect to the self-restriction.

(ii) The duties of the fantasy contest operator or licensed management company with respect to the self-restriction.

(iii) Information explaining that the individual may not collect any prizes or awards or recover any losses resulting from entry or participation in fantasy contests during the period the self-restriction is in effect.

(iv) Information explaining that any fantasy contest entries pending at the time of the self-restriction will be cancelled and the corresponding entry fees will be refunded to the individual.

(v) A full and clear explanation of all activities the fantasy contest operator or licensed management company will restrict or prohibit the individual from engaging in during the period the self-restriction is in effect, whether in this state or any other jurisdiction, subject to all of the following conditions:

(A) During the period the self-restriction is in effect, the fantasy contest operator or licensed management company must prohibit the self-restricted individual from establishing a fantasy contest player account under the act and these rules and from entering or participating in a fantasy contest offered by the fantasy contest operator or licensed management company under the act and these rules.

(B) During the period the self-restriction is in effect, the fantasy contest operator or licensed management company may elect to restrict or prohibit the self-restricted individual from engaging in activities other than those described in subparagraph (A) of this paragraph, provided the restrictions or prohibitions are implemented only as instructed or agreed to by the self-restricted individual. This may include, but need not be limited to, restrictions or prohibitions on participation in fantasy contests conducted under the laws of another jurisdiction and restrictions or prohibitions on participating in gaming-related or other activities conducted in this state or any other jurisdiction.

(C) All restrictions and prohibitions implemented under this paragraph must end and must cease to be effective on expiration of the time period selected or identified by the self-restricted individual under subdivision (b) of this subrule unless the individual extends or renews the self-restriction or enables a new self-restriction.

(f) A completed request for a self-restriction, once received and approved by a fantasy contest operator or licensed management company, must take effect immediately or at the time that was clearly indicated to the individual requesting the self-restriction. A fantasy contest operator or licensed management company must ensure the self-restriction is correctly implemented at the time it takes effect.

(4) During the period a self-restriction is in effect under subrule (3) of this rule, a selfrestricted individual is prohibited from establishing a fantasy contest player account and from entering or participating in a fantasy contest offered by a fantasy contest operator or licensed management company.

(5) A fantasy contest operator or licensed management company may offer additional notifications or self-imposed limits, or both, to fantasy contest players, which may include, but are not limited to, any of the following:

(a) Deposit limits or notifications.

(b) Fantasy contest entry volume limits or notifications.

(d) Loss limits or notifications.

(e) Time-based limits or notifications.

(f) Temporary suspension of an individual’s fantasy contest player account, during which time the individual must be prevented from making a deposit and entering or otherwise participating in fantasy contests offered by the fantasy contest operator or licensed management company.

(g) Any other limits or notifications the fantasy contest operator or licensed management company considers appropriate.

(6) If additional notifications or self-imposed limits, or both, are offered by a fantasy contest operator or licensed management company under subrule (5) of this rule, the fantasy contest operator or licensed management company must do all of the following:

(a) Provide fantasy contest players with an easy and obvious method to request a notification or self-imposed limit.

(b) Ensure any self-imposed limits do not override any more restrictive limits imposed by the fantasy contest operator or licensed management company.

(c) Prevent a fantasy contest player from removing or reducing the severity of a notification or self-imposed limit with less than 24 hours’ notice.

(d) Provide to a fantasy contest player, before he or she enables a notification or selfimposed limit, a full explanation of the notification or self-imposed limit.

(e) Adopt commercially reasonable procedures and internal controls to implement and enforce all notifications and self-imposed limits.

(7) A fantasy contest operator or licensed management company must include on its website or fantasy contest platform a responsible gaming page that is readily accessible to each fantasy contest player throughout a fantasy contest player session. The responsible gaming page must contain, but is not limited to, all of the following:

(a) Information on playing responsibly and how to ask for assistance for compulsive gaming behavior.

(b) Educational information from a reputable mental health or addiction services organization based in the United States on identifying, monitoring, and managing compulsive gaming behavior.

(c) Information regarding resources related to compulsive gaming behavior, including, but not limited to, both of the following:

(i) At least 1 of the following compulsive gaming helplines:

(A) The Michigan Gambling Disorder Helpline administered by the Michigan department of health and human services or its successor.

(B) The National Problem Gambling Helpline operated by the National Council on Problem Gambling.

(C) Any other compulsive gaming helpline operated by a reputable organization based in the United States that is free of charge to fantasy contest players.

(ii) A direct link to at least 1 of the following:

(A) The Michigan gaming control board compulsive/problem gambling website, https://www.michigan.gov/mgcb/0,4620,7-351-79256-231582--,00.html.

(B) The Michigan department of health and human services problem gambling website, https://www.michigan.gov//mdhhs/0,5885,7-339-71550_2941_74002---,00.html.

(C) Any other reputable organization based in the United States that is dedicated to helping people with compulsive gaming behavior.

(d) A clear statement of the fantasy contest operator’s or licensed management company’s policy and commitment to responsible gaming.

(e) Any other responsible gaming information or measures required by the board.

(8) A fantasy contest operator’s or licensed management company’s self-restriction program must be designed to safeguard the confidentiality of an individual’s personal identifiable information.

(9) A fantasy contest operator or licensed management company must make reasonable efforts to prevent the direction of targeted advertisements to a self-restricted individual. A fantasy contest operator or licensed management company is considered to have complied with this subrule if both of the following occur:

(a) The fantasy contest operator or licensed management company removes the selfrestricted individual from all targeted advertisements disseminated by or on behalf of the fantasy contest operator or licensed management company.

(b) The self-restricted individual does not receive targeted advertisements more than 30 days after the individual enabled the self-restriction.

(10) A fantasy contest operator or licensed management company may disclose the names and other identifying information of self-restricted individuals to a third party involved in disseminating advertisements on behalf of the fantasy contest operator or licensed management company for the purpose of allowing the third party to remove the self-restricted individuals from a targeted advertisement or other advertisement.

(11) A third party that obtains the names or other identifying information, or both, of self-restricted individuals from a fantasy contest operator or licensed management company is allowed to use the information only to exclude the self-restricted individuals from targeted advertisements or other advertisements disseminated on behalf of the fantasy contest operator or licensed management company. The third party to whom the information is disclosed must not distribute or disclose the information to the public or any other person. Disclosure may result in a fine or other action available to the board.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532e Scripts {#sec-r-432.532e omnilex-key=us-mi-regs-official--dept-treasury--R 432.532e}

Rule 532e. (1) A fantasy contest player is prohibited from using any script other than an authorized script to create fantasy contest entries or enter or participate in fantasy contests.

(2) A fantasy contest operator or licensed management company must not allow and must use commercially reasonable efforts to monitor for and prevent the use of any scripts other than authorized scripts.

(3) An authorized script must be clearly and conspicuously published and made readily available to all fantasy contest players on the fantasy contest operator’s or licensed management company’s fantasy contest platform.

(4) A fantasy contest operator or licensed management company may elect not to provide authorized scripts and may prohibit all scripts.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532f Proxy servers {#sec-r-432.532f omnilex-key=us-mi-regs-official--dept-treasury--R 432.532f}

Rule 532f. (1) A fantasy contest player is prohibited from using a proxy server or any other software or technology to misrepresent his or her identity or location in order to enter or participate in fantasy contests.

(2) A fantasy contest operator or licensed management company must not allow and must use commercially reasonable efforts to monitor for and prevent the use of proxy servers and other software and technology used by a fantasy contest player to misrepresent his or her identity or location.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532g Protected information {#sec-r-432.532g omnilex-key=us-mi-regs-official--dept-treasury--R 432.532g}

Rule 532g. (1) A fantasy contest operator or licensed management company must adopt commercially reasonable procedures and internal controls to prevent its owners, directors, officers, employees, agents, contractors, and third-party providers from disclosing any protected information to any third parties unless the protected information is made publicly available.

(2) A fantasy contest player is prohibited from entering or participating in any fantasy contest using any protected information that is not publicly available and was obtained in violation of subrule (1) of this rule. This subrule does not apply to a fantasy contest conducted in accordance with R 432.532b(11). If a fantasy contest operator or licensed management company conducts fantasy contests under R 432.532b(11), the fantasy contest operator or licensed management company must adopt commercially reasonable procedures and internal controls to prevent the disclosure or misuse of any material nonpublic information obtained through entry or participation in the fantasy contests.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.532h Duty of fantasy contest operators and licensed management companies {#sec-r-432.532h omnilex-key=us-mi-regs-official--dept-treasury--R 432.532h}

Rule 532h. (1) A fantasy contest operator or licensed management company must adopt commercially reasonable procedures and internal controls to prevent a person from establishing a fantasy contest player account if the person is prohibited from establishing a fantasy contest player account under R 432.532a to R 432.532g, subject to both of the following:

(a) If an individual has a fantasy contest player account at the time of exclusion under R 432.532c, the fantasy contest player account and funds in the account must be addressed as follows:

(i) The fantasy contest player account must be suspended, closed, or otherwise restricted so that no further deposits can be made and no further fantasy contest entries can be submitted until such time as the exclusion is no longer in effect.

(ii) Any funds remaining in the fantasy contest player account must be returned to the individual or seized as directed by the board.

(b) If an individual has a fantasy contest player account at the time of self-restriction under R 432.532d, the fantasy contest player account and funds in the account must be addressed as follows:

(ii) The individual must be allowed to withdraw all funds in the fantasy contest player account, except as otherwise provided in these rules or any other applicable state or federal law.

(2) A fantasy contest operator or licensed management company must adopt commercially reasonable procedures and internal controls to prevent a person from entering or participating in any fantasy contest the person is prohibited from entering or participating in under R 432.532a to R 432.532g, or from entering or participating in a fantasy contest in any other manner in violation of R 432.532a to R 432.532g, subject to both of the following:

(a) If an individual previously submitted fantasy contest entries that are pending at the time of exclusion under R 432.532c, the fantasy contest entries must be cancelled. The corresponding entry fees must be refunded to the individual or seized as directed by the board.

(b) If an individual previously submitted fantasy contest entries that are pending at the time of self-restriction under R 432.532d, the fantasy contest entries must be cancelled and the corresponding entry fees must be refunded to the individual.

(3) A fantasy contest operator or licensed management company must take the following action regarding any person that knowingly establishes a fantasy contest player account or enters or participates in a fantasy contest in any manner in violation of R 432.532a to R 432.532g:

(a) Except as otherwise provided in subdivision (b) of this subrule, the fantasy contest operator or licensed management company must do all of the following, as applicable:

(i) Suspend the person’s fantasy contest player account for a period considered appropriate by the fantasy contest operator or licensed management company.

(ii) Cancel any fantasy contest entries submitted by the person for any fantasy contest the person is prohibited from entering or participating in or that were submitted in any other manner in violation of R 432.532a to R 432.532g. The corresponding entry fees must be seized by the fantasy contest operator or licensed management company.

(iii) Seize from the person any prizes or awards obtained from entering or participating in fantasy contests the person is prohibited from entering or participating in or that were obtained from entering or participating in fantasy contests in any other manner in violation of R 432.532a to R 432.532g.

(b) If a fantasy contest operator or licensed management company detects or is notified that a prohibited person established or used a fantasy contest player account or entered or participated in a fantasy contest in violation of these rules, the fantasy contest operator or licensed management company must do all of the following:

(i) Suspend and immediately prohibit access to the fantasy contest player account established by the prohibited person or used by the prohibited person to submit any fantasy contest entry or entries or participate in any fantasy contest. Any funds remaining in the fantasy contest player account must be seized by the fantasy contest operator or licensed management company.

(ii) Cancel any fantasy contest entries that were submitted by the prohibited person and are pending at the time the fantasy contest operator or licensed management company detects or is notified that the person is a prohibited person. The corresponding entry fees must be seized by the fantasy contest operator or licensed management company.

(iii) Seize from the prohibited person any prizes or awards obtained from entering or participating in fantasy contests in violation of these rules.

(iv) Maintain records related to the incident and all action taken under this subdivision. The fantasy contest operator or licensed management company must provide a written notice to the board, by the fifteenth day of each month, summarizing all incidents and action taken under this subdivision during the previous month.

(c) The action may include any other action considered appropriate by the fantasy contest operator or licensed management company or directed by the board, which may include, but is not limited to, temporarily or permanently restricting the person’s ability to enter or participate in fantasy contests offered by the fantasy contest operator or licensed management company.

(4) The procedures and internal controls of a fantasy contest operator or licensed management company must contain procedures for both of the following:

(a) The maintenance of sufficient information about any fantasy contest player’s or other person’s activity, such that if a fantasy contest player or other person is discovered to be using a fantasy contest player account or entering or participating in fantasy contests in a fraudulent manner or in any other manner in violation of these rules, the fantasy contest operator or licensed management company and the board have all necessary information to take appropriate action.

(b) The processing of any prizes, awards, entry fees, and other amounts seized from a person under this rule.

(5) For purposes of this rule, a fantasy contest entry is considered pending if the outcome of the fantasy contest in which the fantasy contest entry was entered has not yet been determined.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.533 Advertisements {#sec-r-432.533 omnilex-key=us-mi-regs-official--dept-treasury--R 432.533}

Rule 533. (1) Any advertisements disseminated by or on behalf of a fantasy contest operator or licensed management company must satisfy all of the following:

(a) Be based on fact.

(b) Accurately depict any representations made concerning entry or participation in fantasy contests.

(c) Include information on playing responsibly and seeking assistance for compulsive gaming behavior or direct individuals to a reputable source for this information. If an advertisement is not of sufficient size or duration to reasonably allow for inclusion of this information, the advertisement must refer to a website or fantasy contest platform that does prominently include this information.

(d) Clearly and conspicuously state all material or limiting rules, terms, or conditions or provide a reference to the fantasy contest operator’s or licensed management company’s fantasy contest website or fantasy contest platform where all material or limiting rules, terms, or conditions may be found. The referenced material must be publicly available and must state all rules, terms, or conditions clearly and conspicuously.

(2) Any advertisements disseminated by or on behalf of a fantasy contest operator or licensed management company must not do any of the following:

(a) Employ false, deceptive, or misleading advertising techniques.

(b) Contain false, deceptive, or misleading information.

(i) Self-restricted individuals.

(ii) Individuals who are less than 18 years of age.

(d) Portray entry or participation in fantasy contests by anyone who is less than 18 years of age.

(e) Prominently depict anyone who is less than 18 years of age, except for an athlete in an athletic event who may be less than 18 years of age.

(f) Depict or imply the endorsement of any high school or youth sporting league, event, team, or athlete.

(g) Be disseminated in any publication or through any other medium whose target demographic is exclusively or primarily individuals who are less than 18 years of age.

(h) Depict any fantasy contests that do not comply with the act and these rules.

(3) If the board determines that any advertisement disseminated by or on behalf of a fantasy contest operator or licensed management company violates this rule or could adversely impact the public or the integrity of fantasy contests, the board may direct the fantasy contest operator or licensed management company in writing to discontinue use of the advertisement in this state and may take any other action available to the board. On receipt of a written notice from the board directing discontinuance of an advertisement, the fantasy contest operator or licensed management company must discontinue use of the advertisement in this state as expeditiously as possible.

(4) A fantasy contest operator or licensed management company must retain a copy of each advertisement for at least 3 years from the date of the last use of the advertisement and must retain records to identify where and how the advertisement was communicated, published, or otherwise disseminated. The fantasy contest operator or licensed management company must provide the advertisement copies and records to the board on request.

(5) A fantasy contest operator or licensed management company must not use an affiliate marketer that promotes or markets, or both, any of the following to individuals in this state:

(a) Illegal fantasy contest sites that are not licensed, approved, or otherwise lawfully allowed to accept fantasy contest entries from customers located in this state or another state.

(b) Illegal online gaming sites including, but not limited to, illegal internet gaming sites, illegal internet sports betting sites, and illegal advance deposit wagering sites. An illegal online gaming site is an online gaming site that is not licensed, approved, or otherwise lawfully allowed to accept internet wagers, internet sports betting wagers, or advance deposit wagers, as applicable, from customers located in this state or another state.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.534 Bank secrecy act compliance {#sec-r-432.534 omnilex-key=us-mi-regs-official--dept-treasury--R 432.534}

Rule 534. (1) A fantasy contest operator or licensed management company must comply with all provisions of 31 USC 5311 to 5336, commonly referred to as the bank secrecy act, that are applicable to the fantasy contest operator’s or licensed management company’s fantasy contest operations.

(2) A fantasy contest operator or licensed management company must maintain, for a minimum of 3 years, records related to its compliance with all provisions of 31 USC 5311 to 5336 that are applicable to the fantasy contest operator’s or licensed management company’s fantasy contest operations. The fantasy contest operator or licensed management company must provide the records to the board and any appropriate law enforcement agencies on request consistent with the authorization prescribed in provisions of 31 USC 5311 to 5336 and related regulations that are applicable to the fantasy contest operator’s or licensed management company’s fantasy contest operations.

(3) A fantasy contest operator or licensed management company must provide a written notice to the board as soon as the fantasy contest operator or licensed management company becomes aware of a compliance review that is conducted by the Internal Revenue Service under 31 USC 5311 to 5336 and involves or impacts the fantasy contest operator’s or licensed management company’s fantasy contest operations. The fantasy contest operator or licensed management company must provide a copy of the compliance review report or the equivalent to the board within 10 days of the receipt of the report by the fantasy contest operator or licensed management company.

(4) This rule applies to a fantasy contest operator or licensed management company only to the extent to which any provisions of 31 USC 5311 to 5336 apply to the fantasy contest operator’s or licensed management company’s fantasy contest operations.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.534a Integrity monitoring and suspicious behavior {#sec-r-432.534a omnilex-key=us-mi-regs-official--dept-treasury--R 432.534a}

Rule 534a. (1) A fantasy contest operator or licensed management company must employ personnel responsible for ensuring the proper operation and integrity of fantasy contests and reviewing and addressing all reports of suspicious behavior including, but not limited to, all of the following:

(a) Any person entering or participating in a fantasy contest who is engaging in or attempting to engage in, or who is reasonably suspected of, cheating, theft, embezzlement, collusion, use of funds derived from illegal activity, money laundering, or any other illegal activities.

(b) Any person that is reasonably suspected of misrepresenting their identity or using false identification to establish or attempt to establish a fantasy contest player account.

(d) Any unusual or suspicious fantasy contest activity or patterns that indicate a concern regarding the integrity of a fantasy contest or fantasy contest platform.

This includes, but is not limited to, unusual or suspicious fantasy contest activity or patterns that cannot be explained and are indicative of any of the following:

(i) Match-fixing.

(ii) The manipulation of an athletic event.

(iii) Misuse of inside information.

(iv) A potential breach of a sports governing body’s internal rules or code of conduct pertaining to fantasy contests.

(v) Any other conduct that corrupts the outcome of an athletic event.

(e) Any other conduct that corrupts the outcome of a fantasy contest.

(f) Any activity or fantasy contests that violate any applicable state or federal law.

(2) A licensed management company must promptly notify any affected fantasy contest operators for which it manages day-to-day fantasy contest operations of any suspicious behavior or issues impacting the integrity of fantasy contests.

(3) If the board receives information regarding the integrity of athletic events on which fantasy contests are based, the board may, to the extent allowed or provided for in the act and these rules, share the information with a fantasy contest operator, licensed management company, sports governing body, sports team, law enforcement entity, regulatory agency, or other person the board considers appropriate.

(4) A fantasy contest operator or licensed management company must maintain the confidentiality of information provided by a sports governing body to the fantasy contest operator or licensed management company related to suspicious behavior or the integrity of an athletic event, unless disclosure is required by the board, any applicable law, or a lawful order of a court.

(5) A fantasy contest operator or licensed management company must maintain records demonstrating its compliance with this rule, including all reports of suspicious behavior and any supporting documentation, for not less than 3 years and must provide the records to the board on request.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.535 Fantasy contest player complaints {#sec-r-432.535 omnilex-key=us-mi-regs-official--dept-treasury--R 432.535}

Rule 535. (1) A fantasy contest operator or licensed management company must include on its fantasy contest platform a clear mechanism to advise fantasy contest players of their right to make a complaint against the fantasy contest operator, licensed management company, or another fantasy contest player, including information explaining how complaints can be filed and how complaints are resolved.

(2) A fantasy contest operator or licensed management company must attempt to resolve all complaints with the fantasy contest player.

(3) A fantasy contest operator or licensed management company must investigate each complaint and provide a response to the fantasy contest player within 10 calendar days of receipt of the complaint.

(4) The complaint and the fantasy contest operator’s or licensed management company’s response must be made in writing, which may include, but is not limited to, mail, email, and logged internet chat.

(5) A fantasy contest operator or licensed management company must maintain records related to fantasy contest player complaints for a minimum of 3 years and must provide the records to the board on request.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.535a Fantasy contest player funds {#sec-r-432.535a omnilex-key=us-mi-regs-official--dept-treasury--R 432.535a}

Rule 535a. (1) A fantasy contest operator or licensed management company must do 1 of the following:

(a) Segregate deposits in fantasy contest player accounts and other fantasy contest player funds from operational money of the fantasy contest operator or licensed management company. The segregated funds must be maintained in a United States bank account.

(b) Maintain a reserve that meets all of the following conditions:

(i) The reserve must be in 1 of the following forms:

(A) Cash or cash equivalents maintained in a United States bank account segregated from the fantasy contest operator’s or licensed management company’s operational funds.

(B) An irrevocable letter of credit.

(D) Any combination of the allowable forms described in subparagraph (A) to (C) of this paragraph.

(ii) The aggregate amount of the reserve must exceed the total dollar value of deposits in fantasy contest player accounts and other fantasy contest player funds.

(iii) The reserve must not be used for operational activities of the fantasy contest operator or licensed management company.

(2) Unless otherwise approved by the board, the segregated funds or reserve required under subrule (1) of this rule must be maintained by or otherwise under the control of the fantasy contest operator or licensed management company or an independent special purpose entity established by the fantasy contest operator or licensed management company or an affiliate of the fantasy contest operator or licensed management company to hold the funds.

(3) A fantasy contest operator or licensed management company must ensure that fantasy contest player funds are shielded from creditors other than fantasy contest players for whose benefit and protection the segregation or reserve required under subrule (1) of this rule is established.

(4) Funds held in fantasy contest player accounts must not be automatically transferred by a fantasy contest operator or licensed management company. A fantasy contest operator or licensed management company must not require a fantasy contest player to transfer funds from his or her fantasy contest player account in order to circumvent this rule.

(5) A fantasy contest operator or licensed management company must have access to all fantasy contest player account and transaction data to ensure the amount of its segregated funds or reserve is sufficient.

(6) The board may audit a fantasy contest operator’s or licensed management company’s segregated funds or reserve at any time and may direct a fantasy contest operator or licensed management company to take any action necessary to ensure the purposes of this rule are achieved, including, but not limited to, requiring the fantasy contest operator or licensed management company to modify the form of its reserve or increase the amount of its segregated funds or reserve.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.535b Negative fantasy contest player account balance prohibited {#sec-r-432.535b omnilex-key=us-mi-regs-official--dept-treasury--R 432.535b}

Rule 535b. A fantasy contest platform must employ a mechanism that can detect and prevent any fantasy contest entries or withdrawals initiated by a fantasy contest player that would result in a negative balance of the fantasy contest player account.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.536 Fantasy contest rules or terms {#sec-r-432.536 omnilex-key=us-mi-regs-official--dept-treasury--R 432.536}

Rule 536. (1) A fantasy contest operator or licensed management company must establish clear and conspicuous rules or terms for each fantasy contest it offers. The rules or terms must address all of the following, at a minimum:

(a) Unique identification number or other identifier of the fantasy contest.

(b) Entry fee amount.

(i) The athletic events on which the fantasy contest is based and from which a fantasy contest player may select individual athletes.

(ii) The number of athletes a fantasy contest player must select to form the fantasy contest team.

(iii) Any requirements or restrictions regarding the type, position, or other characteristics of the athletes a fantasy contest player must select.

(iv) Any other information a fantasy contest player may need to assemble a fantasy contest team.

(d) An explanation of how winning outcomes reflecting the relative knowledge and skill of fantasy contest players are determined, including, but not limited to, all of the following:

(i) A description of the statistical results of the performance of multiple individual athletes that will determine the outcome of the fantasy contest.

(ii) An explanation of how the statistical results will be aggregated.

(iii) An explanation of how the statistical results correspond with the actual performance of the athletes in the athletic events in which they will participate.

(e) Prize or award amounts, which must be made known to fantasy contest players in advance of the fantasy contest, and a description of the process for calculating and paying prizes or awards, including non-cash or non-cash equivalent prizes or awards. Prizes or awards stipulated in the rules or terms must be available and must be demonstrated on request of the board.

(f) The maximum number of entries each fantasy contest player may submit as required under R 432.532(3).

(g) Any other restrictions regarding the minimum or maximum number of fantasy contest entries that may be submitted by a single fantasy contest player or all fantasy contest players in the fantasy contest.

(h) The date and time the fantasy contest will begin.

(i) The date and time the fantasy contest is expected to be settled or a general statement explaining that the fantasy contest will be settled following the completion of all athletic events on which the fantasy contest is based.

(j) An explanation of when the fantasy contest locks and when no further fantasy contest entries, substitutions, or modifications can be made.

(k) What is to occur when any athletic event or component of an athletic event on which the fantasy contest is based is canceled, rescheduled, suspended, or shortened.

(l) A description of the process for handling incorrectly posted fantasy contests or fantasy contest results.

(m) A policy by which the fantasy contest operator or licensed management company can cancel a fantasy contest due to an obvious error in the setup or parameters of the fantasy contest, which must include a definition and procedures for obvious errors.

(n) How entry fees will be returned to fantasy contest players in the event a fantasy contest is cancelled after entry fees have been paid and what is to occur if any entry fees cannot be returned to a fantasy contest player.

(o) A description of persons who are prohibited or restricted from entering or participating in the fantasy contest in accordance with the act and these rules.

(p) Any other rules or terms required by the board.

(2) The rules or terms for each fantasy contest must be clearly and conspicuously displayed on the fantasy contest operator’s or licensed management company’s fantasy contest platform in a manner that enables a fantasy contest player to read the rules or terms for a fantasy contest before the fantasy contest player pays an entry fee or otherwise enters or commences participation in the fantasy contest.

(3) A fantasy contest operator or licensed management company must enforce and comply with the rules or terms applicable to each fantasy contest.

(4) A fantasy contest operator or licensed management company must not alter the rules or terms established for a fantasy contest after any fantasy contest player has entered or commenced participation in the fantasy contest.

(5) A fantasy contest operator or licensed management company must maintain copies of the rules or terms applicable to each fantasy contest for a minimum of 3 years following completion of the fantasy contest. The fantasy contest operator or licensed management company must provide the rules or terms to the board on request.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.537 Tournaments, bonuses, and promotions {#sec-r-432.537 omnilex-key=us-mi-regs-official--dept-treasury--R 432.537}

Rule 537. (1) A fantasy contest operator or licensed management company may conduct a fantasy contest tournament subject to applicable provisions of the act and these rules. A fantasy contest operator or licensed management company must maintain a record of each fantasy contest tournament it offers that addresses, at a minimum, all of the following:

(a) Athletic events on which the fantasy contest tournament is based.

(b) Rules concerning tournament play and participation.

(d) Prizes or awards.

(e) Methodology for determining the winner or winners.

(2) A fantasy contest operator or licensed management company may offer bonuses and promotions related to fantasy contests, subject to all of the following:

(a) A fantasy contest operator or licensed management company must maintain records of all bonus and promotional offers for a minimum of 3 years and must provide the records to the board on request.

(b) All bonus and promotional offers must be stated in clear and unambiguous terms and must be accessible by a fantasy contest player at both of the following times:

(i) Before the offer is accepted.

(ii) After the offer is accepted and before completion.

(c) Bonus and promotional offer terms and the record of all offers must include, but are not limited to, all of the following:

(i) The date and time the offer is active and expires.

(ii) Fantasy contest player eligibility requirements, including any limitations on participation.

(iii) Any restriction on withdrawals of funds.

(iv) Entry fee requirements and limitations by fantasy contest type.

(v) The order in which funds are used for entry fees.

(vi) Eligible fantasy contests.

(vii) Rules regarding cancellation.

(d) Once a fantasy contest player has met the terms of a bonus or promotional offer, a fantasy contest operator or licensed management company must not limit prizes or awards earned while participating in the offer.

(e) A bonus or promotion must not include or involve targeted advertisements directed to either of the following:

(i) Self-restricted individuals.

(ii) Individuals who are less than 18 years of age.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.538 Kiosks, places of public accommodation, and private clubs {#sec-r-432.538 omnilex-key=us-mi-regs-official--dept-treasury--R 432.538}

Rule 538. A fantasy contest operator allowed under section 8(2) of the act, MCL 432.508, to offer fantasy contests on, at, or from a kiosk or machine, a place of public accommodation, or a facility owned, operated, or occupied by a private club, association, or similar membership-based organization must meet all standards and requirements for the fantasy contests as prescribed by the board.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.539 Geolocation {#sec-r-432.539 omnilex-key=us-mi-regs-official--dept-treasury--R 432.539}

Rule 539. (1) In order to determine the location of a fantasy contest player for purposes of identifying in-state participants and calculating the in-state percentage, a fantasy contest operator or licensed management company must utilize a geolocation system to reasonably detect and accurately pinpoint the physical location of a fantasy contest player each time a fantasy contest operator or licensed management company collects an entry fee from the fantasy contest player or otherwise allows a fantasy contest player to enter a fantasy contest.

(2) In order to prevent the unauthorized use of a fantasy contest player account, the geolocation system must be equipped to monitor for and block attempts to enter or participate in fantasy contests by any single account from geographically inconsistent locations.

(3) A fantasy contest operator or licensed management company may use a third party to provide the geolocation system.

(4) Unless otherwise directed by the board, all geolocation systems must meet technical specifications and requirements that are generally accepted in the fantasy contest industry in the United States.

PART 4. FANTASY CONTEST PLAYER ACCOUNTS

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.541 Single account in use for fantasy contests {#sec-r-432.541 omnilex-key=us-mi-regs-official--dept-treasury--R 432.541}

Rule 541. (1) A fantasy contest operator or licensed management company shall limit each fantasy contest player to 1 fantasy contest player account and username. Each fantasy contest player account must meet all of the following requirements:

(a) Be non-transferable.

(b) Be unique to the fantasy contest player who establishes the fantasy contest player account.

(2) A fantasy contest operator or licensed management company must implement commercially reasonable procedures and internal controls intended to accomplish both of the following:

(a) Prevent an individual from establishing more than 1 username or more than 1 fantasy contest player account, whether directly or by use of another person as a proxy.

(b) Terminate all excess accounts of any individual who establishes or seeks to establish more than 1 username or more than 1 fantasy contest player account, whether directly or by use of another person as a proxy.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.541a Age and identity verification {#sec-r-432.541a omnilex-key=us-mi-regs-official--dept-treasury--R 432.541a}

Rule 541a. (1) A fantasy contest operator or licensed management company must verify an individual’s age and identity before allowing that individual to create a fantasy contest player account and do either of the following, whichever occurs first:

(a) Make a deposit.

(b) Enter or participate in a fantasy contest.

(2) Age and identity verification must be performed using either of the following methods:

(a) Reliable forms of personal identification specified in the fantasy contest operator's or licensed management company’s procedures and internal controls.

(b) Other methodology for remote multi-source authentication, which may include third-party and governmental databases.

(3) Third-party service providers may be used for age and identity verification of an individual attempting to create a fantasy contest player account and make a deposit or enter or participate in a fantasy contest.

(4) A fantasy contest operator or licensed management company must record both of the following:

(a) The date of age and identity verification.

(b) The method and process used to verify the individual’s age and identity. The fantasy contest operator or licensed management company must maintain sufficient records to demonstrate that age and identity verification was performed in accordance with applicable requirements of the act and these rules.

(5) A fantasy contest operator or licensed management company must periodically reverify a fantasy contest player’s identity upon reasonable suspicion that the fantasy contest player’s identity has been compromised.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.541b Data security of age and identity verification information {#sec-r-432.541b omnilex-key=us-mi-regs-official--dept-treasury--R 432.541b}

Rule 541b. Details of the age and identity verification process must be maintained by the fantasy contest operator or licensed management company in a secure manner consistent with security standards generally accepted in the fantasy contest industry in the United States.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.541c Fantasy contest player account classification {#sec-r-432.541c omnilex-key=us-mi-regs-official--dept-treasury--R 432.541c}

Rule 541c. Unless otherwise determined by the board, both of the following apply to the classification of fantasy contest player accounts:

(a) An account that can be used only to conduct games or activities other than fantasy contests, as that term is defined in section 2 of the act, MCL 432.502, is not considered a fantasy contest player account and is not subject to requirements of the act and these rules related to fantasy contest player accounts, except as otherwise determined by the board.

This may include, but is not limited to, an account that can be used only to conduct games or activities that are similar to fantasy contests but that lack an entry fee.

(b) A fantasy contest operator or licensed management company may elect to delay classification of an account as a fantasy contest player account until such time as the individual account holder requests to make his or her first deposit or attempts to enter or participate in his or her first fantasy contest, whichever occurs first, subject to all of the following conditions:

(i) The point at which the account is classified as a fantasy contest player account is considered the point at which the fantasy contest player account is established or created for purposes of the act and these rules.

(ii) The fantasy contest operator or licensed management company must adopt commercially reasonable procedures and internal controls to ensure that all applicable requirements of the act and these rules are met before allowing the individual to make his or her first deposit or enter or participate in his or her first fantasy contest, whichever occurs first. This includes, but is not limited to, commercially reasonable procedures and internal controls designed to ensure all of the following:

(A) A person that is prohibited from establishing a fantasy contest player account under the act and these rules is prevented from establishing a fantasy contest player account, from making a deposit, and from entering or participating in a fantasy contest.

This includes, but is not limited to, a person prohibited from establishing a fantasy contest player account under R 432.532a to R 432.532g.

(B) A person is prevented from entering or participating in any fantasy contest the person is prohibited from entering or participating in under the act and these rules, including, but not limited to, R 432.532a to R 432.532g.

(C) An individual is limited to a single, non-transferrable, and unique fantasy contest player account in accordance with R 432.541.

(D) An individual’s age and identity are verified in accordance with R 432.541a before the individual is allowed to create a fantasy contest player account.

(E) An individual agrees to the terms and conditions established under R 432.542 before establishing a fantasy contest player account.

(F) Compliance with all requirements of R 432.544.

(G) A fantasy contest player is prevented from transferring funds from his or her fantasy contest player account to an account that is not classified as a fantasy contest player account under this subrule, whether the account is held by the fantasy contest player or another individual.

(iii) An account must be classified as a fantasy contest player account and must meet applicable requirements of the act and these rules before it can be used to enter or participate in any tournament, bonus, or promotion involving fantasy contests.

(iv) Once an account is classified as a fantasy contest player account, it must remain classified as a fantasy contest player account.

(v) The fantasy contest operator or licensed management company must meet any other conditions considered appropriate by the board.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.542 Terms and conditions for fantasy contest player accounts {#sec-r-432.542 omnilex-key=us-mi-regs-official--dept-treasury--R 432.542}

Rule 542. (1) All terms and conditions for fantasy contest player accounts must be included in the procedures and internal controls of the fantasy contest operator or licensed management company and must address all aspects of fantasy contests including, but not limited to, all of the following:

(a) Name of the party or parties with whom the individual is entering into a contractual relationship, including any fantasy contest operator or licensed management company.

(b) Individual's consent to have the fantasy contest operator or licensed management company confirm the individual's age and identity.

(i) Prohibition from allowing any other individual to access or use his or her fantasy contest player account.

(ii) Prohibition from submitting a fantasy contest entry on behalf of any other person.

(iii) Consent to the jurisdiction of this state to resolve any disputes arising out of fantasy contest activity conducted under the act and these rules.

(iv) Prohibition against the use of scripts other than authorized scripts.

(v) Prohibition against the use of proxy servers or any other software or technology to misrepresent his or her identity or location in order to enter or participate in fantasy contests.

(vi) Prohibition against establishing or seeking to establish more than 1 username or more than 1 fantasy contest player account, whether directly or by use of another person as a proxy, including notice that all excess accounts of an individual who violates this condition will be terminated.

(d) Full explanation of all service and other transaction-related charges imposed upon a fantasy contest player related to fantasy contests.

(e) Availability of a fantasy contest player account statement and a fantasy contest player’s playing history.

(f) Privacy policies, including information access.

(g) Legal age policy, including a statement that fantasy contest players are prohibited from facilitating an individual under the age of 18 to enter or participate in fantasy contests.

(h) Full explanation of all rules applicable to dormant fantasy contest player accounts.

(i) Fantasy contest player’s right to irrevocably restrict his or her ability to enter or participate in fantasy contests and to select the length of time the restriction will be in effect in accordance with R 432.532d.

(j) Fantasy contest player’s right to enable any other notifications or self-imposed limits available under the fantasy contest operator’s or licensed management company’s self-restriction program operated pursuant to R 432.532d, if applicable.

(k) Fantasy contest player’s right to suspend his or her fantasy contest player account for a period of no less than 72 hours.

(l) Actions that will be taken if a fantasy contest player becomes disconnected from the fantasy contest platform during fantasy contest play.

(m) Notice that a malfunction voids all erroneous or incorrect prizes and awards.

(n) Estimated time period for withdrawal of funds from a fantasy contest player account.

(2)If the fantasy contest player account terms and conditions are changed, the fantasy contest operator or licensed management company shall require the fantasy contest player to acknowledge acceptance of the change. Unless otherwise authorized by the board, the fantasy contest player’s acknowledgement must be date and time stamped.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.543 Fantasy contest player protections {#sec-r-432.543 omnilex-key=us-mi-regs-official--dept-treasury--R 432.543}

Rule 543. A fantasy contest operator or licensed management company must provide a fantasy contest player protection page that must be readily accessible to each fantasy contest player. The fantasy contest player protection page must be accessible to a fantasy contest player throughout a fantasy contest player session. The fantasy contest player protection page must contain, at a minimum, all of the following:

(a) Method for changing or retrieving a password or other access security feature and the ability to choose strong authentication login protection.

(b) Method for filing a complaint with the fantasy contest operator or licensed management company in accordance with R 432.535.

(c) Method for obtaining a copy of the fantasy contest terms and conditions agreed to when establishing a fantasy contest player account.

(d) Method for the fantasy contest player to obtain his or her account history and playing history.

(e) Notification that underage entry or participation in fantasy contests is prohibited and that anyone who facilitates an individual under the age of 18 to enter or participate in a fantasy contest will be subject to action in accordance with R 432.532h.

(f) Notification that the fantasy contest player is responsible for configuring the autolock feature of his or her computer or other device to protect the computer or other device from unauthorized use.

(g) Notification that a fantasy contest player is prohibited from allowing any other person to access or use his or her fantasy contest player account.

(h) Notification that a fantasy contest player is prohibited from submitting a fantasy contest entry on behalf of any other person.

(i) Information about the fantasy contest operator’s or licensed management company’s self-restriction program operated pursuant to R 432.532d, including, but not limited to, the following:

(i) Information about potential risks associated with excessive entry or participation in fantasy contests and where to seek assistance for compulsive gaming behavior.

(ii) The method for a fantasy contests player or other individual to irrevocably restrict his or her ability to enter or participate in fantasy contests and to select the length of time the restriction will be in effect.

(iii) Information about any other notifications or self-imposed limits available under the fantasy contest operator’s or licensed management company’s self-restriction program, if applicable, including information on how to invoke those notifications or self-imposed limits.

(j) Mechanisms in place for a fantasy contest player to detect unauthorized use of his or her fantasy contest player account, such as the fantasy contest player reviewing credit card statements against known deposits.

(k) Other fantasy contest player protections prescribed by the board.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.544 Fantasy contest player account requirements {#sec-r-432.544 omnilex-key=us-mi-regs-official--dept-treasury--R 432.544}

Rule 544. To establish a fantasy contest player account, a fantasy contest operator or licensed management company must do all of the following:

(a) Create an electronic fantasy contest player file that must include, but is not limited to, all of the following:

(i) The fantasy contest player’s legal name.

(ii) The fantasy contest player’s date of birth.

(iii) The fantasy contest player’s fantasy contest account number or username.

(iv) The fantasy contest player’s residential address. A post office box is not acceptable.

(v) The fantasy contest player’s email address.

(vi) The method and process used to verify the fantasy contest player’s age and identity, including sufficient records to demonstrate that age and identity verification was performed in accordance with applicable requirements of the act and these rules.

(vii) The date of verification of the fantasy contest player’s age and identity.

(b) Encrypt all of the following information maintained electronically by the fantasy contest operator or licensed management company:

(i) If collected and maintained, any portion of the fantasy contest player’s Social Security number or equivalent identification number for a noncitizen fantasy contest player, such as a passport or taxpayer identification number.

(ii) The fantasy contest player’s password or other access security feature.

(iii) The fantasy contest player’s personal or financial information.

(d) Require the fantasy contest player to establish a password or other access security feature and advise the fantasy contest player to utilize strong authentication login protection.

(e) Record the fantasy contest player’s acceptance of the terms and conditions for the fantasy contest player account adopted under R 432.542. Unless otherwise authorized by the board, the fantasy contest player’s acceptance must be date and time stamped.

(f) Record the fantasy contest player’s certification that the information provided to the fantasy contest operator or licensed management company is accurate.

(g) Record the fantasy contest player’s acknowledgment that the legal age to enter or participate in a fantasy contest is 18, that he or she is prohibited from allowing any other person to access or use his or her fantasy contest player account, and that he or she is prohibited from submitting a fantasy contest entry on behalf of any other person.

(h) Notify the fantasy contest player of the establishment of the fantasy contest player account via electronic mail.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.544a Fantasy contest player account funding {#sec-r-432.544a omnilex-key=us-mi-regs-official--dept-treasury--R 432.544a}

Rule 544a. A fantasy contest player’s fantasy contest player account may be funded through the use of any of the following:

(a) A fantasy contest player’s credit or debit card.

(b) A fantasy contest player’s deposit of cash or cash equivalents at a physical location at which a fantasy contest operator or licensed management company accepts deposits directly or at which a third-party payment processor accepts deposits on behalf of a fantasy contest operator or licensed management company. Procedures governing transactions conducted at the physical location must be addressed in the fantasy contest operator’s or licensed management company’s procedures and internal controls.

(c) A fantasy contest player’s reloadable prepaid card that is verified as being issued to the fantasy contest player and is non-transferable.

(d) Promotional credit.

(e) Prizes or awards.

(f) Adjustments made by the fantasy contest operator or licensed management company with documented notification to the fantasy contest player.

(g) Automated clearing house (ACH) deposit, provided that the fantasy contest operator or licensed management company has implemented security measures and procedures and internal controls to prevent ACH fraud regarding failed ACH deposits.

(h) Wire transfer.

(i) A fantasy contest operator’s or licensed management company’s issuance of credit to a fantasy contest player. Procedures for the issuance of credit must be addressed in the fantasy contest operator’s or licensed management company’s procedures and internal controls.

(j) Any other means approved by the board.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.544b Failed ACH deposits {#sec-r-432.544b omnilex-key=us-mi-regs-official--dept-treasury--R 432.544b}

Rule 544b. A fantasy contest operator or licensed management company must implement commercially reasonable procedures and internal controls to address failed ACH deposits, subject to both of the following conditions:

(a) A failed ACH deposit attempt is not considered fraudulent if the fantasy contest player has successfully deposited funds via an ACH transfer on a previous occasion with no outstanding chargebacks.

(b) A fantasy contest operator or licensed management company must investigate any failed ACH deposit the fantasy contest operator or licensed management company considers potentially fraudulent. If a failed ACH deposit is deemed fraudulent, the fantasy contest operator or licensed management company must immediately suspend the fantasy contest player account in accordance with R 432.548.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.544c Transfer of funds prohibited {#sec-r-432.544c omnilex-key=us-mi-regs-official--dept-treasury--R 432.544c}

Rule 544c. A fantasy contest operator or licensed management company must not allow a fantasy contest player to transfer funds from his or her fantasy contest player account to any other fantasy contest player account or other wagering account belonging to another fantasy contest player or individual.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.544d Fantasy contest player account withdrawal {#sec-r-432.544d omnilex-key=us-mi-regs-official--dept-treasury--R 432.544d}

Rule 544d. (1) A fantasy contest player must be allowed to withdraw the funds maintained in his or her fantasy contest player account, whether the account is open or closed, except as otherwise provided in these rules or any applicable state or federal law.

(2) A fantasy contest operator or licensed management company must honor the fantasy contest player’s request to withdraw funds within 10 business days after the request, unless the conditions set forth in subrule (3) of this rule are met.

(3) The fantasy contest operator or licensed management company may decline to honor a fantasy contest player’s request to withdraw funds only if the fantasy contest operator or licensed management company believes in good faith that the fantasy contest player engaged in either fraudulent conduct or other conduct that would put the fantasy contest operator or licensed management company in violation of the act and these rules or any other applicable state or federal law. In such cases, the fantasy contest operator or licensed management company must do all of the following:

(a) Provide notice to the fantasy contest player of the nature of the investigation of the fantasy contest player account.

(b) Conduct its investigation in a reasonable and expedient fashion, providing the fantasy contest player additional written notice of the status of the investigation every tenth business day starting from the day the original notice was provided to the fantasy contest player.

(4) For purposes of this rule, a request for withdrawal is considered honored if it is processed by the fantasy contest operator or licensed management company notwithstanding a delay by a payment processor, credit card issuer, or the custodian of a financial account.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.544e Fantasy contest player account review requirements {#sec-r-432.544e omnilex-key=us-mi-regs-official--dept-treasury--R 432.544e}

Rule 544e. All adjustments to fantasy contest player accounts for amounts of $500.00 or less must be periodically reviewed by supervisory personnel as set forth in the fantasy contest operator’s or licensed management company’s procedures and internal controls.

All other adjustments must be authorized by supervisory personnel before being entered.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.545 Fantasy contest player account and playing history {#sec-r-432.545 omnilex-key=us-mi-regs-official--dept-treasury--R 432.545}

Rule 545. (1) A fantasy contest operator or licensed management company shall provide a fantasy contest player access to the fantasy contest player’s playing history that must include, but is not limited to, a summary of entry fees expended, fantasy contests played, previous lineups, and prizes awarded.

(2) A fantasy contest platform must provide an account statement with fantasy contest player account details to a fantasy contest player on demand, which must include detailed account activity for at least 6 months. In addition, a fantasy contest platform must, upon request, be capable of providing a summary statement of fantasy contest player account activity for at least the past 2 years.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.546 Fantasy contest player account closure {#sec-r-432.546 omnilex-key=us-mi-regs-official--dept-treasury--R 432.546}

Rule 546. A fantasy contest operator or licensed management company must provide a conspicuous and readily accessible method for a fantasy contest player to close his or her fantasy contest player account through the account management page or a similar page or through the fantasy contest operator’s or licensed management company’s customer support team. Any balance remaining in a fantasy contest player account closed by a fantasy contest player must be refunded pursuant to the fantasy contest operator’s or licensed management company’s procedures and internal controls.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.547 Fantasy contest player dormant accounts {#sec-r-432.547 omnilex-key=us-mi-regs-official--dept-treasury--R 432.547}

Rule 547. A fantasy contest operator or licensed management company shall consider a fantasy contest player account to be dormant if the fantasy contest player has not logged into the fantasy contest player account for at least 3 years. A dormant fantasy contest player account must be closed by the fantasy contest operator or licensed management company.

Any balance remaining in a dormant fantasy contest player account must be refunded or escheated in accordance with the fantasy contest operator’s or licensed management company’s procedures and internal controls.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.548 Suspension and restoration of fantasy contest player accounts {#sec-r-432.548 omnilex-key=us-mi-regs-official--dept-treasury--R 432.548}

Rule 548. (1) A fantasy contest operator or licensed management company must employ a mechanism that places a fantasy contest player account in a suspended mode under any of the following conditions:

(a) When requested by the fantasy contest player for a specified period of time, which must not be less than 72 hours.

(b) When required by the board.

(d) If the fantasy contest player has committed a violation of the act or these rules.

(e) When initiated by a fantasy contest operator or licensed management company that has evidence that indicates any of the following:

(i) Illegal or fraudulent activity.

(ii) A negative fantasy contest player account balance.

(iii) A violation of the fantasy contest player account terms and conditions on the fantasy contest player account.

(2) When a fantasy contest player account is in a suspended mode, the fantasy contest platform must do all of the following:

(a) Prevent the fantasy contest player from entering or participating in fantasy contests or paying any entry fee.

(b) Prevent the fantasy contest player from depositing funds unless the account is suspended due to having a negative fantasy contest player account balance but only to the extent the fantasy contest player account balance is brought back to zero dollars.

(c) Prevent the fantasy contest player from withdrawing funds from his or her suspended account, unless the suspended mode was initiated by the fantasy contest player.

(d) Prevent the fantasy contest player from making changes to his or her fantasy contest player account.

(e) Prevent the removal of the fantasy contest player account from the fantasy contest platform.

(f) Prominently display to the fantasy contest player that the fantasy contest player account is in a suspended mode, the restrictions placed on the fantasy contest player account, and any further course of action needed to remove the suspended mode.

(3) A suspended account may be restored for any of the following reasons:

(a) Upon expiration of the time period established by the fantasy contest player.

(b) If authorized by the board.

(d) When the fantasy contest operator or licensed management company has lifted the suspended status.

PART 5. PROCEDURES AND INTERNAL CONTROLS; AUDIT

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.551 Fantasy contest operator and licensed management company procedures and internal controls {#sec-r-432.551 omnilex-key=us-mi-regs-official--dept-treasury--R 432.551}

Rule 551. (1) A fantasy contest operator and any licensed management company that manages day-to-day fantasy contest operations of the fantasy contest operator must submit to, and receive approval from, the board commercially reasonable procedures and internal controls intended to accomplish all of the following:

(a) Ensure compliance with R 432.532h, including, but not limited to, procedures designed to do both of the following:

(i) Prevent a person from establishing a fantasy contest player account if the person is prohibited from establishing a fantasy contest player account under R 432.532a to R 432.532g.

(ii) Prevent a person from entering or participating in any fantasy contest the person is prohibited from entering or participating in under R 432.532a to R 432.532g, or from entering or participating in a fantasy contest in any other manner in violation of R 432.532a to R 432.532g.

(b) Prevent the owners, directors, officers, employees, agents, contractors, and thirdparty providers of the fantasy contest operator or licensed management company from sharing protected information with third parties unless the protected information is otherwise made publicly available in accordance with R 432.532g. The procedures must include the means by which a fantasy contest operator or licensed management company shall provide notice to a fantasy contest player related to the sharing of protected information that includes the fantasy contest player’s personal identifiable information.

(c) Establish the maximum number of entries a single fantasy contest player may enter in each fantasy contest and take reasonable steps to prevent fantasy contest players from submitting more than the allowable number of entries in accordance with R 432.532(3).

(d) Ensure compliance with R 432.532a addressing beginning and highly experienced players including, but not limited to, procedures to do all of the following:

(i) Identify each highly experienced player by a symbol attached to the highly experienced player's username.

(ii) Offer some fantasy contests that are open only to beginning players.

(iii) Offer some fantasy contests that are open only to players other than highly experienced players.

(e) Ensure compliance with R 432.535a addressing fantasy contest player funds.

(f) Ensure compliance with the applicable state and federal requirements and these rules to protect the privacy and online security of a fantasy contest player and the fantasy contest player's account, including procedures to prevent any withdrawal from the fantasy contest player’s account that is not authorized by the fantasy contest player.

(g) Ensure the security of personal identifiable information and financial information of a fantasy contest player, funds in a fantasy contest player account, and other information as required by the board. The procedures must include the means by which a fantasy contest operator or licensed management company will provide notice to a fantasy contest player related to the sharing of personal identifiable information.

(h) Identify and report fraud, unusual activity, and suspicious conduct and ensure compliance with R 432.534a.

(i) Ensure compliance with all provisions of 31 USC 5311 to 5336, commonly referred to as the bank secrecy act, that are applicable to the fantasy contest operator’s or licensed management company’s fantasy contest operations as required under R 432.534.

(j) Ensure access to the fantasy contest platform and assets are properly restricted from unauthorized access.

(k) Ensure promotional funds for fantasy contests are properly authorized and approved.

(l) Ensure tournaments, bonuses, and promotions are conducted in accordance with R432.537.

(m) Ensure all advertisements are conducted in accordance with the act and these rules, including R 432.533.

(n) Ensure compliance with all requirements of the act and these rules related to fantasy contest player accounts including, but not limited to, all of the following:

(i) Procedures for the creation, suspension, and closing of fantasy contest player accounts.

(ii) Procedures for the handling of dormant accounts.

(iii) Procedures to ensure the fantasy contest operator or licensed management company completes, within 10 business days of the fantasy contest player’s request, all of the following:

(A) Deposit of cash or cash equivalent prizes or awards into the fantasy contest player account.

(B) Fund withdrawal request from a fantasy contest player account in accordance with R 432.544d.

(iv) Procedures to ensure compliance with all other fantasy contest player account requirements contained in parts 3 and 4 of these rules.

(o) Ensure the security, operation, and maintenance of a fantasy contest platform and other equipment used to conduct fantasy contests.

(p) Ensure that the fantasy contest platform meets or exceeds current standards generally accepted in the fantasy contest industry in the United States and fantasy contest platform requirements contained in these rules.

(q) Ensure the geolocation system functions in accordance with R 432.539.

(r) Detect and prevent the misuse of proxy servers and ensure compliance with R 432.532f.

(s) Ensure the proper recording of fantasy contest adjusted revenues and payment of taxes required under the act.

(t) Ensure the accurate recordation of all fantasy contest transactions and reconciliation of account balances including fantasy contest adjusted revenues and fantasy contest player account balances.

(u) Ensure unclaimed funds are processed in accordance with the uniform unclaimed property act, 1995 PA 29, MCL 567.221 to MCL 567.265.

(v) Ensure security incidents and fantasy contest platform failure incidents are timely identified, responded to, and corrected. The following must be performed on each incident:

(i) Analysis and cause of the incident.

(ii) Containment.

(iii) Planning and implementation of corrective action to prevent recurrence.

(iv) Recovery from and correction of the incident in a careful and controlled manner.

(v) Communication with those affected by or involved with recovery from the incident.

(vi) Reporting of the incident and corrective action to the board as follows:

(A) Any incident involving a breach of privacy or confidentiality or malicious intrusion of a fantasy contest platform, website, device, or other equipment used to conduct fantasy contests must be promptly reported to the board.

(B) Incidents other than those described in subparagraph (A) of this paragraph must be reported as directed by the board. This includes, but is not limited to, any failure, malfunction, or loss of service of a fantasy contest platform.

(w) Establish and operate a self-restriction program in accordance with R 432.532d.

(x) Ensure compliance with R 432.532 addressing the conduct of fantasy contests.

(y) Provide fantasy contest players with fantasy contest rules or terms in accordance with R 432.536.

(z) Identify authorized scripts, detect and prevent unauthorized scripts, and ensure compliance with R 432.532e.

(aa) Ensure that all third-party audits required under the act and these rules, including those required under R 432.554 and R 432.554a, are completed in accordance with the act and these rules.

(bb) Ensure all fantasy contest player complaints, including complaints that a violation of the act or these rules has occurred, are received, investigated, and responded to by the fantasy contest operator or licensed management company in a timely manner in accordance with R 432.535.

(cc) Ensure that monitoring, identification, investigation, correction, and reporting to the board is performed for any violations of the procedures and internal controls adopted pursuant to the act and these rules.

(dd) Ensure procedures are adopted, implemented, and maintained for establishing and using test accounts.

(ee) Otherwise ensure the integrity of fantasy contests.

(2) To the extent a third party is involved in or provides any of the procedures and internal controls required in these rules, the fantasy contest operator’s or licensed management company’s procedures and internal controls must document the roles and responsibilities of the third party and must include procedures to evaluate the adequacy of and monitor compliance with the third party’s procedures and internal controls.

(3) A fantasy contest operator or licensed management company shall comply with the procedures and internal controls that are submitted to the board under these rules and are approved by the board or otherwise allowed to be implemented in accordance with these rules. If a fantasy contest operator or licensed management company fails to comply with any provision of its procedures and internal controls, the board may initiate a disciplinary action.

(4) Unless otherwise determined by the board, all of the following provisions apply to technical adjustments and amendments to the procedures and internal controls:

(a) A fantasy contest operator or licensed management company must notify the board in advance of making any technical adjustment to its procedures and internal controls. The technical adjustment may be implemented immediately if it is not material and the procedures and internal controls continue to meet or exceed standards required by the act and these rules. If at any time the board determines that the technical adjustment is material, the fantasy contest operator or licensed management company must do either of the following:

(i) Submit the material technical adjustment to the board in accordance with subdivision (b) of this subrule. The fantasy contest operator or licensed management company must not implement the material technical adjustment until it is approved by the board under subdivision (b) of this subrule or allowed to be implemented under subdivision (c) of this subrule. If the material technical adjustment was previously implemented, the material technical adjustment may remain in effect during the pendency of the submission unless otherwise directed by the board.

(ii) Withdraw the material technical adjustment. If the material technical adjustment was previously implemented, the fantasy contest operator or licensed management company has 15 days to cease implementation.

(b) Except as otherwise provided in subdivision (c) of this subrule, all material technical adjustments and amendments to the procedures and internal controls must be submitted to and approved by the board, in writing, prior to implementation.

(c) If within 15 days, the board has not approved, denied, or otherwise provided written notice regarding a material technical adjustment or amendment to the procedures and internal controls, a fantasy contest operator or licensed management company may implement the material technical adjustment or amendment, as submitted, with the board retaining its authority to require further amendment, approval, or denial.

(d) If the board requests additional information, clarification, or revision of a proposed technical adjustment or amendment to the procedures and internal controls and the fantasy contest operator or licensed management company fails to satisfy the request within 30 days, the board may consider the proposed technical adjustment or amendment withdrawn.

If the technical adjustment or amendment was previously implemented under subdivision (a) or (c) of this subrule at the time it is considered withdrawn, the fantasy contest operator or licensed management company has 15 days to cease implementation of the technical adjustment or amendment. If the fantasy contest operator or licensed management company subsequently wants to implement or seek board approval of the proposed technical adjustment or amendment, the fantasy contest operator or licensed management company must resubmit the notification or request.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.552 Emergency procedures {#sec-r-432.552 omnilex-key=us-mi-regs-official--dept-treasury--R 432.552}

Rule 552. (1) In the event of an emergency, a fantasy contest operator or licensed management company may temporarily amend its procedures and internal controls. The board must be notified that an emergency exists before temporarily amending the procedures and internal controls.

(2) A fantasy contest operator or licensed management company must submit the temporary emergency amendment of the procedures and internal controls to the board within 3 days of the amendment. The submission must include the detailed emergency procedures that were or will be implemented and the time period the emergency procedures were or will be temporarily in place. Any concerns the board has with the submission must be addressed by the fantasy contest operator or licensed management company.

(3) As soon as the circumstances necessitating the emergency amendment to the procedures and internal controls abate, the fantasy contest operator or licensed management company must resume compliance with the procedures and internal controls that were approved by the board or otherwise allowed to be implemented in accordance with these rules.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.553 Failure to comply with requirements {#sec-r-432.553 omnilex-key=us-mi-regs-official--dept-treasury--R 432.553}

Rule 553. If the board determines that the fantasy contest operator’s or licensed management company’s procedures and internal controls do not comply with the requirements of these rules or require improvement, then the board shall notify the fantasy contest operator or licensed management company in writing. Within 30 days after receiving the notification or as otherwise directed by the board, the fantasy contest operator or licensed management company must amend its written procedures and internal controls accordingly and must submit, for board approval, a copy of the written procedures and internal controls, as amended, and a description of any other remedial measure taken.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.554 Independent financial audit {#sec-r-432.554 omnilex-key=us-mi-regs-official--dept-treasury--R 432.554}

Rule 554. (1) By July 1 of each year, a fantasy contest operator and any licensed management company that manages day-to-day fantasy contest operations of the fantasy contest operator must contract with an independent certified public accountant to perform an independent audit, in accordance with generally accepted accounting principles, of the financial condition of the fantasy contest operator's and licensed management company’s total operations for the previous fiscal year and assess the fantasy contest operator’s and licensed management company’s compliance with R 432.535a and section 14 of the act, MCL 432.514.

(2) A fantasy contest operator and any licensed management company that manages day-to-day fantasy contest operations of the fantasy contest operator must submit an audit engagement letter to the board at least 30 days before the commencement of the audit. The audit engagement letter must meet all of the following conditions, at a minimum:

(a) The scope of the audit must include, at a minimum, each area required under subrule (1) of this rule.

(b) The audit must be performed in accordance with generally accepted auditing standards or their equivalent as approved by the board.

(c) The audit must assess the fair presentation of fantasy contest adjusted revenues and payment of all required taxes and fees required under the act and these rules.

(d) The audit report must contain an opinion of the independent certified public accountant as to its fair presentation in accordance with generally accepted accounting principles.

(e) The audit must meet any other conditions considered appropriate by the board.

(3) A fantasy contest operator and any licensed management company that manages day-to-day fantasy contest operations of the fantasy contest operator must submit the audit results under this rule to the board not later than 180 days after the end of the fiscal year to which the audit results apply.

(4) A fantasy contest operator and any licensed management company that manages day-to-day fantasy contest operations of the fantasy contest operator is responsible for the cost of the audit.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.554a Independent compliance audit {#sec-r-432.554a omnilex-key=us-mi-regs-official--dept-treasury--R 432.554a}

Rule 554a. (1) Each year, a fantasy contest operator and any licensed management company that manages day-to-day fantasy contest operations of the fantasy contest operator must contract with an independent testing laboratory or another professional service provider authorized by the board to assess the fantasy contest operator's and licensed management company’s compliance with part 3 and part 4 of these rules, except for R 432.535a, and verify the integrity of the fantasy contest platform used by the fantasy contest operator and licensed management company to operate fantasy contests.

(2) A fantasy contest operator and any licensed management company that manages dayto-day fantasy contest operations of the fantasy contest operator must submit an audit engagement letter to the board at least 30 days before the commencement of the audit. The audit engagement letter must meet all of the following conditions, at a minimum:

(a) The scope of the audit must include, at a minimum, each area required under subrule (1) of this rule.

(b) The audit must be performed in accordance with attestation standards established by the American Institute of Certified Public Accountants or their equivalent as approved by the board.

(c) The audit report must include a listing of all instances of non-compliance and an overall assessment of the integrity of the fantasy contest platform used to operate fantasy contests.

(d) The audit must meet any other conditions considered appropriate by the board.

(3) A fantasy contest operator and any licensed management company that manages dayto-day fantasy contest operations of the fantasy contest operator must submit the audit results under this rule to the board by March 31 of each year.

(4) A fantasy contest operator and any licensed management company that manages dayto-day fantasy contest operations of the fantasy contest operator is responsible for the cost of the audit.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

Mich. Admin. Code R 432.555 Recordkeeping and retention {#sec-r-432.555 omnilex-key=us-mi-regs-official--dept-treasury--R 432.555}

Rule 555. (1) A fantasy contest operator or licensed management company must keep and maintain accurate, complete, and legible records of any books, records, or documents pertaining to, prepared in, or generated by the fantasy contest operator or licensed management company, including, but not limited to, all of the following:

(a) Forms.

(b) Reports.

(d) Ledgers.

(e) Subsidiary records.

(f) Computer generated data.

(g) Internal audit records.

(h) Correspondence.

(i) Personnel records.

(j) Records of all transactions related to fantasy contest operations.

(k) Records required by the act, these rules, and the fantasy contest operator’s or licensed management company’s procedures and internal controls.

(l) Records supporting the calculation of fantasy contest adjusted revenues and the related taxes.

(m) Other records deemed necessary by the board.

(2) A fantasy contest operator or licensed management company must provide access to fantasy contest platform related data as deemed necessary by the board and in a manner approved by the board.

(3) A fantasy contest operator or licensed management company shall retain and maintain in a place secure from theft, loss, or destruction all of the records required to be maintained under the act and these rules for at least 3 years after the date of the record's creation.

(4) A fantasy contest operator or licensed management company must make the records available to the board, upon request, within the timeframe requested by the board.

(5) A fantasy contest operator or licensed management company shall organize all records under the act and these rules in a manner that enables the fantasy contest operator or licensed management company to provide the board with the records on request.

History

History: 2023 MR 20, Eff. Oct. 11, 2023.

R 432.611 to R 432.676 Internet Gaming

Mich. Admin. Code R 432.611 Definitions {#sec-r-432.611 omnilex-key=us-mi-regs-official--dept-treasury--R 432.611}

DEPARTMENT OF TREASURY

MICHIGAN GAMING CONTROL BOARD

INTERNET GAMING RULES

(By authority conferred on the Michigan gaming control board by section 10 of the lawful internet gaming act, 2019 PA 152, MCL 432.310)

PART 1. GENERAL PROVISIONS

Rule 611. As used in these rules:

(a) “Act” means the lawful internet gaming act, 2019 PA 152, MCL 432.301 to MCL 432.322.

“Affiliate” means a person that, directly or indirectly, through 1 or more intermediaries, controls or is controlled by an internet gaming operator.

(b) “Affiliate marketer” means a person involved in promoting, marketing, and directing business to online gaming sites who is compensated based on the volume of customer referrals to an online gaming site or customer activity, including but not limited to, number of registrations, number of depositing registrations, or wagering activity, or both.

(c) “Agent” means any individual who is employed by any agency of this state, other than the board, the state police, or attorney general, and who is assigned to perform full-time services on behalf of or for the benefit of the board regardless of the title or position held by that individual.

(d) “Authorized game” means any internet game that the board determines to be suitable for use for wagering through the internet, which must include, but need not be limited to, poker, blackjack, cards, slots, games played with dice or tiles, or both, such as roulette, craps, pai gow, and other games typically offered at a casino. An authorized game does not include any of the following: pick numbers or other lottery games typically offered by the bureau of lottery under the McCauley-Traxler-Law-Bowman- McNeely lottery act, 1972 PA 239, MCL 432.1 to 432.47; a lawful fantasy contest; or any lawful internet sports betting.

(e) “Authorized participant session” means the period of time that an authorized participant is logged on to an internet gaming platform.

(f) “Conflict of interest” means a situation, relationship, or association in which the private interest of employees, agents, and contractors of the board may influence the judgment of the employee, agent, or contractor in the performance of his or her public duty under the act.

(g) “Contractor” means any individual not employed by this state who performs services on behalf of or for the benefit of the board and requires unescorted access to board facilities.

(h) "Excluded person" means any individual who has been involuntarily placed in the responsible gaming database by the executive director and who is prohibited from establishing an internet wagering account or participating in internet wagering, or both, offered under the act or these rules.

(i) “Executive Director” means the executive director of the Michigan gaming control board, appointed under section 4 of the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.204.

(j) “Game server” means a server that contains game software and control programs.

(k) “Internet gaming network” means the linking of authorized participants of 1 or more Internet gaming operators to participate in peer-to-peer gaming in this state. An internet gaming network does not include linking of authorized participants pursuant to a multijurisdictional internet gaming agreement entered into in accordance with the act.

(l) “Interactive gaming system” means the hardware, software, firmware, communications technology and other equipment that allows an authorized participant to remotely bet or wager through the internet or a similarly distributed networking environment, and the corresponding equipment related to game outcome determination, the display of the game and game outcomes, and other similar information necessary to facilitate play of the game. The internet gaming platform provides the authorized participant with the means to play authorized games. The internet gaming platform provides the internet gaming operator with the means to review internet wagering accounts, disable games, generate various gaming/financial transaction and account reports, input outcomes for live internet games, and set any configurable parameters. The term does not include computer equipment or communications technology used by an authorized participant to access the interactive gaming system. Unless otherwise specified in these rules, the term internet gaming platform includes the entire interactive gaming system inclusive of remote gaming systems.

(m) “Key person” means any of the following except as otherwise provided in paragraph (vii):

(i) A director of the applicant.

(ii) A managerial employee of the applicant that performs the function of principal executive officer, principal operations officer, or principal accounting officer.

(iii) A person who holds more than 5% ownership interest in the applicant.

(iv) An affiliate of the applicant.

(v) A director of an affiliate of the applicant.

(vi) A managerial employee of an affiliate of an applicant that performs the function of principal executive officer, principal operations officer, or principal accounting officer.

(vii) “Key person” does not include an elected or appointed representative of any applicant or licensee that is a federally recognized Indian tribe located in this state unless the representative is also a full-time employee of the applicant’s or licensee’s internet gaming operations. A key person for an Indian tribe includes a primary management official of the applicant who has management responsibilities for the applicant’s internet gaming operations.

(n) “Licensee” means a person who holds a license under the act.

(o) “Live game” means a game conducted by a gaming attendant (e.g., dealer, croupier, etc.) or other gaming equipment (e.g., an automated roulette wheel, ball blower, or gaming device), or both, in a live game environment in which authorized participants have the ability to review game play and communicate game decisions through the internet gaming platform. Live games include, but are not limited to, live card games, live table games, and live play of gaming devices, and other live authorized games.

(p) “Live game environment” means a physical location that utilizes live video streaming technology to provide live games to a remote player device that permits the authorized participant to participate in live streamed games, interact with game attendants, and interact with fellow authorized participants.

(q) “Peer-to-peer gaming” means all gaming activity, such as poker, where authorized participants are directly competing against each other but not the licensee.

(r) "Prohibited person" means any excluded person, any voluntarily-excluded person, and all of the following:

(i) An individual who is under the age of 21.

(ii) Any employee of, or appointee to, the Michigan gaming control board.

(iii)Employees of an internet gaming operator. An employee of an internet gaming operator shall not create an internet wagering account or place an internet wager with the internet gaming operator for which he or she is employed unless using a test account under R 432.639a.

(iv) Employees of an internet gaming platform provider. An employee of an internet gaming platform provider shall not create an internet wagering account or place an internet wager with the internet gaming operator for which the internet gaming platform provider supplies the internet gaming platform unless using a test account under R 432.639a.

(v) Employees or appointees of a tribal gaming regulatory agency with jurisdiction over internet gaming being operated under the tribe’s gaming ordinance and the Indian gaming regulatory act, 18 USC 1166 to 1168 and 25 USC 2701 to 2721.

(vi) Occupational licensees and applicants. Occupational licensees and applicants shall not place wagers with the internet gaming operator or internet gaming platform provider for which they are employed or for which they had to qualify.

(vii) An individual not in an authorized location to make a wager.

(viii) An individual placing an internet wager on behalf of another (ix) An individual wagering in violation of state, tribal, or federal law.

(x) Other prohibited persons as determined by the board.

(s) “Publicly traded corporation” means any corporation or other legal entity regulated by the U.S. Securities and Exchange Commission under the securities exchange act of 1934, 15 USC 78a to 78qq, or securities act of 1933, 15 USC 77a to 77aa.

(t) “Random number generator” or “RNG” means a computational or physical device, algorithm, or system designed to produce numbers in a manner indistinguishable from random selection. .

(u) “Remote gaming system” means hardware and software used to provide authorized internet games to an authorized participant on an internet gaming platform. The remote gaming system may contain features common to game offerings, game configurations, the random number generator, and reporting. The remote gaming system may be a standalone system or integrated within another part of the internet gaming platform.

(v) “Remote player device” means an authorized participant-owned device that at a minimum will be used for the execution of game play. Examples of a remote player device include a personal computer, mobile phone, tablet, etc.

(w) “Secure transaction file” means a file that contains data that cannot be modified without detection.

(x) “Self-authentication process” means a method used by a system to verify the validity of software and includes the following:

(i) The method requires the calculation of an output digest that is compared to a secure embedded value.

(ii) The output digest must be of 128-bit complexity, at a minimum.

(iii) Software is authenticated if the calculated digest equals the secure embedded value.

(y) "Self-exclusion list" means a list of individuals who voluntarily excluded themselves from establishing or maintaining an internet wagering account with an internet gaming operator or internet gaming platform provider.

(z) “Strong authentication” means a method that has been demonstrated to the satisfaction of the board to effectively provide higher security than a username and password alone.

(aa) "Suspended account" means an internet wagering account that has been temporarily disabled from engaging in wagering activity.

(bb) "Targeted mailing" means an advertisement or promotional offer from an internet gaming operator or an internet gaming supplier directed to an individual on the basis of specific criteria, such as being a member or former member of a rewards club or a participant in social games. "Targeted mailing" does not include mass communication, including mailings or e-mailings, made to an entire area or zip code or targeted list, nor does it include an advertisement that arrives in a packet of 5 or more non-gaming advertisements, if the packet of advertisements is addressed to "resident," "occupant," or some similar wording and not to a specific individual.

"Targeted mailing" further does not include any "pop-up" advertisement that appears on an individual’s computer or mobile device on the basis of his or her IP Address.

(cc) “Theoretical return to player” or “RTP” means the expected percentage of bets or wagers that a specific game will return to the player in the long run. The RTP can be calculated via either a theoretical or simulated approach. The method used for calculation depends on the game type.

(dd) "Things of value" means anything of value that may be used to place an internet wager.

(ee) “Voluntarily-excluded person” means any individual whose name is included, at his or her own request, in the responsible gaming database or on a self-exclusion list, or both.

History

History: 2020 AACS.

Mich. Admin. Code R 432.612 Terms defined in act {#sec-r-432.612 omnilex-key=us-mi-regs-official--dept-treasury--R 432.612}

Rule 612. Terms defined in the act have the same meaning when used in these rules.

History

History: 2020 AACS.

Mich. Admin. Code R 432.613 Board duties, jurisdiction, and authority {#sec-r-432.613 omnilex-key=us-mi-regs-official--dept-treasury--R 432.613}

Rule 613. (1) To execute and administer the act for the purpose of licensing, regulating, and enforcing lawful internet gaming, the board may do all of the following:

(a) Determine its practices and internal policies or procedures.

(i) Execute and enter into contracts on behalf of the board.

(ii) Hire and fire employees of the board and administer oaths.

(iii) Issue subpoenas for the attendance of witnesses and the production of documents.

(iv) Issue and renew licenses.

(v) Register vendors.

(vi) Conduct investigations, inspections, and audits, share information with law enforcement agencies, conduct hearings, and settle alleged violations of the act and these rules.

(vii) Engage in other functions necessary to the proper administration and enforcement of the act and these rules.

(viii) Grant requests and waivers, answer inquiries, issue interpretations, and otherwise take any action that is reasonably requested by applicants, licensees, and vendors in furtherance of, and consistent with, the efficient administration and enforcement of the act and these rules, as determined to be necessary or appropriate by the executive director.

(2) The board may set hiring standards for employees.

(3) The board has general responsibility for the implementation of the act. The board’s duties include, but are not limited to, all of the following:

(a) Deciding in a reasonable period of time all license applications.

(b) Investigating applicants for licenses or registration. The board may grant licenses or register persons in accordance with the act and these rules.

(d) Investigating alleged violations of the act or these rules and taking appropriate disciplinary action against a licensee or any other person, or instituting appropriate legal action for enforcement, or both.

(f) Revoking or suspending licenses and registrations, and imposing fines as the board considers necessary and in compliance with applicable laws of this state.

(g) Imposing fines against individuals, internet gaming operators and internet gaming suppliers for engaging in a fraudulent practice, for each violation of the act, these rules, or any resolution or order of the board, or for any other action that the board determines is a detriment or impediment to internet gaming.

(h) Taking any other action as may be reasonable or appropriate to enforce the act and these rules.

(4) The board may seek and shall receive the cooperation and assistance of other departments and agencies in conducting background investigations and in fulfilling its responsibilities under the act.

History

History: 2020 AACS.

Mich. Admin. Code R 432.613a Member, employee, or agent of board; conduct generally {#sec-r-432.613a omnilex-key=us-mi-regs-official--dept-treasury--R 432.613a}

Rule 613a. (1) By January 31 of each year, each member, the executive director, and all employees of the board shall file 1 or more board disclosure forms. The board shall determine the contents of the form, but it must include such information as necessary to ensure the integrity of internet gaming and disclosure of all relevant financial information. The form may be combined with similar forms required by other acts or rules.

(2) If a member, the executive director, an employee, or an agent of the board negotiates for, or acquires by any means, any interest in a licensee, applicant, or person affiliated with a licensee or applicant, he or she must immediately provide written notice of the details of the interest to the chairperson. The member, executive director, employee, or agent of the board must not act on behalf of the board with respect to that licensee, applicant or person affiliated with the licensee or applicant.

(3) A member, the executive director, an employee, or an agent of the board may enter into any negotiations for employment with a licensee, applicant or affiliate of a licensee or applicant. The member, executive director, employee, agent, licensee, applicant, or affiliate must immediately notify the chairman and the executive director once the invitation to negotiate has been extended. A potential employer asking if an individual would be interested in a position or explaining the nature of a position does not constitute negotiations for employment. Further, an individual completing an employment application does not constitute negotiations for employment. The member, executive director, employee, or agent of the board must not take any action on behalf of the board with respect to that licensee, applicant, or person affiliated with a licensee or applicant while the negotiations are ongoing. All members, the executive director, board employees, agents, and contractors must, to the maximum extent possible, avoid situations, relationships, or associations that may represent or lead to an actual or perceived conflict of interest.

(4) A member, the executive director, an employee, or an agent, or their spouse, may not accept any gift, gratuity, compensation, travel, lodging, or anything of value, directly or indirectly, from any licensee, applicant, or an affiliate or representative of an applicant or licensee, unless the acceptance conforms to a written policy issued by the chairperson.

The chairman may exempt attendance at a reception, and food and drink for immediate consumption, from this policy. The policy must be publicly available and shared with all licensees.

(5) A licensee, applicant, or an affiliate or representative of an applicant or licensee, shall not, directly or indirectly, give or offer to give any gift, gratuity, compensation, travel, lodging, or things of value to any member, the executive director, an employee, or an agent of the board that the member, employee, or agent of the board is prohibited from accepting under subrule (4) of this rule.

(6) A licensee, applicant, or an affiliate or representative of an applicant or licensee must not engage in ex parte communications with a member of the board. A member of the board must not engage in any ex parte communications with a licensee, applicant, or affiliate or representative of an applicant or licensee.

(7) Any member, licensee, applicant, or affiliate or representative of a board member, licensee, or applicant who receives any ex parte communication in violation of subrule (6) of this rule, or who is aware of an attempted communication in violation of subrule (6) of this rule, must immediately report details of the communication or attempted communication in writing to the chairperson.

(8) A member, the executive director, an employee, or an agent of the board must not have an internet wagering account or participate in or wager on any internet gaming conducted in this state except as part of the individual’s surveillance, security, or other official duty authorized by the board.

(9) Violation of this rule by a licensee, applicant, or affiliate or a representative of a licensee, applicant, or affiliate, may result in denial of an application for licensure, revocation or suspension of a license, or other action by the board.

(10) Violation of this rule does not create a civil cause of action.

History

History: 2020 AACS.

Mich. Admin. Code R 432.614 Denial or non-renewal hearings {#sec-r-432.614 omnilex-key=us-mi-regs-official--dept-treasury--R 432.614}

Rule 614. (1) A person whose application for a license or a transfer of ownership has been denied, whose license has not been renewed, or who has been denied an approval from the board required in these rules may request a hearing. The hearing must be de novo.

(2) The person must submit an original hearing request, pleading, or other written document to the board, serve each party or attorney of record, and provide a proof of service on each party or attorney of record.

History

History: 2020 AACS.

Mich. Admin. Code R 432.614a Request for hearing {#sec-r-432.614a omnilex-key=us-mi-regs-official--dept-treasury--R 432.614a}

Rule 614a. (1) A request for hearing must meet all of the following requirements:

(a) Be in writing.

(b) State the name, current address, and current telephone number of the petitioner.

(2) A request for hearing must be submitted within 21 days after service of the notice of denial, notice of nonrenewal, or disapproval. A request for a hearing submitted by certified mail or overnight express mail is considered submitted in a timely manner if it is postmarked no later than 21 days after service of a notice of denial, notice of nonrenewal, or disapproval.

(3) A request for a hearing is considered granted unless denied.

(4) A request for a hearing may be withdrawn by the petitioner. If the request for hearing is withdrawn, then the initial denial, nonrenewal, or disapproval becomes a final board order.

(5) Unless the board denies a request for hearing, the board shall submit the request for hearing to the appropriate state agency.

(6) Default judgment or dismissal may result at any stage of the proceeding.

History

History: 2020 AACS.

Mich. Admin. Code R 432.614b Proceedings {#sec-r-432.614b omnilex-key=us-mi-regs-official--dept-treasury--R 432.614b}

Rule 614b. (1) The burden of proof is at all times on the petitioner. The petitioner has the affirmative responsibility of establishing, by clear and convincing evidence, any of the following:

(a) The petitioner should have been awarded a license.

(b) The license should have been renewed.

(d) Approval should have been granted.

(2) The hearing must be conducted in accordance with the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, except as otherwise provided in these rules or the act.

History

History: 2020 AACS.

Mich. Admin. Code R 432.614c Prohibition on ex parte communication {#sec-r-432.614c omnilex-key=us-mi-regs-official--dept-treasury--R 432.614c}

Rule 614c. A party or its attorney must not communicate directly or indirectly with the hearing officer regarding any pending matter, except upon notice and opportunity for all parties to participate. A party that engages in ex parte communication with the hearing officer may be subject to sanctions and penalties.

History

History: 2020 AACS.

Mich. Admin. Code R 432.614d Sanctions and penalties {#sec-r-432.614d omnilex-key=us-mi-regs-official--dept-treasury--R 432.614d}

Rule 614d. (1) The hearing officer may recommend sanctions and penalties if the hearing officer finds that a party has failed to appear at a scheduled hearing, has acted in bad faith for the purpose of delay, or has otherwise abused the hearing process.

Sanctions and penalties include, but are not limited to, a fine or default judgment or a directed finding on 1 or more issues.

(2) If a petitioner refuses to testify on his or her own behalf with respect to any question propounded to him or her, then the hearing officer may infer that the testimony or answer would have been adverse to the case of the petitioner.

(3) If the petitioner or attorney of record fails to answer a subpoena or refuses to testify fully at the request of the board, then the failure may be considered independent grounds for a finding that the petitioner should have been denied a license or the transfer of ownership. The hearing officer may also infer from the failure to answer a subpoena or refusal to testify fully that the testimony would have been adverse to the petitioner.

History

History: 2020 AACS.

Mich. Admin. Code R 432.614e Recording proceedings; transmittal of record and board action {#sec-r-432.614e omnilex-key=us-mi-regs-official--dept-treasury--R 432.614e}

Rule 614e. (1) Oral proceedings involving contested issues must be recorded to ensure the preservation of the testimony. A party may request a transcript of the proceedings. The requesting party must pay for the transcript.

(2) Unless otherwise specified by the board, the hearing officer, within 60 days after the conclusion of the hearing, or the submission of post-hearing briefs or proposed findings of fact, shall issue, to the board and to the parties, written findings of fact, conclusions of law, and recommendations. Findings of fact must be based exclusively on testimony, evidence, and matters within the record. The findings of fact must be stated separately.

(4) Unless otherwise agreed to by the parties or as set by the hearing officer, the parties may file a response to the objections within 21 days after service of the objections.

(5) After the time period for the parties to file objections and responses to those objections, the hearing officer must transmit the entire record to the board.

(6) Before issuing a final order, the board must consider the record as a whole.

(7) After considering the record, the board may take any of the following actions:

(a) Affirm the written recommendations, findings of fact, and conclusions of law submitted by the hearing officer as its final board order.

(b) Issue a final order modifying the written recommendations, findings of fact, and conclusions of law submitted by the hearing officer.

(c) Issue a final order rejecting the written recommendations, findings of fact, and conclusions of law submitted by the hearing officer.

(d) Issue an order remanding the matter, with instructions, to the hearing officer for further proceedings.

(8) The board must serve copies of its orders on the parties.

(9) A board order becomes effective upon service.

History

History: 2020 AACS.

Mich. Admin. Code R 432.615 Request for declaratory ruling; form; contents {#sec-r-432.615 omnilex-key=us-mi-regs-official--dept-treasury--R 432.615}

Rule 615. (1) An individual who requests a declaratory ruling from the board as to the applicability to an actual state of facts of a statute, rule, resolution, or order administered, promulgated, or issued by the board must do so in writing.

(2) The written request must contain the relevant and material facts along with a reference to the statute, rule, resolution, or order applicable.

History

History: 2020 AACS.

Mich. Admin. Code R 432.615a Declaratory ruling; notice of issuance; request for information or arguments; hearing {#sec-r-432.615a omnilex-key=us-mi-regs-official--dept-treasury--R 432.615a}

Rule 615a. (1) Within 90 days after the receipt of a request for a declaratory ruling, the board shall issue a written notification by regular first-class mail to the petitioner and the petitioner’s legal counsel, if any, stating whether or not a declaratory ruling will be issued.

(2) If the board decides to issue a declaratory ruling, the board may do any of the following:

(a) Request more information from the individual.

(b) Request information from other interested parties.

(d) Request oral or written arguments from interested parties.

(e) Hold a hearing upon proper notice to all interested parties.

(f) Decline to issue a declaratory ruling.

History

History: 2020 AACS.

Mich. Admin. Code R 432.616 Reasons for investigation of, or disciplinary action against, licensee; hearing procedure {#sec-r-432.616 omnilex-key=us-mi-regs-official--dept-treasury--R 432.616}

Rule 616. (1) The board may initiate an investigation or a disciplinary action, or both, against a licensee if the board has reason to believe that at least 1 of the following applies:

(a) The licensee is not maintaining suitability for licensure as provided by the act.

(b) The licensee is not complying with licensure conditions.

(3) An internet gaming operator is responsible for the conduct of any licensee it uses to conduct internet wagering under the act. An internet gaming supplier is also responsible for its conduct of internet gaming under the act and these rules. Any violation of the act or the rules by the internet gaming operator in which the internet gaming supplier participated in the action is also considered a violation by the internet gaming supplier, and the board may hold both, or either, accountable for the violation.

History

History: 2020 AACS.

Mich. Admin. Code R 432.616a Actions available to hearing officer {#sec-r-432.616a omnilex-key=us-mi-regs-official--dept-treasury--R 432.616a}

Rule 616a. (1) A hearing officer may recommend sanctions and penalties if the hearing officer finds that a party has failed to appear for a scheduled hearing, acted in bad faith for the purpose of delay, or has otherwise abused the hearing process.

History

History: 2020 AACS.

Mich. Admin. Code R 432.616b Actions available to the board {#sec-r-432.616b omnilex-key=us-mi-regs-official--dept-treasury--R 432.616b}

Rule 616b. The board may take any of the following disciplinary actions against a licensee:

(a) Suspend, revoke, restrict, or place conditions on the license of a licensee.

(b) Require the removal of a licensee or the removal of an employee of a licensee.

(d) Impose against an occupational licensee, for each violation of the act or these rules, a civil penalty of not more than $10,000.00 as a result of the violation or attempted violation of the act or these rules.

(e) Any other action considered necessary by the board to ensure compliance with the act or these rules.

History

History: 2020 AACS.

Mich. Admin. Code R 432.617 Special proceedings {#sec-r-432.617 omnilex-key=us-mi-regs-official--dept-treasury--R 432.617}

Rule 617. (1) The board may suspend a license without notice or hearing if the board determines that the safety or health of persons or employees or the integrity of internet gaming is jeopardized by continuing an operation or that the action is necessary for the immediate preservation of the integrity of internet gaming, public peace, health, safety, morals, good order, or general welfare.

(2) The suspension may remain in effect until the board determines that the cause for suspension has been abated.

(3) Following a hearing, the board may revoke the license upon a determination that satisfactory progress toward abating the hazard has not been made.

History

History: 2020 AACS.

Mich. Admin. Code R 432.618 Waiver of requirements {#sec-r-432.618 omnilex-key=us-mi-regs-official--dept-treasury--R 432.618}

Rule 618. The board may, in writing, waive, restrict, or alter any requirement or procedure set forth in these rules, if the board determines any of the following:

(a) That the requirement or procedure is impractical or burdensome.

(b) That the waiver, restriction, or alteration is in the best interest of the public and the internet gaming.

(c) That the waiver, restriction, or alteration is not outside the technical requirements necessary to serve the purpose of the requirement or procedure.

PART 2. LICENSING: OPERATOR, SUPPLIER, OCCUPATIONAL; VENDOR

REGISTRATION

History

History: 2020 AACS.

Mich. Admin. Code R 432.621 Required notification of anticipated or actual changes in key person of internet gaming operator and internet gaming supplier {#sec-r-432.621 omnilex-key=us-mi-regs-official--dept-treasury--R 432.621}

Rule 621. An internet gaming operator applicant or licensee must notify the board before any anticipated or actual change in key person. An internet gaming supplier applicant or licensee must notify the board of any change in key person within 30 days after appointment.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621a Notification of new financial sources of internet gaming platform providers {#sec-r-432.621a omnilex-key=us-mi-regs-official--dept-treasury--R 432.621a}

Rule 621a. An internet gaming platform provider applicant or licensee must notify the board, in writing, as soon as practicable, after it becomes aware that it intends to enter into a transaction related in any way to its development and operations that may result in any new financial backers, investors, mortgagees, bondholders, or holders of indentures, notes, or other evidences of indebtedness of the applicant or licensee. A publicly traded corporation is considered to have complied with this rule if it has complied with the reporting requirements in R 432.621d.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621b Notification by applicants or licensees required {#sec-r-432.621b omnilex-key=us-mi-regs-official--dept-treasury--R 432.621b}

Rule 621b. (1) An internet gaming operator or internet gaming supplier applicant or licensee, affiliate that has control of an internet gaming operator applicant or licensee, or other person that has control of an internet gaming operator or internet gaming supplier applicant or licensee must notify the board, as soon as practicable after it becomes aware that, with regard to any such company, any person or individual has:

(a) Beneficially acquired more than 5% of any class of the company's equity securities.

(b) The ability to control the company.

(2) To the extent known by the internet gaming operator license or internet gaming supplier license applicant or licensee, the required notification must include the name, business address, phone number, and other personal identification information for each person.

(3) A person applying for or holding an internet gaming operator license or internet gaming supplier license must report to the board the election or appointment of a director or officer of that applicant or licensee or a holding company of that applicant or licensee who is actively and directly engaged in the administration or supervision of that applicant’s or licensee’s internet gaming operation.

(4) A person who applies for or holds an internet gaming operator license and all other persons covered by this part must file any other document requested by the board to ensure compliance with the act or this part within 30 days after the board request or at another time established by the board.

(5) A publicly traded corporation is considered to have complied with this rule if it has complied with the reporting requirements in R 432.621d.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621c Required notification of formation, dissolution, or transfer of subsidiaries {#sec-r-432.621c omnilex-key=us-mi-regs-official--dept-treasury--R 432.621c}

Rule 621c. (1) An internet gaming operator or internet gaming supplier applicant or licensee, affiliate that has control of an internet gaming operator applicant or licensee, or other person that has control of an internet gaming operator or internet gaming supplier applicant or licensee, must report, in writing, to the board, as soon as practicable, the formation or dissolution of, or any transfer of, a nonpublicly traded or publicly traded interest in an internet gaming operator or internet gaming supplier applicant or licensee, affiliate that has control of an internet gaming operator applicant or licensee, or other person that has control of an internet gaming operator or internet gaming supplier applicant or licensee.

(2) A publicly traded corporation is considered to have complied with this rule if it has complied with the reporting requirements in R 432.621d.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621d Publicly traded corporation reporting requirements {#sec-r-432.621d omnilex-key=us-mi-regs-official--dept-treasury--R 432.621d}

Rule 621d. (1) A publicly traded corporation or other person that applies for or holds an internet gaming operator license or internet gaming supplier license who is a public reporting company under the securities exchange act of 1934, 15 USC 78a to 78qq, or the securities act of 1933, 15 USC 77a to 77aa, must submit a copy of all submissions required by the U.S. Securities and Exchange Commission to the board in a format prescribed by the board. The submissions are due within 14 days of the filing dates required by the U.S. Securities and Exchange Commission.

(2) If a publicly traded corporation or other person that applies for or holds an internet gaming operator license or internet gaming supplier license receives any material document filed with the U.S. Securities and Exchange Commission by any other person relating to the publicly traded corporation, the person must file 1 copy of the document with the board within 14 days after receipt of the material.

(3) A publicly traded corporation or other person that applies for or holds an internet gaming operator license or internet gaming supplier license must file a list of record holders of its voting securities with the board annually.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621e Exemption for institutional investors {#sec-r-432.621e omnilex-key=us-mi-regs-official--dept-treasury--R 432.621e}

Rule 621e. (1) An institutional investor who acquires beneficial ownership of a person that has applied for or holds an internet gaming operator license or internet gaming supplier license must notify the board within 14 days after the institutional investor acquires the interest or files form 13-D or 13-G with the U.S. Securities and Exchange Commission, or both, and must provide additional information, and may be subject to a finding of suitability, as required by the board.

(2) An institutional investor who acquires and holds a less than 25% interest for investment purposes only in a person that has applied for or holds an internet gaming operator license or internet gaming supplier license in this state may, in a manner and form prescribed by the board, file an exemption form to establish exemption from the eligibility and suitability requirements of the act.

(3) The licensee in whom the institutional investor acquires the interest must file an application for approval of the transfer within 30 days after the transfer. Within the same time period, the institutional investor must file either an exemption form if the institutional investor holds the interest for investment purposes only or an application and disclosure forms as part of the licensee’s application if the institutional investor does not hold the interest for investment purposes only.

(4) The board may require that any person, including an institutional investor, seeking approval to hold ownership interests subject to this part apply for a finding of suitability in accordance with this rule if the board considers the finding of suitability necessary to ensure compliance with the act and these rules. If the board denies a request for an institutional investor exemption, the institutional investor must, within 30 days, either divest itself of the interest or file application and disclosure forms as part of the relevant licensee’s license.

(5) The following activities are considered to be consistent with holding equity securities for investment purposes only under this rule:

(a) Voting, directly or indirectly, through the delivery of a proxy furnished by the board of directors, on all matters voted on by the holders of the voting securities.

(b) Serving as a member of a committee of creditors or security holders formed in connection with a debt restructuring.

(c) Nominating a candidate for election or appointment to the board of directors in connection with a debt restructuring.

(d) Accepting appointment or election as a member of the board of directors in connection with a debt restructuring and serving in that capacity until the conclusion of the member's term.

(e) Making financial and other inquiries of management of the type normally made by securities analysts for information purposes and not to cause a change in its management, policies, or operations.

(f) Other activities that the board determines to be consistent with the investment intent.

(6) If an institutional investor acquires 25% or more ownership interest of a licensee, the institutional investor must notify the board within 14 days of acquiring the ownership interest.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621f Applicability of part; transfer of ownership interest; limitation {#sec-r-432.621f omnilex-key=us-mi-regs-official--dept-treasury--R 432.621f}

Rule 621f. (1) An interest in a person applying for or holding an internet gaming operator license or internet gaming supplier license may only be transferred in accordance with this part.

(2) The following persons must provide notice to the board no later than 30 days after execution of the transfer:

(a) Except for an internet gaming platform provider, a person that transfers or acquires greater than a 5% interest in a person that has applied for or holds an internet gaming operator license or an internet gaming supplier license in this state.

(b) Except for an internet gaming platform provider, a person who, as a result of an acquisition, has acquired an interest totaling greater than 5% in a person that has applied for or holds an internet gaming operator license or an internet gaming supplier license in this state.

(3) Except as stated in subrules (5) and (6) of this rule, the following persons must provide notice to the board 30-days before execution of a transfer:

(a) A person that intends to transfer or acquire greater than a 5% interest in a person that has applied for or holds an internet gaming operator license or internet gaming platform provider in this state.

(b) A person who, as a result of an acquisition, will acquire an interest totaling greater than 5% in a person that has applied for or holds an internet gaming operator license or is an internet gaming platform provider in this state.

(4) The board must determine whether the person acquiring the interest is eligible and suitable under the standards set forth in the act and these rules, unless the board grants the person an institutional-investor exemption under these rules or under section 6(11) or 8(10) of the act, MCL 432.306 and 432.308. Once the board determines that the person acquiring the interest is eligible and suitable under the standards set in the act and these rules, the executive director may approve the transfer.

(5) A transfer of interest to an institutional investor that acquires or will have acquired, upon completion of the transfer, less than 25% of the equity securities of a person that applies for or holds an internet gaming operator license or internet gaming supplier license may occur without first receiving executive director approval if the equity securities are held for investment purposes only but is subject to other requirements of this part.

(6) A transfer of interest in an internet gaming operator or internet gaming supplier licensee may occur if the transfer is between persons the board has found eligible and suitable for licensure during the licensing period in which the transfer occurs. In those cases, approval of the transfer must be requested no later than 30 days after the transfer, and the executive director may decide the application.

(7) If approval of the transfer of interest is denied by the executive director or the person acquiring the interest is found unsuitable by the board, the transferee must divest itself of the interest within 30 days after the date of the order denying approval.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621g Application for transfer of ownership {#sec-r-432.621g omnilex-key=us-mi-regs-official--dept-treasury--R 432.621g}

Rule 621g. (1) A person desiring to acquire an ownership interest in a person applying for or holding an internet gaming operator license or internet gaming supplier license must complete and submit application and disclosure forms, in the manner and form prescribed by the board.

(2) A person desiring to acquire an interest in a person applying for or holding an internet gaming operator license or internet gaming supplier license must present evidence that the person desiring to acquire the interest is eligible and suitable under the standards and criteria for licensure set forth in the act and these rules.

(3) A person applying for or holding an internet gaming operator license or internet gaming supplier license that is attempting to transfer an ownership interest must submit any information or documentation considered necessary by the board to ensure compliance with the act and these rules.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621h Transfer investigative costs and fees {#sec-r-432.621h omnilex-key=us-mi-regs-official--dept-treasury--R 432.621h}

Rule 621h. An investigation fee may be assessed to the extent that there are costs directly associated with the background investigation relating to the person desiring to acquire an interest in an internet gaming operator or internet gaming supplier. Unless otherwise determined by the board, approval may be withheld until full payment of the background investigation fees.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621i Denials {#sec-r-432.621i omnilex-key=us-mi-regs-official--dept-treasury--R 432.621i}

Rule 621i. If an application for a transfer of interest is denied, a notice of denial must be issued.

Mich. Admin. Code R 432.621j Review of information at licensee’s or applicant’s premises; costs to internet gaming operator and internet gaming supplier {#sec-r-432.621j omnilex-key=us-mi-regs-official--dept-treasury--R 432.621j}

Rule 621j. (1) The board may review, at the premises of the custodian of the information, any information that the act or these rules provide for from any of the following entities:

(a) A license applicant.

(b) A licensee.

(2) If information is reviewed at the premises of the custodian of the information, the license applicant or licensee must, as soon as practicable, reimburse the board for all licensure investigation expenses incurred in performing the review at the premises of the custodian of the information, including travel, food, and lodging that exceed the amount of the application fee.

History

History: 2020 AACS.

Mich. Admin. Code R 432.621k Applicant/licensee disclosure of representatives to act on their behalf before the board {#sec-r-432.621k omnilex-key=us-mi-regs-official--dept-treasury--R 432.621k}

Rule 621k. (1) An applicant or licensee must file, with the board, a list of persons authorized to act on the applicant's or licensee's behalf as to any matter before the board.

An attorney appearing on behalf of an applicant or licensee in a matter before the board must promptly file an appearance identifying his or her client and the matter in which the attorney will appear.

(2) A person holding or applying for a license must establish and identify a representative for the purpose of accepting service of process, notices, and other forms of communication from the board for the person holding or applying for a license.

History

History: 2020 AACS.

Mich. Admin. Code R 432.622 License classifications {#sec-r-432.622 omnilex-key=us-mi-regs-official--dept-treasury--R 432.622}

Rule 622. (1) The following licenses may be issued under the act and these rules:

(a) Internet gaming operator license.

(b) Internet gaming supplier license.

(2) The following persons are eligible to hold an internet gaming operator license:

(a) A person that holds a casino license under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.

(b) An Indian tribe that lawfully conducts class III gaming in a casino located in this state under a facility license issued in accordance with a tribal gaming ordinance approved by the chair of the National Indian Gaming Commission.

(3) A person that provides goods or services that directly affect wagering, play, and results of internet games to internet gaming operators is required to hold an internet gaming supplier license. As used in this subrule, "internet gaming supplier" includes, but is not limited to, the following:

(a) Internet gaming platform providers.

(b) Geofence providers.

(c) Providers of software that directly affect wagering, play, the results of an internet game, or the integrity of internet gaming.

(d) Providers hosting live internet gaming data.

(e) Affiliate marketers that have an agreement based on the sharing of customer revenue.

(f) Unless otherwise determined by the board, any other person that meets 1 or more of the following criteria:

(i) The person manufactures, supplies, or distributes devices, machines, equipment, items, or articles that meet any of the following provisions:

(A) Are specifically designed for use in the conduct of internet gaming.

(B) Have the capacity to affect the outcome of an internet wager.

(ii) The person services or repairs internet gaming wagering devices, machines, equipment, items, or articles impacting the integrity of internet gaming.

(iii) The person provides services directly related to the operation, security, surveillance, or management of internet gaming.

(iv) The person provides other goods or services determined by the board to be so utilized in, or incidental to, the operation of an internet gaming operator that the person must be licensed as an internet gaming supplier to protect the public and enhance the credibility and integrity of internet gaming in this state.

(4) A person must be licensed as an internet gaming supplier before providing goods, software, or services as an internet gaming supplier to an internet gaming operator.

History

History: 2020 AACS.

Mich. Admin. Code R 432.623 Occupational licensing {#sec-r-432.623 omnilex-key=us-mi-regs-official--dept-treasury--R 432.623}

Rule 623. (1) An individual must have an occupational license if his or her duties directly impact the integrity of internet gaming as determined by the board in its sole discretion, subject to the following:

(a) The board shall exercise its discretion with respect to any internet gaming operator applicant or licensee that is an Indian tribe consistent with limitations prescribed in the act.

(b) An internet gaming operator or internet gaming supplier may provide an explanation, such as a job description, to support an allegation that a position should not require an occupational license.

(c) Elected or appointed officials of a federally recognized Indian tribe located within this state are exempt from any occupational licensing requirement unless they are employees of the tribe’s internet gaming operation.

(2) The following individuals when employed by an internet gaming operator or internet gaming supplier are considered by the board to directly impact the integrity of internet gaming:

(a) An individual who has the capability to directly affect the outcome of an internet wager or game.

(b) An individual who has the capability of affecting a payout to an authorized participant.

(3) An individual applying for an occupational license must complete an application in the manner and form prescribed by the board and submit it together with the required application fee and a written statement from an internet gaming operator or internet gaming supplier indicating that it has employed or will employ the individual if the individual is licensed.

(4) If a preliminary review of the application and criminal history check does not uncover or indicate any circumstance that may require denial of the application under the licensing standards established in this rule, a temporary occupational license may be issued. The temporary occupational license authorizes the individual to perform the employment duties for which the license is sought, pending action on the license application. A temporary license is valid until the occupational license application is withdrawn or denied, the temporary license is suspended or revoked, or the license is issued by the board.

(5) An individual has the burden to establish by clear and convincing evidence his or her suitability as to character, reputation, integrity, and responsibility.

(6) The board may, in its discretion, deny an occupational license to an individual who is or does any of the following:

(a) Fails to disclose or states falsely any information requested in the application.

(b) Has been convicted of a criminal offense involving gambling, dishonesty, theft, or fraud in any jurisdiction. However, the board may waive this requirement if the conviction occurred more than 5 years before the applicant applies for a license and the board is convinced that the applicant does not pose a threat to the integrity of internet gaming and the applicant otherwise meets the requirements of this rule.

(d) Lacks the requisite suitability as to integrity and character as determined by the board.

(e) Has had a prior gambling related license or license application suspended, restricted, revoked, or denied for just cause in any other jurisdiction.

(7) The board shall decide whether to grant or deny the application for an occupational license. The decision must not be arbitrary or capricious.

(8) Upon granting the application for an occupational license and payment of the licensing fee, the executive director shall issue the occupational license.

(9) The occupational license is not transferable to another individual.

(10) An occupational licensee must have on his or her person the license while working for the applicable internet gaming operator or internet gaming supplier in this state during work hours.

(11) The board may exempt an individual from any or all of the occupational licensing requirements if any of the following apply:

(a) The individual is licensed under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to MCL 432.226.

(b) The individual is licensed under the lawful sports betting act, 2019 PA 149, MCL 432.401 to MCL 432.419.

(d) The board determines, in its sole discretion, that licensing is not considered necessary to protect the public interest or accomplish the policies of the act.

(12) An individual exempted from occupational licensing may be required to register with the board using a form prescribed by the board.

(13) The board may suspend, revoke, summarily suspend, or refuse to renew a license for just cause.

(14) An occupational license is valid for 2 years and must be renewed as prescribed by the board. If the occupational licensee files a renewal request and pays the licensing fee in a timely manner and in the manner and form prescribed by the board, the licensee’s existing occupational license does not expire until a decision on the application for renewal is made.

History

History: 2020 AACS.

Mich. Admin. Code R 432.624 Fees, fines, taxes, payments, and assessments {#sec-r-432.624 omnilex-key=us-mi-regs-official--dept-treasury--R 432.624}

Rule 624. (1) All fees, fines, taxes, payments, and assessments provided for under the act and these rules must be timely submitted to the board by a payment method acceptable to the board, such as a certified check, cashier's check, money order made payable to "State of Michigan," or electronic transfer of funds.

(2) An internet gaming operator must remit the tax or payment imposed by the act to the board by an electronic transfer of funds. An internet gaming operator licensee must maintain an account at a designated financial institution that is capable of handling electronic fund transfers.

(3) The following nonrefundable license application fees must be submitted to the board, together with the required license application form or forms, for the corresponding license classification to which the fees relate:

(a) Internet gaming operator license application: $50,000.00.

(b) Internet gaming supplier license application: $2,500.00.

(4) The license application fee will be used by the board to conduct an appropriate background investigation of the applicant as prescribed by the board, the act, and these rules. No portion of a remitted application fee will be refunded.

(5) An additional background investigation charge may be assessed to the extent the board's direct investigative costs exceed the applicant's application fee. Unless otherwise determined by the board, a license may not be issued until payment of the additional assessed charge for completion of the background investigation is received by the board.

(6) A licensee may also be assessed the board's direct investigative costs arising from a background investigation for renewal of a license to the extent the costs exceed the application fees. The board may deny a renewal application if the licensee does not pay the additional assessed costs by a date set by the board.

(7) The following license fees must be submitted to the board by the applicant upon initial issuance of the license under the act and these rules:

(a) Internet gaming operator license: $100,000.00.

(b) Internet gaming supplier license: $5,000.00.

(8) The following license fees must be submitted to the board by the licensee after the initial license is issued under the act and these rules:

(a) Internet gaming operator license annual fee: $50,000.00.

(b) Internet gaming supplier license annual fee: $2,500.00.

History

History: 2020 AACS.

Mich. Admin. Code R 432.624a Deposit of fees, fines, taxes, payments, and assessments {#sec-r-432.624a omnilex-key=us-mi-regs-official--dept-treasury--R 432.624a}

Rule 624a. Except as provided in sections 15 and 15a of the act, MCL 432.315 and 432.315a, all fees, fines, taxes, payments, and assessments imposed by this state under the act and these rules must be deposited into the internet gaming fund.

History

History: 2020 AACS.

Mich. Admin. Code R 432.625 Investigation process for internet gaming operators and internet gaming suppliers {#sec-r-432.625 omnilex-key=us-mi-regs-official--dept-treasury--R 432.625}

Rule 625. The board shall conduct a background investigation on an applicant subject to the limitations of section 6 of the act, MCL 432.306, when the applicant is an Indian tribe. The board shall also use the information provided in the application and disclosure form or forms as a basis for a background investigation and to evaluate and determine the eligibility and suitability of the applicant to receive an internet gaming operator license or internet gaming supplier license under the licensing standards and criteria provided in the act and these rules. A misrepresentation or omission in the application is cause for the denial, suspension, restriction, or revocation of an internet gaming operator license or internet gaming supplier license by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.625a Persons required to be found eligible and suitable {#sec-r-432.625a omnilex-key=us-mi-regs-official--dept-treasury--R 432.625a}

Rule 625a. (1) The board shall not issue or renew an internet gaming operator license or internet gaming supplier license unless every person required by the act and these rules as part of the application for issuance or renewal of the license has first been determined by the board to be eligible and suitable in accordance with the relevant licensing standards set forth in the act and these rules.

(2) Unless otherwise prescribed by the board, the following persons are required to be found eligible and suitable as part of the application for the issuance, or request for renewal, of an internet gaming operator license or internet gaming supplier license:

(a) A person who is required to apply for an internet gaming operator license or internet gaming supplier license under the act and these rules.

(b) A person who is included in the term “applicant” as defined in section 3 of the act, MCL 432.303.

(3) A person required to be found eligible and suitable as part of the application for issuance or renewal of an internet gaming operator license or internet gaming supplier license must complete and file with the board an application and required disclosure forms in the manner and form prescribed by the board.

(4) A person that applies for or holds an internet gaming operator or internet gaming supplier license must ensure that all persons who are required by the act and these rules to establish their eligibility and suitability as part of the applicant's application for the issuance, or the licensee's maintenance or renewal, of the internet gaming operator license or internet gaming supplier license have filed, with the board, all required applications, reports, and disclosure forms in the manner and form prescribed by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.625b License issuance by the board—standards and criteria {#sec-r-432.625b omnilex-key=us-mi-regs-official--dept-treasury--R 432.625b}

Rule 625b. (1) Except to the extent the board may require different or additional procedures, an applicant for an internet gaming operator license or internet gaming supplier license is subject to all of the following before licensing:

(a) Application (b) Background investigation (c) Action and decision by the board on the application.

(2) A person that is required to be licensed as an internet gaming operator or internet gaming supplier under the act and these rules must, before issuance of an internet gaming operator’s or internet gaming supplier’s license, produce information, documentation, and assurances to establish all of the following by clear and convincing evidence:

(a) Its suitability as to character, reputation, integrity, business probity, and financial ability.

(b) Its willingness to be subject to the jurisdiction of the board.

(c) That the applicant has adequate capitalization and the financial ability and the means to develop, construct, operate, and maintain the applicant’s internet gaming operator or internet gaming supplier business in accordance with the act and these rules.

(e) That the applicant’s compliance with casino or casino-related licensing requirements or compacts with this state or any other jurisdiction.

(g) That the applicant, if an individual, and all other individuals required to be found eligible and suitable as part of the application are not less than 21 years of age, unless otherwise approved by the board.

(h) That the applicant and all other persons required to be found eligible and suitable as part of the application have not been convicted of any criminal offense involving gaming, theft, dishonesty, or fraud in any jurisdiction. However, the board may waive this requirement if the conviction occurred more than 5 years before the applicant applies for a license and the board is convinced that the applicant does not pose a threat to the integrity of internet gaming and the applicant otherwise meets the requirements of this rule.

(i) That the applicant and all other persons required to be found eligible and suitable as part of the application do not appear on the exclusion list of any jurisdiction.

(j) That the applicant and all other persons required to be found eligible and suitable as part of the application are in substantial compliance with all local, state, and federal laws.

(k) That the applicant has the financial ability to purchase and maintain adequate liability and casualty insurance and to provide an adequate surety bond.

(3) Subrule (2) of this rule does not apply to an Indian tribe except to the extent authorized by the act. To the extent a non-tribal applicant or licensee will be providing goods and services to an internet gaming operator who is an Indian tribe, that applicant or licensee shall provide information relative to its relationship with the internet gaming operator to determine if it is an arm of the tribe. Arm of the tribe means a tribally-created economic entity owned in part or in whole by the Indian tribe which was intended by the Indian tribe to share in its sovereign immunity and satisfies any relevant legal criteria under federal Indian law for establishing arm of the tribe status.

(4) Once licensed, a person must comply with the act and these rules. Failure to comply may result in disciplinary action.

History

History: 2020 AACS.

Mich. Admin. Code R 432.625c Provisional licenses for internet gaming suppliers {#sec-r-432.625c omnilex-key=us-mi-regs-official--dept-treasury--R 432.625c}

Rule 625c. (1) Upon written request of a person applying for an internet gaming supplier’s license, the executive director may issue a provisional license to the applicant and permit the applicant to conduct business transactions with, and provide goods and services to, internet gaming operators, if all of the following provisions are complied with:

(a) A completed application, an application fee, and all required disclosure forms and other required written documentation and materials have been submitted by the applicant.

(b) Preliminary review of the application and a criminal history check does not reveal that the applicant or the applicant’s affiliate or key person has been convicted of a felony or misdemeanor involving gambling, theft, dishonesty, or fraud, or may otherwise be ineligible or unsuitable to permit licensure under the act or these rules.

(d) The applicant has a letter of intent to provide goods or services to an internet gaming operator or the applicant shows good cause for being granted a provisional license.

(2) A provisional license issued under this rule expires on the date provided by the board.

(3) If the internet gaming supplier’s provisional license expires, or is suspended or revoked, the executive director shall forward the applicant’s application for an internet gaming supplier license to the board at the conclusion of the background investigation for action on the application.

(4)The board may, at its discretion, waive any or all of the provisions listed in subrule (1) of this rule if the applicant is licensed by the board under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226, or the lawful sports betting act, 2019 PA 149, MCL 432.401 to 432.419.

History

History: 2020 AACS.

Mich. Admin. Code R 432.626 Denials {#sec-r-432.626 omnilex-key=us-mi-regs-official--dept-treasury--R 432.626}

Rule 626. (1) If the board denies an application for a license, it shall direct the executive director to issue a notice of denial.

(2) An applicant, including an individual applying for an occupational license, who is served with a notice of denial under these rules may request a contested case hearing as set forth in these rules.

(5) A person whose application for a license was denied may seek leave of the board to reapply within the 1-year period by addressing the request to the board. The board may require the person to present oral or written argument outlining why an exception should be made.

History

History: 2020 AACS.

Mich. Admin. Code R 432.627 Renewal of a license {#sec-r-432.627 omnilex-key=us-mi-regs-official--dept-treasury--R 432.627}

Rule 627. (1) An internet gaming operator or internet gaming supplier license when issued is valid for a 5-year period.

(2) An internet gaming operator or internet gaming supplier licensee may renew its license every 5 years after receiving its initial license.

(3) An internet gaming operator or internet gaming supplier licensee intending to renew its license must, at least 30 days before expiration of its license, submit the annual license renewal fee and application in the manner and form required by the board.

(4) If the board denies the application for renewal, it shall direct the executive director to issue the licensee a notice of nonrenewal.

(5) An internet gaming operator or internet gaming supplier licensee who is served with a notice of nonrenewal under this rule may request a contested case hearing as set forth in these rules.

(6) The notice of nonrenewal is a finding that the internet gaming operator or internet gaming supplier licensee is ineligible or unsuitable for licensure or is otherwise in violation of the licensing requirements of the act or these rules. When the board denies an application for renewal, the person is prohibited from conducting business that would otherwise require licensure.

History

History: 2020 AACS.

Mich. Admin. Code R 432.628 Application explained; applicant to demonstrate eligibility and suitability {#sec-r-432.628 omnilex-key=us-mi-regs-official--dept-treasury--R 432.628}

Rule 628. (1) An application for a license under the act and these rules is a request by the applicant seeking a revocable privilege. A license must be granted by the board if the applicant meets the licensing requirements of the act and these rules.

(3) A license issued by the board under the act and these rules is a revocable privilege granted by the board. A person who holds a license does not acquire, and must not be considered to have acquired, a vested property right or other right in the license.

(5) An applicant or licensee may claim any privilege afforded by the Constitution or laws of the United States or of this state in refusing to answer questions or provide information requested by the board. However, a claim of privilege with respect to any testimony or evidence pertaining to the eligibility or suitability of an applicant or licensee to be granted or hold a license under the act and these rules may constitute cause for denial, suspension, revocation, or restriction of the license.

(6) An applicant and licensee have a continuing duty to do all of the following:

(b) Maintain the applicant's or licensee's eligibility and suitability to be issued and hold the license held or applied for under the act and these rules.

(c) Provide any information or records requested by the board relating to licensing or regulation; cooperate with the board in investigations, inspections, audits, hearings, and enforcement and disciplinary actions; allow access to its facilities relevant to Michigan internet gaming operation; and comply with all conditions, restrictions, requirements, orders, and rulings of the board in accordance with the act and these rules.

History

History: 2020 AACS.

Mich. Admin. Code R 432.628a Eligibility and suitability of new key person {#sec-r-432.628a omnilex-key=us-mi-regs-official--dept-treasury--R 432.628a}

Rule 628a. An individual required to be found eligible and suitable or licensed under the act or these rules by virtue of his or her position with an internet gaming operator licensee must not perform any duties or exercise any powers of the position until he or she is determined to be eligible and suitable and is licensed by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.628b Duty to disclose violation of licenses {#sec-r-432.628b omnilex-key=us-mi-regs-official--dept-treasury--R 432.628b}

Rule 628b. An internet gaming operator and an internet gaming supplier must immediately notify the board, in writing, if it becomes aware that an internet gaming operator, internet gaming supplier, or occupational licensee involved in its internet gaming operations under the act has acted contrary to the act or these rules.

History

History: 2020 AACS.

Mich. Admin. Code R 432.628c Contracts {#sec-r-432.628c omnilex-key=us-mi-regs-official--dept-treasury--R 432.628c}

Rule 628c. The internet gaming operator must maintain all contracts that relate to its Michigan internet gaming operations for 5 years following its expiration. The board must be allowed access to any contract related to its Michigan internet gaming operations entered into by an internet gaming operator upon demand. The internet gaming operator may be required by the board to promptly submit copies of any such contract upon request of the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.629 Vendor Requirements {#sec-r-432.629 omnilex-key=us-mi-regs-official--dept-treasury--R 432.629}

Rule 629. (1) Only vendors that are either approved by the board as a registered vendor pursuant to R 432.629a, or are exempt from registration under subrule (4) of this rule, may provide goods or services, or both, directly or indirectly, to an internet gaming operator or internet gaming platform provider in connection with internet gaming in this state.

(2) Vendors requiring registration include, but are not limited to, the following:

(a) Affiliate marketers that do not have an agreement based on the sharing of gross receipts or adjusted gross receipts. In connection with its vendor registration, the affiliate marketer shall certify it does not promote or market, or both, illegal online gaming sites to individuals located in this state. An illegal online gaming site is one that is not licensed to accept wagers from customers located in this state or another state.

(b) Independent integrity monitoring providers.

(d) A person that provides over $100,000.00 worth of goods or services, or both, to an internet gaming operator or internet gaming platform provider in connection with its internet gaming operations in this state in a calendar year.

(e) Data centers providing physical security and infrastructure.

(f) Another person as considered necessary by the board.

(3) An internet gaming operator or internet gaming platform provider is prohibited from receiving goods or services in connection with internet gaming in this state from a vendor that is either not registered with the board, or that is not exempt from registration under subrule (4) of this rule.

(4) Unless otherwise provided for by the board, the following persons are exempt from the vendor registration requirement:

(a) A vendor that provides $100,000.00 or less worth of goods or services, or both, to an internet gaming operator or internet gaming platform provider in connection with internet gaming operations in this state in a calendar year.

(b) Insurance companies.

(d) Entities providing medical related services.

(e) Public institutions of higher education in this state.

(f) Public utilities regulated by the public service commission.

(g) A Michigan or federally chartered depository financial institution.

(h) An individual or business that provides goods or services as a result of the licensee’s employees engaging in business travel, including transportation, lodging, food, and fuel providers.

(i) A person that provides employee training or professional development to a licensee.

(j) A person that provides conferences, seminars, publications, or memberships that directly contribute to the work performance or professional development of the licensee’s employees.

(5) All of the following requirements apply regarding vendor conduct regardless of whether the vendor is required to register:

(a) A vendor shall conduct itself in a manner that does not compromise the integrity of internet gaming and comply with the applicable provisions of the act and these rules.

(b) A vendor is subject to the jurisdiction of the board.

(d) A vendor shall cooperate with the board in any investigation, inspection, audit, or inquiry.

(e) A vendor shall allow the board access to its facilities that are relevant to this state’s internet gaming operations.

(f) A vendor shall notify the board of any change in information previously submitted to the board.

(6) The board may conduct an investigation to determine if a vendor has acted in a manner that does or could compromise the integrity of internet gaming in this state.

(7) If the investigation reveals a vendor’s conduct could or does compromise the integrity of internet gaming in this state, the board may issue a cease-and-desist order, obtain injunctive relief, or take other action necessary to protect the integrity of internet gaming in this state, or all 3.

History

History: 2020 AACS; 2025 MR 9, Eff. April 29, 2025.

Mich. Admin. Code R 432.629a Vendor Registration {#sec-r-432.629a omnilex-key=us-mi-regs-official--dept-treasury--R 432.629a}

Rule 629a. (1) To register, a vendor shall complete and file with the board an application for registration and provide the required information in the manner and form prescribed by the board.

(2) An application for registration and the required information must be submitted to the board, together with a nonrefundable application fee of $200.00 by a payment method acceptable to the board, such as a certified check, cashier’s check, money order made payable to “State of Michigan”, or electronic fund transfer.

(3) The board shall investigate all vendor applications for registration. The following may be considered during an investigation:

(a) Criminal records.

(b) Suspension of licenses or registrations, or their equivalent, or other adverse actions in other jurisdictions.

(d) Associations with businesses and individuals.

(e) Compliance with gaming laws and regulations in this state and other jurisdictions.

(f) Compliance with all local, state, and federal tax laws.

(g) Other information considered appropriate by the board.

(4) The executive director shall approve or deny an application for registration. If an application is denied, the person may submit a hearing request as provided for under R 432.614(2).

(5) A vendor shall renew its registration every 5 years after the vendor’s initial registration.

(6) A vendor intending to renew its registration shall, at least 30 days before expiration of the vendor’s registration, submit the required registration fee and application in the manner and form required by the board.

PART 3. TECHNICAL STANDARDS

History

History: 2025 MR 9, Eff. April 29, 2025.

Mich. Admin. Code R 432.631 Geofence requirements {#sec-r-432.631 omnilex-key=us-mi-regs-official--dept-treasury--R 432.631}

Rule 631. (1) All internet wagering transactions must be initiated and received or otherwise made by an authorized participant located in this state or, if the act allows the board to enter into agreements to facilitate, administer, and regulate multijurisdictional internet gaming, another jurisdiction authorized by a multijurisdictional internet gaming agreement. An authorized participant located in another jurisdiction authorized by a multijurisdictional internet gaming agreement must only be allowed to place internet wagers on internet games authorized by the board under the multijurisdictional internet gaming agreement.

(2) To prevent the unauthorized placement of an internet wager by an individual or authorized participant not within this state, the internet gaming operator and its internet gaming platform provider must utilize a geofencing system to reasonably detect the physical location of an individual or authorized participant attempting to access the internet gaming platform and place an internet wager and to monitor and block unauthorized attempts to access the internet gaming platform to place an internet wager when an individual or authorized participant is not within the permitted boundary.

(3) The geofencing system must ensure that an individual or authorized participant is located within the permitted boundary when placing an internet wager, and must be equipped to dynamically monitor the individual’s or authorized participant’s location and block unauthorized attempts to access the internet gaming platform to place an internet wager throughout the duration of the internet gaming authorized participant session.

(4) The board shall approve all technical specifications for geofencing and any specific requirements related to geofencing technology that is commercially available.

History

History: 2020 AACS.

Mich. Admin. Code R 432.632 Approval of internet gaming platform and games {#sec-r-432.632 omnilex-key=us-mi-regs-official--dept-treasury--R 432.632}

Rule 632. (1) Except as otherwise determined by the board in writing, an internet gaming platform provider or internet gaming supplier must not distribute an internet gaming platform or internet game to an internet gaming operator unless the item has been approved by the board.

(2) An internet gaming platform provider may seek approval of its internet gaming platform by submitting an application to the board in the manner and form prescribed by the board.

(3) If an internet gaming operator does not utilize an internet gaming platform provider and, instead, develops its own internet gaming platform or internet game, the internet gaming operator will be considered both an internet gaming operator and an internet gaming platform provider for the purposes of this part.

History

History: 2020 AACS.

Mich. Admin. Code R 432.632a Internet gaming platform and internet game submission and approval process {#sec-r-432.632a omnilex-key=us-mi-regs-official--dept-treasury--R 432.632a}

Rule 632a. (1) Each internet gaming platform provider must submit its internet gaming platform proposed for use by an internet gaming operator to the board or to an independent lab approved by the board for evaluation. The internet gaming platform provider must provide all information the board requests including, but not limited to, all of the following:

(a) A complete, comprehensive, and technically accurate description and explanation of the internet gaming platform and its intended use in both technical and lay language. The document must be signed under penalty of perjury.

(b) Detailed operating procedures or service manuals, or both, of the internet gaming platform.

(d) Details of all tests performed on the internet gaming platform, the conditions and standards under which the tests were performed, the test results, and the identity of the individual who conducted each test.

(e) A description of all hardware devices.

(f) A description of all software including software version.

(g) A description of all wagering communications.

(h) A description of all third-party integrated systems.

(i) Any equipment that is required to perform testing.

(j) A detailed description of the risk management framework including, but not limited to:

(i) User access controls for all internet gaming personnel.

(ii) Information regarding segregation of duties.

(iii) Information regarding automated risk management procedures.

(iv) Information regarding fraud detection.

(v) Controls for ensuring regulatory compliance.

(vi) Description of anti-money laundering compliance standards.

(2) An internet gaming platform provider or internet gaming supplier must submit all internet games, including, but not limited to, slot machine, table, live games, progressives, and peer-to-peer games proposed for use by any internet gaming operator to the board or to an independent lab approved by the board for evaluation.

(3) The internet gaming platform provider or internet gaming supplier must provide all information the board requests, including, but not limited to, all the following:

(a) A complete, comprehensive, and technically accurate description and explanation of the internet game and its intended use in both technical and lay language. The document must be signed under penalty of perjury.

(b) Detailed operating procedures.

(d) A description of all software including software version.

(e) Complete paytable information including paytable identification and date code.

(f) Detailed information on the RNG.

(g) Return to player (RTP) calculation sheet.

(h) Rake percentage.

(i) Rules of the game.

(4) All internet game software used to conduct internet gaming must be designed with a method to permit the validation of software using a gaming authentication tool or other method approved by the board.

(5) A submission for board approval of progressive software to be used on an internet gaming platform must also include all of the following at a minimum:

(a) Software controlling the internet jackpot.

(b) A mechanism to authenticate the software.

(d) The internet games that are common to a single progressive.

(e) The odds of hitting the progressive amount.

(f) The reset value of the progressive.

(g) The rate of progression for the progressive amount.

(h) How the rate of progression is split between the various progressive components.

(i) Other information considered necessary and requested in writing by the board to ensure compliance with the act and this part.

(6) All the following provisions apply to calculation sheets:

(a) For each internet game program submitted, the internet gaming platform provider or internet gaming supplier requesting approval must supply calculation sheets that determine the RTP percentage, including base game, bonus games or features, free games, double-up options, progressives, and any other game features included in the RTP calculation.

(b) Where different player options such as number of credits, lines bet, or player strategy cause the pay table to vary, a separate calculation for each option is required.

(7) The internet gaming platform provider or internet gaming supplier must submit all internet game source code and any special tool, computer equipment, compiling program, or other technical assistance necessary to compile the submitted software.

The result of the compiled source code must be identical to that in the storage medium submitted for evaluation.

(8) The internet gaming platform provider or internet gaming supplier must provide the board with a method to compensate for or resolve any differences between the compiled program and the submitted program. The internet gaming platform provider or internet game supplier may employ other equivalent methods that ensure the results of the complied source code are identical to the storage medium submitted for evaluation upon written request and approval of the board.

(9) Except where the board has provided written notification that approval is not required, an internet gaming operator must install or use an internet gaming platform or internet game, or both that has been approved by the board. An internet gaming operator must not alter the manner in which the internet gaming platform or internet game operates without the prior written approval of the board.

(10) After evaluating the internet gaming platform or internet game, the board shall advise the internet gaming platform provider or internet gaming supplier, in writing, of the determination.

History

History: 2020 AACS.

Mich. Admin. Code R 432.632b Procedures and notification requirements after approval {#sec-r-432.632b omnilex-key=us-mi-regs-official--dept-treasury--R 432.632b}

Rule 632b. (1) If another gaming jurisdiction revokes or otherwise directs discontinuance of the internet gaming platform, any component of the internet gaming platform, an internet game, or an internet game component that has been approved by the board, the internet gaming operator, internet gaming platform provider, or internet gaming supplier must advise the board in writing of the discontinuance within 21 days of the revocation or direction of discontinuance.

(2) An internet gaming operator, internet gaming operator license applicant, internet gaming platform provider, or internet gaming supplier must immediately notify the board, in writing, of any defects or malfunctions of the internet gaming platform, any component of the internet gaming platform, an internet game, or an internet game component that adversely affects the integrity or conduct of internet wagering or proper reporting of adjusted gross receipts, or that materially affects the operation or safety of, or wagering on, any internet gaming platform, any component of the internet gaming platform, any internet game, or any component of an internet game that has been approved by the board and is utilized by the internet gaming operator or internet gaming operator license applicant.

(3) An internet gaming operator, internet gaming platform provider, or internet gaming supplier must maintain all records required under this rule for a minimum of 5 years.

(4) The board may require an internet gaming operator to discontinue use of the internet gaming platform, any component of the internet gaming platform, an internet game, or any component of an internet game for any of the following reasons:

(a) The internet gaming platform, platform component, internet game, or internet game component does not perform in the manner described in the application and related submission documentation.

(b) The internet gaming platform, platform component, internet game, or internet game component is defective or malfunctions frequently.

(c) The internet gaming platform, platform component, internet game, or internet game component has a detrimental impact on the conduct or integrity of internet gaming.

(d) The internet gaming platform, platform component, internet game, or internet game component improperly computes adjusted gross receipts.

(5) The board shall provide written notification to the internet gaming operator, internet gaming platform provider, and the internet gaming supplier if the internet gaming platform, platform component, internet game, or internet game component is no longer approved for use.

History

History: 2020 AACS.

Mich. Admin. Code R 432.633 Internet gaming platform and internet games technical standards {#sec-r-432.633 omnilex-key=us-mi-regs-official--dept-treasury--R 432.633}

Rule 633. (1) An internet gaming platform or internet game, or both, for use to conduct internet gaming must meet the specifications set forth in these rules or other technical specifications as prescribed by the board. Failure to comply with the approved specifications, internal controls, or technical specifications may result in disciplinary action by the board.

(2) Internet gaming operators, internet gaming platform providers, and internet gaming suppliers must comply with, and the board adopts and incorporates by reference, Gaming Laboratories International, LLC Standard GLI-19: Standards for Interactive Gaming Systems, version 3.0, released July 17, 2020, which is available for inspection and distribution at no cost, as of the time of adoption of these rules, at the board’s office located at 3062 W. Grand Blvd., Suite L-700, Detroit, Michigan 48202-6062 or Gaming Laboratories International website at https://gaminglabs.com and does not include any later amendments or editions. GLI-19 standards are intended to supplement rather than supplant other technical standards and requirements under these rules. Where GLI-19 standards conflict with other requirements provided under these rules, these rules shall control unless otherwise determined by the board.

(3) Before conducting internet gaming, and as otherwise required by the board, an internet gaming platform provider must submit the internet gaming platform used in conjunction with the internet gaming operation to the board or an independent testing laboratory approved by the board for certification testing.

(4) If the internet gaming platform meets or exceeds the technical standards adopted in subrule (2) of this rule, the board or independent testing laboratory approved by the board shall certify the internet gaming platform. Internet gaming operators and internet gaming platform providers are prohibited from offering internet gaming in Michigan without such certification. The internet gaming platform provider is responsible for all costs associated with testing and obtaining such certifications.

(5) All internet games for proposed use must meet or exceed the technical standards adopted in subrule (2) of this rule. Internet gaming operators, internet gaming platform providers, and internet gaming suppliers are prohibited from offering any internet game without written approval by the board. An internet gaming platform provider and internet gaming supplier is responsible for all costs associated with testing and obtaining such approvals.

History

History: 2020 AACS.

Mich. Admin. Code R 432.633a Additional internet gaming software and platform technical standards {#sec-r-432.633a omnilex-key=us-mi-regs-official--dept-treasury--R 432.633a}

Rule 633a. (1) Software utilized for internet gaming must either:

(a) Continuously display the current time in the time zone where the game server is physically located and the time elapsed that an authorized participant has been in the current internet gaming authorized participant session, or (b) Cause a pop-up notification, at least every half-hour, to be prominently displayed on the remote player device advising the authorized participant of the current time and the amount of time elapsed since his or her log on.

(2) An internet gaming platform must not induce an authorized participant to continue placing internet wagers when play is in session, when the authorized participant attempts to end an internet gaming authorized participant session, or when the authorized participant wins or loses an internet wager.

(3) No auto play feature will be permitted in internet game software unless authorized by the board.

(4) All internet games must operate in accordance with the game rules and internet wagering account terms and conditions approved by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.633b Additional standards for approval of internet games {#sec-r-432.633b omnilex-key=us-mi-regs-official--dept-treasury--R 432.633b}

Rule 633b. (1) Each house-banked internet game that requires an internet wager must have an RTP equal to or greater than 80% but not more than 100% unless otherwise authorized by the board. The RTP must be calculated using both the highest and lowest level of skill, where player skill impacts the RTP.

(2) An house-banked internet game must comply with all odds-related requirements prescribed in the technical standards adopted in R 432.633(2), including those prescribed in section 4.7.3 of the referenced technical standards, except that the odds of achieving the highest advertised award that is based solely upon chance must occur at least once in every 50 million games (3) The RTP of a house-banked internet game must not decrease by more than 1/100 of a percentage point with an increased internet wager unless the aggregate total of the decreases in RTP for plays offered by the house-banked internet game is no more than 1/2 of 1 percent.

(4) The projected contribution from a progressive award may not count toward the RTP of a house-banked internet game in order to achieve the minimum RTP as approved by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.634 Location of servers, security, and cloud storage {#sec-r-432.634 omnilex-key=us-mi-regs-official--dept-treasury--R 432.634}

Rule 634. (1) Unless otherwise approved by the board in writing, an internet gaming operator and its internet gaming platform provider must place a server or other equipment that is capable of receiving internet wagers in this state. The location selected must have adequate security, protections, and controls over the servers or other equipment that is capable of receiving internet wagers, including those adopted in R 432.633(2). The internet gaming operator and its internet gaming platform provider must provide the board with information on the location of all servers and other equipment.

(2) The board may approve of the use of cloud storage for duplicate data upon written request of an internet gaming operator or internet gaming platform provider.

History

History: 2020 AACS.

Mich. Admin. Code R 432.635 Communication standards {#sec-r-432.635 omnilex-key=us-mi-regs-official--dept-treasury--R 432.635}

Rule 635. (1) All internet gaming platforms authorized by the board under these rules must be designed to ensure the integrity and confidentiality of all individual and authorized participant communications and ensure the proper identification of the sender and receiver of all communications.

(2) If communications are performed across a public or third-party network, the internet gaming platform must either encrypt the data packets or utilize a secure communications protocol to ensure the integrity and confidentiality of the transmission.

(3) Internet gaming platform providers must meet or exceed all communication standards prescribed by the board.

(4) Internet gaming platform providers or internet gaming operators, or both must address all communication requirements in the internet gaming platform and internal controls submitted to the board for approval.

History

History: 2020 AACS.

Mich. Admin. Code R 432.636 Internet gaming data logging standards {#sec-r-432.636 omnilex-key=us-mi-regs-official--dept-treasury--R 432.636}

Rule 636. (1) Internet gaming platforms must employ a mechanism capable of maintaining a separate copy of all information the board requires to be logged. Except as otherwise provided in subrule (2) of this rule, the information must be maintained on a separate and independent logging device capable of being administered by an employee with no incompatible function.

(2) If the internet gaming platform can be configured such that any logged data is contained in a secure transaction file, a separate logging device is not required.

(3) Internet gaming platform providers must meet or exceed all internet gaming data logging standards prescribed by the board. Internet gaming platform providers or internet gaming operators, or both must address all internet gaming data logging requirements in the internet gaming platform and internal controls submitted to the board for approval.

(4) The internet gaming platform must provide a mechanism for the board to query and export, in a format required by the board, all internet gaming platform data related to internet gaming conducted under the act.

History

History: 2020 AACS.

Mich. Admin. Code R 432.637 Self-monitoring of internet gaming platform critical components {#sec-r-432.637 omnilex-key=us-mi-regs-official--dept-treasury--R 432.637}

Rule 637. An internet gaming platform must, at least once every 24 hours, perform a self-authentication process on all software used to offer, record, and process internet wagers conducted under this act that is identified by the board as a critical component to ensure there have been no unauthorized modifications. If there is an authentication failure, the internet gaming platform must immediately notify the internet gaming operator, internet gaming platform provider, and the board within 24 hours. The results of all self-authentication attempts must be retained by the internet gaming platform for not less than 90 days.

History

History: 2020 AACS.

Mich. Admin. Code R 432.637a Change approval {#sec-r-432.637a omnilex-key=us-mi-regs-official--dept-treasury--R 432.637a}

R. 637a. (1) Any change or modification to the internet gaming platform that impacts a regulated feature of an approved internet gaming platform, unless otherwise permitted by the board, requires submission to and approval by the board before the implementation of the change or modification. Regulated feature includes, but is not limited to, internet gaming platform and internet game software that is validated using a gaming authentication tool or other method approved by the board and all critical component software.

(2) The internet gaming operator and its internet gaming platform provider must submit change control processes that detail evaluation procedures for all updates and changes to equipment and the internet gaming platform to the board for approval. These processes must include details for identifying the criticality of updates and determining the updates that must be submitted to the board or a board approved independent testing laboratory for review and certification.

History

History: 2020 AACS.

Mich. Admin. Code R 432.638 Internet gaming platform assessment {#sec-r-432.638 omnilex-key=us-mi-regs-official--dept-treasury--R 432.638}

Rule 638. (1) Each internet gaming operator or internet gaming platform provider shall, within 90 days after commencing operations, and annually thereafter, perform an internet gaming platform integrity and security assessment of the internet gaming platform conducted by an independent professional selected by the internet gaming operator or internet gaming platform provider and subject to approval of the board. The scope of the internet gaming platform integrity and security assessment is subject to approval of the board and must include, at a minimum, all of the following:

(a) A vulnerability assessment of internal, external, and wireless networks with the intent of identifying vulnerabilities of all devices, the internet gaming platform, and applications connected to or present on the networks.

(b) A penetration test of all internal, external, and wireless networks to confirm if identified vulnerabilities of all devices, the internet gaming platform, and applications are susceptible to compromise.

(c) A policy and procedures review against the current ISO 27001 standard or another similar standard approved by the board.

(d) Any other specific criteria or standards for the internet gaming platform integrity and security assessment as prescribed by the board.

(2) The full independent professional's report on the assessment must be submitted to the board and must include all the following:

(a) Scope of review.

(b) Name and company affiliation of the individual or individuals who conducted the assessment.

(d) Findings.

(e) Recommended corrective action, if applicable.

(f) Internet gaming operator’s or internet gaming platform provider’s response to the findings and recommended corrective action.

History

History: 2020 AACS.

Mich. Admin. Code R 432.639 Internet gaming operators and internet gaming platform provider technical and security standards (controls) {#sec-r-432.639 omnilex-key=us-mi-regs-official--dept-treasury--R 432.639}

Rule 639. (1) An internet gaming operator or its internet gaming platform provider, or both must adopt, implement, and maintain technical security standards (controls) that meet or exceed those adopted in R 432.633(2). The technical security standards must apply, at a minimum, to all the following critical components of the internet gaming platform:

(a) Components that record, store, process, share, transmit, or retrieve sensitive information (e.g., validation numbers, personal identification numbers (PIN), and individual and authorized participant data).

(b) Components that generate, transmit, or process random numbers used to determine the outcome of games or virtual events.

(d) Points of entry to and exit from the components provided for in subdivisions (a) to (c) of this subrule and other systems that are able to communicate directly with core critical internet gaming platform components.

(e) Communication networks that transmit sensitive information involving internet gaming under the act.

(2) The following technical security standards are the minimum standards an internet gaming operator or internet gaming platform provider must incorporate into its internal controls:

(a) Technical security standards addressing internet gaming platform operations and security include, but are not limited to all of the following:

(i) Internet Gaming Platform Operations and Security. The internet gaming operator or internet gaming platform provider must adopt, implement, and maintain procedures for, at a minimum, the following:

(A) Monitoring the critical components and the transmission of data of the entire internet gaming platform.

(B) Maintenance of all aspects of security of the internet gaming platform to ensure secure and reliable communications.

(D) Monitoring and adjusting resource consumption and maintaining a log of the internet gaming platform performance.

(E) Investigating, documenting, and resolving malfunctions.

(ii) Physical Location of Servers and Security. The internet gaming platform must be housed in secure locations. Internet gaming operators and their internet gaming platform providers must provide the board with information on the location of all internet gaming platform servers. The secure locations must have sufficient protection from unauthorized access and physical and environmental hazards and be equipped with surveillance and security systems that meet or exceed industry standards.

(iii)Internet Gaming Platform Logical Access Controls. The internet gaming platform must be logically secured against unauthorized access.

(iv) Internet Gaming Platform User Authorization. The internet gaming platform must be subject to user authorization requirements as required by the board.

(v) Server Programming. The internet gaming platform must be sufficiently secure to prevent any user-initiated programming capabilities on the server that may result in unauthorized modifications to the database.

(vi) Verification Procedures. Procedures must be in place for verifying on demand that the critical control program components of the internet gaming platform in the production environment are identical to those approved by the board.

(vii) Electronic Document Retention System. The internet gaming operator or internet gaming platform provider must establish procedures that ensure that all reports required under the act and these rules are stored in an electronic document retention system.

(viii) Asset Management. All assets that house, process, or communicate sensitive information, including those comprising the operating environment of the internet gaming platform or its components, or both, must be accounted for and have a nominated owner or designated management official that is responsible for each asset.

(b) The technical security standards addressing data security and backup recovery include, but are not limited to, all of the following:

(i) Data Security. The internet gaming platform must provide a logical means for securing individual and authorized participant data and wagering data, including accounting, reporting, significant event, or other sensitive information, against alteration, tampering, or unauthorized access.

(ii) Data Alteration. The alteration of any accounting, reporting, or significant event data relating to internet wagering under the act is not permitted without supervised access controls. If any data is changed, all information required by the board must be documented or logged.

(iii)Backup Frequency. Backup scheme implementation relating to information involving internet wagering under the act must occur at least once every day or as otherwise specified by the board.

(iv) Storage Medium Backup. Audit logs, internet gaming platform databases, and any other pertinent individual and authorized participant data and wagering data must be stored using reasonable protection methods. The internet gaming platform must be designed to protect the integrity of this data if there is a failure. Redundant copies of this data must be kept on the internet gaming platform with open support for backups and restoration, so that no single failure of any portion of the internet gaming platform would cause the loss or corruption of the data.

(v) Internet Gaming Platform Failure. The internet gaming platform must have sufficient redundancy and modularity so that if any single component or part of a component fails, the functions of the internet gaming platform and the process of auditing those functions can continue with no critical data loss. If 2 or more components are linked, the process of all internet gaming operations between the components must not be adversely affected by restart or recovery of either component and upon restart or recovery, the components must immediately synchronize the status of all transactions, data, and configurations with one another.

(vi) Accounting and Master Resets. The internet gaming operator or internet gaming platform provider must be able to identify and properly handle the situation where a master reset has occurred on any component that affects internet gaming under the act.

(vii) Recovery Requirements. If there is a catastrophic failure when the internet gaming platform cannot be restarted in any other way, it must be possible to restore the internet gaming platform from the last backup point and fully recover. The contents of that backup must contain critical information as required by the board.

(viii) Uninterrupted Power Supply (UPS) Support. All internet gaming platform components must be provided with adequate primary power. If the server is a stand-alone application, it must have a UPS connected and must have sufficient capacity to permit a methodical shut-down that retains all individual and authorized participant data and wagering data during a power loss. It is acceptable that the internet gaming platform may be a component of a network that is supported by a network-wide UPS if the server is included as a device protected by the UPS. There must be a surge protection system in use if not incorporated into the UPS itself.

(ix) Business Continuity and Disaster Recovery Plan. A business continuity and disaster recovery plan must be in place to recover internet gaming operations conducted under the act if the internet gaming platform’s production environment is rendered inoperable.

(i) Connectivity. Only authorized devices are permitted to establish communications between any internet gaming platform components.

(ii) Communication Protocol. Each component of the internet gaming platform must function as indicated by a documented secure communication protocol.

(iii)Communication Over Internet/Public Network. Communications between internet gaming platform components must be secure. Individual and authorized participant data, sensitive information, internet wagers, results, financial information, and individual and authorized participant transaction information related to internet gaming conducted under the act must always be encrypted and protected from incomplete transmissions, misrouting, unauthorized message modification, disclosure, duplication, or replay.

(iv) Wireless Local Area Network (WLAN) Communications. The use of WLAN communications must adhere to applicable requirements specified for wireless devices and is subject to approval by the board.

(v) Network Security Management. Networks must be logically separated to ensure that there is no network traffic on a network link that cannot be serviced by hosts on that link.

(vi) Mobile Computing and Communications. Formal policies shall be in place, and appropriate security measures shall be adopted to protect against the risk of using mobile computing and communication facilities. Telecommuting shall not be permitted except under circumstances where the security of the endpoint can be guaranteed.

(d) Technical security standards addressing third party service providers include, but are not limited to, all of the following:

(i) Third-Party Service Communications. Where communications related to internet gaming conducted under the act are implemented with third-party service providers, the internet gaming platform must securely communicate with all third-party service providers utilizing encryption and strong authentication, ensure that all login events are recorded to an audit file, and ensure that all communications do not interfere or degrade normal internet gaming platform functions.

(ii) Third-Party Services. The roles and responsibilities of each third-party service provider engaged by the internet gaming operator or internet gaming platform provider must be defined and documented in a manner approved by the board. The internet gaming operator or internet gaming platform provider must have policies and procedures in place for managing third-party service providers and monitoring their adherence to relevant security requirements.

(e) Technical security standards addressing technical controls include, but are not limited to, all of the following:

(i) Domain Name Service (DNS) Requirements. An internet gaming operator or internet gaming platform provider must establish requirements that apply to servers used to resolve DNS queries used in association with the internet gaming platform.

(ii) Cryptographic Controls. An internet gaming operator or internet gaming platform provider must establish and implement a policy for the use of cryptographic controls that ensures the protection of information.

(iii)Encryption Key Management. The management of encryption keys must follow defined processes established by the internet gaming operator or internet gaming platform provider and approved by the board.

(f) The technical security standards addressing remote access and firewalls include, but are not limited to, all of the following:

(i) Remote Access Security. Remote access, if approved by the board, must be performed via a secured method, must have the option to be disabled, may accept only the remote connections permissible by the firewall application and internet gaming platform settings, and must be limited to only the application functions necessary for users to perform their job duties.

(ii) Remote Access and Guest Accounts Procedures. Remote access and guest accounts procedures must be established that ensure that remote access is strictly controlled.

(iii)Remote Access Activity Log. The remote access application must maintain an activity log that updates automatically and records and maintains all remote access information.

(iv) Firewalls. All communications, including remote access, must pass through at least 1 approved application-level firewall. This includes connections to and from any non-internet gaming platform hosts used by the internet gaming operator or internet gaming platform provider.

(v) Firewall Audit Logs. The firewall application must maintain an audit log and must disable all communications and generate an error if the audit log becomes full. The audit log must contain, at a minimum, all the following information:

(A) All changes to configuration of the firewall.

(B) All successful and unsuccessful connection attempts through the firewall.

(vi) Firewall Rules Review. The firewall rules must be periodically reviewed by the internet gaming operator or internet gaming platform provider to verify the operating condition of the firewall and the effectiveness of its security configuration and rule sets and must be performed on all the perimeter firewalls and the internal firewalls.

(g) Technical security standards addressing change management include, but are not limited to, all of the following:

(i) Program Change Control Procedures. Program change control procedures must ensure that only authorized versions of programs are implemented on the production environment.

(ii) Software Development Life Cycle. The acquisition and development of new software must follow defined processes established by the internet gaming operator or internet gaming platform provider and subject to review by the board.

(iii) Patches. All patches should be tested, as applicable, in a development and test environment configured to match the target production environment before being deployed into production. Permitted exceptions and related procedures and controls must be fully addressed.

(h) Technical security standards addressing periodic security testing include, but are not limited to, all of the following:

(i) Technical Security Testing. Periodic technical security tests on the production environment must be performed quarterly or as required by the board to guarantee that no vulnerabilities putting at risk the security and operation of the internet gaming platform exist.

(ii) Vulnerability Assessment. The internet gaming operator or the internet gaming platform provider must conduct vulnerability assessments. The purpose of the vulnerability assessment is to identify vulnerabilities, which could be later exploited during penetration testing by making basic queries relating to services running on the internet gaming platform concerned.

(iii)Penetration Testing. The internet gaming operator or the internet gaming platform provider must conduct penetration testing. The purpose of the penetration testing is to exploit any weaknesses uncovered during the vulnerability assessment on any publicly exposed applications or internet gaming platform hosting applications processing, transmitting, or storing sensitive information.

(iv) Information Security Management System (ISMS) Audit. An audit of the ISMS will be periodically conducted, including all the locations where sensitive information is accessed, processed, transmitted, or stored. The ISMS will be reviewed against common information security principles in relation to confidentiality, integrity, and availability.

(v) Cloud Service Audit. An internet gaming operator and its internet gaming platform provider that utilizes a cloud service provider (CSP), if approved by the board, to store, transmit, or process sensitive information must undergo a specific audit as required by the board. The CSP must be reviewed against common information security principles in relation to the provision and use of cloud services, such as ISO/IEC 27017 and ISO/IEC 27018, or equivalent.

(3) The internet gaming operator or its internet gaming platform provider, or both must include the technical security standards (controls) in the internal controls and internet gaming platform submitted to the board for approval.

(4) The technical security standards (controls) must:

(a) Have a provision requiring review when changes occur to the internet gaming platform.

(b) Be approved by the internet gaming operator’s or internet gaming platform provider’s senior management.

(d) Undergo review at planned intervals.

(e) Delineate the responsibilities of the internet gaming operator’s staff, the internet gaming platform provider’s staff, and the staff of any third parties for the operation, service, and maintenance of the internet gaming platform or its components, or both.

History

History: 2020 AACS.

Mich. Admin. Code R 432.639a Test accounts {#sec-r-432.639a omnilex-key=us-mi-regs-official--dept-treasury--R 432.639a}

Rule 639a. (1) An internet gaming operator or internet gaming platform provider may establish test accounts to be used to test the various components and operation of an internet gaming platform pursuant to internal controls adopted by the internet gaming operator or internet gaming platform provider, which, at a minimum, must address all or the following:

(a) The procedures for issuing funds used for testing, including the identification of who may issue the funds and the maximum amount of funds that may be issued.

(b) The procedures for assigning each test account for use by only 1 individual.

However, an internet gaming operator may establish a specific scenario or instance of a test account that may be shared by multiple users if each user's activities are separately logged.

(c) The maintenance of a record for all test accounts, to include when they are active, to whom they are issued, and the employer of the individual to whom they are issued.

(d) The procedures for auditing testing activity by the internet gaming operator or internet gaming platform provider to ensure the accountability of funds used for testing and proper adjustments to gross receipts.

(e) The procedures for authorizing and auditing out-of-state test activity.

(2) Peer-to-peer games may be tested by a user with multiple test accounts if authorized participants are not involved in game play.

History

History: 2020 AACS.

Mich. Admin. Code R 432.639b Live games {#sec-r-432.639b omnilex-key=us-mi-regs-official--dept-treasury--R 432.639b}

Rule 639b. (1) An internet gaming operator or its internet gaming platform provider must obtain written board approval to conduct live games or other similar type games.

Unless otherwise approved by the board in writing, the live game environment used to conduct live games or similar games must be located in this state in a location approved by the board.

(2) The live game service provider may be an internet gaming operator, internet gaming platform provider, or an internet gaming supplier if approved by the board . The live game service provider, shall adopt, implement, and maintain all technical standards adopted in R 432.633(2) including the live game service provider requirements contained in Appendix C.6 of the referenced technical standards

History

History: 2020 AACS.

Mich. Admin. Code R 432.639c Progressive jackpots {#sec-r-432.639c omnilex-key=us-mi-regs-official--dept-treasury--R 432.639c}

Rule 639c. (1) An internet gaming operator or its internet gaming platform provider may offer a progressive jackpot that increases uniformly in value as the internet game is played based upon an approved rate of progression and is awarded for a specific outcome or event.

(2) The rules governing the award and the value of the progressive award must be readily available to individuals and authorized participants.

(3) An internet gaming operator or its internet gaming platform provider must obtain approval from the board in the form and manner prescribed by the board before offering, modifying, or transferring a progressive jackpot on software approved by the board under these rules.

(4) Two or more linked internet games offering the same progressive jackpot may be of different denominations or have different minimum internet wagers required to win the progressive jackpot, or both, if the probability of winning the progressive jackpot is directly proportional to the minimum internet wager required to win that jackpot.

For example, if on the same link, a nickel game requires 20 credits (a $1.00 wager), a quarter game requires 8 credits (a $2.00 wager), and a dollar game requires 3 credits (a $3.00 wager) to win the progressive jackpot, the probability of a winning internet wager must be 3 times more likely on a linked dollar game than on the linked nickel game, and twice as likely on a linked quarter game than on the linked nickel game.

Similarly, if among 3 linked quarter denomination games, the first required 2 credits (a 50 cent wager), the second required 4 credits (a $1.00 wager), and the third required 8 credits (a $2.00 wager) to play for the progressive jackpot, on each wager, the probability of winning the jackpot would be twice as likely on the second game than on the first game, and 4 times more likely on the third game than on the first game.

(5) The internet gaming operator or its internet gaming platform provider, or both must ensure that progressive jackpot awards that have a reset amount greater than $5,000.00 are reconciled at least once a month in accordance with approved internal controls unless otherwise required by the board.

(6) An internet gaming operator or its internet gaming platform provider, or both must maintain a detailed record of the monthly reconciliation. An internet gaming operator or its internet gaming platform provider, or both must also reconcile a progressive jackpot before a transfer or modification.

(7) The internet gaming operator or its internet gaming platform provider, or both must investigate the reason for any progressive amount variance exceeding $100.00 and file an incident report with the board that must include corrective actions proposed or taken to resolve the variance.

(8) An internet gaming operator or its internet gaming platform provider, or both must remove or make the progressive game unavailable to individuals and authorized participants for all occurrences in which a game malfunctions or if otherwise required by the board.

(9) The internet gaming operator or its internet gaming platform provider, or both that chooses to restore a progressive jackpot previously made unavailable pursuant to this rule, must restore the entire progressive jackpot amount. The amount restored must include the entire jackpot, including the seed amount and all previously collected authorized participant contributions.

(10) An internet gaming operator may remove or transfer a progressive jackpot upon obtaining board approval as provided for in this rule and after notification to individuals and authorized participants, which notification must be given not less than 10 days before a transfer or not less than 30 days before a removal.

(11) If a wide area progressive offered on the internet is removed, it must be restored or transferred by the internet gaming platform provider or internet gaming supplier as applicable. The amount restored or transferred must include the entire jackpot, including the seed amount and all previously collected authorized participant contributions.

History

History: 2020 AACS.

Mich. Admin. Code R 432.639d Internet gaming networks {#sec-r-432.639d omnilex-key=us-mi-regs-official--dept-treasury--R 432.639d}

Rule 639d. (1) With the approval of the board, 1 or more internet gaming operators may participate in an internet gaming network as set forth in a written agreement that has been executed by each internet gaming operator. The agreement must include all provisions required by the board.

(2) Each party to an agreement for an internet gaming network must be jointly and severally liable for acts, omissions, and violations of the act or these rules.

PART 4. AUTHORIZED PARTICIPANT INTERNET WAGERS

History

History: 2020 AACS.

Mich. Admin. Code R 432.641 Authorized participant complaints {#sec-r-432.641 omnilex-key=us-mi-regs-official--dept-treasury--R 432.641}

Rule 641. (1) An internet gaming operator or internet gaming platform provider must include on its internet gaming platform a clear mechanism to advise authorized participants of their right to make a complaint against the internet gaming operator, the internet gaming platform provider, or another authorized participant (when collusion is suspected or when an authorized participant is disruptive or abusive), including information explaining how complaints can be filed, how complaints are resolved, and how the authorized participant may submit a complaint to the board.

(2) An internet gaming operator or internet gaming platform provider must attempt to resolve all complaints with the authorized participant.

(3) An internet gaming operator or internet gaming platform provider must investigate each complaint and provide a response to the authorized participant within 10 calendar days after receipt of the complaint.

(4) In its response, the internet gaming operator or internet gaming platform provider must advise the authorized participant of his or her right to submit the complaint to the board in the form and manner prescribed by the board.

(5) The complaint and the internet gaming operator’s or internet gaming platform provider’s response must be made in writing.

(6) Unless otherwise directed by the board, for complaints related to internet wagering accounts, game outcomes, or illegal activity related to internet gaming that cannot be resolved to the satisfaction of the authorized participant, the internet gaming operator or internet gaming platform provider must promptly notify the board of the complaint and the internet gaming operator’s or internet gaming platform provider’s response.

(7) On receipt of a complaint from an authorized participant or notification of an unresolved complaint from an internet gaming operator or internet gaming platform provider, the board may conduct any investigation the board considers necessary and may direct an internet gaming operator or internet gaming platform provider to take any corrective action the board considers appropriate.

(8) An internet gaming operator or internet gaming platform provider must maintain records related to authorized participant complaints for a minimum of 5 years and must provide the records to the board on request.

History

History: 2020 AACS.

Mich. Admin. Code R 432.642 Bank secrecy act compliance {#sec-r-432.642 omnilex-key=us-mi-regs-official--dept-treasury--R 432.642}

Rule 642. (1) An internet gaming operator or internet gaming platform provider must comply with all provisions of the bank secrecy act of 1970, 31 USC 5311 to 5332, applicable to the internet gaming operator’s or internet gaming platform provider’s internet gaming operation.

(2) An internet gaming operator or internet gaming platform provider must, with regard to its internet gaming operation, maintain records related to its compliance with the bank secrecy act of 1970, 31 USC 5311 to 5332, including all currency transaction reports, suspicious activity reports, and any supporting documentation, for a minimum of 5 years. The internet gaming operator or internet gaming platform provider must provide the records to the board and any appropriate law enforcement agencies on request consistent with the authorization prescribed in the bank secrecy act of 1970, 31 USC 5311 to 5332, and applicable regulations.

(3) An internet gaming operator or internet gaming platform provider must provide a written notice to the board as soon as the internet gaming operator or internet gaming platform provider becomes aware of a compliance review that is conducted by the Internal Revenue Service under the bank secrecy act of 1970, 31 USC 5311 to 5332, and involves or impacts the internet gaming operator’s or internet gaming platform provider’s internet gaming operation. The internet gaming operator or internet gaming platform provider must provide a copy of the compliance review report or the equivalent to the board within 10 days after the receipt of the report by the internet gaming operator or internet gaming platform provider.

History

History: 2020 AACS.

Mich. Admin. Code R 432.643 Integrity monitoring/suspicious behavior {#sec-r-432.643 omnilex-key=us-mi-regs-official--dept-treasury--R 432.643}

Rule 643. (1) An internet gaming operator or internet gaming platform provider must employ personnel responsible for ensuring the operation and integrity of internet gaming and reviewing all reports of suspicious behavior. Unless otherwise directed by the board, an internet gaming operator or internet gaming platform provider must immediately notify the board upon detecting or becoming aware of any of the following:

(a) Any person participating in internet wagering who is engaging in or attempting to engage in, or who is reasonably suspected of, cheating, theft, embezzlement, collusion, use of funds derived from illegal activity, money laundering, or any other illegal activities, including those activities prohibited in section 13 of the act, MCL 432.313.

(b) Any person who is reasonably suspected of misrepresenting their identity or using false identification to establish or attempt to establish an internet wagering account.

(d) Any criminal or disciplinary proceedings commenced against the internet gaming operator or internet gaming platform provider in connection with its internet gaming.

(e) Any suspicious internet wagering activity or patterns that indicate a concern regarding the integrity of an internet game or internet wagering.

(f) Any other conduct that corrupts the outcome of an internet game or internet wager.

(g) Any internet wagers that violate any applicable state or federal law.

(2) An internet gaming platform provider must promptly notify any affected internet gaming operators on behalf of which it accepts internet wagers of any issues impacting the integrity of internet gaming.

(3) The board may require an internet gaming operator or internet gaming platform provider to provide any hardware or software necessary to the board, or to an independent lab approved by the board, for evaluation of its internet gaming offering or to conduct further monitoring of data provided by its internet gaming platform.

(4) An internet gaming operator or internet gaming platform provider must maintain records demonstrating its compliance with this rule, including all reports of suspicious behavior and any supporting documentation, for a minimum of 5 years and must provide the records to the board on request.

History

History: 2020 AACS.

Mich. Admin. Code R 432.644 Reserve requirement {#sec-r-432.644 omnilex-key=us-mi-regs-official--dept-treasury--R 432.644}

Rule 644. (1) An internet gaming operator or internet gaming platform provider must maintain a reserve in the amount necessary to ensure the security of funds held in internet wagering accounts. The reserve must be in the form of:

(a) Cash or cash equivalents maintained in a U.S. bank account segregated from the internet gaming operator’s or internet gaming platform provider’s operational funds.

(b) An irrevocable letter of credit.

(d) Any other form acceptable to the board.

(e) Any combination of the allowable forms described in subdivisions (a) to (d) of this subrule.

(2) The reserve must be not less than the sum of the following:

(a) The daily ending cashable balance of all authorized participants’ internet wagering accounts.

(b) Pending withdrawals.

(3) Funds held in internet wagering accounts must not be automatically transferred by an internet gaming operator or internet gaming platform provider. An internet gaming operator or internet gaming platform provider must not require an authorized participant to transfer funds from his or her internet wagering account, in order to circumvent this rule.

(4) Amounts available to authorized participants for play that are not redeemable for cash may be excluded from the reserve computation.

(5) On request, the board may allow an internet gaming operator or internet gaming platform provider to combine the reserve for all of its Michigan internet gaming, or all of its Michigan internet sports betting conducted under the lawful sports betting act, 2019 PA 149, MCL 432.401 to 432.419, or both.

(6) An internet gaming operator or internet gaming platform provider must have access to all internet wagering account and transaction data to ensure the amount of its reserve is sufficient. Unless otherwise directed by the board, an internet gaming operator or internet gaming platform provider must file a monthly attestation with the board, in the form and manner prescribed by the board, that funds have been safeguarded under this rule.

(7) The board may audit an internet gaming operator’s or internet gaming platform provider’s reserve at any time and may direct an internet gaming operator or internet gaming platform provider to take any action necessary to ensure the purposes of this rule are achieved, including but not limited to requiring the internet gaming operator or internet gaming platform provider to modify the form of its reserve or increase the amount of its reserve.

History

History: 2020 AACS.

Mich. Admin. Code R 432.645 Voiding of internet wagers {#sec-r-432.645 omnilex-key=us-mi-regs-official--dept-treasury--R 432.645}

Rule 645. An internet gaming operator or internet gaming platform provider may not void a completed internet wager without board approval unless a void is necessary to resolve an internet gaming platform or internet game error or malfunction.

History

History: 2020 AACS.

Mich. Admin. Code R 432.647 Negative internet wagering account balance prohibited {#sec-r-432.647 omnilex-key=us-mi-regs-official--dept-treasury--R 432.647}

Rule 647. An internet gaming platform must employ a mechanism that can detect and prevent any internet wagering or withdrawal activity initiated by an authorized participant that would result in a negative balance of the internet wagering account.

History

History: 2020 AACS.

Mich. Admin. Code R 432.648 Minimum and maximum internet wager {#sec-r-432.648 omnilex-key=us-mi-regs-official--dept-treasury--R 432.648}

Rule 648. Unless otherwise prescribed by the board, there must be no limitation as to the minimum or maximum internet wager an internet gaming operator or internet gaming platform provider may accept. This rule does not preclude an internet gaming operator or internet gaming platform provider from establishing its own minimum or maximum internet wagers or limiting an authorized participant’s internet wager for reasons considered necessary or appropriate by the internet gaming operator or internet gaming platform provider.

History

History: 2020 AACS.

Mich. Admin. Code R 432.649 Tournaments/contests and bonus and promotional wagering {#sec-r-432.649 omnilex-key=us-mi-regs-official--dept-treasury--R 432.649}

Rule 649. (1) An internet gaming operator or internet gaming platform provider may conduct an internet gaming tournament or contest on an authorized game subject to all of the following:

(a) No internet gaming tournament or contest will be conducted unless the internet gaming operator or internet gaming platform provider, before the first time a tournament or contest type is offered, files written notice with the board of its intent to offer that tournament or contest type. The internet gaming operator or internet gaming platform provider may file a master tournament list with the board to satisfy this requirement.

(b) Each internet gaming operator or internet gaming platform provider must maintain a record of each tournament or contest type it offers, which must address, at a minimum, all of the following:

(i) Internet game type (for example, hold 'em poker).

(ii) Rules concerning tournament or contest play and participation.

(iii)Entry fee amount or amounts per participant.

(iv) Funding source amount or amounts comprising the prize pool (for example, buy-ins, re-buys, or add-ons).

(v) Prize structure on payout.

(vi) Methodology for determining winner or winners.

(2) An internet gaming operator or internet gaming platform provider may conduct internet gaming bonus and promotional wagering offers subject to all of the following:

(a) An internet gaming operator or internet gaming platform provider must maintain a record of all bonus and promotional wagering offers related to internet gaming in an electronic file that is readily available to the board.

(b) All bonus and promotional wagering offers must be stated in clear and unambiguous terms and must be accessible by the authorized participant after the offer is accepted and before completion.

(i) The date and time the offer is active and expires.

(ii) Authorized participant eligibility, including any limitations on participation.

(iii)Any restriction on withdrawals of funds.

(iv) Wagering requirements and limitations by type of internet game.

(v) The order in which funds are used for internet wagers.

(vi) Eligible internet games.

(vii) Rules regarding cancellation.

(3) An internet gaming platform or internet gaming platform provider must provide a clear and conspicuous method for an authorized participant to cancel his or her participation in a bonus or promotional wagering offer that utilizes restricted gaming credits that cannot be cashed out until a wagering requirement or other restrictions associated with the credits is met. If an authorized participant elects to proceed with cancellation, unrestricted funds remaining in an internet wagering account must be returned according to the terms and conditions.

(4) Once an authorized participant has met the terms of a bonus or promotional wagering offer, an internet gaming operator or internet gaming platform provider must not limit winnings earned while participating in the offer.

(5) Internet gaming operators or internet gaming platform providers may utilize celebrity authorized participants or other authorized participants to participate in peer-topeer games for advertising or publicity purposes. Such authorized participants may have their internet wagering account funded in whole or in part by an internet gaming operator or internet gaming platform provider.

(6) An internet gaming operator or internet gaming platform provider may pay a fee to the celebrity authorized participant. If a celebrity authorized participant is utilized and the celebrity authorized participant generates winnings that the internet gaming operator or internet gaming platform provider does not permit the celebrity authorized participant to retain, the winnings must be included in gross receipts in a manner approved by the board.

PART 5. INTERNET WAGERING ACCOUNTS

History

History: 2020 AACS.

Mich. Admin. Code R 432.651 Single wagering account in use for internet wagering {#sec-r-432.651 omnilex-key=us-mi-regs-official--dept-treasury--R 432.651}

Rule 651. (1) An internet gaming operator or internet gaming platform provider shall limit each authorized participant to one internet wagering account and username. Each internet wagering account must be all of the following:

(a) Non-transferable.

(b) Unique to the authorized participant who establishes the internet wagering account.

(c) Distinct from any other account number that the authorized participant may have established with the internet gaming operator or internet gaming platform provider except as set forth in subrule (2).

(2) An internet wagering account must be separate and distinct from an internet sports betting account established under the lawful sports betting act, 2019 PA 149, MCL 432.401 to MCL 432.419. Notwithstanding the foregoing, an internet wagering account may be integrated with an internet sports betting account, subject to all of the following conditions:

(a) Internet gaming transactions must be identified, recorded, accounted for, and reported separately and distinctly from internet sports betting transactions conducted under the lawful sports betting act, 2019 PA 149, MCL 432.401 to MCL 432.419.

(b) An internet gaming operator or internet gaming platform provider must comply with all applicable provisions of the act and these rules and any other conditions considered appropriate by the board.

(3) An internet gaming operator or internet gaming platform provider must implement internal controls and publish procedures to terminate all accounts of any individual who establishes or seeks to establish multiple active internet wagering accounts, whether directly or by use of another individual as a proxy.

History

History: 2020 AACS.

Mich. Admin. Code R 432.651a Age and identity verification {#sec-r-432.651a omnilex-key=us-mi-regs-official--dept-treasury--R 432.651a}

Rule 651a. (1) An internet gaming operator or internet gaming platform provider must verify an individual’s identity before allowing that individual to create an internet wagering account and place an internet wager.

(2) Only an individual who is 21 years of age or older and not a prohibited person may create an internet wagering account, deposit funds, or participate in internet wagering.

The internet gaming operator or internet gaming platform provider must deny the ability to create an internet wagering account, deposit funds, or participate in internet wagering to any individual who is under 21 years of age or is a prohibited person. This subrule shall not be construed to prevent an individual from creating an internet gaming account and depositing funds to such an account even if they are prohibited from placing certain wagers.

(3) An internet gaming operator or internet gaming platform provider must use commercially available and demonstrable standards to confirm that an individual attempting to create an internet wagering account is not a prohibited person.

(4) Third-party service providers may be used for age and identity verification of individuals attempting to create internet wagering accounts.

History

History: 2020 AACS.

Mich. Admin. Code R 432.651b Data security of age and identity verification information {#sec-r-432.651b omnilex-key=us-mi-regs-official--dept-treasury--R 432.651b}

Rule 651b. Details of the age and identity verification process must be kept by the internet gaming operator or internet gaming platform provider in a secure manner approved by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.651c Handling of internet wagering accounts found to be used in fraudulent manner {#sec-r-432.651c omnilex-key=us-mi-regs-official--dept-treasury--R 432.651c}

Rule 651c. An internet gaming operator or internet gaming platform provider must have a documented system of internal controls for the handling of authorized participants or other individuals discovered to be using internet wagering accounts in a fraudulent manner, including, but not limited to the following:

(a) The maintenance of information about any authorized participant’s activity or other individual’s activity, such that if fraudulent activity is detected, the internet gaming operator or internet gaming platform provider and the board have all of the necessary information to take appropriate action.

(b) The suspension of any internet wagering account discovered to be providing fraudulent access to prohibited persons.

(c) The treatment of deposits, internet wagers, and wins associated with a prohibited person’s fraudulent use of an account and the confiscation of any winnings and things of value of a prohibited person in accordance with part 7 of these rules.

History

History: 2020 AACS.

Mich. Admin. Code R 432.652 Terms and conditions for internet wagering accounts {#sec-r-432.652 omnilex-key=us-mi-regs-official--dept-treasury--R 432.652}

Rule 652. (1) All terms and conditions for internet wagering accounts must be included in the internal controls of the internet gaming operator or internet gaming platform provider and address all aspects of the internet wagering, including, but not limited to all of the following:

(a) Name of the party or parties with whom the individual is entering into a contractual relationship, including any licensee.

(b) Individual's consent to have the internet gaming operator or internet gaming platform provider confirm the individual's age and identity.

(i) Prohibition from allowing any other individual to access or use his or her internet wagering account.

(ii) Prohibition from engaging in internet wagering activity unless physically present in Michigan or another jurisdiction authorized under a multijurisdictional internet gaming agreement entered into in accordance with the act.

(iii)Prohibition from placing an internet wager while physically present in another jurisdiction on an internet game not authorized by the act and a multijurisdictional internet gaming agreement.

(iv) Consent to the monitoring and recording by the internet gaming operator, internet gaming platform provider, or the board, or all 3 of any internet wagering communications and geographic location information.

(v) Consent to the jurisdiction of this state to resolve any disputes arising out of internet wagering.

(vi) Prohibition against utilizing automated computerized software or other equivalent mechanism, such as a "bot," to engage in play.

(d) Full explanation of all fees and charges imposed upon an authorized participant related to internet wagering transactions.

(e) Availability of internet wagering account statements detailing the authorized participant’s internet wagering account activity.

(f) Privacy policies, including information access.

(g) Legal age policy, including a statement that it is a criminal offense to allow an individual who is under the age of 21 to participate in internet wagering.

(h) Full explanation of all rules applicable to dormant internet wagering accounts.

(i) Authorized participant’s right to set responsible gaming limits and to selfexclude.

(j) Authorized participant’s right to suspend his or her internet wagering account for a period of no less than 72 hours.

(k) Actions that will be taken if an authorized participant becomes disconnected from the internet gaming platform during game play.

(l) Notice that a malfunction voids all pays.

(m) Estimated time period for withdrawal of funds from an internet wagering account.

(2) If the internet gaming terms and conditions are changed, the internet gaming operator or internet gaming platform provider shall require the authorized participant to acknowledge acceptance of the change. Unless otherwise authorized by the board, the authorized participant’s acknowledgement must be date and time stamped by the internet gaming platform.

History

History: 2020 AACS.

Mich. Admin. Code R 432.653 Authorized participant protections {#sec-r-432.653 omnilex-key=us-mi-regs-official--dept-treasury--R 432.653}

Rule 653. (1) An internet gaming operator or internet gaming platform provider must provide an authorized participant protection information page that must be readily accessible to each authorized participant. The authorized participant protection page must be accessible to an authorized participant throughout an authorized participant session.

The authorized participant protection page must contain, at a minimum, all of the following:

(a) Method for changing or retrieving a password or other approved access security feature and the ability to choose "strong authentication" login protection.

(b) Method for filing a complaint with the internet gaming operator or internet gaming platform provider.

(c) Method for filing with the board an unresolved complaint after all reasonable means to resolve the complaint with the internet gaming operator or internet gaming platform provider have been exhausted utilizing forms and in the manner prescribed by the board.

(d) Method for obtaining a copy of the internet wagering terms and conditions agreed to when establishing an internet wagering account.

(e) Method for the authorized participant to obtain his or her internet wagering account and game history from the internet gaming operator or internet gaming platform provider.

(f) Notification that underage gambling is a criminal offense and that anyone who facilitates an individual under the age of 21 to place an internet wager has committed a criminal offense and must be prohibited from internet gaming.

(g) Notification that the authorized participant is responsible for configuring his or her terminal's auto-lock feature to protect the terminal from unauthorized use.

(h) Notification that an authorized participant is prohibited from allowing any other individual to access or use his or her internet wagering account.

(i) Information about potential risks associated with excessive participation in internet wagering, and where to get help related to gaming responsibly.

(j) A list of the available authorized participant protection measures that can be invoked by the authorized participant, such as self-imposed limits, and information on how to invoke those measures.

(k) Mechanisms in place for authorized participants to detect unauthorized use of their internet wagering account, such as the authorized participant reviewing credit card statements against known deposits.

(l) Other authorized participant protections authorized by the board.

(2) Authorized participants must be provided with an easy and obvious method to impose limitations for internet wagering parameters including, but not limited to, deposits, wagers, and time-based limitations. The self-imposed limitation method must provide the following functionality:

(a) Upon receiving any self-imposed limitation order, the internet gaming operator or internet gaming platform provider must ensure that all specified limits are correctly implemented immediately or at the time that was clearly indicated to the authorized participant.

(b) The self-imposed limitations set by an authorized participant must not override more restrictive internet gaming operator or internet gaming platform providerimposed limitations. The more restrictive limitations must take priority.

(c) Once established by an authorized participant and implemented by the internet gaming platform, it must only be possible to reduce the severity of self-imposed limitations upon 24 hours’ notice, or as required by the board.

(d) Self-imposed limitations must not be compromised by internal status events, such as self-imposed exclusion.

(3) The self-imposed limitations must be available to the authorized participant immediately after the internet wagering account is created, when placing a deposit into his or her internet wagering account, and upon logging into his or her internet wagering account.

History

History: 2020 AACS.

Mich. Admin. Code R 432.654 Responsible gaming {#sec-r-432.654 omnilex-key=us-mi-regs-official--dept-treasury--R 432.654}

Rule 654. Each internet gaming operator’s website or internet gaming platform must display a responsible gaming logo in a manner approved by the board to direct an authorized participant to the internet gaming operator’s website or internet gaming platform responsible gaming page. The responsible gaming page must be accessible to an authorized participant during an authorized participant session and contain, but is not limited to, the following:

(a) A prominent message that informs authorized participants of a toll-free compulsive helpline number that the participants can call for help with a gambling problem.

(b) A direct link to the Michigan Gaming Control Board Compulsive/Problem Gambling website and other organizations based in the United States that are dedicated to helping people with potential gambling problems.

(c) A clear statement of the internet gaming operator’s or internet gaming platform provider’s policy and commitment to responsible gaming.

(d) Other responsible gaming measures required by the board.

History

History: 2020 AACS; 2025 MR 9, Eff. April 29, 2025.

Mich. Admin. Code R 432.655 Internet wagering account requirements {#sec-r-432.655 omnilex-key=us-mi-regs-official--dept-treasury--R 432.655}

Rule 655. To establish an internet wagering account, an internet gaming operator or internet gaming platform provider must do all of the following:

(a) Create an electronic authorized participant file, which must, at a minimum, include the following:

(i) The authorized participant’s legal name.

(ii) The authorized participant’s date of birth.

(iii) The authorized participant’s Social Security number, or the last 4 digits of the Social Security number, or an equivalent identification number for a noncitizen authorized participant, such as a passport or taxpayer identification number.

(iv) The authorized participant’s internet wagering account number or username.

(v) The authorized participant’s residential address. A post office box is not acceptable.

(vi) The authorized participant’s electronic mail address.

(vii) The authorized participant’s telephone number.

(viii) Any other information collected from the authorized participant used to verify his or her identity.

(ix) The method used to verify the authorized participant’s identity.

(x) The date of verification.

(b) Encrypt all of the following information contained in an electronic authorized participant file:

(i) Any portion of the authorized participant’s Social Security number or equivalent identification number for a noncitizen authorized participant, such as a passport or taxpayer identification number.

(ii) The authorized participant’s passwords and PINs.

(iii) The authorized participant’s personal financial information.

(c) Verify the authorized participant’s age and identity and record the date of verification in accordance with any of the following:

(i) Reliable forms of personal identification specified in the internet gaming operator’s or internet gaming platform provider’s internal controls.

(ii) Other methodology for remote multi-source authentication, which may include third-party and governmental databases, as approved by the board.

(d) Record the document number of the government issued identification credential examined, if applicable. If a government issued identification credential is not required for registration, the electronic record that details the process used to confirm the authorized participant’s identity must be recorded.

(e) Require the authorized participant to establish a password or other access security feature as approved by the board and advise the authorized participant to utilize strong authentication login protection.

(f) Record the authorized participant’s acceptance of the internet gaming operator’s or internet gaming platform provider’s internet wagering terms and conditions to participate in internet gaming through the internet gaming operator’s or internet gaming platform provider’s website.

(g) Record the authorized participant’s certification that the information provided to the internet gaming operator or internet gaming platform provider is accurate.

(h) Record the authorized participant’s acknowledgment that the legal age for internet wagering is 21, and that he or she is prohibited from allowing any other individual to access or use his or her internet wagering account.

(i) Notify the authorized participant of the establishment of the account via electronic mail.

History

History: 2020 AACS.

Mich. Admin. Code R 432.655a Internet wagering account funding {#sec-r-432.655a omnilex-key=us-mi-regs-official--dept-treasury--R 432.655a}

Rule 655a. An authorized participant’s internet wagering account may be funded through the use of any of the following:

(a) An authorized participant’s credit or debit card.

(b) An authorized participant’s deposit of cash or cash equivalent at a cashiering location approved by the board.

(c) An authorized participant’s reloadable prepaid card, which has been verified as being issued to the authorized participant and is non-transferable.

(d) Promotional credit.

(e) Winnings.

(f) Adjustments made by the internet gaming operator or internet gaming platform provider with documented notification to the authorized participant.

(g) ACH transfer, provided that the internet gaming operator or internet gaming platform provider has security measures and controls to prevent ACH fraud regarding failed ACH deposits.

(h) Wire transfer.

(i) Any other means approved by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.655b Failed ACH deposits {#sec-r-432.655b omnilex-key=us-mi-regs-official--dept-treasury--R 432.655b}

Rule 655b. A failed ACH deposit attempt is not considered fraudulent if the authorized participant has successfully deposited funds via an ACH transfer on a previous occasion with no outstanding chargebacks. Otherwise, the internet gaming operator or internet gaming platform provider shall do all of the following:

(a) Temporarily block the authorized participant’s internet wagering account for investigation of fraud after 5 consecutive failed ACH deposit attempts within a 10minute period. If there is no evidence of fraud, the block may be vacated.

(b) Suspend the authorized participant’s internet wagering account after 5 additional consecutive failed ACH deposit attempts within a 10-minute period.

History

History: 2020 AACS.

Mich. Admin. Code R 432.655c Transfer of funds prohibited {#sec-r-432.655c omnilex-key=us-mi-regs-official--dept-treasury--R 432.655c}

Rule 655c. An internet gaming operator or internet gaming platform provider must not permit an authorized participant to transfer funds from one authorized participant’s internet wagering account to another authorized participant’s internet wagering account or any other wagering account belonging to another authorized participant.

History

History: 2020 AACS.

Mich. Admin. Code R 432.655d Authorized participant account withdrawal {#sec-r-432.655d omnilex-key=us-mi-regs-official--dept-treasury--R 432.655d}

Rule 655d. (1) An authorized participant must be allowed to withdraw the funds maintained in his or her internet wagering account, whether the account is open or closed, except as otherwise provided in these rules, or any other applicable state or federal law.

(2) An internet gaming operator or internet gaming platform provider must honor the authorized participant's request to withdraw funds within 10 business days after the request, unless the conditions set forth in subrule (3) of this rule are met.

(3) The internet gaming operator or internet gaming platform provider may decline to honor an authorized participant’s request to withdraw funds only if the internet gaming operator or internet gaming platform provider believes in good faith that the authorized participant engaged in either fraudulent conduct or other conduct that would put the internet gaming operator or internet gaming platform provider in violation of the act and these rules. In such cases, the internet gaming operator or internet gaming platform provider must do all of the following:

(a) Provide notice to the authorized participant of the nature of the investigation of the internet wagering account.

(b) Conduct its investigation in a reasonable and expedient fashion, providing the authorized participant additional written notice of the status of the investigation every tenth business day starting from the day the original notice was provided to the authorized participant.

(4) For purposes of this rule, a request for withdrawal is considered honored if it is processed by the internet gaming operator or internet gaming platform provider notwithstanding a delay by a payment processor, credit card issuer, or the custodian of a financial account.

History

History: 2020 AACS.

Mich. Admin. Code R 432.655e Internet wagering account review requirements {#sec-r-432.655e omnilex-key=us-mi-regs-official--dept-treasury--R 432.655e}

Rule 655e. All adjustments to internet wagering accounts for amounts of $500.00 or less must be periodically reviewed by supervisory personnel as set forth in the internet gaming operator’s or internet gaming platform provider’s internal controls. All other adjustments must be authorized by supervisory personnel before being entered.

History

History: 2020 AACS.

Mich. Admin. Code R 432.656 Internet wagering account information {#sec-r-432.656 omnilex-key=us-mi-regs-official--dept-treasury--R 432.656}

Rule 656. (1) An internet gaming platform must provide an account statement with account details to an authorized participant on demand, which must include detailed account activity for at least 6 months. In addition, an internet gaming platform must, upon request, be capable of providing a summary statement of all authorized participant activity during the past 2 years. Information provided on the summary statement must include, but not be limited to, the following:

(a) Deposits to the internet wagering account.

(b) Withdrawals from the internet wagering account.

(d) Beginning and ending internet wagering account balances.

(e) Self-imposed limit history, if applicable.

(2) An internet gaming operator or internet gaming platform provider must periodically re-verify an authorized participant’s identification upon reasonable suspicion that the authorized participant’s identification has been compromised.

History

History: 2020 AACS.

Mich. Admin. Code R 432.657 Internet wagering account closure {#sec-r-432.657 omnilex-key=us-mi-regs-official--dept-treasury--R 432.657}

Rule 657. An internet gaming platform must provide a conspicuous and readily accessible method for an authorized participant to close his or her internet wagering account through the account management or similar page or through the internet gaming platform customer support team. Any balance remaining in an internet wagering account closed by an authorized participant shall be refunded pursuant to the internet gaming operator’s or internet gaming platform provider’s internal controls.

History

History: 2020 AACS.

Mich. Admin. Code R 432.658 Internet wagering dormant accounts {#sec-r-432.658 omnilex-key=us-mi-regs-official--dept-treasury--R 432.658}

Rule 658. An internet gaming operator or internet gaming platform provider shall consider an internet wagering account to be dormant if the authorized participant has not logged into the internet wagering account for at least 3 years. A dormant internet wagering account must be closed by the internet gaming operator or internet gaming platform provider. Any balance remaining in a dormant internet wagering account must be refunded or escheated in accordance with the internet gaming operator’s or internet gaming platform provider’s internal controls.

History

History: 2020 AACS.

Mich. Admin. Code R 432.659 Suspension and restoration of internet wagering accounts {#sec-r-432.659 omnilex-key=us-mi-regs-official--dept-treasury--R 432.659}

Rule 659. (1) An internet gaming platform must employ a mechanism that places an internet wagering account in a suspended mode under any of the following conditions:

(a) When requested by the authorized participant for a specified period of time, which must not be less than 72 hours.

(b) When required by the board.

(d) When initiated by an internet gaming operator or internet gaming platform provider that has evidence that indicates any of the following:

(i) Illegal activity.

(ii) A negative internet wagering account balance.

(iii) A violation of the internet wagering account terms and conditions has taken place on an authorized participant’s internet wagering account.

(2) When an internet wagering account is in a suspended mode, the internet gaming platform must do all of the following:

(a) Prevent the authorized participant from internet wagering.

(b) Prevent the authorized participant from depositing funds unless the account is suspended due to having a negative internet wagering account balance but only to the extent the internet wagering account balance is brought back to zero dollars.

(c) Prevent the authorized participant from withdrawing funds from his or her suspended account, unless the suspended mode was initiated by the authorized participant.

(d) Prevent the authorized participant from making changes to his or her internet wagering account.

(e) Prevent the removal of the internet wagering account from the internet gaming platform.

(f) Prominently display to the authorized participant that the internet wagering account is in a suspended mode, the restrictions placed on the internet wagering account, and any further course of action needed to remove the suspended mode.

(3) A suspended account may be restored for any of the following reasons:

(a) Upon expiration of the time period established by the authorized participant.

(b) If authorized by the board.

(d) When the internet gaming operator or internet gaming platform provider has lifted the suspended status.

PART 6. AUDIT AND INTERNAL CONTROLS

History

History: 2020 AACS.

Mich. Admin. Code R 432.661 Internal control standards applicability of part {#sec-r-432.661 omnilex-key=us-mi-regs-official--dept-treasury--R 432.661}

Rule 661. This part applies to internet gaming operators and internet gaming platform providers.

History

History: 2020 AACS.

Mich. Admin. Code R 432.662 Purpose {#sec-r-432.662 omnilex-key=us-mi-regs-official--dept-treasury--R 432.662}

Rule 662. The procedures of the internal control standards are designed to ensure all of the following:

(a) Assets are safeguarded.

(b) The financial records of the internet gaming operator and internet gaming platform provider are accurate and reliable.

(c) The transactions of the internet gaming operator and internet gaming platform provider are performed only in accordance with the act and these rules.

(d) The transactions are recorded adequately to permit the proper recording of the adjusted gross receipts, fees, and all applicable taxes and payments.

(e) Accountability of assets is maintained pursuant to generally accepted accounting principles.

(f) Only authorized personnel have access to assets.

(g) Internet wagering account balances are complete and accurate, and appropriate action is taken with respect to discrepancies.

(h) Internet wagering accounts and personal identifiable information are adequately protected.

(i) The functions, duties, and responsibilities are appropriately segregated and performed pursuant to sound practices by competent, qualified personnel and that no employee of the internet gaming operator, the internet gaming platform provider, a supplier, a registered vendor, or a third-party provider is in a position to perpetuate and conceal errors or irregularities in the normal course of the employee’s duties.

(j) Internet gaming is conducted with integrity and in accordance with the act and these rules.

History

History: 2020 AACS.

Mich. Admin. Code R 432.663 Board approval of internal control standards and requirements {#sec-r-432.663 omnilex-key=us-mi-regs-official--dept-treasury--R 432.663}

Rule 663. (1) Unless otherwise provided for by the board, before beginning internet gaming, an internet gaming operator or internet gaming platform provider, or both, must submit its administrative and accounting procedures in detail in a written system of internal control for board review and written approval. A written system of internal controls must include a detailed narrative description of the administrative and accounting procedures designed to satisfy the requirements of these rules.

(2) The written system of internal controls must address the following items, at a minimum:

(a) Procedures for responding to a failure of the internet gaming platform (i.e., game, system, communications, or platform malfunction), including procedures for restoring internet gaming. The internet gaming operator or internet gaming platform provider, or both, must also file with the board an incident report for each significant platform failure and document the date, time, and reason for the failure along with the date and time the system is restored.

(b) User access controls for all internet gaming personnel.

(d) Automated and manual risk management procedures.

(e) Procedures for identifying and reporting fraud and suspicious conduct.

(f) Procedures to prevent wagering by prohibited persons.

(g) Procedures for internet gaming operator-imposed or internet gaming platform provider-imposed exclusion of authorized participants, including the following:

(i) Providing a notification containing operator-imposed or internet gaming platform provider-imposed exclusion status and general instructions for resolution.

(ii) Ensuring that immediately upon executing the operator-imposed or internet gaming platform provider-imposed exclusion order, no new wagers or deposits are accepted from the authorized participant, until such time as the operator-imposed or internet gaming platform provider-imposed exclusion has been revoked.

(iii) Ensuring that the authorized participant is not prevented from withdrawing any or all of his or her account balance, if the internet gaming operator or internet gaming platform provider acknowledges that the funds have cleared, and that the reason or reasons for exclusion would not prohibit a withdrawal.

(h) Description of anti-money laundering compliance standards.

(i) Process for submitting or receiving approval of all types of internet games and wagers available.

(j) Description of process for accepting wagers and issuing payouts, plus any additional controls for accepting wagers and issuing payouts in excess of $10,000.00.

(k) Description of process for voiding or cancelling wagers and refunding the authorized participant in accordance with these rules.

(l) Description of process for accepting multiple wagers from one authorized participant in a 24-hour cycle, including process to identify authorized participant structuring of wagers to circumvent recording and reporting requirements.

(m) Procedure for the recording of and reconciliation of internet gaming transactions.

(n) Procedures for issuance and acceptance of promotional funds for internet gaming.

(o) Description of all integrated third-party platforms.

(p) Procedures for identifying and restricting prohibited persons.

(q) Description of process to close out dormant accounts.

(r) Procedures for making adjustments to an internet wagering account, providing a method for an authorized participant to close out an account and how an authorized participant will be refunded after the closure of an account or how funds will be escheated.

(s) Procedures to verify each authorized participant's physical location pursuant to part 3 of these rules.

(t) Procedures for the security and sharing of personal identifiable information of an authorized participant, funds or financial information in an internet wagering account, and other information as required by the board. The procedures must include the means by which an internet gaming operator or internet gaming platform provider, or both, will provide notice to an authorized participant related to the sharing of personal identifiable information.

(u) Detailed responsible gaming measures.

(v) Method for securely implementing the responsible gaming database.

(w) Methods for securely issuing, modifying, and resetting an authorized participant’s account password, personal identification number (PIN), or other approved security feature, if applicable. Any method must include notification to the authorized participant following any modification via electronic or regular mail, text message, or other manner approved by the board. Such methods must include, at a minimum, one of the following:

(i) Proof of identity, if in person.

(ii) The correct response to 2 or more challenge questions.

(iii) Strong authentication.

(x) Procedures for receiving, investigating, and responding to all authorized participant complaints.

(y) In detail, the location of the internet gaming servers, including any third-party remote location servers, and what controls will be in place to ensure security of the internet gaming servers.

(z) Technical security standards (controls) required by these rules.

(aa) Procedures for registration of authorized participants and establishing internet wagering accounts, including a procedure for authenticating the age, identity, and physical address of an applicant for an internet wagering account and whether the applicant is prohibited from establishing or maintaining an account under applicable laws or regulations.

(bb) Procedures for terminating an internet wagering account and the return of any funds remaining in the internet wagering account to the authorized participant or confiscation of funds in accordance with these rules.

(cc) Procedures for the logging in and authentication of an authorized participant to enable the authorized participant to commence internet gaming and the logging off of the authorized participant when the authorized participant has completed play, including a procedure to automatically log an authorized participant out of the internet wagering account after a specified period of inactivity.

(dd) Procedures for the crediting and debiting of an internet wagering account.

(ee) Procedures for withdrawing funds from an internet wagering account by the authorized participant.

(ff) Procedures for the protection of an authorized participant’s funds, including the segregation of an authorized participant’s funds from operating funds of the internet gaming operator or internet gaming platform provider, or both.

(gg) Procedures and security for the calculation and recording of gross receipts, adjusted gross receipts, and winnings.

(hh) Procedures and security standards as to receipt, handling, and storage of internet gaming equipment.

(ii) Procedures and security standards to protect and respond to an individual's suspected or actual hacking of or tampering with the internet gaming operator’s or internet gaming platform provider’s internet gaming website or internet gaming devices and associated equipment.

(jj) Procedures and appropriate measures implemented to deter, detect, and, to the extent possible, prevent cheating, including collusion, and use of cheating devices, including the use of software programs that make bets according to algorithms.

(kk) Procedures to govern emergencies, including suspected or actual cyber-attacks on, hacking of, or tampering with the internet gaming platform, internet gaming website or internet gaming devices and associated equipment. The procedures must include the process for the reconciliation or repayment of an authorized participant's internet wagering account.

(ll) Policies and procedures in connection with the internal audit function of its internet gaming operations.

(mm) Establishing policies and procedures with respect to credit.

(nn) Any other items considered necessary by the board.

(3) To the extent a third-party is involved in or provides any of the internal controls required in these rules, the internet gaming operator’s or internet gaming platform provider’s internal controls, or the controls of both of them, must document the roles and responsibilities of the third-party and must include procedures to evaluate the adequacy of and monitor compliance with the third-party’s internal control procedures.

History

History: 2020 AACS.

Mich. Admin. Code R 432.663a Amendments to internal controls {#sec-r-432.663a omnilex-key=us-mi-regs-official--dept-treasury--R 432.663a}

Rule 663a. Unless otherwise provided by the board, all of the following provisions apply to amendments to the internal control procedures:

(a) Amendments to any portion of the internal control procedures must be submitted to the board for approval. If within 30 days the board has not approved, denied, or otherwise provided written notice, an internet gaming operator or internet gaming platform provider, or both, may implement the amended internal controls as submitted with the board retaining its authority to require further amendment, approval, or denial.

(b) The board may, in writing, approve, deny, or require a revision to the amendment to the internal control procedures. If the internet gaming operator or internet gaming platform provider, is notified of a required revision, the internet gaming operator or internet gaming platform provider must work with the board to address the revision.

(c) If the board requests additional information, clarification, or revision of an amendment to an internal control and the internet gaming operator or internet gaming platform provider, or both, fail to satisfy the request within 30 days after the board request, the board shall consider the amendment denied and it cannot be implemented or, if previously implemented under subdivision (a) of this rule, the internet gaming operator or internet gaming platform provider has 15 days to cease implementation of that amendment. If the internet gaming operator or internet gaming platform provider subsequently wants to pursue the amendment, it must resubmit the request along with the additional information previously requested by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.663b Emergency procedures {#sec-r-432.663b omnilex-key=us-mi-regs-official--dept-treasury--R 432.663b}

Rule 663b. (1) In the event of an emergency, the internet gaming operator or internet gaming platform provider, or both, may temporarily amend an internal control procedure. The executive director or his or her designee must be notified that an emergency exists before temporarily amending an internal control procedure.

(2) An internet gaming operator or internet gaming platform provider, or both, must submit the temporary emergency amendment of the internal control procedures to the executive director or his or her designee within 3 days of the amendment. The submission must include the detailed emergency procedures that will be implemented and the time period the emergency procedures will be temporarily in place. Any concerns the board has with the submission must be addressed with the internet gaming operator or internet gaming platform provider, or both.

(3) As soon as the circumstances necessitating the emergency amendment to the internal control procedures abate, an internet gaming operator or internet gaming platform provider, or both, shall resume compliance with the approved internal control procedures.

History

History: 2020 AACS.

Mich. Admin. Code R 432.663c Failure to comply with requirements {#sec-r-432.663c omnilex-key=us-mi-regs-official--dept-treasury--R 432.663c}

Rule 663c. If the board determines that the administrative or accounting procedures or written internal control procedures of the internet gaming operator or internet gaming platform, or both, do not comply with the requirements of these rules or require improvement, the board shall notify the internet gaming operator or internet gaming platform provider, or both, in writing. Within 15 days after receiving the notification, the internet gaming operator or internet gaming platform provider must amend its procedures and written internal control procedures accordingly and must submit, for board approval, a copy of the written internal control procedures, as amended, and a description of any other remedial measure taken.

History

History: 2020 AACS.

Mich. Admin. Code R 432.664 Compliance with internal controls {#sec-r-432.664 omnilex-key=us-mi-regs-official--dept-treasury--R 432.664}

Rule 664. (1) Internet gaming operators and internet gaming platform providers must comply with all internal controls.

(2) If an internet gaming operator or internet gaming platform provider fails to comply with any provision of its internal controls, the board may initiate a disciplinary action.

History

History: 2020 AACS.

Mich. Admin. Code R 432.665 Accounting records {#sec-r-432.665 omnilex-key=us-mi-regs-official--dept-treasury--R 432.665}

Rule 665. (1) An internet gaming operator and internet gaming platform provider must maintain complete, accurate, and legible records of all transactions related to their internet gaming, including transactions pertaining to revenues, expenses, assets, liabilities, and equity in conformance with generally accepted accounting principles.

(2) The board may direct an internet gaming operator and internet gaming platform provider to alter the manner in which the records are maintained if the internet gaming operator’s and internet gaming platform provider’s records are not in accordance with generally accepted accounting principles or if the records are not in sufficient detail.

(3) The accounting records must be maintained using a double entry system of accounting with transactions recorded on the accrual basis and supported by detailed subsidiary records.

(4) The detailed subsidiary records must include, at a minimum, all of the following:

(a) Detailed general ledger accounts identifying all revenue, expenses, assets, liabilities, and equity.

(b) A record of all investments, advances, loans, and accounts receivable balances due the establishment.

(d) A record of all accounts receivable written off as uncollectible.

(e) Journal entries prepared.

(f) Tax work papers used in preparation of any state or federal tax return if applicable.

(g) Records supporting the accumulation of the costs for complimentary services and items. A complimentary service or item provided to individuals in the normal course of an internet gaming business must be recorded in an amount based upon the full retail price normally charged for the service or item or as is otherwise consistent with generally accepted accounting principles.

(h) Records required by the internal control system.

(i) Other records that the board requires to be maintained.

(5) The internet gaming operator and internet gaming platform provider must maintain all records supporting the adjusted gross receipts.

(6)If an internet gaming operator or internet gaming platform provider, or both, fails to maintain the records used by it to calculate the adjusted gross receipts, the board may compute and determine the amount upon the basis of an audit conducted by the board using available information.

History

History: 2020 AACS.

Mich. Admin. Code R 432.665a Annual audits and annual compliance reports {#sec-r-432.665a omnilex-key=us-mi-regs-official--dept-treasury--R 432.665a}

Rule 665a. (1) All of the following provisions apply to annual and special audits and other reports:

(a) The board requires an annual audit of the financial condition of the internet gaming operator’s and internet gaming platform provider’s total internet gaming operations. For an internet gaming operator licensed as a casino under the Michigan Gaming Control and Revenue Act, the audit prepared pursuant to section 14 of the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.214, satisfies this requirement. An independent certified public accountant must perform the annual audit.

(b) The annual audit must be performed and presented in accordance with generally accepted accounting principles and contain the opinion of the independent certified public accountant as to its fair preparation and presentation in accordance with generally accepted accounting principles.

(c) To assure the integrity of internet gaming and compliance with the act and these rules, the board may require a special audit of an internet gaming operator or an internet gaming platform provider, or both, to be conducted by board personnel or an independent certified public accountant. The board shall establish the scope, procedures, and reporting requirements of a special audit. For an internet gaming operator who is an Indian tribe, the scope of the special audit must be limited to the internet gaming operator’s internet gaming operations.

(2) The board shall require annual compliance reports to be prepared by the internet gaming operator or the internet gaming platform provider, or both, and submitted in a manner and form prescribed by the board. The annual compliance report must address all of the following areas:

(a) Compliance with procedures to ascertain that adjusted gross receipts are determined and state and local taxes or payments are paid, in conformity with the act and these rules.

(b) Compliance with applicable ordinances and agreements with other governmental authorities.

(c) Compliance with internal control procedures, accounting procedures, credit procedures, dispute procedures, and board-imposed security and safety requirements.

(d) A material deviation from the internal control procedures, accounting procedures, credit and dispute procedures, and board-imposed security and safety requirements.

(e) Corrective action taken to resolve deficiencies observed in subdivisions (a) to (d) of this subrule.

(f) Other matters required by the board to measure compliance with the act and these rules.

(4) The reporting year-end of the internet gaming operator and internet gaming platform provider is December 31 unless otherwise approved by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.665b Board access to platform data {#sec-r-432.665b omnilex-key=us-mi-regs-official--dept-treasury--R 432.665b}

Rule 665b. The internet gaming operator or internet gaming platform provider must provide access to internet gaming platform related data as considered necessary by the board and in a manner approved by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.666 Records retention {#sec-r-432.666 omnilex-key=us-mi-regs-official--dept-treasury--R 432.666}

Rule 666. (1) Each internet gaming operator or internet gaming supplier must maintain, in a place secure from theft, loss, or destruction, adequate records of its business and accounting operations. An internet gaming operator or internet gaming supplier must make the records available to the board, upon request, within a time provided for by the board. An internet gaming operator or internet gaming supplier must hold the records for not less than 5 years. The records must include, but not be limited to, all of the following:

(a) All correspondence with, or reports to, the board or any local, state, tribal, or federal governmental agency.

(b) All correspondence concerning the business of an internet gaming operator or internet gaming supplier.

(2) An internet gaming operator or internet gaming supplier must keep and maintain, in a manner and form required by the board, accurate, complete, and legible records of any books, records, or documents pertaining to, prepared in, or generated by, the internet gaming operator or internet gaming supplier, including, but not limited to, all of the following:

(a) Forms.

(b) Reports.

(d) Ledgers.

(e) Subsidiary records.

(f) Computer generated data.

(g) Internal audit records.

(h) Correspondence.

(i) Personnel records.

(3) An internet gaming operator or internet gaming supplier must keep and maintain the books, records, or documents in a manner and form approved or required by the board.

(4) An internet gaming operator or internet gaming supplier must organize and index all required records in a manner that enables the board to locate, inspect, review, and analyze the records with reasonable ease and efficiency.

(5) For an internet gaming operator that is an Indian tribe, records required to be maintained under this rule are limited to those records related to the internet gaming operator’s internet gaming operations.

History

History: 2020 AACS.

Mich. Admin. Code R 432.667 Taxes and payments {#sec-r-432.667 omnilex-key=us-mi-regs-official--dept-treasury--R 432.667}

Rule 667. (1) The internet gaming platform must be able to generate reports supporting adjusted gross receipts, wagering liability, winnings, and any other reports considered necessary by the board or as required by the internal controls. The reporting must be done on a form and in the manner prescribed by the board.

(2) An internet gaming operator who fails to remit to the board the tax or payment imposed under the act is liable for payment of a fine, as determined by the board of up to 25% per month of the amounts ultimately found to be due, to be recovered by the board.

History

History: 2020 AACS.

Mich. Admin. Code R 432.668 Write-offs/amounts returned/disputed credit or debit charges {#sec-r-432.668 omnilex-key=us-mi-regs-official--dept-treasury--R 432.668}

Rule 668. (1) An internet gaming operator shall not receive a deduction from gross receipts unless written approval is granted by the board for the following:

(a) Amounts returned to an authorized participant because of a game, platform, or system malfunction or because the internet wager must be voided because of concerns regarding integrity of the wager or game that were previously included in the computation of gross receipts.

(b) Uncollectible markers or successfully disputed credit or debit card charges that were previously included in the computation of gross receipts. Discretionary write-offs by the internet gaming operator do not constitute an uncollectible marker.

(2) An internet gaming operator must submit for board review and approval a written request, including all supporting documentation, of the deductions it would like to take against gross receipts.

PART 7. RESPONSIBLE GAMING; PROHIBITED PERSON

History

History: 2020 AACS.

Mich. Admin. Code R 432.671 Establishment and maintenance of the responsible gaming database {#sec-r-432.671 omnilex-key=us-mi-regs-official--dept-treasury--R 432.671}

Rule 671. (1) The board shall establish a responsible gaming database that contains a list of individuals who are prohibited from establishing an internet wagering account or participating in internet wagering offered by an internet gaming operator.

(2) The executive director may place an individual’s name in the responsible gaming database for any of the following reasons:

(a) The individual has been convicted in any jurisdiction of a felony, a crime of moral turpitude, or a crime involving gaming.

(b) The individual has violated the act or another gaming-related law.

(c) The individual has performed an act or has a notorious or unsavory reputation such that the individual's participation in internet wagering under the act would adversely affect public confidence and trust in internet gaming.

(d) The individual's name is on a valid and current exclusion list maintained by this state or another jurisdiction in the United States.

(e) A court has ordered the placement of an individual’s name in the responsible gaming database.

(f) The internet gaming operator or internet gaming platform provider has requested an individual’s name be included in the responsible gaming database.

(g) Any other reason the executive director considers appropriate to protect the integrity of internet gaming under the act and these rules.

(3) An internet gaming operator or internet gaming platform provider may request an individual’s name be included in the responsible gaming database. The request must be done in the manner and form prescribed by the executive director, but must at a minimum include all of the following:

(a) The individual’s name and other identifying information.

(b) The reason why the internet gaming operator or internet gaming platform provider believes the individual should be included.

(d) Any other information requested by the executive director.

(4) If the executive director places an individual in the responsible gaming database, it shall notify the individual. This notification must include the basis for the individual’s placement in the responsible gaming database and explain that the individual is prohibited from establishing an internet wagering account or making an internet wager as authorized by the act and these rules.

(5) An excluded person may request a hearing under these rules to contest placement in the responsible gaming database. It is the excluded person’s responsibility to prove by clear and convincing evidence why he or she should not be in the responsible gaming database.

(6) Involuntary placement in the responsible gaming database is permanent, unless removed by the executive director. The executive director shall only remove an excluded person from the responsible gaming database if the excluded person no longer satisfies the criteria for placement.

History

History: 2020 AACS.

Mich. Admin. Code R 432.672 Voluntary placement in the responsible gaming database {#sec-r-432.672 omnilex-key=us-mi-regs-official--dept-treasury--R 432.672}

Rule 672. (1) An individual may have his or her name placed in the responsible gaming database for a period of 1 or 5 years by submitting a request in the manner and form prescribed by the executive director.

(2) An individual seeking voluntary placement in the responsible gaming database must agree to release the state, the board and its employees and agents, the internet gaming operator, the internet gaming platform provider, and each of their respective officers, directors, employees, and agents from any harm, monetary or otherwise, that may arise as a consequence of placing his or her name in the responsible gaming database.

(3) The executive director shall not include an individual in the responsible gaming database until the individual has provided all necessary information.

(4) If an internet gaming operator or internet gaming platform provider prohibits a voluntarily-excluded person in the responsible gaming database from engaging in other forms of gaming authorized by law in this state or in another jurisdiction, the limitation shall only be for the 1 or 5 year placement chosen by the voluntarily-excluded person.

History

History: 2020 AACS.

Mich. Admin. Code R 432.673 Distribution of the responsible gaming database {#sec-r-432.673 omnilex-key=us-mi-regs-official--dept-treasury--R 432.673}

Rule 673. (1) The executive director shall provide the internet gaming operator and internet gaming platform provider with information the executive director considers necessary to carry out the purposes of the act and these rules.

(2) Internet gaming operators and internet gaming platform providers may only use the information as provided for in the internal controls and as is consistent with the act and these rules.

(3) Use of information from the responsible gaming database for a purpose other than what is provided for in the act or these rules may result in disciplinary action by the board against the licensee or a civil fine. Nothing in this part is intended to preclude the disclosure of such information pursuant to subpoena or other legal process.

History

History: 2020 AACS.

Mich. Admin. Code R 432.674 Self-exclusion list {#sec-r-432.674 omnilex-key=us-mi-regs-official--dept-treasury--R 432.674}

Rule 674. (1) Each internet gaming operator and internet gaming platform provider must establish and maintain a self-exclusion list as prescribed in the act, in these rules, by direction of the executive director, and in accordance with internal controls.

(2) The self-exclusion list must be designed to safeguard the confidentiality of the information.

(3) An individual may have his or her name added to the self-exclusion list maintained by the internet gaming operator or internet gaming platform provider if he or she agrees to release the state, the board and its employees and agents, the internet gaming operator, the internet gaming betting platform provider, and each of their respective officers, directors, employees, and agents from any harm, monetary or otherwise, that may arise as a consequence of placing his or her name in the responsible gaming database or self-exclusion list.

(4) Any individual requesting placement in the self-exclusion list must submit through his or her internet wagering account or by another means authorized by the board, a completed request for self-exclusion.

(5) An internet gaming operator or internet gaming platform provider may disclose the names of voluntarily-excluded persons on the self-exclusion list to a person licensed or registered by the board for the purpose of allowing the third-party to remove the names of such individuals from a targeted mailing or other advertising or promotion to be made on behalf of an internet gaming operator or internet gaming platform provider.

(6) A licensed or registered third-party that obtains the self-exclusion list from an internet gaming operator or internet gaming platform provider is permitted to use the list solely to exclude names and other information from targeted mailings or other advertising or promotion made on behalf of the internet gaming operator or internet gaming platform provider. The third-party to whom the information is disclosed shall not distribute or disclose the information to the public or any other person. Disclosure may result in disciplinary action or civil fine.

History

History: 2020 AACS.

Mich. Admin. Code R 432.675 Prohibited persons {#sec-r-432.675 omnilex-key=us-mi-regs-official--dept-treasury--R 432.675}

Rule 675. (1) An internet gaming operator and an internet gaming platform provider must make reasonable efforts to prevent a prohibited person from establishing an internet wagering account and not permit the prohibited person to place an internet wager based on the most current information available to the internet gaming operator and internet gaming platform provider. This subrule shall not be construed to prevent an individual from creating an internet gaming account and depositing funds to such an account even if they are prohibited from placing certain wagers.

(2) If an internet gaming operator or internet gaming platform provider detects, or is notified of, an individual suspected of being a prohibited person who had engaged or is engaging in prohibited internet wagering, the internet gaming operator or internet gaming platform provider, or both, must use reasonable measures to verify whether the individual is prohibited or not. If the internet gaming operator or internet gaming platform provider cannot establish by reasonable measures that the individual is prohibited, the individual is presumed to not be a prohibited person for the purposes of this rule.

(3) Upon verification of a prohibited status, the internet gaming operator or internet gaming platform provider, or both, must do both of the following:

(a) Immediately prohibit access to the individual’s internet wagering account.

(b) Seize from the individual any winnings or things of value obtained from engaging in internet wagering.

(4) The internal controls of an internet gaming operator or internet gaming platform provider must contain procedures for processing any winnings or things of value confiscated or withheld from a prohibited person.

History

History: 2020 AACS.

Mich. Admin. Code R 432.676 Duty of internet gaming operator and internet gaming platform provider {#sec-r-432.676 omnilex-key=us-mi-regs-official--dept-treasury--R 432.676}

Rule 676. (1) An internet gaming operator and internet gaming platform provider must make reasonable efforts to prohibit a prohibited person from establishing an internet wagering account and from participating in internet wagering offered under the act and these rules. This subrule shall not be construed to prevent an individual from creating an internet gaming account and depositing funds to such an account even if they are prohibited from placing certain wagers.

(2) If an internet gaming operator or internet gaming platform provider becomes aware that a prohibited person has established an internet wagering account or has participated in internet wagering, the internet gaming operator or internet gaming platform provider must provide written notice to the executive director. Any wager made by a prohibited person must be cancelled and the internet wagering account used to place the wager must be suspended or closed.

History

History: 2020 AACS.

R 432.711 to R 432.776 Internet Sports Betting

Mich. Admin. Code R 432.711 Definitions {#sec-r-432.711 omnilex-key=us-mi-regs-official--dept-treasury--R 432.711}

DEPARTMENT OF TREASURY

MICHIGAN GAMING CONTROL BOARD

INTERNET SPORTS BETTING RULES

(By authority conferred on the Michigan gaming control board by section 10 of the lawful sports betting act, 2019 PA 149, MCL 432.410)

PART 1. GENERAL PROVISIONS

Rule 711. As used in these rules:

(a) “Act” means the lawful sports betting act, 2019 PA 149, MCL 432.401 to 432.419.

(b) “Affiliate” means a person that, directly or indirectly, through 1 or more intermediaries, controls or is controlled by a sports betting operator.

(c) “Affiliate marketer” means a person involved in promoting, marketing, and directing business to online gaming sites who is compensated based on the volume of customer referrals to an online gaming site or customer activity, including but not limited to, number of registrations, number of depositing registrations, or wagering activity, or both.

(d) “Agent” means any individual who is employed by any agency of this state, other than the board, the state police, or attorney general, and who is assigned to perform full-time services on behalf of or for the benefit of the board regardless of the title or position held by that individual.

(e) “Authorized participant session” means the period of time that an authorized participant is logged on to an internet sports betting platform.

(g) “Contractor” means any individual not employed by this state who performs services on behalf of or for the benefit of the board and requires unescorted access to board facilities.

(h) “Event category” means a specific type of athletic event or other event governed by a specific sports governing body or other oversight body (for example, professional basketball governed by the National Basketball Association).

(i) “Event wagering system” means the hardware, software, firmware, communications technology, other equipment, as well as the sports betting operator procedures implemented to allow an authorized participant to participate in wagering, and, if supported, the corresponding equipment related to the display of the wager outcomes, and other similar information necessary to facilitate an authorized participant’s participation. The event wagering system provides the authorized participant with the means to place and manage wagers. The event wagering system provides the sports betting operator with the means to review internet sports betting accounts, if supported, suspend events, generate various wagering/financial transaction and account reports, input outcomes for events, and set any configurable parameters. The term does not include computer equipment or communications technology used by an authorized participant to access the internet sports betting platform. Unless otherwise specified in these rules, the term internet sports betting platform includes the entire event wagering system.

(j) "Excluded person" means any individual who has been involuntarily placed in the responsible gaming database by the executive director and who is prohibited from establishing an internet sports betting account or participating in internet sports betting, or both, offered under the act or these rules.

(k) “Executive Director” means the executive director of the Michigan gaming control board, appointed under section 4 of the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.204.

(l) "Independent integrity monitoring provider" means an independent person who is registered with the board as a vendor and who receives reports of unusual wagering activity from a sports betting operator or internet sports betting platform provider for the purpose of assisting in identifying suspicious wagering activity.

(m) “Key person” means any of the following except as otherwise provided in paragraph (vii):

(i) A director of the applicant.

(ii) A managerial employee of the applicant that performs the function of principal executive officer, principal operations officer, or principal accounting officer.

(iii)A person who holds more than 5% ownership interest in the applicant.

(iv) An affiliate of the applicant.

(v) A director of an affiliate of the applicant.

(vi) A managerial employee of an affiliate of an applicant that performs the function of principal executive officer, principal operations officer, or principal accounting officer.

(vii) Key person does not include an elected or appointed representative of any applicant or licensee that is a federally recognized Indian tribe located in this state unless the representative is also a full-time employee of the applicant’s or licensee’s internet sports betting operations. A key person for an Indian tribe includes a primary management official of the applicant who has management responsibilities for the applicant’s internet sports betting operations.

(n) "Layoff wager" means a wager placed by a sports betting operator or internet sports betting platform provider with another sports betting operator or internet sports betting platform provider for the purpose of offsetting authorized participant internet sports betting wagers.

(o) “Licensee” means a person who holds a license under the act.

(p) "Prohibited person" means any excluded person, any voluntarily-excluded person, and all of the following:

(i) An individual who is under the age of 21.

(ii) Any employee of, or appointee to, the Michigan gaming control board.

(iii)Employees of a sports betting operator. An employee of a sports betting operator shall not create an internet sports betting account or place an internet sports betting wager with the sports betting operator for which he or she is employed unless using a test account under R 432.739a.

(iv) Employees of an internet sports betting platform provider. An employee of an internet sports betting platform provider shall not create an internet sports betting account or place an internet sports betting wager with the sports betting operator for which the internet sports betting platform provider supplies the internet sports betting platform unless using a test account under R 432.739a.

(v) Employees and appointees of a tribal gaming regulatory agency with jurisdiction over internet gaming being operated under such tribe’s gaming ordinance and the Indian gaming regulatory act, 25 USC 2701 to 2721.

(vi) Occupational licensees and applicants. Occupational licensees and applicants shall not place wagers with the sports betting operator or internet sports betting platform provider for which they are employed or for which they had to qualify.

(vii) An individual not in an authorized location to make a wager.

(viii) An individual placing an internet sports betting wager on behalf of another.

(ix) An individual with access to non-public/exclusive information related to an event or an individual who may impact the outcome of an event or wager type is prohibited from wagering on any event overseen by the relevant sports governing body.

(x) Athletes, coaches, managers, owners, and anyone with sufficient authority to influence the outcome of an event are prohibited from wagering on events overseen by the relevant sports governing body.

(xi) Employees of a sports governing body or its members teams are prohibited from wagering on any event overseen by the relevant sports governing body.

(xii) Owners of a sports governing body or member team are prohibited from wagering on any event overseen by the sports governing body or any event in which a member team of that sports governing body participates.

(xiii) At the board’s discretion, an individual on a list provided by a team or sports governing body may be prohibited from wagering on any event overseen by the relevant sports governing body.

(xiv) An individual wagering in violation of state, tribal, or federal law.

(xv) Other prohibited persons as determined by the board.

(q) “Publicly traded corporation” means any corporation or other legal entity regulated by the U.S. Securities and Exchange Commission under the securities exchange act of 1934, 15 USC 78a to 78qq, or securities act of 1933, 15 USC 77a to 77aa.

(r) “Secure transaction file” means a file that contains data that cannot be modified without detection.

(s) “Self-authentication process” means a method used by a system to verify the validity of software and includes the following:

(i) The method requires the calculation of an output digest that is compared to a secure embedded value.

(ii) The output digest must be of 128-bit complexity, at a minimum.

(iii)Software is authenticated if the calculated digest equals the secure embedded value.

(t) "Self-exclusion list" means a list of individuals who voluntarily excluded themselves from establishing or maintaining an internet sports betting account with a sports betting operator or internet sports betting platform provider.

(u) “Strong authentication” means a method that has been demonstrated to the satisfaction of the board to effectively provide higher security than a username and password alone.

(v) "Suspended account" means an internet sports betting account that has been temporarily disabled from engaging in wagering activity.

(w) "Suspicious wagering activity" means unusual wagering activity that cannot be explained and is indicative of any of the following:

(i) Match-fixing.

(ii) The manipulation of an event.

(iii)Misuse of inside information.

(iv) A potential breach of a sports governing body’s internal rules or code of conduct pertaining to sports betting.

(v) Any other conduct that corrupts the outcome of an event.

(vi) Any other prohibited activity.

(x) "Targeted mailing" means an advertisement or promotional offer from a sports betting operator or an internet sports betting platform provider directed to an individual on the basis of specific criteria, such as being a member or former member of a rewards club or a participant in social games. "Targeted mailing" does not include mass communication, including mailings or e-mailings, made to an entire area or zip code or targeted list, nor does it include an advertisement that arrives in a packet of 5 or more non-gaming advertisements, if the packet of advertisements is addressed to "resident," "occupant," or some similar wording and not to a specific individual. "Targeted mailing" further does not include any "popup" advertisement that appears on an individual’s computer or mobile device on the basis of his or her IP Address.

(y) "Things of value" means anything of value that may be used to place an internet sports betting wager.

(z) "Unusual wagering activity" means abnormal wagering activity exhibited by one or more authorized participants and considered by a sports betting operator or internet sports betting platform provider as a potential indicator of suspicious wagering activity. Unusual wagering activity may include the size of an authorized participant's internet sports betting wager or increased wagering volume on a particular event or wager type.

(aa) "Voluntarily-excluded person" means any individual whose name is included, at his or her own request, in the responsible gaming database or on a self-exclusion list, or both.

(bb) “Wager type” means a type of internet sports betting wager, which may include, but is not limited to, the following:

(i) Single-game bets.

(ii) Teaser bets.

(iii) Parlays.

(iv) Over-under.

(v) Moneyline.

(vi) Pools.

(vii) Exchange betting.

(viii) In-game betting.

(ix) Proposition bets.

(x) Straight bets.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.712 Terms defined in act {#sec-r-432.712 omnilex-key=us-mi-regs-official--dept-treasury--R 432.712}

Rule 712. Terms defined in the act have the same meaning when used in these rules.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.713 Board duties, jurisdiction, and authority {#sec-r-432.713 omnilex-key=us-mi-regs-official--dept-treasury--R 432.713}

Rule 713. (1) To execute and administer the act for the purpose of licensing, regulating, and enforcing lawful internet sports betting the board may do all of the following:

(a) Determine its practices and internal policies or procedures.

(i) Execute and enter into contracts on behalf of the board.

(ii) Hire and fire employees of the board and administer oaths.

(iii) Issue subpoenas for the attendance of witnesses and the production of documents.

(iv) Issue and renew licenses.

(v) Register vendors.

(vi) Conduct investigations, inspections, and audits, share information with law enforcement agencies, conduct hearings, and settle alleged violations of the act and these rules.

(vii) Engage in other functions necessary to the proper administration and enforcement of the act and these rules.

(2) The board may set hiring standards for employees.

(3) The board has general responsibility for the implementation of the act. The board's duties include, but are not limited to, all of the following:

(a) Deciding in a reasonable period of time all license applications.

(b) Investigating applicants for licenses or registration. The board may grant licenses or register persons in accordance with the act and these rules.

(f) Revoking or suspending licenses and registrations, and imposing fines as the board considers necessary and in compliance with applicable laws of this state.

(g) Imposing fines against individuals, sports betting operators, and sports betting suppliers for engaging in a fraudulent practice, for each violation of the act, these rules, or any resolution or order of the board, or for any other action that the board determines is a detriment or impediment to sports betting.

(h) Taking any other action as may be reasonable or appropriate to enforce the act and these rules.

(4) The board may seek and shall receive the cooperation and assistance of other departments and agencies in conducting background investigations and in fulfilling its responsibilities under the act.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.713a Member, employee, or agent of board; conduct generally {#sec-r-432.713a omnilex-key=us-mi-regs-official--dept-treasury--R 432.713a}

Rule 713a. (1) By January 31 of each year, each member, the executive director, and all employees of the board shall file 1 or more board disclosure forms. The board shall determine the contents of the form, but it must include such information as necessary to ensure the integrity of internet sports betting and disclosure of all relevant financial information. The form may be combined with similar forms required by other acts or rules.

(2) If a member, the executive director, an employee, or an agent of the board negotiates for, or acquires by any means, any interest in a licensee, applicant, or person affiliated with a licensee or applicant, he or she must immediately provide written notice of the details of the interest to the chairperson. The member, executive director, employee, or agent of the board must not act on behalf of the board with respect to that licensee, applicant, or person affiliated with the licensee or applicant.

(3) A member, the executive director, an employee, or an agent of the board may enter into any negotiations for employment with a licensee, applicant, or affiliate of a licensee or applicant. The member, executive director, employee, agent, licensee, applicant, or affiliate must immediately notify the chairman and the executive director once the invitation to negotiate has been extended. A potential employer asking if an individual would be interested in a position or explaining the nature of a position does not constitute negotiations for employment. Further, an individual completing an employment application does not constitute negotiations for employment. The member, executive director, employee, or agent of the board must not take any action on behalf of the board with respect to that licensee, applicant, or person affiliated with a licensee or applicant while the negotiations are ongoing. All members, the executive director, board employees, agents, and contractors must, to the maximum extent possible, avoid situations, relationships, or associations that may represent or lead to an actual or perceived conflict of interest.

(4) A member, the executive director, an employee, or an agent or their spouse, may not accept any gift, gratuity, compensation, travel, lodging, or anything of value, directly or indirectly, from any licensee, applicant, or an affiliate or representative of an applicant or licensee, unless the acceptance conforms to a written policy issued by the chairperson.

The chairman may exempt attendance at a reception, and food and drink for immediate consumption from this policy. The policy must be publicly available and shared with all licensees.

(8) A member, the executive director, an employee, or an agent of the board must not have an internet sports betting account or participate in or wager on any sports betting conducted in this state except as part of the individual’s surveillance, security, or other official duty authorized by the board.

(10) Violation of this rule does not create a civil cause of action.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.714 Denial or non-renewal hearings {#sec-r-432.714 omnilex-key=us-mi-regs-official--dept-treasury--R 432.714}

Rule 714. (1) A person whose application for a license or a transfer of ownership has been denied, whose license has not been renewed, or who has been denied an approval from the board required in these rules may request a hearing. The hearing must be de novo.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.714a Request for hearing {#sec-r-432.714a omnilex-key=us-mi-regs-official--dept-treasury--R 432.714a}

Rule 714a. (1) A request for hearing must meet all of the following requirements:

(a) Be in writing.

(b) State the name, current address, and current telephone number of the petitioner.

(3) A request for a hearing is considered granted unless denied.

(4) A request for a hearing may be withdrawn by the petitioner. If the request for hearing is withdrawn, then the initial denial, nonrenewal, or disapproval becomes a final board order.

(5) Unless the board denies a request for hearing, the board shall submit the request for hearing to the appropriate state agency.

(6) Default judgment or dismissal may result at any stage of the proceeding.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.714b Proceedings {#sec-r-432.714b omnilex-key=us-mi-regs-official--dept-treasury--R 432.714b}

Rule 714b. (1) The burden of proof is at all times on the petitioner. The petitioner has the affirmative responsibility of establishing, by clear and convincing evidence, any of the following:

(a) The petitioner should have been awarded a license.

(b) The license should have been renewed.

(d) Approval should have been granted.

(2) The hearing must be conducted in accordance with the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, except as otherwise provided in these rules or the act.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.714c Prohibition on ex parte communication {#sec-r-432.714c omnilex-key=us-mi-regs-official--dept-treasury--R 432.714c}

Rule 714c. A party or its attorney must not communicate directly or indirectly with the hearing officer regarding any pending matter, except upon notice and opportunity for all parties to participate. A party that engages in ex parte communication with the hearing officer may be subject to sanctions and penalties.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.714d Sanctions and penalties {#sec-r-432.714d omnilex-key=us-mi-regs-official--dept-treasury--R 432.714d}

Rule 714d. (1) The hearing officer may recommend sanctions and penalties if the hearing officer finds that a party has failed to appear at a scheduled hearing, has acted in bad faith for the purpose of delay, or has otherwise abused the hearing process. Sanctions and penalties include, but are not limited to, a fine or default judgment or a directed finding on 1 or more issues.

History

History: 2020 MR 22, Eff. Dec. 2, 2020.

Mich. Admin. Code R 432.714e Recording proceedings; transmittal of record and board action {#sec-r-432.714e omnilex-key=us-mi-regs-official--dept-treasury--R 432.714e}

Rule 714e. (1) Oral proceedings involving contested issues must be recorded to ensure the preservation of the testimony. A party may request a transcript of the proceedings. The requesting party must pay for the transcript.