The Michigan sales and use tax is imposed on taxable retail sale of tangible personal property and certain services. The statewide general tax rate is 6%. There are no local sales or use taxes imposed in Michigan.
We covered the concept of sales and use tax “nexus” in a prior blog – Michigan asserts nexus for sales and use tax purposes when the taxpayer has a physical presence in the state.
Without going into the details of what qualifies as physical presence, I did want to point out that when a company has an employee or agent visit the state for purposes of solicitation or in the performance of a service for more than one day during a calendar year, the company will have nexus for Michigan sales and use tax purposes.
Michigan is one of a very few states that provide specific guidance regarding the number of days required to establish nexus.
The Michigan Department of Treasury can be effective at identifying companies with nexus in their state – sending nexus questionnaires. The nice thing about the Michigan approach with nexus questionnaires is that they usually allow the company receiving the questionnaire to enter into a voluntary disclosure with the state if nexus has existed for some period of time. The voluntary disclosure program provides for a waiver of penalties and limited look-back where the sales tax was due but wasn’t charged and collected by the company.
Despite it being the primary industry of the state for decades, the 6% Michigan sales and use tax applies to the sale/purchase of a motor vehicle.
With a relatively low sales and use tax rate and no local taxes, Michigan is fairly straight forward state for sales and use tax purposes.
Stay tuned for more of Jeff's EYE ON series as he blogs aboout sales and use tax State by State.