State Sales Tax Nexus and General Overview

Need to Understand a State's Sales Tax Situation? Here it is...

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Michigan (MI)

MI Sales Tax - Name of Tax and General Application:

Michigan imposes a tax on sales of tangible personal property at the retail level in the state. This tax is called a "sales tax". In addition there is a tax imposed on using, storing or consuming tangible personal property in Michigan, even when purchased outside the state. This tax is known as a "use tax" and does not apply where sales tax has already been paid.

MI Nexus - General Requirements:

The word "nexus" means a link or connection. If you are determined to have nexus to a U.S. state then you are subject to that state's sales and use tax rules and must collect and remit sales tax to the state. This is known as a "filing obligation."

Each state has a different definition of nexus. However, if the answer to any of the following questions is yes, it is likely that a company has nexus as legally defined in most U.S. States.

Does the company own property in the state? Does the company have employees living in the state? Does the company regularly send employees in the state to perform services? Does the company have an agent acting on behalf of the company in the state?

In Michigan, an out-of-state seller is subject to sales and use tax when it has one or more employees who reside or work in the state, owns or maintains tangible personal property or real property physically located in the state, maintains an office or other place of business in the state, has goods delivered on vehicles into the state or has agents or other representatives operating within the state. Merely holding and attending meetings and events in Michigan does not create nexus.

MI Local Tax - Do Localities Impose Tax?

No, Michigan does not impose local sales tax.

MI Resale Certificate Renewal Agreements:

There is no specific resale certificate in Michigan. When a purchase is claimed resale exempt by the purchaser, the seller must keep a record of pertinent information about the sale and purchaser. Tangible personal property purchased for resale and then used or consumed by the purchaser are subject to tax and the purchaser is liable.

MI Resale Certificate Renewal Periods

There is no stated expiration period.

MI Statute of Limitations

Later of four years from the date the return was due or the date the return was filed. In the case of a fraudulent return, two years from the date fraud was discovered.