Online and Out-Of-State Retailers Must Pay Sales Tax for Michigan Transactions
In the past, one could avoid Michigan sales tax by shopping online, but no more.
Starting October 1, 2018, the Michigan Treasury Department will be enacting a new policy that requires the standard 6 percent sales tax on all transactions even those from retailers with no physical presence, such as online orders. The Treasury estimates this will bring in more than $200 million in the first year it is in place.
Until now, Michigan had been able to enforce the sales tax on retailers with physical locations within the state, while the sales tax on goods purchased from online retail sources had to be voluntarily reported as a “use tax” by consumers on their income tax.
“This is something many Michigan businesses and associations have wanted for years.” Michigan Treasurer Nick Khouri was quoted. “If you wanted to buy a table in Michigan, you’d have to pay the 6 percent tax, but if you were selling it on the internet, you were exempt. There was this unfair price advantage that we can now equalize.”
The sales tax will affect mostly large businesses, anything over $100,000 in sales or 200 or more transactions in Michigan within the previous calendar year will have to report and pay sales tax.