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Michigan Sales Tax Will Hit Internet Shoppers on Oct. 1
Michigan Capitol Confidential ^ | 9/22/2015 | Anne Schieber

Posted on 09/24/2015 12:40:19 PM PDT by MichCapCon

Starting Oct. 1, many Internet shoppers in Michigan may see an unusual item on their order summary page — Michigan sales tax.

In January of 2015 Gov. Rick Snyder signed the Main Street Fairness Act, which more explicitly defines which out-of-state companies will be compelled to collect Michigan sales tax.

It is not yet clear whether the change will affect purchases from the nation's top online retailer, Amazon. By most accounts, Amazon does not have a warehouse or fulfillment center in Michigan and so may be exempt from the new law.

The complication will come with third-party sellers on Amazon who may have a nexus in the state if they use an agent or warehouse here to complete a sale to a customer in Michigan.

“Note that this bill clarifies that storing goods in a warehouse, or contracting with installers or repair people will now specifically constitute a sales tax nexus with Michigan,” said Mark Faggiano, founder of TaxJar, a company that helps retailers with sales tax compliance.

Faggiano says a nexus will now also include agents that an out-of-state retailer may use to establish a market in Michigan, under what is known as a “click-through” nexus. He cites an example of an out-of-state seller using a Michigan-based website to sell merchandise.

The Michigan Department of Treasury does not publish a list of registered sellers in the state, and Amazon does not list Michigan as one of the 25 states for which it collects sales tax.

“Nexus” is a legal concept derived from the due process and commerce clauses of the U.S. Constitution. The Supreme Court ruled that a state may compel an out-of-state seller to collect sales tax from in-state customers only if the seller has a physical presence, or nexus, in the state.

With the burgeoning of online sales, many states, including Michigan, have been complaining that they are missing out on millions of dollars in sales tax revenue. Out-of-state merchandise is not exempt from sales tax, but the law does require purchasers to remit an equivalent “use” tax.

Compliance with the use tax requirement is low, according to the Michigan Department of Treasury. The department estimates that up to $444 million worth of use tax will go uncollected this fiscal year.

Diane Yetter, founder of the Sales Tax Institute and president of a sales tax consulting firm, says Michigan is not unusual in passing an Internet tax law. She said many states are waiting to see how tax fairness laws hold up in court.

“This year is probably the biggest year of states enacting these laws and it’s because litigation involving the laws in New York and Illinois came to an end in 2013,” said Yetter.

Yetter believes legal challenges to Michigan’s law are unlikely. It is similar to the law in New York. The high court declined to hear a challenge to that law.

Amazon could not be reached for comment, and Faggiano says the company does not disclose where it has fulfillment centers. TaxJar believes Amazon operates them in 17 states, but not Michigan.

According to its website, Amazon collects sales tax in 25 states. The Michigan Department of Treasury estimates that under the new sales tax law, Michigan will collect an additional $60 million a year in sales and use tax.


TOPICS: Government
KEYWORDS: taxes

1 posted on 09/24/2015 12:40:19 PM PDT by MichCapCon
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To: MichCapCon
Government at all levels is becoming more sadistic. The sadists in government will never stop their quest for absolute control.

Most of those who go into government are control freaks -- they seek to use the power of government to compel others to do what they say.

They need an ever expanding dependent class. Hence, the insatiable need to take more and more of the hard-earned income of real Americans.

Government at all levels should be scaled back at least 80% -- Liberty will once again flourish. But, alas that wont happen. What awaits us is ever encroaching tyranny -- until the system collapses.

2 posted on 09/24/2015 12:51:12 PM PDT by sand88 (We can never legislate our way back to Liberty)
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To: MichCapCon

> Main Street Fairness Act

But Main Street will still be paying the same tax as before? Why not cut it?


3 posted on 09/24/2015 12:52:28 PM PDT by ArcadeQuarters ("Immigration Reform" is ballot stuffing)
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To: MichCapCon

Normally the way it works is:

If your business is located within the boundaries of a state, anything you sell comes under a state sales tax unless you sell to an exempt entity and/or have a legal paper of some kind they sign claiming a legal sales tax exemption.

How ever, if you sell to the XYZ company in Florida and your company is in Texas there is no Texas sales tax involved UNLESS “the company has a presence in Texas.” That means they have an outlet/retail store/or any other business of any kind in Texas. Then, you must get a sales tax exemption from that company (the home office or owner) claiming a legal exemption from Texas sales tax.

It’s not complicated. However, I give you the law in Texas...not in other states.


4 posted on 09/24/2015 12:57:09 PM PDT by DH (Once the tainted finger of government touches anything the rot begins)
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To: MichCapCon

We are going to need the extra money to support all the suffering refugees.../s


5 posted on 09/24/2015 12:57:24 PM PDT by just me (GOD BLESS AMERICA Amen)
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To: BinaryBoy

[Main Street Fairness Act]

Gotta hand it to them, they are quite creative in naming a new tax. It’s all about the sales pitch on ballots, a lot of the time.


6 posted on 09/24/2015 12:59:08 PM PDT by SaveFerris (Be a blessing to a stranger today for some have entertained angels unaware)
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To: MichCapCon

“Click-through” nexus is an interesting theory, but it will be litigated.

Keep in mind what the state is asking of vendors when they force them to collect indirect taxes.

The vendor is being forced by the State to act as an agent for the State. Let that sink in for a minute. The state says, “I am going to take over a part of your business and make you take on another job: being my tax collector. If you don’t, I’m going to shut you down. When you do, I’m going to audit you and fine you if you apply my ridiculously impossible tax code incorrectly.”

The whole logic behind the nexus requirement is that this is a huge imposition on a vendor. No state has the power to FORCE a person to do a job for that state if they don’t have a connection to that state.

Arguably, with “click-through” nexus standards, very small vendors with no intention of focusing on the market in Michigan could be forced (according to Michigan) to become a tax collector for Michigan.

You never know how the courts will look at this.


7 posted on 09/24/2015 2:36:38 PM PDT by cizinec (Liberty is the only political "party" that deserves our loyalty.)
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To: MichCapCon

Had the SAME PROBLEM here in Texas. One of Perry’s Republican CRONY CAPITALIST’s ‘friends’ signed a deal that caused Texans to spend Hundreds of Millions of dollars more in sales taxes. Pretty damn SICK, when imposed by a REPUBLICAN.


8 posted on 09/24/2015 5:57:41 PM PDT by BobL (REPUBLICANS - Fight for the WHITE VOTE...and you will win (see my 'profile' page))
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