Governor Rick Snyder signed legislation (to take effect October 1, 2015) designed to require online sellers of tangible goods to Michigan residents to collect the state’s sales tax, partially closing a loophole which some internet retailers exploited. The legislation is not a tax increase, as the tax is already owed, but rather a partial solution to a growing tax collection problem.
When an internet retailer selling to a Michigan resident does not collect the Michigan sales tax owed, the buyer is obligated by law to report and remit the tax him/herself to the State of Michigan. This legislation removes the burden from the buyer and places it on the internet retailers subject to this law to collect the sales tax and remit it to the State of Michigan, in the same way as a brick and mortar retailer.
As a member of the International Council of Shopping Centers’ Government Relations Committee in Michigan, I applaud the Legislature and Governor in taking this important step towards partially removing a tax reporting burden from consumers, and moving towards leveling the playing field between internet retailers that do not collect Michigan sales tax, and Michigan-based brick and mortar retailers that invest in our communities.
The law is Public Act 553 of 2014 (SB 658 and SB 659).
by Alfredo Casab, Member, Dawda, Mann, Mulcahy & Sadler