UPDATE 12-5-07: The 6% services tax enacted by the Michigan legislature went briefly into — and then out of — effect, on December 1, 2007. The repeal legislation retroactively exempted all potentially covered transactions from tax liability.
All other information below (ie, laws and statutes and other legal resources) is still valid as of this date.
Effective December 1, 2006, the state of Michigan will begin levying a sales and use tax on services. If you are a business owner, this is a very short timeline to bring your business into compliance — talk to your lawyer and your accountant. Business clients are already asking whether services they provide or purchase are covered under the Act. I’m compiling resources and FAQs about the new services tax on this page. A complete list of descriptions of services covered under the new tax, cross-referenced against the bill section numbers the NAICS code numbers, and the expected Michigan Compiled Laws statutory numbers, is on the companion page Michigan Services Tax here at Arborlaw.
Laws and statutes, legal resources
- Michigan House Bill 5198 (2007) – the enabling act
- Comprehensive table of services covered by the tax — REPEALED 12-1-07
I put together this table of services covered by the act, from the bill text. Tax sections cite directly to the NAICS (North American Industry Classification System) codes; I pulled the text lists directly from NAICS, with minor text editing for formatting purposes. All services under the referenced code number are included in the new tax. I have cross-referenced the services list against the bill section numbers and the expected section number in MCL (Michigan Compiled Laws).
- Michigan Compiled Laws – General Sales Tax Act, MCL s. 205.51 – 205.78
- Michigan Compiled Laws – Use Tax Act, MCL s. 205.91 – 205.111
- Michigan Administrative Code – General Sales and Use Tax Rules, R 205.1 – 205.140 (1997 – no updates to regulations for Sales / Use Tax Acts until 2007).
- Michigan Register – Updates to Michigan Administrative Code – General Sales and Use Tax Rules (2007 Michigan Register #6 – several new sections and revisions to the General Sales Tax Act) [PDF]
- FAQ on Sales and Use Tax at michigan.gov
- Explanation of Use Tax at michigan.gov
- Taxability Matrix – Streamlined Sales and Use Tax at michigan.gov [PDF]
lists items covered by sales and use taxes and provides cross references to MCL sections.
- Streamlined Sales and Use Tax Project at michigan.gov
- Streamlined Sales Tax Project – http://www.streamlinedsalestax.org/
National NGO (non-governmental organization) working to simplify and harmonize state and local sales and use tax laws across US jurisdictions.
- Sales Tax Rates in the 50 States – as of September 1, 2007
- NAICS – North American Industry Classification System
- Internet Tax Nondiscrimination Act (formerly Internet Tax Freedom Act) – exempts internet access services from tax by state and local authorities. This law is currently set to expire on November 1, 2007.
- New tax confuses businesses as start date nears, Associated Press (MLive.com), October 21, 2007
- Hail To The Taxers, Wall Street Journal, October 2, 2007 (subscription required)
- What’s Taxed Is A Taxing Question, Detroit Free Press, October 3, 2007
- Service Tax Repeal Is Plotted, Detroit Free Press, October 3, 2007
- New Levy Taxes 23 Services, The Detroit News, October 1, 2007
- Group May Fight New State Tax on Services, Crain’s Detroit Business, October 2, 2007
- Sales Tax Extension On Some Business Services Saved Budget Talks, Michigan Technology News, October 1, 2007
- Sales Tax Expansion, Michigan Association of Certified Public Accountants (michcpa.org), October 1, 2007
- Sales, Use, Withholding…And Now A Services Tax? Arborlaw.com, March 18, 2007
- Michigan’s Changing Economy: The Impact on State Sales Tax Collections
By Gary S. Olson, Director (Michigan State Senate, SFA), July 2004
- 6% of x? Untangling Michigan’s Service Tax, at absolutemichigan.com.
- Jack Lessenberry’s interview with Tricia Kinley, Director of Tax Policy and Economic Development, Michigan Chamber of Commerce, October 12, 2007.
- StopTheServicesTax.com – advocacy site of the NFIB/MI (National Federation of Independent Businesses, Michigan chapter), looking to recall the new 6% services tax.
- Tax Update Blog: Great Moments in Economic Development, October 1, 2007.
- SERVICETAX-MI – http://groups.google.com/group/servicetax-mi
Mailing list to discuss the nuts and bolts of the new law. List participation is restricted to tax and legal professionals, academics and students of those disciplines, and members of the media.
Blogs and websites / opinion
McIntyre, Michael J., Taxing Electronic Commerce Fairly and Efficiently, 52 Tax Law Review 625-654 (1997)