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Michigan Steps Closer to Internet Sales Tax Law

  • Dec 12, 2014 | Gail Cole

 Michigan Senate approves Amazon tax.

Earlier this week there was buzz surrounding internet sales tax legislation making its way through the Michigan House, and yet it is the Michigan Senate that successfully passed bills requiring certain online retailers to collect and remit sales tax in the Wolverine State.

All Democratic members of the Senate voted in favor of the legislation and ten Republican senators joined them. Sixteen others opposed the bills. Republican Senator Patrick Colbeck said that he isn’t against the principle of online sales tax but needs more time to consider the matter: “I have not had time to review these bills, and when you start talking about Main Street Fairness and interstate commerce, this is not something you want to rush” (Detroit Free Press).

Senate Bills 658 and 659 seek to “create a statutory nexus standard” for both sales and use tax (nexus being the connection between a state and a business that triggers an obligation to collect sales tax). Under the bills, businesses making sales at retail in Michigan are presumed to be engaged in business in the state if the seller or an affiliated person engages in or performs a number of activities, including but not limited to:

  • Sells a similar line of products as the seller under the same or a similar business name.
  • Uses employees, agents, representatives, or independent contractors in Michigan to promote or facilitate sales by the seller.
  • Maintains, occupies, or uses an office, distribution facility, warehouse, storage place or similar place of business in Michigan to facilitate the delivery of items sold by seller to Michigan purchasers.
  • Conducts any other activities in this state that are significantly associated with the seller’s ability to establish and maintain a market in this state for the seller’s sales of tangible personal property to purchasers in this state.

Nexus is also triggered when a seller enters into an agreement (direct or indirect) with one or more state residents “under which the resident, for a commission or other consideration, directly or indirectly, refers potential purchasers, whether by a link on an internet website, in-person oral presentation, or otherwise, if all of the following conditions are satisfied:

  • The cumulative gross receipts from sales by the seller to in-state purchasers referred by residents of the state are greater than $10,000.00 during the immediately preceding 12 months.
  • The seller’s total cumulative gross receipts from sales to purchasers in Michigan exceed $50,000.00 during the immediately preceding 12 months."

Basing nexus on a web link has landed this and similar affiliate nexus legislation the moniker “Amazon tax.”

The Michigan Amazon tax now moves for consideration in the House, where there is strong support for internet sales tax (plus some opposition, of course).

Is your business prepared to collect sales tax in Michigan and all other states where you sell? Automated sales tax software as a service (SaaS) simplifies sales tax management for multiple state filers. Learn more.

photo credit: alles-schlumpf via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.