Michigan Tax Nexus
Businesses with nexus in Michigan are required to register with the Michigan Department of Treasury and to charge, collect, and remit the appropriate tax.
Generally, a business has nexus in Michigan when it has a physical presence there, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives. However, out-of-state sellers can also establish nexus in the ways described below.
Michigan nexus for out-of-state sellers
If your business has ties to businesses in Michigan, including affiliates, it may have nexus under Michigan’s affiliate nexus policy. An out-of-state seller is presumed to be engaged in the business of making sales at retail in Michigan if the seller, or another person on the seller’s behalf, engages in or performs any of the following activities:
- 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 to Michigan residents
- Maintains, occupies or uses an office, distribution facility, warehouse, storage facility or other place of business in Michigan to facilitate the delivery or sale of tangible personal property sold to Michigan purchasers
- Uses, with the seller’s consent or knowledge, trademarks, service marks, or trade names that are the same or substantially similar to those used by the seller
- Delivers, installs, assembles, maintains or repairs for the seller’s Michigan customers
- Allows the seller’s Michigan purchasers to pick up or return tangible personal property sold by the seller at a place of business maintained by that person in Michigan
- Shares management, business systems or practices, or employees with the seller, or engages in inter company transactions that help the seller to establish or maintain the seller’s market in Michigan
- Conducts any other activities in Michigan that are significantly associated with the seller’s ability to establish and maintain a market in Michigan
Referrals, including online referrals, from an in-state entity may also trigger nexus for out-of-state businesses. A seller is presumed to be making sales in Michigan if it enters into an agreement with one or more Michigan residents whereby the resident, for a commission or other consideration, directly or indirectly refers potential purchasers to the seller (by a link on an internet website, an in-person oral presentation, or otherwise) if all of the following conditions are met:
- The cumulative gross receipts from sales by the seller to purchasers in Michigan who are referred to the seller by all residents of Michigan with an agreement with the seller are greater than $10,000 during the immediately preceding 12 months
- The seller’s total cumulative gross receipts from sales for storage, use, or consumption to purchasers in Michigan exceed $50,000.00 during the immediately preceding 12 months
See New Sales and Use Tax Requirements for Out-of-State Sellers; Registration FAQs; the General Sales Tax Act; Public Act 553; and Public Act 554.