Michigan's Sales and Use Tax

Tax Professionals' Resource
December 6, 2012 — 2,723 views  
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In the state of Michigan, retailers are required to collect a 6% sales tax on all tangible personal property sold to consumers. A rate of 4% sales tax is applied to all utilities such as electricity, natural and propane gas, and residential heating fuels. Local municipalities are not allowed to collect sales tax. All those who sell tangible property are required to possess a sales tax license. A sales tax license can be obtained from the State of Michigan by completing and submitting Form 518. A person who sells just a couple times a year can apply for a Concessionaire's Sales Tax Return and Payment Form 2271.

To avoid the collection of sales tax on an item twice, a sales tax exemption certificate can be obtained from the state of Michigan. Michigan does not issue sales tax exempt numbers. Buyers are to present a completed Form 3372 to the seller. For more detailed information on exemptions, refer to the Revenue Administrative Bulletin 2002-15.

Distinguishing items that are tax exempt from those that are not can be confusing. The building materials a contractor purchases to be used in his construction business is taxable. The tax paid would be passed on to his customer as part of the total amount due upon completion. A farmer's exemption is limited to tangible property used in the breeding, raising, and caring for livestock, those used for tilling the soil and planting or the harvesting of those crops. For more details refer to Revenue Administrative Bulletin 2000-4

Combined Return for Michigan Taxes, Form 160, is used to pay sales and use taxes. The frequency for filing this form depends on annual sales, use and withholding liability.


-Annual tax liability of less than $750 is to be filed annually

-An annual tax liabilty of $750 to $3,600 is required to file quarterly

-Tax liabilities of over $3,600 are to be filed monthly

To amend a sales, use and withholding monthly, quarterly, or annual return and send the following documents:

1) A copy of the original return with the corrected tax figures and write "amended return" on the form.

2) Attach a letter of explanation for the amendment. Include your account number, a contact phone number, and the name of the person to speak with if questions should arise.

Just as a consumer is charged sales and/or use tax on an item purchased, they would also be entitled to a full refund of those taxes upon rendering the item for return.






Tax Professionals' Resource