Michigan Sales & Use Tax Exemptions
What is Exempt From Sales Tax In Michigan?
The state of Michigan levies a 6% state sales tax on the retail sale, lease or rental of most goods and some services. There are no local sales taxes in the state of Michigan.
Use tax is also collected on the consumption, use or storage of goods in Michigan if sales tax was not paid on the purchase of the goods. The use tax rate is the same as the sales tax rate. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Michigan on or before February 20th.
Need more information?
For more information on Michigan sales tax exemptions, please visit the sites below.
Michigan Sales Tax Exemptions Information
Michigan Sales Tax Exemption Research Bulletins
- Determination of Property’s Taxability for Michigan Sales and Use Tax
- Michigan Sales Tax Exemption for Implants
- Michigan Sales Tax Exemption for Manufacturing
- Michigan Sales Tax Exemption for Prosthetic Devices
- Michigan Sales Tax Exemption for Industrial Processing
- Michigan Software Sales Tax on Software and Digital Products
Don't try to reinvent the wheel. There are a number of excellent sales tax rate software solutions in the marketplace and we are partners with ALL of them. Ask us for our input on which would be the best choice for your business and we'll gladly guide you and provide an introduction to one (or several options) available in the marketplace.
Sales Tax Compliance FAQs
Sales tax compliance can be intimidating, but it doesn't have to be!
Do I have to charge sales tax?
You do if your business is considered to be "doing business" within a state. The Supreme Court ruling in SD v. Wayfair on June 21, 2018 changed the standard by which this was determined. Now, if your business has a sufficient volume or revenues or transactions within a state, you have established nexus within that state. Nexus means you have to charge sales tax to your customers within that state.
How do we know if we have sales tax nexus in a state?
Agile will complete a sales tax nexus study to determine in which states you have met or exceeded the nexus thresholds. All we need are your: a) physical locations, and; b) prior years sales records to analyze both revenues and transaction counts per state.
How do I know what sales tax rate to charge?
Don't try to reinvent the wheel. There are a number of excellent sales tax rate software solutions in the marketplace and we are partners with ALL of them. Ask us for our input on which would be the best choice for your business and we'll gladly guide you and provide an introduction to one (or several options) available in the marketplace.
Are my products or services subject to sales tax?
Well, the answer like most everything is sales tax is, "it depends," because each state drafts its own laws and they vary widely from state-to-state. A sales tax consulting firm, such as Agile, should perform a taxability study on the products and services your business sells in any states where you have nexus to determine whether you should be collecting sales tax on your sales of those products or services.
Which sales tax software is best for my business?
There are a number of excellent choices in the sales tax software space. We are a sales tax consulting partner with ALL the available options in the marketplace. Leverage our years worth of firsthand experience with these options to help guide you to the best choice for your business.
How do I register for sales tax with a state?
Agile can do this for you. Most states require the same information to process a registration. Things like: legal entity name, FEIN #, date of incorporation, etc. All states require the names, date-of-birth and social security numbers of officers. Some states will even require a copy of an officer's driver's license.
Should we register or file a voluntary disclosure agreement ("VDA")?
Completing a registration will allow your business to begin collecting taxes going forward. If you have taxes from prior periods to disclose, a VDA will enable you to do so with the added benefit of the penalties being waived.
How do states determine your filing frequency?
Your assigned filing frequency depends on the volume of transactions you have within a state. Many states will ask about your expected volume of sales during the registration (or VDA) process. Some other states will initially default your account to monthly filings. All states will re-evaluate your filing frequency on an annual basis.
Will Agile handle any notices and communications received from the state(s)?
Yes! We will absolutely handle all notices and communications you receive from the state(s) regarding sales and use tax. We provide a comprehensive, turnkey solution to outsource your sales and use tax issues.
How do I determine my taxable sales?
Determining taxable sales is the first, and most important step in determining your monthly sales tax filing obligations. Sales tax software, if properly configured, can solve or at least simplify this process. Combine that with an accurate matrix classifying your products or services taxability, and this becomes a cinch!
Michigan Sales Tax Compliance Details
Here are some useful Michigan sales tax tips our Agile team members felt could be helpful:
Use Michigan Online Treasury Online (MTO)
Companies in Michigan are encouraged to use Michigan Treasury Online (MTO) for registering, filing, and paying sales and use taxes, with benefits including error prevention, automatic use of correct forms, faster payment turnarounds, and mandatory use for specific businesses designated by the state.
Responsibilities & Filing Frequency
Understanding and fulfilling your responsibilities is crucial for Michigan sales tax compliance, encompassing tasks like maintaining registration information, record-keeping, timely filing even with a $0 payment, and being aware of the correct filing frequency.
Pay Early
Make the most of your dollars by paying your taxes before the 12th of the month. Doing so earns taxpayers an early payer discount and saves them a little bit of money. Those who consistently pay by the 20th, called Timely Payers, also receive a tax discount, but it’s smaller than the early payer discount. The maximum discount one can receive is $20,000.
Penalty Waivers
If you miss a return or payment, you can request a penalty waiver in writing, typically granted for reasons such as death, serious illness, fire, theft, criminal acts against the taxpayer, or misapplications of payment by the Michigan treasury; additionally, you can request a one-time penalty waiver for any reason, a tip that often proves effective in other states as well.
How to Calculate Michigan Sales Tax?
Utilize the following sales tax formula to obtain the necessary sales tax:
Sales tax = total amount of sale x sales tax rate
If you are looking for more information, check out our Sales Tax Consulting page or talk to one of our Experts:
Find the sales tax exemptions for your state
Select any state in the map below to view all relevant sales and use tax information available for that state.
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