These rules take effect immediately upon filing with the secretary of state unless adopted under section 33, 44, or 45a(9) of the administrative procedures act of 1969, 1969 PA 306, MCL 24.233, 24.244, or 24.245a. Rules adopted under these sections become effective 7 days after filing with the secretary of state.
(By authority conferred on the Department of Treasury department
of treasury by section 3 of 1941 PA 122, MCL 205.3)
GENERAL SALES AND USE TAX RULES
R 205.1 Sales tax licenses.
Rule 1. (1) Except as provided in subrules (7) and (8)
of this rule, aA Michigan sales tax license shall must be
obtained by every person engaged in the business of
selling tangible personal property at retail in this state. A
person shall not engage or continue in the a business
of making sales at retail in this state taxable
under the sales tax law without securing a license, regardless of the
amount of sales or the manner of obtaining goods for sale. An application for a
license, before or at the time of beginning business, shallmust be
made to the Michigan department of treasury on a form prescribed by the Michigan
department of treasury. All licenses mustshall be displayed
on the licensed premises.
(2) Every sales tax license expires on September 30 of each
year, regardless of the date the license is issued, and must shall be
renewed by furnishing such the information
as the Michigan department of treasury may require. A person selling at
retail at more than 1 location or place of business shall display a copy of the
license at each location. If a valid license is lost or destroyed, it may be
replaced without charge by notifying the Michigan department of
treasury.
(3) A license is not transferable and a new license mustshall be
secured immediately if whenever there is a change of ownership of the
business. For example, if a partner is added or dropped, or if a corporation is
formed or dissolved, this constitutes a change of ownership necessitating
application in the name of the new ownership for a sales tax license to sell at
retail. If the new owner fails to apply for a license, the new owner may be
subjected to penalty for operating without a valid sales tax license.
(4) The fact that a person is licensed by the Michigan
department of treasury to sell at retail does not automatically mean that sales
to the licensed person are exempt from sales tax as sales for resale.
(5) The Michigan department of treasury may deny a
license to an applicant if the department considers the applicant to be the
agent or representative of a principal required to be licensed and responsible
for filing the sales tax returns.
(6) The Michigan department of treasury may require an
applicant for a sales tax license to submit a surety bond as
provided by statute.
(7) A person making retail sales at 2 or fewer events per calendar year is not required to obtain a license, but instead shall file a per event tax return as follows
(a) If the 2 or fewer events are for purposes of fundraising, a special events sales tax return must be filed.
(b) If the 2or fewer sales events are not for fundraising purposes, a concessionaire’s sales tax return must be filed.
(8) A person only making casual and isolated sales as described in R 205.13 is not required to obtain a Michigan sales tax license.
R 205.8 Consumer; use; conversion.
Rescinded.
Rule 8. (1) “Consumer” means a person who, for consideration,
acquires tangible personal property for storage, use, or other consumption in
this state, whether acquired in person, through the mail or catalog, over the
Internet, or by other means. A consumer includes, but is not limited to the
following:
(a) A person who acquires tangible personal property if engaged
in the business of constructing, altering, repairing, or improving the real
estate of others.
(b) A person who converts tangible personal property or
services that were exempt from sales or use tax, to a use that is not exempt
from tax.
(2) The buyer who disposes of goods in any other manner than by
resale becomes the final consumer. The final consumer is the last person in a
chain of transactions to acquire the goods. The seller, who is the taxpayer
under the general sales tax act, is also the consumer when either of the
following occurs:
(a) The seller removes goods from inventory for personal use or
consumption, or in the conduct of the seller’s business, and would be liable
for use tax on the removed goods.
(b) The seller converts tangible personal property acquired for
a use exempt from tax to a use not exempt from tax, and would be liable for use
tax on the converted tangible personal property.
(3) “Use” means the exercise of a right or power over tangible
personal property incident to the ownership of that property, including
transfer of the property in a transaction where possession is given.
(4) Converting tangible personal property acquired for a use
exempt from tax to a use not exempt from tax is a taxable use.
R 205.13 Casual or isolated sales.
Rule 13. (1) Sales at retail shall must not include an isolated
transaction made other than in the ordinary course of repeated and successive
transactions of a like character.
Examples:
AAn individual person sells personal his household
furniture, a farmer sells his farm machinery or other farm equipment, a
merchant sells a his cash register, counters or other
store fixtures at auction or otherwise. Such sales are “casual or isolated transactions”
and are not subject to tax. However, any person who in any manner or at any
time advertises, solicits, or offers tangible personal property for sale
for the purpose of repeated sales is deemed determined to be
regularly engaged in business and those his sales are not
considered casual or isolated, even though they may be few or infrequent.
(2) Vehicles, airplanes, snowmobiles, and watercraft acquired in an
isolated transaction from a person who is not a retailer are subject to
an use equalization tax. The equalization use tax
on vehicles, snowmobiles, and watercraft mustshall be paid
to the secretary of state before prior to the transfer of a
vehicle title, snowmobile registration, or watercraft registration. The
equalization tax on such transactions is imposed at a rate of 6% of the retail
dollar value of the item at the time of acquisition. The equalization use
tax on the transfer of airplanes mustshall be paid
directly to the department of revenue treasury by the purchaser. The
equalization tax on manufactured housing must be collected by the secretary of
state before the transfer of the certificate of title. All use tax exemptions
also apply to the equalization tax. Credit is given for any use tax paid
against equalization tax that is due on the same transaction.
(3) A person that is not licensed as an automobile dealer by the secretary of state is presumed to be in the business of making retail sales when selling or offering for sale 3 or more used vehicles in the previous 12 months.
(4) A person that holds a single sales event per calendar year, such as a garage or yard sale to sell personal household items, that lasts no longer than 3 consecutive days, is not making sales at retail and is not liable for tax on the transactions.
(See R 205.135. Isolated vehicle, aircraft, watercraft, and snowmobile
transfers.)
R 205.15 Trade-in deduction and core charges.
Example
1: A customer purchases a vehicle with a sticker price of $20,000.00. The
dealer (seller) and the customer negotiate a selling price of $18,500.00. The
customer also has a vehicle to trade in. The dealer credits the customer
$2,500.00 for the vehicle traded in. No deduction is allowed for the vehicle
taken in trade on such transaction. Tax is due on the total amount of the sale
($18,500.00), without regard to the trade-in amount.
Example:
2: A customer Customer purchases an LP tank filled with propane gas
for the sales price of $49.95. Tax is due on the sales price of $49.95. Months
later, the customer Customer returns for more propane gas, trades
in an empty LP tank, and receives an LP tank full of propane gas. The
customerCustomer is charged $24.95, and the seller credits the
customer $25.00 for the empty LP tank traded in. No deduction is allowed
for the empty LP tank taken in trade on the such transaction. Tax
is due on the total amount of $49.95, ($24.95 plus $25.00),
without a reduction for the trade-in amount.
(2) Credit given by a seller, except for rentals and leases, is not part of the sales price and is not subject to tax if the agreed-upon value is separately stated on the invoice, bill of sale, or similar document given to the purchaser, in the following circumstances:
(a) Credit for the agreed-upon value of a titled watercraft used as part payment of the purchase price of a new titled watercraft or used titled watercraft purchased from a watercraft dealer.
(b) Credit for the agreed-upon value of a motor vehicle used as part payment of the purchase price of a new or used motor vehicle or new or used recreational vehicle purchased from a dealer. This deduction does not apply to a recreational vehicle used as part payment for a motor vehicle. This deduction is limited, as follows:
(i) Beginning January 1, 2019, the lesser of the following:
(A) $5,000.00. Beginning January 1, 2020, and each January 1 after that, this limit is increased by $1,000.00.
(B) The agreed-upon value of the motor vehicle used as part payment.
(ii) Beginning January 1, 2029, the full agreed-upon value of the traded-in motor vehicle is eligible for the deduction.
(c) Beginning January 1, 2018, credit for the full agreed-upon value of a recreational vehicle used as part payment for a new or used recreational vehicle purchased from a dealer.
Example: Customer purchases a new motor vehicle on February 1, 2019 from a dealer for $25,000.00. Dealer agrees to take Customer’s used motor vehicle in on trade and agrees to credit Customer $10,000.00 for the traded in vehicle. Customer pays the remaining $15,000.00 through a financing agreement. Only up to $5,000.00 of the trade-in vehicle is eligible for the deduction, therefore, the taxable sales price of the vehicle is $20,000.00.
(3) Beginning January 1, 2017, credit for the core charge attributable to a recycling fee, deposit, or disposal fee for a motor vehicle or recreational vehicle part or battery is deductible from the sales price if the recycling fee, deposit, or disposal fee is separately stated on the invoice, bill of sale, or similar document given to the purchaser.
Example: Retailer sells Customer a car battery for $100.00. The invoice given to Customer separately itemizes a $20.00 charge for a recycling fee for the battery. The taxable sales price of the battery is $80.00.
(4) If tangibleTangible personal property acquired by
the seller through a trade-in that is later sold at retail
then the sale of that tangible personal property is subject to sales tax
on the full sales price.
(2) A used part received by the seller as consideration for a
sale at retail is considered a trade-in. In the automotive parts industry a
used part traded in is commonly referred to as a “core.”
(3) Sellers of automotive parts shall remit sales tax on the
total sales price, which includes the value placed on the used part traded in
(core) and the part sold. No refund or reduction of tax is permitted based on
any payment or credit given to a customer for a part traded in (core) by the
customer. It makes no difference whether the part traded in (core) is presented
at the time of purchase or presented at a later time for refund or credit. The
following is an example:
Example:
When a part (such as a battery or an alternator) is sold, the seller often
separately itemizes the sales price of the part sold and the value of the customer’s
used part that may be traded in (core). Tax is due on the total amount received
by the seller for the part sold, whether received from the customer as all cash,
or cash and trade-in value in the form of a used part (core).
For
instance, the part sold is an alternator listed as selling for $69.99 plus a $40.00
trade-in (core) charge. The total taxable cost of the alternator sold is $109.99,
whether the customer paid with $109.99 in cash, or $69.99 cash together with a
used alternator (core) valued at $40.00. The used alternator traded in (core)
is considered a credit or property received in consideration of a sale at
retail (a $40.00 value) toward the purchase of the alternator sold, without
which the price to purchase the alternator would be $109.99. There is no credit
or refund of sales tax on the $40.00 value attributed to the used alternator
traded in (core). Tax is due on the total sales price of $109.99, which is the
listed price of the alternator ($69.99) plus the value of the used alternator
($40.00).
R 205.16 Returned goods.
Rule 16. (1) The term “returned goods” does not include repossession or
recapture of merchandise by legal process, abandonment of contract, voluntary
surrender of goods without a refund, or credit being given for the
amount paid, or goods accepted in trade or barter.
(2) If the seller provides a full refund or credit of the purchase price of the
returned goods and provides a full refund or credit of tax on the purchase
price the seller may claim a refund or credit of the tax paid to the Michigan department
of treasury within 4 years of the date set for the filing of the original
return for the period in which the tax was due.
(3)(2) If the seller provides a full or partial refund or
credit on returned goods within the time period for returns stated in the
seller’s refund policy or 180 days after the initial sale, whichever is sooner,
the seller shall refund tax on the full amount or that portion of the
purchase price that was refunded or credited. The seller may claim a refund
or credit of the tax paid to the Michigan department of treasury on all
or that portion of the purchase price that was refunded or credited to the
seller’s customer. The seller’s claim for refund must be submitted to the Michigan
department of treasury within 4 years of the date set for the filing of the
original return for the period in which the tax was due.
(4)(3)
A
refund or credit of tax must shall not be given on goods returned
to the seller for a refund or exchange without proof that Michigan tax was paid
on the original sale.
(5)(4)
A
rehandling or restocking charge by the seller in connection with returned goods
is not a reduction of the sales or purchase price for refund purposes.
unless the charge Charges includes cost attributable to use
of the returned goods by the purchaser are taxable.
(6)(5)
A
Credits credit or refunds of tax is are allowed
for a motor vehicles returned to a manufacturer under 1986 PA 87,
MCL 257.1401 to 257.1410, less allowances for use certified by the manufacturer
on a form provided by the Michigan department of treasury.
R 205.20 Interpretation of rules. General
application.
Rule 20. These rules must be read and interpreted in their entirety, taking into account the effect of all pertinent legislation, rules, and court decisions.
R 205.22 Discounts, coupons, and rebates generally; discounts on certain motor vehicle sales.
Rule 22. (1) Except as provided in subrule 2 of this rule,
Cash, trade, and quantity, or other discounts given
directly by a seller to a purchaser are deductible in arriving at the net sales
price which is subject to tax. These discounts are not deductible
until the actual discount has been given to the purchaser. For discounts
offered directly by a seller after the time of sale, through the mail or other
means, the purchaser may seek a refund of the sales tax paid on the discount or
rebate amount from the seller if the seller collected the tax from the
purchaser. The seller may request a refund from the department of treasury after
it has refunded the tax to its customer. SuchThe discounts
must appear on the invoices, records, and accounts of the seller and be
substantiated to the satisfaction of the Michigan department of
treasury.
Example 1: ABC is a retailer that sells widgets for a sales price of $10.00 each. ABC offers a quantity discount of $2.00 per widget if the customer purchases 10 widgets. Customer purchases 10 widgets at a sales price of $80.00. The taxable sales price of the widgets is $80.00.
(2) Trade and quantity discounts given directly by a seller are usually
known and available to the purchaser at the time of sale and are deductible
immediately on the invoice before determining the tax. A cash discount that is
offered by the seller as an inducement for payment within a specified time
shall not be deducted by the seller until it has been given to the purchaser.
Such discounts will be allowed as a deduction on the seller’s tax return when
there is sufficient evidence in the records of the seller to indicate that such
discounts have been the regular policy of the seller and have been given to the
purchaser.
Example 2: ABC is a retailer that sells musical instruments. ABC sells a baby grand piano to Customer for a sales price of $25,000.00. ABC’s contract with Customer provides that if Customer pays $20,000.00 within 60 days, ABC must reduce the price of the piano to $20,000.00. Customer pays in 59 days. The taxable sales price of the property is $20,000.00. However, when the sale is first reported by ABC it must include gross proceeds of $25,000.00 on its return and remit the appropriate tax. If ABC collected tax from Customer on the $5,000.00 discount it shall refund its customer before taking a credit or seeking a refund.
(3) A discount or instant rebate offered directly by a seller (without
reimbursement by a third party) reduces the sales price and reduces the tax
base of a sale at retail. A customer receiving a discount or rebate offered
directly by a seller after the time of sale, through the mail or other means,
may seek from the seller a refund of sales tax paid on the discount or rebate
amount.
(4)(2) A discount or rebate does not reduce the taxable sales
price and does not reduce the tax base of a sale at retail, and
is subject to tax, when if all the following conditions are met:
(a) The seller receives consideration from a personparty
other than the purchaser, (for example, from a manufacturer,)
and the consideration is directly related to the price reduction or discount.
(b) The seller is obligated to pass the price reduction or discount through to the purchaser.
(c) The amount of the consideration attributable to the sale is fixed and determinable by the seller at the time of the sale of the item to the purchaser.
(d) One of the following criteria are met:
(i)
The purchaser presents documentation to the seller to claim a price reduction
or discount granted by a third party third-party with the
understanding that the third party third-party will reimburse
any seller to whom the documentation is presented.
(ii)
or the The purchaser identifies himself or /herself
as a member of a group or organization entitled to a reduction or discount,.
Preferred customer cards that are available to any patron do not constitute
membership in a group or organization.
(iii)
or the The price reduction or discount is identified as a third-party
reduction or discount on the invoice received by the purchaser or on other
documentation presented by the purchaser.
Example: ABC is a retailer that sells widgets manufactured by XYZ for a sales price of $10.00. XYZ mails manufacturer coupons to the public for $2.00 off per widget. ABC and XYZ have an agreement that XYZ will reimburse ABC $2.00 per widget sold when the coupon is presented. The agreement requires ABC to pass this discount on to its customers. A customer presents XYZ’s coupon to ABC and ABC sells the customer a widget for $8.00. The taxable sales price of the widget for purposes of the seller’s liability is $10.00.
If any of the conditions in subdivision ((a), (b), (c), or (d)) of this subrule
is not met, the amount of the discount or rebate is not included in sales price
or in the tax base of the sale at retail, and is not subject to tax.
(5)(3) For the sale of a motor vehicle, a discount given to a
purchaser because of the purchaser’s status as a current employee, where the
amount of the discount is reimbursed to the seller by a third party third-party,
is not included in sales price and is not subject to tax. Retired employees,
laid-off employees, and relatives of an employee are not considered current
employees.
(6)(4) An automobile
dealer may reduce the taxable sales price, calculate a credit, or seek a refund
for consideration received from an automobile manufacturer to reimburse the
dealer for a discount or price reduction given on the sale of a motor vehicle,
to For
the sale of a motor vehicle to a purchaser who is a member of a
group designated by the an automobile manufacturer as entitled to
a price identified on the manufacturer’s invoice to the automobile dealer that
the manufacturer requires the dealer to charge the purchaser of that vehicle,
if all of the following conditions are met: (who is not an
employee of that automobile manufacturer), where the dealer/seller is
reimbursed by the manufacturer for the discount or price reduction given to the
purchaser, and where the dealer/seller did not reimburse itself by adding sales
tax on that portion of the sales price received from the manufacturer, the
dealer/seller may do either of the following:
(a) The purchaser is not employed by the manufacturer when the discount or price reduction is given.
(b) The dealer did not reimburse itself tax on the portion of the sales price it receives from the manufacturer.
(c) The amount of the credit or refund does not exceed the actual amount of sales tax paid on the portion of the sales price received from the manufacturer.
(a) Calculate a credit and seek a
refund from the Michigan department of treasury under MCL 205.182 in an amount
equal to 6% of the consideration received from the manufacturer in reimbursement
for the discount or price reduction given to the purchaser.
(b) Apply the credit and refund
identified in subdivision (a) of this subrule to reduce the dealer/seller’s
sales tax due.
(7) The amount of the credit or refund
shall not exceed the actual amount of sales tax paid by the dealer/seller on
that portion of the sales price received by the dealer/seller from the
automobile manufacturer.
R 205.26 Use tax registration.
Rule 26. (1) Except as provided in subrule 5 of this rule, Activities
activities that require a registration under the use tax actUse
Tax Act, 1937 PA 94, MCL 205.91 to 205.111, include, but are not limited
to, all of the following:
(a) An out-of-state seller making sales into this state that has nexus with this
state if the transfer of ownership of the tangible personal property occurs
outside of this state., not registered as a retailer under the general
sales tax act, 1933 PA 167, MCL 205.51 to 205.78 having nexus with this state.
(b) An out-of-state seller making sales into this state that voluntarily collects and remits use tax that does not have nexus with this state.
(b)(c) A business in this state that buying purchases
tangible personal property from non-registered a
sellers that does not provide proof that sales or use tax was due and
paid on the transaction.
(c)(d) A lessor of tangible personal property when rental
receipts are taxable under the use tax act, 1937 PA 94, MCL 205.91 to 205.111 that
elects to collect and remit use tax on its rental receipts.
(d)(e) A provider of intrastate or interstate
telecommunications services having nexus with this state.
(e) A provider of interstate telecommunications services having nexus with this
state.
(f) A provider of rental accommodations for a continuous period of 1 month
or less to the public.
(g) A provider of laundering or textile cleaning service under a sale, rental,
or service agreement with a term of not less thanat least 5 days
having nexus with this state.
(h) A provider of mobile wireless services.
(i) A person holding a direct payment authorization.
(2) A use tax registration mustshall be obtained using a form as
prescribed by the Michigan department of treasury.
(3) A use tax registration is not transferable from 1 person 1
ownership to another. For example, if a partner is added or dropped, or
if a corporation is formed or dissolved, this constitutes a change in ownership
necessitating an application in the name of the new ownership for another
registration.
(4) Registration under the use tax act Use Tax Act, 1937 PA 94, MCL
205.91 to 205.111, requires the filing of monthly, quarterly, or annual
tax returns on forms and at a frequency as required furnished
by the Michigan department of treasury. Filing by electronic means, by
accelerated filing, or by other methods approved by the Michigan
department of treasury may be required. Failure to register and file
returns may subject the taxpayer to penalties.
(5) A seller holding a sales tax license under the General Sales Tax Act, 1933 PA 167, MCL 205.51 to MCL 205.78, is not required to register for use tax.
R 205.29 Exemption for use tax already paid on tangible personal property or services.
Rule 29. (1) A person in this state that purchases or otherwise acquires from a seller located in another state tangible personal property that is used, stored, or consumed in this state is not liable for the tax levied under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111, if the use tax was already paid to the seller by that person for the tangible personal property. In addition, a person who uses or consumes a service in this state that is taxable to that person under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111, is not liable for the use tax if the seller or provider of the service collected the use tax from that person in connection with the sale or provision of the service or the person otherwise paid the use tax that was billed by the provider of the service.
(2) For purposes of subrule (1) of this rule, it is the responsibility of the person using, storing, or consuming the tangible personal property in this state, or using or consuming the service in this state, to retain proof that the use tax was paid by that person for the purchase or acquisition of the tangible personal property or service, or was otherwise collected from that person by the seller or provider of the tangible personal property or service.
SPECIFIC SALES AND USE TAX RULES
R 205.52 Antiques,
works of art, and artists. Rescinded.
Rule 2.
Sales of antiques and works of art are taxable, without deductions for trade-in
values or expenses of any kind. If the seller is regularly engaged in the
business of selling antiques or works of art, his sales are taxable, regardless
of the infrequency of the sales.
R 205.54 Automobile and other vehicle dealers.
Rule 4. (1)
Sales of new and used automobiles, buses, trucks, tractors, trailers,
housetrailers, motorcycles, motor scooters, and other vehicles for consumption
or use are subject to the tax on the full original retail sales price. The
sales price includes the total amount of consideration, including cash, credit,
property, and services, for which the vehicle is sold, whether received in
money or otherwise, and without any deductions for federal taxes, freight,
handling, delivery, commissions, trade-ins, repossessions, advertising,
future free service, or any expense incurred as part of the cost of doing
business. The sales tax must be paid to the secretary of state when the
application of title is submitted by the dealer.
(2) In calculating the retail sales price of a motor vehicle subject to tax, if separately stated on the invoice, bill of sale, or similar document given to the purchaser, the following may be excluded:
(a) The agreed-upon value of a vehicle used as partial payment to a dealer, subject to the limitations set forth in R 205.15.
(b) Interest, financing, or carrying charges from credit extended on the sale of the vehicle.
(c) Taxes legally imposed directly on the consumer.
(3)
(2) The sales tax shall be paid to the secretary of state at the time
application for title is submitted by the dealer.Unless otherwise
exempt, vehicle Vehicle transfers between individuals are subject to
use tax on the purchase price of the vehicle. In addition, equalization tax
as computed under section 9 of the streamlined sales and use tax revenue equalization
act, 2004 PA 175, MCL 205.179, is imposed to the extent that the retail dollar
value at the time of acquisition exceeds the purchase price of the vehicle. The
use tax and equalization tax due in a vehicle transfer between individuals is
payable to be paid to the secretary of state at the time when
the application for title is submitted by the purchaser.
(4) (3) When a vehicle is sold by a dealer, the sales
same delivered selling price, together with the amount of sales tax to
be paid to the secretary of state, mustshall be indicated on the
invoice, sales order, the statement of Michiganthis state’s retail
sales tax paid (form RD 108 as provided by the secretary of state),
and on the records of the dealer. Authorized discounts are deductible only when
given to the purchaser by the dealer at the time of sale and shown on
the invoice, sales order, the statement of sales tax paid (form RD 108 as
provided by the secretary of state), and on the records of the
dealer., See R 205.22.
(5) (4) The sale of a vehicle for delivery and use outside this
state Michigan is exempt not subject to tax if all the
following conditions exist:
(a) The dealer,
in order to consummate a sale, must delivers and assumes all
responsibility for delivery without knowledge that the such
vehicle will be returned to this state Michigan except for
a temporary use therein.
(b) Title to the vehicle passes to the purchaser at a point outside the state.
(c) A Michigan vehicle registration for this state title and
license are is not required.
(d) The dealer’s records substantiate subdivisions (5)(a) to (c) of this
rule. each of the 3 preceding facts.
(6) (5) A dealer may claim exemption on the sale of a new or used
vehicle when the purchaser will license and title the unit for use in another
state. To obtain such an exemption, the purchaser shall qualify for a special
registration issued by the secretary of state and appear in person, or by power
of attorney, at an office of the secretary of state to attest that he is the
bona fide purchaser and that the vehicle is dedicated for use in another state.
If the purchaser later returns the vehicle to Michigan for registration, a use
tax will apply on the value of the vehicle at that time. For a vehicle sold and delivered in this state to a
person securing special registration under section 226 of the Michigan vehicle code,
1949 PA 300, MCL 257.226, to register and use that vehicle in a state that does
not impose use tax upon registration in that state or that does not have a
sales tax reciprocity agreement with this state, no tax is collected upon the
sale and delivery of that vehicle in this state.
(7) (6)
Unless
otherwise exempt, tax is levied on any vehicle sold and delivered in this state
if the purchaser intends to register and use that vehicle in another country or
does not qualify for special registration issued by the secretary of state. (See
MCL 257.226.) VehiclesA vehicle purchased
and remaining in this statewhich will be used in Michigan for a period of
more than 30 days areis subject to sales tax irrespective of
whether even if the purchaser may be is not a legal resident
of this stateMichigan or whether the vehicle will be titled
registered in another state. except when If the purchaser
is an active nonresident military person a nonresident person
actively serving in the Armed Forces of the United States, the sale may
be exempt from tax if that purchaser provides a sworn statement of
nonresidency from that purchaser’s is furnished by his commanding
officer and the vehicle is titled and registered by the registers the
vehicle in the purchaser’s in his state of residency or domicile.
(8) For a vehicle sold and delivered in this state to a person securing special registration under section 226 of the Michigan vehicle code, 1949 PA 300, MCL 257.226, to register and use that vehicle in a state having a sales tax reciprocity agreement with this state, tax is imposed on the lesser of the tax to be imposed on the vehicle by the state in which the vehicle will be registered and the amount of Michigan sales tax due on the sale of the vehicle. In computing the tax due in each state under this provision, the value of any trade-in should be deducted in accordance with the respective law of each state. See R 205.15.
(9)
(7) When a vehicle that has been sold is returned to the dealer voluntarily
by the purchaser and the dealer refunds the full amount of money
or other consideration given by the purchaser, the dealer may receive a refund
or credit for the amount of sales tax paid to the state on the portion of
the original price that was refunded. When a vehicle that has been sold is
returned to the manufacturer under 1986 PA 87, MCL
257.1401 to 257.1410, and the manufacturer certifies the amount of money or
consideration paid by the purchaser that has been refunded, less an allowance
for the purchaser’s use of the vehicle, a refund for the amount of sales tax
paid to the state may be issued to the manufacturer., but only by
submitting an affidavit in the following form:
**** For
application see attached file labeled “Figures” ****
(8) Upon the sale of a new or used vehicle, the tax applies to the total
amount of the sale and no deduction is allowed for another vehicle taken in
trade on such transaction. The total amount of the sale means the amount
received in money, credits, property or other money’s worth. When credits,
property or other money’s worth becomes all or part of the consideration, then
the dollar value of such credits, property or other money’s worth must be
determined and made a part of the seller’s record. For sales tax purposes the
trade-in value of a vehicle shall not be less than its wholesale dollar value
at the time of trade. The dealer may use, as a guide, the wholesale dollar
value as shown in the current issue of any nationally recognized used vehicle
guide for financial institution appraisal purposes in Michigan. However, when such traded-in vehicle is resold, the
sales tax applied to the full amount of the sale of such traded-in vehicle and
not upon the amount originally allowed for the
trade-in.
Zero to 25 2 tax-free demonstrators
26-100 7 tax-free demonstrators
101-500 20 tax-free demonstrators
501 or more 25 tax-free demonstrators
(Maximum
allowable for each calendar year)
(11) (10) To qualify as a demonstrator the vehicle mustshall
be registered in the name of a dealer as provided on an affidavit prescribed
the department of treasury. titled in the name of a dealer upon
submission of an affidavit in the following
form:
**** For
application see attached file labeled “Figures” ****
(12) (11) A vehicle dealer that is engaged in the business of
renting or leasing vehicles shall pay tax on the vehicle at the time of
purchase, unless that dealer elects to pay use tax on rental receipts. See R
205.132(5). Vehicle dealers may also be engaged in the business
of leasing vehicles wherein the use tax will apply on rental income. It is not necessary that a dealer have a
separate use tax registration to report tax on such rentals unless the
ownership of the leasing company is different from that of the dealership. It is required, however, that the rental
income be reported in the use tax column of the combined sales and use tax
return. Dealers leasing vehicles to salesmen or employees will be required to
remit use tax on a base rental figure which cannot be less than their monthly
costs of ownership. This would include depreciation, finance charges, insurance
charges and any other incidental costs involved in operating the vehicle. (See R 205.132—Rentals.)
(13) (12) The annual surety bond required of each new and used
vehicle dealer under this the state’s Michigan vehicle
code shall must provide for indemnification or reimbursement to
the state for sales or use tax deficiencies for the year in which the bond was
in effect upon the entry of a final judgment in a court of record against the dealer.
R 205.55 Automotive parts dealers.
Rule 5. (1) Sales
at retail of automobile parts for consumption or use are taxable. (See R
205.117.—Repairers and servicers.) Every retailer of automotive parts,
such as a garage, car dealer, or service station, etc.,shallis
required to have a sales tax license. Sales for resale by a wholesaler
to such a licensed retailer are exempt. A wholesaler to such a licensed
retailer are exempt. However, the A wholesaler is liable for the
tax when he sells for retail sales to the consumer or user,
including a person with a sales tax license who purchases automobile parts or
tools, equipment, and supplies for consumption or use. For instance, the
sale of piston rings to a duly licensed garage operator is exempt if the rings
are to be resold over the counter to a person who will install them,;
sold in connection with repair work for a customer,; or installed
in a used car that the retailer has purchased or taken as trade-in, which is
being reconditioned for sale. However, the sale of the rings to the retailer is taxable if hethe retailer installs them in a vehicle keptmaintained for the
retailer’s his own use,
such as a wrecker used in the retailer’s hisbusiness or a car maintainedkept for use by the
retailer’shis family.
(2) All sales not for resale to a person not having a sales tax license are
taxable, regardless of what he buys, the nature of his business or the manner
in which he uses the material.
(2) (3) Any amount allowed or allowable as a trade-in, exchange,
or deposit is part of the gross proceeds subject to tax. Effective, January 1, 2017, any core charges
attributable to a recycling fee, deposit, or disposal fee for a motor vehicle
or recreational vehicle part or battery are excluded if the core charge is
separately stated on the invoice, bill of sale, or similar document given to
the purchaser. See R 205.15.
R
205.56 Bakeries Rescinded.
Rule 6. (1) Sales of bakery products for home consumption are exempt, except that
sales of bakery products which are “prepared food,” as defined in MCL 205.54g
(4), are taxable.
(2) Sales of bakery items described in MCL 205.54g (5) (d) are not sales of “prepared
food” and are exempt. (See R 205.136)
(3) Tangible personal property is taxable, unless that tangible personal
property becomes an ingredient or component part of bakery products produced
for sale by a retailer for retail sale.
R 205.57 Barber and beauty shops. Rescinded.
Rule 7.
(1) Barber or beauty shop operators are engaged primarily in rendering personal
services not subject to tax. Sales of tangible personal property to them are
taxable. Sellers of cosmetics, tonics, lotions, shaving soaps, barber tools and
supplies, barber chairs, shop equipment, furniture and fixtures and other
tangible personal property purchased for use in barber and beauty shops are
required to remit the tax thereon.
(2) However,
if a barber or beauty shop operator sells tangible personal property separately
from the rendering of personal services, these sales are taxable but he may
deduct in his tax return the amount on which tax was paid at the time of
purchase.
R
205.58 Beer, wine, and liquors. Rescinded.
Rule 8. (1) Sales of beer, wine, and spirituous liquors for consumption and use
are taxable. The seller shall also include in the gross sales reported on his
tax return all other retail sales.
(2) Sales of spirituous liquor and wine by specially designated distributors
shall be included in total gross sales reported by such distributors. Sales of
spirituous liquor and wine by a club to its members and guests are subject to
the tax on the full retail price with no deduction for the cost of such liquor
and wine. (See R 205.68--Containers, cartons, and wrapping materials.)
R 205.60 Bookbinders
and paper cutters. Rescinded.
Rule 10.
(1) Persons engaged in the business of binding books, magazines, and printed
matter for others, wherein the value of the tangible property transferred is
negligible, are considered to be selling a service and tax applies on the cost
of the equipment, materials, and supplies purchased.
(2) If a bookbinder binds his own printed matter and sells the finished
products to users or consumers or makes and sells loose-leaf binders or other
articles at retail, he shall remit the tax on the entire receipts from such sales.
(3) A person engaged in the business of paper cutting, folding, gathering,
padding, or punching circulars, office forms, or other printed matter belonging
to others renders nontaxable services. Sales of tangible personal property to
such persons for use or consumption in the performance of these services are taxable.
R
205.62 Airplanes and airlinesAircraft.
Rule
12. (1) Except for exempt sales under section 4x of the General Sales Tax Act,
1933 PA 167, MCL 205.54x, and sales to a purchaser that has made a valid lessor
election under section 5(4) of the Use Tax Act, 1937 PA 94, MCL 205.95, The
sales of new and used aircraft are subject to sales tax on the full selling
price without any deductions for expenses incurred as part of the cost
of doing business or trade-in credit given to a purchaser. Trade-ins
are not deductible.
(2).
Unless exempt under section 4x of the General Sales Tax Act, 1933 PA 167,
MCL 205.54x, Gasolinegasoline, jet fuel, oil, repair parts,
and other tangible personal property sold and delivered in this stateMichigan
for operation of aircraft are subject to sales tax regardless of where the
plane will be flown or used. Tax applies whether such sales are to private
or commercial airlines.
(3)
An airplane retailerA seller in the ordinary course of business,
including an aircraft dealer engaged in the purchasing, selling,
brokering, exchanging, or dealing in aircraft parts or in aircraft of a
type required to be registered under the Aeronautics code
of the state of Michigan, 1945 PA 327, MCL 259.1a to 259.208, shall is
required to remit sales tax on sales the full sales price of planes
an aircraft, solicited through his sales organization regardless
of whether such the sales are on his its own behalf
or on behalf of the plane aircraft owner.So-called “brokerage”
transactions are taxable on the full selling
price.
(4)
Aircraft purchased for consumption or use in this state Michigan from individuals or retailers sellers outside this state the state of Michigan
are subject to the 4% use tax.
(5)
A purchaser of airplanes who is licensed as a retailer of airplanes, whoA
dealer, as that term is defined in section 3 of the Aeronautics code of the state
of Michigan, 1945 PA 327, MCL 259.3, that uses thesuch
property solely for demonstration or display and for which no charge is
made while holding it for sale in the regular course of business, is not
required to pay a is exempt from tax on account of such use.
(6)
A retailer of aircraft who purchases new or used aircraft for the primary
purpose of demonstration, who is licensed by the Michigan department of revenue
as an aircraft retailer and, further, who has secured registration certificates
for each aircraft from the Michigan department of aeronautics, shall pay a use
tax on all revenue derived from the utilization of such aircraft or on the
amount taken as depreciation charges plus operating costs, whichever is
greater, during the period such property is held in inventory and retained as a
valid demonstrator. When an
aircraft used for demonstration is converted to a taxable use, use tax is owed
on the dealer’s original purchase price, if the aircraft was converted to a
purpose other than selling, brokering, exchanging, or dealing in aircraft parts
or in sales of aircraft.
(7)
Sales tax applies to the retail sale of the airplane aircraft following
its use for demonstration without deduction for use tax previously paid
under subrule 6 of this rule.,display, or other use. This is a distinct
and separate transaction from the prior election to convert the plane to personal use. Thus, sales tax must be
paid by the dealer on the full selling price without deduction for use tax
previously paid.
(8)The transfer of an aircraft registration from one individual owner to
another is subject to imposition of use tax. Such tax shall be paid directly to
the Michigan department of revenue. (See R 205.135--Isolated vehicle, aircraft,
watercraft, and snowmobile transfers.)
(8) A specific tax under the streamlined sales and use tax revenue equalization act, 2004 PA 175, MCL 205.171 to 205.191, of 6% is owed, less an amount equal to the use tax paid, on the retail value of a “qualified aircraft” for the privilege of storing, registering, or transferring ownership in this state, unless exempt from sales or use tax. A “qualified aircraft” is an aircraft purchased outside of the state, used solely for personal, non-business purposes, and either brought into the state more than 90 days after the date of purchase by a nonresident or brought into the state more than 360 days after the date of purchase by a resident.
R 205.63 Cemeteries and
crematories.
Rescinded.
Rule 13. (1) Sales of tangible personal property (boxes, urns, markers, vases,
flowers, etc.) by cemeteries and crematories are taxable.
(2) The sale of lots, crypts, and niches are considered to be real estate and
are not taxable.
(3) Sales not for resale to cemeteries and crematories are taxable. These
include materials and supplies used in construction, maintenance, improvement,
or alteration of buildings and grounds, such as seeds, plants, fertilizer, etc.
(4) Sales of equipment to cemeteries and crematories for consumption and use
are taxable.
R 205.64 Chemicals. Rescinded.
Rule 14.
(1) Sales of chemicals are taxable when sold to persons who consume or use them
in experimental or development work not connected with an industrial process. Chemicals used in the
rendering of services, repair work, and other nonindustrial activities are taxable.
(2) Sales
of chemicals are not taxable when consumed or used in industrial processing.
(See R 205.90--Industrial processing.)
R 205.66 Clipping
bureaus. Rescinded.
Rule 16.
(1) Sales of press clippings are taxable. If
a press clipping bureau merely furnishes special information derived
from press clippings to which it retains title, its receipts are deemed to be
derived from rendering service and not taxable.
(2) Sales
of lists of names, statistics, and other information in the form of cards,
sheets, or other tangible personal property are taxable.
R 205.67 Coal and other fuel Fuel dealers.
Rule 17. (1)
The sale of coal, coke, wood, fuel oil, liquid petroleum gas, and other fuel to
consumers or users is taxable on the basis of delivery price, including all
transportation charges. However, a separate charge for wheeling or carrying
coal from the residence street of purchaser to his bin or cellar is deemed to
be a service charge and is not taxable since such services are beyond the trade
practice of dumping from vehicle into purchaser’s bin. that is not
otherwise exempt is taxable based on the sales or purchase price. The
sale for residential use of electricity, natural or artificial gas, or home
heating fuels is exempt from the sales tax at the additional rate of 2%
approved by the electors on March 15, 1994.
(2) The sale of equipment, tools, materials, and supplies, etc.
consumed or used in handling and preparing fuel for market or delivery is taxable.
(3) The saleSales of bottled gas equipment to cylinders
by dealers and distributors are is subject to sales or
use tax except when purchased for rental to the gas user with the use tax then
to be paid on the rental charge tax at the time of sale. A dealer or
distributor that rents bottled gas cylinders to its customers may elect to pay
use tax on the rental receipts instead of paying sales tax when the dealer or
distributor purchases the cylinder for use in its rental business. See For
purposes of determination, only those rentals which are collected under a
specific written rental agreement carrying a reasonable rental rate consistent
with the actual cost of the equipment will be considered as a rental subject to
use tax. All other use of bottle gas equipment will be subject to tax at the
time of purchase. (See R 205.132--Rentals.)
(4) The sale of fuel is taxable if for consumption or use by ships,
tugs, dredges, barges, fishing boats, and other watercraft either for
commercial, pleasure, or private use, irrespective of where the buyer and
seller are located or whether the purchaser, subsequent to the delivery of such
property within the state, transports it out of the state or uses it in
interstate commerce. Sales of bunker and galley fuel sold for use by certain
vessels with a registered tonnage of 500 tons or more, and engaged in interstate
commerce, are exempt. Sales for use of vessels operating in foreign commerce
are taxable. The sale
of fuel used in rail operations is exempt from tax, except for use in vehicles
licensed and titled for use on public highways.
(5) The sale of fuel to public utilities to be used or consumed in the
manufacturing of power, heat, light, or gas to be sold at retail is not
taxable. (For sales of fuel for industrial processing purposes, see R 205.90.)
(6) The sale of fuel used for an exempt agricultural purpose or industrial processing is exempt from tax.
R 205.68 Containers, cartons, and wrapping materials.
Rule 18. (1) “Containers” means the articles and devices in
which tangible personal property is placed for shipment and delivery, such as
wrapping materials, bags, cans, twines, gummed tapes, barrels, boxes, tote
boxes, pallets, racks, bottles, drums, carboys, cartons, sacks, and materials
from which suchthe containers are manufactured.
(2) Sales of containers to persons regularly engaged in
rendering a service are taxable.
(3) Sales of containers to persons that will be resold
with the product are eligible for a resale exemption. are
exempt. If a separate charge is made for the sale of a container to a
person, other than for resale, the receipts from the sales are it is
taxable. Sales of containers that are not resold with the property it
contains are taxable.
Example: ABC manufactures golf balls. ABC sells its golf balls for resale to retailers. When a retailer places an order, ABC packages its golf balls by the dozen into boxes that are intended to be sold with the golf balls. When ABC receives an order from a retailer it places multiple boxes of golf balls into a larger box for shipment. The box that is sold with the golf balls is eligible for the resale exemption. However, the larger box used to ship multiple boxes of golf balls is taxable because it is not resold. ABC shall pay sales tax when it purchases the larger box or remit use tax on the purchase price of the box.
(4) Sales of containers to a person, such as a manufacturer,
wholesaler, jobber, or retailer, who uses the containers to ship or deliver
goods, and who retains the ownership or legal right of possession of the
containers, are taxable.
(5) Sales or purchases, for a single use only, of bracings,
blocking, skidding, shoring, and other materials, commonly known as “dunnage,”,
are taxable when used in the shipment of a product to a customer.
(6) Deposits on a returnable container for a beverage, or the deposit on a carton or case which is used for returnable beverage containers, are not taxable when sold in conjunction with a sale of a beverage.
R 205.70 Consignments.
Rule 20. (1) Sales of tangible personal property consigned, delivered, or entrusted
to a retailer for the purpose of selling at retail sale are
taxable to the retailer on the total retail sale price without deduction
for any expense, such as storage, rental, commission, or repairs,
etc. It is immaterial whether suchthe goods are different
from those sold in the regular business of the retailer.seller.
(2) Where a retailer selling tangible personal property belonging to another
has the right to withhold or claim a portion of the sale price as his
compensation, the retailer he shall include the total
amount received from the sale of the such goods in its his
tax return.
R 205.71 Contractors
Rule 21. (1)
“Contractor” includes only prime, general, and subcontractors directly engaged
in the business of constructing, altering, repairing, or improving real estate
for others.
(2) Contractors are consumers of the materials used by them. All sales to or purchases by contractors
of tangible personal property are taxable, except when affixed and made a
structural part of real estate for a qualified exempt nonprofit hospital or a
nonprofit housing entity qualified as exempt under the sales and use tax acts.
All materials consumed in the performance of such contracts and not affixed and
made a structural part of real property are taxable. Retailers making exempt
sales shall obtain the following exemption certificate:
SALES
OR USE TAX
Certification
is made that the merchandise specified in the instrument to which this is made
part will become part of the completed structure for a nonprofit hospital or a nonprofit housing entity qualified as
exempt under the sales and use tax acts. Should determination be made that any
or all of this merchandise is used for a taxable purpose, it is agreed that
tax, penalty, and interest will be paid to the
seller.
 |
Name
of exempt entity
|
Name
of contractor
Signed by Dated
 |
(3) Sales and rentals of tools, machinery, and equipment to contractors are
taxable.
(4) Where a contractor is exclusively engaged in the contracting business and
makes no direct sales to other contractors or consumers, he does not need a
sales tax license. Such non-licensed contractors are required to maintain a use
tax registration and pay the use tax to the state on purchases made from
out-of-state sellers.
(5) Where a contractor is not
engaged exclusively in the contracting business but makes sales of tangible
property at retail to other contractors and consumers, he shall secure a sales
tax license and file returns to report sales on such transactions. Use tax due
on out-of-state purchases and on merchandise acquired for resale and later
consumed in contract operations shall be reported on the combined sales and use
tax return.
(6) Where a manufacturer
affixes his product to real estate for others, he qualifies as a
contractor and shall remit use tax on the inventory value of the property at
the time the property is converted to the contract which value shall include
all costs of manufacturing, fabricating, and
processing.
(7) A contractor purchasing tangible personal property for affixation to realty
where delivery is taken in Michigan is subject to sales or use tax on the
purchase price whether the improvement or construction of realty takes place
within or without Michigan, except as noted in subrule (2).
R 205.72 Milk
and dairy products. Rescinded.
Rule 22.
(1) The commercial production of milk, for sale, by persons regularly engaged
in business as farmers or agriculturists, is set forth in R 205.51.
(2) Transportation of milk from the place where it is produced for sale by
persons regularly engaged in business as farmers or agriculturists, as well as
the receiving and storage of the milk at the processing plant, is taxable.
Processing includes all necessary operations performed on the milk prior to shipment from the plant. Sales of tools
and equipment used directly in the processing
of milk or milk products,
and lubricants and other materials
consumed or used in the repair
of maintenance of that equipment, are not taxable. Sales of tangible personal
property consumed or used in the construction, alteration, repair, or
improvement of buildings and grounds are taxable.
(3) Sales of equipment used or consumed in the transportation or delivery of
milk and milk products are taxable, including vehicles, cases, crates, and
property used for the maintenance and operation of that equipment.
(4) Sales of milk bottles and milk cans to dairies for use in processing milk
for sale at retail by others, including washing machines and cleaning compounds
used in connection therewith by such processors, are not subject to tax. Sales
of milk bottle crates or cases for transportation, receiving, storage, or
delivery are subject to tax. Sales of milk cans to farmers or agriculturists
for use in cooling milk prior to shipment to dairies are not taxable.
R 205.73 Directories. Rescinded.
Rule 23. (1) Sales of business, telephone, city, and other similar directories are taxable.
(2) When
such directories are given without charge to users, the tax applies to the cost
when sold to the donor.
R 205.75 Employee
associations and organizations.Rescinded.
Rule 25.
Organizations of employees which sell tangible personal property of any kind to
their members or others must procure a sales tax license and pay the tax on
such sales.
R
205.76 Employer sales to employees and
employer-sponsored incentive programs.
Rule 26. (1)
When an employer sells tangible personal property to his employees, allows
permits them to purchase through the his organization
or to buy from others on discounts available to the employer, him or
in any other another manner obtain goods through the employer
him, the such sales are taxable. The employer shall
include such sales in his tax return
and pay the tax regardless of whether such articles are
charged to the employee.
(2) If the employer is exempt from the tax on his regular business, he must
apply for a license and pay the tax on such sales.
An employer shall report and pay tax on sales to employees under subrule (1)
of this rule, even if the employer is exempt from tax on the employer’s regular
business.
(3) When an employer purchases tangible property for free distribution to
employees, the tax applies to the sale of such property to him. (See R 205.112—Premiums
and gifts.) Tax applies on
the sale of tangible personal property to an employer who purchases that tangible
personal property for free distribution to employees, unless the tangible
personal property is otherwise exempt. For example, tax would not apply to the
sale of goggles, protective gear, and other safety equipment to a manufacturer
for use by employees engaged in an exempt industrial process.
(4) The sale of tangible personal property to an employee by a third-party retailer through an employer-sponsored rewards, performance improvement, or other incentive program is taxable. The tax on any such transaction is imposed on the total value of the points, rewards, or other consideration redeemed in the transaction for the tangible personal property. Tax is not imposed on the redemption of any product that is not tangible personal property.
Example: Employer contracts with Company to operate a points-based incentive plan for employees. Under the plan, employees accumulate points that may be used to redeem certain prizes from Company, including tangible personal property and travel packages. Under the service agreement, Company then bills the employer based upon the value of points redeemed each period. Under this arrangement, tax is imposed on any redemption of tangible personal property by the employee based upon the total value of the points used to redeem that tangible personal property. Tax is not imposed on any redemption of prizes that does not involve tangible personal property, such as travel packages. The payments from the employer to Company for the points redeemed each period relate to the operation of the service agreement and are not taxable.
R 205.77 Fairs, circuses, carnivals, and other public exhibitions.
Rule 27. (1)
Persons conducting games of chance or skill at fairs, carnivals, circuses,
expositions, celebrations, bazaars, picnics, and similar places and delivering
merchandise as prizes are deemed consumers of such articles. All sales to them of tangible personal property,
including merchandise, devices, apparatus, furnishings, and other equipment are
taxable. Credit cards and extension of credit in any form, given as prizes,
will be deemed merchandise and taxable, unless the tax is paid at the time the
credit is exchanged for merchandise.
(2) Concessionaires
at fairs, circuses, carnivals, etc., shall procure a sales tax license and pay
the tax on all their sales at retail. The department reserves the right to
require a concessionaire to file a report and pay the tax at the close of any
business day or period during which he operates.
(3)
Persons
operating or sponsoring a fair, circus, carnival, etc. exposition,
bazaar, or similar event are shall be held liable, as the principal,
for the tax upon the sale or use of tangible personal property sold, given as
prizes, or otherwise disposed of by a person engaged in business without
a sales tax license at the such exhibition, unless the tax is
paid by the dispenser of the such property.
R
205.78 Farmers, market masters, and other marketers.Rescinded.
Rule 28. (1) Farmers, market masters, and other persons who sell at retail tangible
personal property, other than food for home consumption or use, shall secure a license
and pay the tax on those sales.
(2) Sales of the property specified in subrule (1) for resale to persons
possessing a sales tax license are not taxable.
(3) Where a person selling other than food at retail rents or occupies space in
a general market or other place operated for the purpose of transacting sales,
that person shall secure a sales tax license, and shall pay the tax on the
sales made by that person. If the seller does not have a sales tax license, the
market master, as the principal, is responsible for paying the tax on the sales
made by that person.
R 205.79 Federal and state governments.
Rule 29. (1) Sales to the United
States government, its unincorporated agencies and instrumentalities, any
incorporated agency wholly owned by the United States or by a corporation
wholly owned by the United States, the American Red Cross and its chapters and
branches, and the state and its political subdivisions, departments,
and institutions are not taxable if suchthe sales are ordered
on the prescribed respective government form or purchase order and are paid
for directly to the seller by warrant on with government funds.
(2) When suchthe sales
are made without the required purchase order form being supplied in advance,
the sale is taxable, but the licensee may later take credit for the tax
payment upon the licensee’s his subsequent receipt of purchase order
and warrant covering such the sales.
(3) Sales to governmental employees for their own consumption or use are taxable.
(4) The tax applies on
sSales to and purchases by private entrepreneursnon-governmental
entities doing business on federal areas are taxable, if the sale is
not made directly to an exempt federal instrumentality.
(5) The tax does not apply on
sales to the regular departments of the United States government. Exempt also
are sales to federal agencies, offices, establishments and instrumentalities
which the state is prohibited from taxing under the constitution or laws of the
United States. Address inquiries to the department of revenue as to the
taxability of sales to specific federal agencies, giving full information
concerning the transaction.
(5)(6) A
person subject to a tax under this act need not include in the amount of his or
her gross proceeds used for the computation of the tax any proceeds of his or
her business derived from sales to the United States, its unincorporated
agencies and instrumentalities, any incorporated agency or instrumentality of
the United States wholly owned by the United States or by a corporation wholly
owned by the United States, the American rRed cCross
and its chapters and branches, and the state or its departments and
institutions or any of its political subdivisions.
(6)(7) Sales to and
purchases by national banks are taxable.
(7) Sales made by political subdivisions of the state, including counties, municipalities, villages, school districts, water districts, and airport districts, are taxable, unless otherwise specifically exempted.
R 205.80 Florists and nurserymen.
Rule 30. (1) Flowers,
trees, plants, shrubs, seeds, grass, and other similar property are tangible
personal property subject to tax. Florists, and nurserymen,
and other persons regularly engaged in the business of selling such
tangible personal property at retail, such as flowers, trees, plants,
shrubs, seeds, grass, etc., are liable for the tax on their gross sales.
The tax applies is applicable irrespective regardless of
where or how the such items are grown or produced and regardless
of whether sold from a store, curb, market, greenhouse, farm, or other place.
(Sales for commercial production explained in R 205.51, Agricultural producing.)
(2) The following apply only to sales made through telegraphic delivery association, wire service, or in similar manner:
(a) On all orders taken by a Michigan florist in this state and telegraphed
communicated to a second florist, either located in this stateMichigan
or to a point outside the state, the florist taking the order is liable
for the tax.
(b) Where Michigan florists in this state receive telegraphic
instructions from other florists located either within or outside of this
stateMichigan for the delivery of flowers, the florist receiving the
telegraphic instructions is not held liable for the tax with respect to
any proceeds which he may realize from the transaction.
(3) Where a A florist or nurseryman that contracts to furnish
provide and plant shrubbery, plants, trees, etc., flowers,
trees, plants, shrubs, seeds, grass, and other similar property for others heis
deemed to be improving real estate and use tax will apply,
based on the fair market value purchase price of the stock property
consumed, will apply.
R
205.81
Foreign
commerce.Rescinded.
Rule 31. (1) The tax does not apply to export sales when, as a necessary
incident to the contract of sale, the exporter must and does deliver the goods
to the purchaser at a foreign destination, or is bound, under terms of contract
of sale, to place the goods in the hands of a common carrier consigned to the
buyer at a foreign destination. It is immaterial whether title to the goods
passes upon delivery to the carrier or upon arrival of the goods at their
destination.
(2) A sale to an exporter is not taxable if the contract requires the seller to
deliver the goods on board ship or in the hands of a common carrier consigned
on board ship.
(3) The principal factors giving evidence to a shipment for export are that the
foreign destination be shown on the container of such goods and on a bill of
lading or other evidence of shipment to a carrier or forwarder acting for the
shipper or carrier and that the goods remain in the original, unbroken
container until arrival at destination.
(4) The tax will apply to sales made by an importer of tangible personal
property imported into the state from a foreign country in like manner and to
the same extent as sales made by a retailer of domestic tangible personal
property.
R 205.83 Gasoline stations and other
motor fuel retailers.Rescinded.
Rule 33. (1) The sale of motor
fuel, oil, grease, antifreeze, and other tangible personal property for use or
consumption in motor vehicles operated on public highways or for any other use
not specifically exempted by law is taxable. Such sales are taxable on the
basis of the total receipts, without deduction for labor or other expenses or
losses.
(2) The sale of aviation gasoline,
turbojet fuel, jet fuel, and other fuels, oils, and lubricants to commercial
airlines and to other operators of aircraft is taxable on the total receipts,
without deduction for labor or other expenses or losses.
(3) The sale of fuel and
lubricants for use in commercial fishing craft, pleasure craft, and boats under
500 tons is taxable.
(4) The sale of equipment,
material, and supplies consumed or used by a person in the business of
marketing gasoline and other petroleum products is taxable.
(5) The sale of chassis
lubricants, wheel greases, and other products sold to a gasoline station
operator or to others for use in performing a service is taxable.
(6) Motor fuel retailers may take
a deduction from gross proceeds on their sales tax returns for the state motor
fuel taxes paid by the retailer to the state or to the distributor.
(7) The manufacturers’ federal
excise tax on gasoline, lubricating oils, tires, and tubes shall be included as
part of retailers’ gross proceeds subject to tax.
(8) Dealers paying retailers’
federal excise taxes on special motor fuels, such as diesel fuel or liquid
petroleum gas, are not required to include the excise taxes as part of the
gross proceeds subject to sales tax.
(9) Sales
or use tax does not apply on sales or purchases of diesel fuel for use in
passenger vehicles of 10 or more capacity operated for hire under a certificate
issued by the public service commission when such vehicles operate over
regularly scheduled routes in this state. Exemption does not prevail for
charter trips.
R 205.84 Golf
and country clubs.Rescinded.
Rule 34. (1) Sales of tangible personal property by golf and country clubs are
taxable and such clubs must obtain and maintain a sales tax license.
(2) Sales,
not for resale, to these clubs are taxable, including seeds, plants, fertilizer,
etc., used to improve the grounds, and equipment, supplies and other tangible
personal property. (See also R
205.116--Restaurants, hotels, lunchrooms, and other establishments; R
205.95--Leased departments; and R 205.98--Meals.)
R 205.88 Lodging provided by
hotels, motels, cabins and camps. Hotels,
motels, cabins, and camps; accommodations.
Rule 38. (1) Effective September 1, 1959, a 4% use Use tax
is imposed on rental receipts from rooms or lodgings furnished by hotel
keepers, motel operators, and other persons furnishing accommodations
that are available to the public based on the basis ofa
commercial and business enterprise, irrespective of whether membership is
required for use of the accommodations.
(2) The
following rentals are exempt from the tax
not taxable:
(a) Rooms or accommodations lodging rented for a continuous
period of more than 1 month to the same tenant.
As used in this subdivision, “1 month” means 30 days
or the calendar month of the rental period, whichever is shorter.
(b) Rooms or accommodations lodging furnished by hospitals,
nursing homes, convalescent homes, and mental institutions or similar
institutions dedicated to the care and treatment of the sick under medical supervision.
(c) Rooms or accommodations lodging furnished by summer camps
operated by a legally qualified nonprofit corporation or association organization
and camps licensed under Act No. 47, Public Acts of 1944, as amended,
administered by the social welfare department 1973
PA 116, MCL 722.111 to 722.128.
(3) The following rentals are exempt from the tax:
(a)(d) Rooms or accommodations lodging furnished
directly to the federal United States government, its
unincorporated agencies or instrumentalities, any incorporated agency wholly
owned by the United States or by a corporation wholly owned by the United
States, the American Red Cross or its chapters or branches, provided
exemption certificates are executed as issued by the comptroller general if paid for directly to
the seller with government funds.
(b)(e) Rooms or accommodations lodging furnished
directly to state and local governmental entities this state or its
political subdivisions, departments, or institutions, provided payment
for such accommodations are made to the seller by a prescribed warrant on
government funds if paid for
directly to the seller with government funds.
(c)(f) Rooms or accommodations lodging furnished
directly to legally qualified nonprofit organizations, corporations
or associations, as prescribed in section 4, subsection (j), of the use tax
act, and regularly organized churches and houses of religious worship as
provided under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111.
Organizations and societies of church members are taxable. (3) As used in the act “hotel” or “motel” means a
building or group of buildings in which the public may obtain accommodations
for a consideration, including, without limitation, such establishments as
inns, motels, tourist homes, tourist houses or units, lodging houses, apartment
hotels, rooming houses, camps, resort lodges and cabins and any other building
or group of buildings in which accommodations are available to the public.
(4) All tangible personal property purchased by a hotel or motel operator is
subject to sales or use tax.
(5) A motel or hotel operator making sales of tangible personal property, in
addition to the renting of rooms, will be required to have a sales tax license
for the purpose of reporting both sales and use tax. If no retail sales of
tangible personal property are made, a use tax registration is needed.
R
205.89 Ice producing.Rescinded.
Rule 39. (1) Sales tax applies on the full retail selling price of ice sold to
the final consumer by a retailer maintaining a sales tax license. The entire
gross proceeds from sales of ice through vending machines and other automatic
sales devices are taxable without any deductions for commissions, rentals and
other expenses paid. It is immaterial whether the business operator owns such
machine or the merchandise sold thereby.
(2)
Ice producers and manufacturers selling directly to final consumers, except
sales through vending machines as provided in subrule (1), shall maintain a
sales tax license and remit tax on the sales.
(3) The sale of tools, equipment, materials and supplies consumed or used by an
ice producer in the manufacturing of ice for sale is not taxable. Tangible
personal property acquired for storing and delivery of ice is taxable.
R
205.90 Industrial processing. Rescinded.
Rule 40. (1) This rule applies to sales, purchases and rentals of tangible
personal property to persons for use or consumption in industrial processing,
and the word “sales” hereafter used shall be construed to be either sale,
purchase or rental. The word “manufacturing” as used in this rule is included
within those activities which are considered “industrial processing.”
(2) “Industrial processing” means the activity of converting or conditioning
tangible personal property by changing the form, composition, quality,
combination or character of the property for ultimate sale at retail or use in
manufacturing of a product to be ultimately sold at retail.
(3) The sale of tangible personal property to manufacturers, which property
becomes an ingredient or component part of the finished product or that which
is consumed, destroyed or loses its identity in a manufacturing process,
together with the processing machinery and equipment (including maintenance and
repairs thereof) used in the manufacturing of a product which is either to be
sold ultimately at retail or to be used as tangible personal property in the
manufacture of a product to be sold ultimately at retail, is not taxable. The
consumption or use of the tangible personal property rather than the kind or
character of the property sold is the determining factor as to whether or not
such a sale is taxable. The industrial processing exemption does not include:
(a) Tangible personal property permanently affixed and becoming a structural
part of real estate. This includes building utility systems such as heating,
air conditioning, ventilating, plumbing, lighting and electrical distribution.
Example: all electrical transmission and distribution materials and equipment
which are installed in the construction of plant facilities for, or by, an
industrial processor for use in transmitting electrical energy is taxable up to
the last transformer, switch or other device at which point usable power is
diverted from distribution circuits for use in industrial processing.
(b) Tangible personal property used or consumed in performing services upon
property owned by others where the services do not transform, alter or modify
the property so as to place it in a different form, composition or character.
(c) Office equipment, including data processing equipment used for
nonindustrial processing purposes, and office furniture and office supplies
wherever and however used.
(d) Tangible personal property used for receiving and storage of materials,
supplies, parts and components purchased by the user or consumer.
(e) Tangible personal property used for receiving and storage of natural
resources extracted by the user or consumer.
(f) Vehicles, including special bodies or attachments, licensed and titled for
use on public highways.
(g) Tangible personal property used for preparation of food and beverages by a
retailer for retail sale.
(h) Tangible personal property used or consumed for the preserving or
maintaining of a product in the form and condition in which it is to be sold.
(4) The following examples of nontaxable sales illustrate the application of
the industrial processing exemption:
(a) Property which becomes an ingredient or component part of the finished
product to be sold ultimately at retail.
(b) Machinery, tools, dies, patterns, machinery and equipment foundations and
other processing equipment, including repair and maintenance of all of these,
used in an industrial processing operation.
(c) Property which is consumed, destroyed or loses its identity in a
manufacturing or other production process.
(d) Tangible personal property, not permanently affixed and not becoming a
structural part of real estate, which becomes a part of, or is used and
consumed in installation and maintenance of, systems used for processing
purposes.
(e) Fuel or energy used or consumed for industrial processing.
(f) Machinery, equipment and materials used within a plant site for movement of
tangible personal property in process of production.
(g) Office equipment, including data processing equipment, used for industrial
processing purposes.
(5) Industrial processing includes the following activities:
(a) Production.
(b) Patent, experimental, development, engineering inspection and quality
control.
(c) Planning, scheduling and production control.
(d) Design, construction and maintenance of factory machinery, equipment and
tooling.
(e) Disposal of production scrap and waste.
(f) Production supervision.
(g) Production material handling.
(6) Industrial processing does not include the following activities:
(a) Purchasing, receiving and storage of raw materials.
(b) Sales, distribution, warehousing, shipping and advertising departments.
(See R 205.68.)
(c) Administrative, accounting and personnel.
(d) Design, construction and maintenance of real property and nonprocessing
equipment.
(e) Plant security, fire prevention and hospitals.
(7) The foregoing examples of taxable and exempt activities shall not be
considered as exclusive in either category but are included as generally
descriptive of industrial processing operations which are considered exempt as
distinguished from nonexempt activities.
(8) Where the industrial processing areas or spaces are not separate and
distinct from other departments or activities, or where the same tangible
personal property can be used or consumed in the industrial processing area and
1 or more other areas, the tax will apply to such property unless it can be
determined and substantiated to the satisfaction of the revenue division,
department of treasury that a percentage or other apportionment thereof is
equitable and practical.
R
205.91 Interstate Commerce. Rescinded.
Rule 41. (1) The tax does not apply to any sale of tangible personal
property when such tax is prohibited by the constitution or laws of the United
States. Whether or not the tax on a sale at retail is prohibited by the
constitution or laws of the United States depends primarily on the facts in
each individual case. The department requests your inquiries concerning
specific transactions involving interstate commerce.
(2)
Where tangible personal property is located within the state at the time of
sale and is delivered within the state it is taxable. It is immaterial that the purchaser may, subsequent to the sale,
transport the property out of the state or use it in interstate commerce
(3)
A sale taking place within the state is taxable as an intrastate transaction.
For example: tax would apply when a customer in Michigan purchases tangible
personal property from a Michigan retailer, pays the seller the required sales
price together with insurance or postage or freight regardless of the
destination of the property purchased; tax would not apply on sales where the
seller is obligated to make delivery to the purchaser at an out-of-state
delivery point when the property will not be returned to Michigan for storage,
use or consumption.
(4)
When making a valid sale in interstate commerce, it is necessary for the seller
to retain documentary evidence of shipment outside the state for the purpose of
substantiating a deduction on the tax return. If the shipment of the property
is diverted in transit or if for any
reason it does not arrive at the indicated destination outside the state, or is
reshipped into the state, the sale is taxable. The documents acceptable to the
department are any of the following:
(a) A waybill or bill of lading made out to the seller’s order and calling for
delivery outside the state.
(b) An insurance or registry receipt issued by
the United States postal service.
(c) A trip sheet signed by the seller’s delivery agent and showing the
signature and address of the person, outside the state, who received the goods delivered.
(d) Sales slips or other sales and shipping forms regularly used by the seller
for interstate transactions must be filed separately from intrastate, in an
accessible manner to facilitate an audit by the state.
R 205.92 Jewelers
and jewelry repairers.Rescinded.
Rule 42. (1) Sales, not for resale, of watches,
clocks, jewelry and other items by jewelers and jewelry repairers, are taxable.
(2) Sales of jewelry, such as class rings and pins, to high school and college
students, members of fraternities, sororities, etc., are subject to the tax.
This is true even when sales are made through a school official acting as agent
either for the seller or the purchaser. Manufacturing jewelers making such
sales by contract, either through school officials or through retail jewelers
acting as commission agents, are to report and pay the tax on the full sales
price of such transactions. They are not deemed to be either sales for resale
or sales to educational institutions.
(3) Sales of trophies, medals, etc., to nonprofit educational institutions,
intended for awards to students, are not taxable.
R
205.93 Kennels, stables, and pet shops. Sales and breeding of
animals.
Rule 43. (1) Sales, not for resale, of tangible personal property for use
and consumption in operating boarding kennels and stables, or pet shops, are
subject to tax.
(2) Persons operating boarding kennels and stables only, and making no retail
sales of animals, are considered as consumers subject to tax on acquisition
cost of property purchased.
(3)(1)
Unless otherwise exempt, sSales of horses, dogs, other animals cats,
birds, goldfish, guinea pigs, reptiles, and other animals, including
household pets, are taxable sales of tangible personal property. subject
to tax, except when sold to a person regularly engaged in the business of
breeding such livestock for resale and conditioned that such breeder or
propagator is the holder of a sales tax license.
(2) Persons that breed and sell animals as pets, including those who engage in the activities merely as a hobby or pastime, are engaged in the business of making retail sales and are required to pay sales tax on all sales of animals not for resale. While a single, isolated sale of an animal would not be subject to tax, a breeder who advertises or offers animals for sale at any time and in any manner, including on the internet, for purposes of repeated sales is determined to be regularly engaged in the business of making retail sales, and their sales are not considered casual or isolated, even if they are few or infrequent. See R 205.13.
R 205.94 Labels, tags, and nameplates other
property included in or affixed to containers.
Rule 44. (1) Sales of labels, tags, or nameplates to persons using them in rendering services or for personal or business use or which do not accompany products sold, are sales for consumption and are taxable.
(2) Sales of labels, tags, or nameplates is not subject to tax if the
labels, tags, or nameplates will be affixed to tangible personal property that will
be sold at retail or affixed to the containers sold with the property.to
be affixed to tangible personal property which is taxable when sold at retail,
or to the containers sold with such property, are not subject to tax if the
labels or nameplates are an inseparable part of the property sold and purchased
by the buyer as a part of such property.
(3) Sales of labels to persons retaining title to containers to which the labels are affixed are not sales for resale but are sales for consumption and subject to tax.
R 205.97 Linen
and laundry suppliers and laundries. Rescinded.
Rule 47.
(1) Persons engaged in the business of laundering clothes and other textiles
for others and persons operating a linen service or providing the use of clean jackets and other garments,
towels and similar articles to hotels, barber shops and other establishments
are deemed to be rendering a service. All sales to them of tangible personal
property of any kind are taxable.
(2) Sales of tangible personal property at retail by such persons are taxable,
but they may deduct on their tax returns the amount of gross sales upon which
they paid the tax at time of purchase.
(3) Rentals of linens and other similar articles are subject to use tax unless
the lessor has paid Michigan sales or use tax on the purchase price of the
articles to be rented. A person remitting tax on the purchase price as a
purchaser-consumer or remitting tax on rental receipts as a lessor, shall
follow 1 or the other methods of remitting for his entire business operation.
R 205.98 Meals. Sales made in transit.
Rule 48. (1)
The sale of mealsPrepared food or other tangible personal property sold
or otherwise provided on any form of transportation, including, but not limited
to, by a railcar road, pullman car,
watercraft steamship, or airplane, or other transportation
companies while operating in this state the state of Michigan,
or upon this state’s Michigan waters, is subject to taxable. See R 205.136.
(2) Fraternities,
sororities, and other student societies, with members residing at a common location
and jointly sharing household expenses, including meals, are not considered to
be selling at retail, and meals furnished to members are not taxable. Caterers
or other persons selling meals to fraternities and sororities are taxable on
their gross proceeds from meals so furnished.
R 205.99 Mining, oil wells, and extractive operations. Rescinded.
Rule 49.
(1) An extractive operator includes a person who, from his own land or from the
land of another, either directly or by contract, takes or extracts for resale
ore, oil, gas, coal, timber, stone, gravel, clay, minerals or other natural
resource material.
(2) An extractive operation begins when contact is made with the actual type of
natural raw product being recovered and no exemptions in the nature of
industrial processing are to be considered pending such contact. Processing
includes all necessary processing operations before shipment from the place of
extraction, except that tangible personal property consumed or used in the
construction, alteration, improvement or repair of buildings, storage tanks,
storage and housing facilities is taxable. The
sale of tangible personal property for consumption or use in transporting the product from
the place of extraction is taxable.
(3) If an extractive operator sells any part of his product at retail, or if he
consumes or uses it himself in other than the manufacturing or producing of a
product for ultimate sale, extractions thus sold or used are taxable and the
extractor shall account for and remit the tax to the state. When he consumes or
uses his own product, the tax shall be based upon its fair market value. Where
an extractor sells to a wholesaler, refiner, manufacturer or other person for
resale, the tax does not apply. However, where an extractor sells to a final
buyer or ultimate consumer, the tax applies to the gross proceeds of such sales.
(4) The drilling or prospecting for oil, gas, brine or other natural resources
does not constitute industrial processing. Sales of equipment, materials and
supplies used in exploring for natural resources and sales of equipment and
materials used in the drilling of oil, gas and brine wells are taxable.
(5) The actual production of oil, gas, brine or other natural resources
constitutes industrial processing and exempts from application of the tax
casing pipe and drive pipe commonly known as 8-inch or under (8 5/8-inch O.D.);
tubing; well-pumping equipment; chemicals, explosives and acids used in
fracturing, acidizing or shooting wells; Christmas trees and other wellhead
equipment; treatment tanks; piping, valves and pumps used before movement or
transportation of the natural resource from the production area; and chemicals
and acids used in treating such crude oil, gas, brine or other natural resources.
(6) The storage of oil, gas, brine or other natural resources (including
underground storage) does not constitute industrial processing. Sales of
equipment, material and supplies used in the storing, withdrawing or
distribution of oil, gas or brine from a storage facility are taxable.
R
205.100
Tombstones,
markers, and other memorials.Rescinded.
Rule 50. (1) Memorial dealers are retailers of tombstones, markers and other
memorials sold by them and also of the materials used in setting a memorial in
the cemetery. Such sales are subject to tax.
(2) If the memorial dealer furnishes a memorial and sets it in the cemetery for
a lump sum, the tax applies to the entire amount charged. If a charge made for
the labor of setting the memorial is separately itemized, the tax does not
apply to this labor charge. No deduction may be made of charges for cutting,
shaping, polishing or lettering a memorial or for transporting it to the
cemetery.
(3) When a cemetery constructs the foundation upon which a memorial is placed
and collects the charges therefor from the memorial dealer who then either
collects that amount from his customer or includes it in the charge for the
memorial, the memorial dealer is the retailer of the foundation or the material
used therein and must pay the tax on it. The cemetery in this case is deemed to
be acting as the agent of the memorial dealer in constructing the foundation.
(4) If the cemetery collects the charges for foundations directly from
customers of the memorial dealer, the cemetery is the retailer and must pay the
tax to the state on the charges for the foundations or for the materials alone
when the latter are charged separately.
R
205.101
Morticians,
undertakers, and funeral directors.Rescinded.
Rule 51. (1) Morticians, undertakers, and funeral directors are construed to be
rendering a service beyond the selling of tangible personal property,
therefore, their sales are taxable as follows.
(2) Where a lump sum charge is made for the ordinary funeral, consisting of the
casket complete with rough box, embalming and care of the deceased, use of
hearse, limousine, funeral chapel and establishment and professional services,
it is assumed that 50% of such lump sum charge is tangible personal property and
subject to the tax.
(3) The tax will apply to the entire charges made on purchases that are not
included in lump sum billing which may be in the nature of extras. The tax will
not apply to accommodation cash advances for such items as cemetery charges,
newspaper notices, railroad tickets, ministerial fee, choir, etc.
(4) If the casket and other tangible personal property furnished for a funeral
are segregated on the invoice and also in the records of the undertaker, the
tax applies to the price charged for each item of tangible personal property,
provided such price is the fair retail value of such personal property.
(5) Direct sales to a governmental entity are exempt. This exemption does not
include payments from social security benefits, veterans’ administration
benefits, and similar participation benefits accruing to the deceased under
various federal and state laws.
(6) All equipment, ambulances, hearses, embalming equipment and materials,
chapel furnishings, etc., are presumed to be used or consumed by the mortician,
undertaker or funeral director in rendering a service and such sales to them
are subject to the tax. Generally speaking, these commodities are
classified as trade tools or equipment that have more than a onetime use.
R 205.102 Multigraphers
and mimeographers.Rescinded.
Rule 52. (1) Sales of tangible
personal property by multigraphers, mimeographers, and similar establishments
are taxable, except when for resale or to be used in “industrial processing” (R
205.90).
(2) A multigrapher or
mimeogapher may not deduct, from the selling price of an item, the labor or
other service charge in performing the job even though it is shown separately
and regardless of when the services are performed. The labor cost is considered
part of the cost of the article sold. Amount paid for postal privileges never
becomes part of the price upon which tax is figured.
(3) When a customer furnishes
his own printed paper stock and a multigrapher or mimeographer imprints thereon
the name, address, telephone number, etc., this is merely service and not
taxable.
(4) If government postcards or
stamped envelopes are furnished by the customer to the multigrapher or
mimeographer, receipts for imprinting the cards or envelopes are not taxable.
(5) Sales to multigraphers and
mimeographers of equipment and materials consumed or used directly in the
processing of their product are not taxable. However, when sold to persons not
regularly engaged in mimeographing or multigraphing for sale, they are taxable.
(6) This rule also applies to
persons engaged in the business of conducting a letter service for others,
regardless of the method used to produce such letters.
R 205.104 Optometrists, ophthalmologists, opticians, and optical supply houses.
Rule 54. (1)
Licensed optometrists and ophthalmologists whothat examine,
prescribe, and dispense eyeglasses and contact lenses are considered for sales
tax purposes to be making retail sales. A sales tax license is required for this activity.
(2) Sales of eyeglasses prescribed or dispensed to correct a person’s vision
Eyeglasses dispensed to a patient by an ophthalmologist,
optometrist, or optician pursuant to a prescription to correct that patient’s
vision, and repair and replacement parts for the such
eyeglasses, are exempt. Contact lenses are taxable, except when prescribed
by an optometrist or ophthalmologist for a specific disease which precludes the
use of eyeglasses. If necessary to complete the sale of contact lenses,
Examination examination charges or other service charges are
taxable, even if when billed separately. are exempt.
(3) Sales by opticians and optical supply houses to optometrists and
ophthalmologists are exempt when sold for resale, provided the optometrist
or ophthalmologist is properly licensed as a retailer as noted in subrule (1)
of this rule. in both of the following
situations:
(a) When sold for resale, provided the optometrist or ophthalmologist is
properly registered as a retailer as noted in subrule (1).
(b) When sold pursuant to a specific prescription, except as noted in subrule
(2).
(4) Sales of machinery and apparatus used directly in the manufacture of
eyeglasses for resale are not taxable. Sales of all other equipment and
materials to opticians are taxable.
(5) Sales at retail by a person regularly engaged in any of the businesses
mentioned above of stock accessories, such as sunglasses, barometers,
thermometers, telescopes, opera glasses, solutions for cleaning glasses,
lorgnettes, chains, ribbons, and similar items, are taxable.
(6) If an optician employs an optometrist or ophthalmologist, and sells
eyeglasses directly to the ultimate consumer, the sale will be exempt if in
fulfillment of a prescription issued by the optometrist or ophthalmologist.
(4)(7) Physicians acting in the capacity of optometrists or
ophthalmologists are subject to this rule., see (See R 205.111.)
R 205.106 Pawnbrokers.Rescinded.
Rule 56.
Pawnbrokers are engaged primarily in the business of lending money for the
repayment of which they accept as security tangible personal property from the
pawner or pledger. In case the pawner
or pledger does not redeem the property pledged or pawned within the
specified time and the property is forfeited and title rests in the pawnbroker,
the gross proceeds realized by the pawnbroker from a subsequent sale of the
articles are taxable.
R 205.107 Pharmacists.Rescinded.
Rule 57.
(1) The sale of prescription drugs for human use by a licensed pharmacist is
exempt from tax. To qualify for this exemption, the pharmacist shall have a
specific prescription as prescribed by a physician or other licensed
practitioner of the healing arts.
(2) Retail sales of any apparatus, device, appliance, or equipment used to
replace or substitute for any part of the human body, or used to assist the
disabled person to lead a reasonably normal life, are exempt when the tangible
personal property is purchased on a written prescription or order issued by a
licensed health professional. (See R 205.139 for definition of “licensed health professional.”)
(3) To support the exemption claimed when filing the required return, a
pharmacist shall keep a record showing the date the prescription is issued, the
name of the person issuing it, the name of the individual for whose consumption
it is issued, the contents of the formula prescribed, and the amount charged to
the consumer. This information may appear either in the form of the original
prescription attached to a substantial record in chronological order or in a
transcribed record in the same order. These records shall be kept for a period
of 4 years.
(4) Insulin dispensed by a pharmacist, either with or without a prescription,
is exempt from the tax.
(5) The sale to consumers of drugs without a prescription is taxable.
(a) Sales of nonprescription apparatuses, devices, or equipment are taxable.
Repair and replacement parts are also taxable.
R 205.108 Philatelists;
antiques, curios, and old coins. Postage stamps.
Rule 58. (1) Sales of curios,
antiques, art work, coins, postage stamps and like articles to art collectors,
philatelists, numismatists or other persons who purchase such items for use or
storage and not for immediate resale are sales subject to tax.
(2)(1) Sales by
the United States Postal Service or by an Approved Postal Provider of
uncancelled United States postage or revenue stamps valid for
transportation of mail or for revenue tax purposes are not taxable. Sales
of these items made by other sellers are subject to tax. Sales of cancelled
domestic or foreign stamps or of uncancelled foreign postage stamps not valid
for transportation of mail in the United States are taxable.
(2) “Approved Postal Provider” means a business that has entered into a contractual agreement with the United States Postal Service to provide authorized postal services, including the sale of postage stamps, to the public.
R
205.109 Photographers and photo finishersprocessors.
Rule 59. (1) The making of
photographs for sale is an industrial process, and tangible personal property
used and consumed directly in the process is not taxable.
(1)(2) The total
amount charged for making photographs, including the camera charge, is taxable.
When an order is not received from proofs, the amount of the deposit retained
is not taxable. If a photographer’s sitting fee or session fee is part
of a package that includes tangible personal property, such as prints, the
total amount charged for the package is taxable, even if the packaged parts are
separately itemized on the invoice. If a sitting fee or session fee is charged
as a separate transaction, and the customer is not required to also purchase
prints or other products, then the sitting fee or session fee is not taxable.
(2)(3) The
development and processing of exposed film or negatives in black and white or
in color, and the production of film strips, slides, or prints therefrom, are
subject to sales tax on the total price charged to the customer. The purchase
of machinery, equipment, materials, and supplies used by the processor in
processing the exposed film, and in the production of the film strips, slides,
and prints, are exempt from tax as being a part of an industrial process. The
development and processing of photographic images, whether using a physical or
digital process, together with the production of prints, film strips, slides,
or other tangible personal property, are subject to sales tax on the total
price charged to the customer.
Whether equipment, materials, and supplies purchased for use in the creation and development of photographic images are used in industrial processing and are therefore exempt from tax, depends upon the process used to develop the photographic images. Equipment, materials, and supplies purchased for use in the creation, development, and sale of digital products, including digital photographic images, are not used in industrial processing, and are taxable. However, equipment, materials, and supplies purchased for use in the physical processing of non-digital photographic images, such as the development of exposed film or film negatives, may be used in industrial processing and are exempt from tax. See sections 4t of the General Sales Tax Act, 1933 PA 167, MCL 205.54t and section 4o of the Use Tax Act, 1937 PA 94, MCL 205.94o.
(3)(4) The
coloring or tinting of photographs returned to the photographer for such a purpose
is a nontaxable service. However, if the coloring or tinting of the photograph
is included in a quoted price, the total amount is taxable. Coloring, tinting, retouching, restoration, and similar
services, if performed on photographs or images owned by the customer, are
nontaxable. If the services are performed as part of a package that includes
tangible personal property, or in connection with the photographer’s creation
of photographic images to be sold as prints or other tangible personal property,
the total amount charged to the customer is taxable.
(5) Sales of cameras, films,
frames, and other articles to the consumer are taxable.
(6) Sales of x-ray films to
laboratories, physicians, surgeons, and dentists, and to other persons primarily
engaged in rendering x-ray services, are taxable.
R 205.110 Telephone
and telegraph.Rescinded.
Rule 60.
(1) Use tax applies on income derived from intrastate telephone, telegraph,
leased wire, private line, teletypewriter and similar communications services.
The tax applies only on such services which both originate and terminate in
Michigan.
(2) The
tax does not apply on income from coin-operated installations, directory
advertising proceeds, or on charges to telephone answering services for switchboards,
concentrator-identifiers, interoffice circuitry and their accessories. Charges
for lines, stations, toll calls and other services and equipment to such
answering services which are normally furnished to a subscriber are taxable.
(3) The tax does not apply on sales of services to the United States
government, the state of Michigan, political subdivisions of the state of
Michigan or to the American red cross.
(4) The tax does not apply on services sold to schools, hospitals, homes for
the aged or children, or other health, welfare, educational or charitable
institutions or agencies not operated for profit or benefit to the
shareholders.
(5) Sales or use tax applies on purchases of tangible personal property by
sellers of taxable communication services except exemption will prevail on the
necessary exchange equipment and on the tangible personal property acquired for
installation on the premises of the subscriber.
(6) Sales or use tax will apply on tangible personal property purchased and
used in providing the exempt services noted in preceding paragraphs.
R 205.111 Physicians, surgeons, dentists, veterinarians,
osteopaths, and other health professionals practitioners.
Rule 61. (1)
Physicians, surgeons, dentists, veterinarians, osteopaths or other health
professionals practitioners of the healing arts not otherwise
specifically provided for in these rules render nontaxable services.
(2) Unless otherwise exempt, sales of drugs, medications, instruments,
equipment, and other tangible personal property to such persons
for use in rendering professional services or in connection with for
use within their office, laboratory offices, laboratories, or
other similar quarters are taxable.
(3) Sales by dental supply houses and others to dentists or dental laboratories
of materials, supplies and equipment used in the rendition of their services
are taxable.
(4) If a dental laboratory sells to dentists tangible personal property in its
original form upon which no professional services are performed such as cement,
gold, cleaning preparations, etc., then such sales shall be considered as sales
at retail and the dental laboratory so engaged must obtain a sales tax license
and pay the tax on these sales.
R 205.112 Premiums and gifts.
Rule 62. (1) Unless
an exemption applies, Donors donors
of tangible personal property are regarded as consumers thereof of
that tangible personal property and the sale of that such
property to them is taxable. Similarly, the sale to an employer of tangible
personal property for free distribution to its employees may also be taxable. See
R 205.76. The sale of goods to be given away for advertising purposes is
also taxable.
(2) If goods purchased for resale are subsequently given away or used by the
retailer, he the retailer is liable for use tax on must
include in his use tax return the cost purchase price of
thesuch goods, and pay the tax thereon unless otherwise
exempt.
(3) The redemption of scrips, whether in the form of punch cards,
certificates, box tops, tokens, proofs of purchase, points, or similar
promotional consideration trading stamps for premiums is a taxable
sale at retail and sales tax must is to be paid on the redemption
value of the scrips stamps. Sales tax will does not
apply on if the consideration stamps is redeemed
for cash rather than for merchandise tangible personal property.
Premiums acquired for “resale” purposes are not subject to sales or use tax.
(4) Purchasers of tangible personal property to be awarded as prizes,
the winning of which depends upon chance or skill, are regarded as consumers of
that property thereof and the tax applies to sales of such
the property to them. Similarly, purchasers of tangible personal
property for use in games, promotions, and similar operations, in which each
customer receives some merchandise or prize regardless of skill or chance, are
regarded as the consumers of that property and the tax applies to sales of the property
to them. Sales of tangible personal property to the operator of a game
of skill or chance or similar device are taxable as he is considered the
consumer of property used in connection therewith.
R
205.113 Printers, lithographers, photostaters, typographers, and
blueprinters. Rescinded.
Rule 63. (1) Sales of tangible
personal property by printers, lithographers, photostaters, typographers and
blueprinters are taxable except when such sales are for resale purposes or used
in “industrial processing.” (See R 205.90.)
(2) Labor charges involved in
producing the property for sale cannot be deducted from the selling price
regardless of whether or not the charge is billed separately on the sales
invoice. The labor cost is considered as part of the “gross proceeds” derived
from the sale.
(3) If a customer furnishes
his own printing stock which was acquired from another source and the printer
imprints thereon the name, address and telephone number, this constitutes the
rendition of a service and is not taxable.
(4) Purchases of tangible
personal property by a printer, lithographer, photostater, typographer or
blueprinter are not taxable when such materials are to be consumed in the
producing of a product for resale. (See R 205.90.)
R 205.114 Professional
shoppers. Rescinded.
Rule 64.
(1) When a professional shopper purchases tangible personal property either in
his own name or in the name of his client, such sales are taxable without
deduction for any commission or other compensation of the shopper.
(2) The
commission or other compensation paid to professional shoppers employed by
retailers to assist customers in selecting and purchasing tangible personal
property is not deductible from the selling price of such property on which the
tax applies.
R 205.115 Public
utilities; gas, electricity, and steam. Rescinded.
Rule 65.
(1) Sales of tangible personal property, including sales of gas, electricity,
and steam by public and private utilities, are subject to sales tax, except in
those cases wherein the purchaser is entitled to exemption as specifically
provided in the sales and use tax statutes. (See R 205.51 and R 205.90.)
(2) When gas, electricity, or steam is sold to a customer for 2 or more
purposes through 1 meter, and 1 of the purposes is taxable while another is
exempt, the total consumption as shown by the meter is taxable, except where it
is impractical to install separate meters and the consumption for each use can
be substantiated in a manner acceptable to the department. On sales of
electricity to farmers, if the farmer’s total electrical consumption exceeds
1,500 kwh per month, or 2,500 kwh per month for a home with electric heat,
during the period of November to March, the consumption in excess will be
considered exempt if the farmer provides the seller with the prescribed
agricultural producing exemption certificate.
(3) The sale of tangible personal property is not taxable when consumed or used
in the process of manufacturing or generating electricity, gas, or steam which
is taxable when sold at retail. Transformers used in industrial processing are
not taxable.
(4) The sale of tangible personal property consumed or used in the transmission
or distribution of electricity, gas, or steam is taxable. Such transmission or
distribution starts at the place where the product leaves the immediate
premises from which it is manufactured.
(5) When a public utility uses or consumes its own product for purposes not
included in “industrial processing” (see R 205.90), the tax applies upon the
basis of the cost of the part of its product thus used.
R
205.116 Restaurants, hotels, lunchrooms, and other establishments.
Rescinded.
Rule 66. (1) The tax applies to sales of meals, foods, or beverages of any
kind, and to sales of other tangible personal property, by restaurants, hotels, cafes,
bars, caterers, lunch counters, lunch wagons, and other establishments
engaged in the business of preparing and selling food or beverages for direct
consumption, on or off the premises.
(2) The tax applies to the cover or minimum charge and all other charges,
except to those charges for entertainment and dancing, separately listed on the
bill or collected as an admission fee or fixed
charge.
(3) When food is delivered or served at a location other than the place of
business of the retailer or in a room other than a regular dining room, and an
extra charge is made for that service, the entire amount is taxable.
(4) Banquets, dinners, and similar functions served by hotels or other
establishments covered by this rule are subject to tax at the contracted price
per plate or seat, or at the minimum price, whichever is greater. Charges for flowers
are taxable.
(5) Amounts paid as a gratuity and distributed to the employees as a gratuity,
and not as a wage, are not considered as part of the tax base when that
gratuity is separately identified and itemized on the guest check or billed to
the customer. All service charges in connection with the transfer of tangible
personal property shall be included as part of the tax base.
(6) All tools, equipment, and materials used or consumed in the preparation of
food or beverages for retail sale are taxable. Materials which become an
ingredient or component part of the prepared food or beverage may be purchased
for resale by the preparer, tax exempt.
(7) Meals provided to employees are taxable. When provided without charge, the
actual cost of the meals shall be taxed at the cost shown by the employer’s
records. When records are not available, each meal furnished shall be taxed at
the cost of 45 cents a meal. The actual number of meals served shall be taxed
if satisfactory records are maintained to establish the number. If the employer
furnishes board and room, it is presumed that 3 meals a day per employee are
served 7 days a week. If meals only are provided, it is presumed that 2 meals a
day per employee are served each working day.
(8) Fraternities, sororities, and other student societies, with members
residing at a common location and jointly sharing household expenses, including
meals, are not considered to be selling at retail. Sales to these organizations
of tangible personal property, other than food and nonalcoholic beverages for
preparation and consumption at the consumer’s location, are subject to tax.
R 205.117 Repairers
and servicers. Rescinded.
Rule 67.
(1) Persons regularly and exclusively engaged in the business of repairing,
improving, or altering tangible personal property owned by others, in which
work the value of the material used is incidental or negligible, render a
nontaxable service. Sales of equipment, materials, and supplies to such persons
are taxable. For example, sales to the following are taxable: Bootblacks,
cleaners and dyers, garment repairers, jewelry and watch repairers, linen
suppliers and laundries, radio repairers (radio tubes not being considered
repair material), refrigerator repairers, small tool sharpeners, and welders.
(2) Sales for resale to a person who has a sales tax license and an established
business of one of the following types are not taxable, but sales to such a
person of all other tangible personal property are taxable: Automobile
repairers or garages, electrical repairers, machinery repairers, upholsterers
and furniture repairers, and shoe repairers.
(3) Persons selling tangible personal property in addition to providing labor
or service shall obtain a sales tax license and pay the tax on their sales of
tangible personal property, including such property sold in connection with
repair work. When both labor and service charges are involved in repair work
for others, the retailer shall separately itemize the amount charged for the
tangible personal property sold; otherwise, the tax shall apply to the total
gross proceeds.
(4) A person engaged in a repair or service business not specifically covered
may write the department for information.
R 205.118 Shoe
repairers. Rescinded.
Rule 68.
(1) When persons in the business of repairing shoes affix soles, heels, laces,
sewing thread, nails, etc., to the property of their customers they sell
tangible personal property at retail and also render services. It shall be considered that of the amount
received by them for repairing shoes, etc., the taxable sale of tangible
personal property is 35% and the sale of the nontaxable services 65% of such amount.
(2) The sale of leather, heels, laces and other shoe findings by shoe repairers
(not used in connection with repair work but sold directly to purchasers for
use) is taxable on the full amount of such sale.
(3) Vendors who sell machinery, tools and other equipment to shoe repairmen are
subject to either the sales or use taxes, as the case may be, on the full
amount of such sales.
R 205.119 Sign
painting. Rescinded.
Rule 69.
(1) The painting and selling of detached metal, wood, cardboard or paper signs
constitute a retail sale and tax applies on the
full selling price without deduction for any costs incurred in producing
the sign.
(2) A sign
painter, working on the property of others, is a servicer and a sales tax
license is not required unless, in addition to this work, he also makes retail
sales of manufactured signs. Sales of tangible personal property to sign
painters for use or consumption in performing services for others are taxable.
R
205.124 Transportation charges. Rescinded.
Rule 74. For the purpose of computing the tax, no deduction is allowable on
account of freight, express, mail, cartage or other transportation or delivery
charges incurred or to be incurred on tangible personal property prior to completion
of transfer of ownership of such property from the seller to the purchaser for
use or consumption. It is immaterial whether such transportation charges are
billed separately or whether they are paid by the seller or the purchaser.
R
205.126 Vending machines and other automatic sales devices. Rescinded.
Rule 76. (1) The gross receipts from sales of tangible personal property
through vending machines and other automatic sale devices, including food or
drink as specified in MCL 205.54g (2), are taxable. Vending machine sales of
certain items described in MCL 205.54g (2), including candy, nuts, chewing gum,
cookies, crackers and chips, are exempt from tax. It is immaterial whether the
sales are made for money, coins, tokens, or coupons redeemable in money or
merchandise. If both taxable and exempt merchandise is sold through the same
vending machine, sales tax shall be calculated in accordance with MCL 205.54g
(2).
(2) The operator of a nonelectric vending machine business, having sales of
merchandise where the consideration is 10 cents or less, may deduct from the
operator’s gross proceeds the commissions paid to an exempt nonprofit entity,
if the sales are of unsorted nuts, confections, or other merchandise, dispensed
at random in substantially equal portions upon insertion of a coin.
(3) The business operator of a vending machine or other automatic sales device
is defined, for the purpose of this rule, as the person who, personally or
through an agent, removes the coins or other means of payment from the machines
and is responsible for their disposition.
(4) The business operator of a vending machine or other automatic sales device
shall maintain a sales tax license and shall pay the tax to the state on all
taxable sales made through each machine or device operated by that person.
(5) It is immaterial whether the business operator owns the machine or the
merchandise sold. If merchandise belonging to another is sold, the merchandise
shall be considered consigned or entrusted to the control of the business
operator for sale, in accordance with R 205.70.
(6)
The name, address, and sales tax license number of its current business
operator shall appear at all times on every vending machine or other automatic
sales device from which tangible personal property is sold.
(7) Sales or purchases of vending machines and parts, as well as the tools and
equipment for the maintenance thereof, are subject to sales or use tax. Machines
used in retail vending of tangible personal property cannot qualify as exempt
equipment acquired for “industrial processing” purposes.
R 205.130 Tire
retreading and vulcanizing. Rescinded.
Rule 80.
(1) Gross receipts from retail sales of retreaded tires are taxable. When a
person in the business of retreading tires purchases old tires and retreads and
sells them to consumers or users, the sales tax applies to the full retail
selling price of the tires. Sales of equipment and supplies used for retreading
and vulcanizing tires for retail sale are exempt.
(2) When tires are supplied by a customer for retreading or vulcanizing, the
sales tax shall apply on the selling price of the materials sold. Labor
charges, billed separately to the customer, are not taxable. The materials
consumed directly in the retreading or vulcanizing of tires may be purchased
for resale without tax. However, sales of all equipment used for retreading and
vulcanizing tires for others are taxable.
(3) If tires that require retreading or vulcanizing are traded in or credited
for tires that have been retreaded or vulcanized, or for the purchase of other tires,
the sales tax applies to the full selling price of the tires accepted by the purchaser.
R 205.131 Vessels
and watercraft. Rescinded.
Rule 81.
(1) Sales of vessels designed for commercial use of registered tonnage of 500
tons or more, when produced upon special order of the purchaser, are exempt
from tax. Also nontaxable are sales of bunker and galley fuel, provisions,
supplies, maintenance, and repairs for the exclusive use of those vessels of
500 tons or more, if those vessels travel from a point in Michigan to a
destination in another state. Sales of
such items for the use of vessels operating in foreign commerce are taxable.
(2) All sales and purchases of vessels and watercraft, except those noted in
subrule (1), are subject to sales or use tax. Persons acquiring watercraft from
other than a registered retailer shall be required to pay the use tax to the
secretary of state at the time of registration. (See R 205.135—Isolated
vehicle, aircraft, watercraft, and snowmobile
transfers.)
(3) Sales of fuel and supplies for use on commercial fishing or pleasure craft
are subject to tax.
(4) Sales of food for resale on vessels plying the Great Lakes are exempt if
the vessel operator has a sales tax license and remits tax on all sales within
the territorial waters of Michigan.
R 205.132 RentalsLease or rental.
Rule 82. (1) A lessor is a person engaged in the
business of renting or leasing tangible personal property.to others shall pay the Michigan sales or use tax at the
time he purchases
(2) The terms “lease” and “rental” have the same meaning and may be used interchangeably. For agreements entered into after September 1, 2014, a lease or rental means either of the following:
(a) Any transfer of possession or control of tangible personal property, or he may report and
for a fixed or indeterminate term
for consideration and may include future options to purchase or extend.
(b) An agreement covering motor vehicles or trailers if the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property, as that term is defined in 26 USC 7701(h)(1).
(3) A lease or rental does not include any of the following:
(a) A transfer of possession or control of tangible personal property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments.
(b) A transfer of possession or control of tangible personal property under an agreement requiring transfer of title upon completion of the required payments and payment of an option price that does not exceed $100.00 or 1% of the total required payments, whichever is greater.
(c) The provision of tangible personal property along with an operator for a fixed or indeterminate period of time, where that operator is necessary for the equipment to perform as designed. To be necessary, an operator shall do more than maintain, inspect, or set up the tangible personal property.
(4) A lease also includes a school bus primarily used, with or without an operator, in the performance of a contract entered into with an authorized representative of a school for the transportation of preprimary, primary, or secondary school pupils to or from a school or school-related events authorized by the administration of the school.
(5) A lessor may elect to pay use tax on the rental receipts from the rental
thereof. A person remitting tax on the purchase price as a purchaser-consumer
or remitting tax on rental receipts as a lessor, shall follow 1 or the other
methods of remitting for his entire business operation. A person remitting tax
on for tangible personal property that would otherwise be taxed on the
full cost at the time of purchase. The election to pay on rental receipts is
made on each item of tangible personal property. The election is made by
claiming an exemption from sales or use tax at the time of purchase and paying
use tax on the rental receipts. shall be the holder of a sales tax
license, or a registration as is provided in the use tax act. Each month such
lessor shall compute and pay use taxes on the total rentals charged.
(2) A lessor
remitting tax on rental receipts may deduct direct rentals to the United
States, the state of Michigan or its local governmental entities, churches
(excluding vehicles), schools and other qualified nonprofit institutions or
agencies, or to persons or concerns for use in agricultural producing or
industrial processing. However, rentals to construction contractors engaged in
contract work for such entities are taxable.
(6) A lessor remitting tax on rental receipts must hold a sales tax license, or register under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111. For aircraft, a person shall register for use tax with the department of treasury by the earlier of the date set for the first payment of use tax under the lease or rental agreement or 90 days after the lessor first brings the aircraft into this state.
(8) A taxpayer that makes the lessor election will lose that election if tangible personal property is converted to personal use. Tax is owed at the time of conversion on the original purchase price of the property.
R 205.133 Advertising
agencies. Rescinded.
Rule 83.
(1) The primary function of an advertising agency is to plan, create and
arrange for production of advertising on the special order of clients. Their
activities are in the nature of special creative services. Part of their
services consist in ordering the services, publication space, and the materials
necessary to produce advertising as
directed by the client. For the convenience of the client it is the practice
for the agency to pay for these services and materials and to re-bill the
client. The compensation of the agency is derived from discounts available to
agencies, but not to advertisers from publications, and from percentage charges
added to the cost of services and materials acquired for the client. The
practice is to attach invoices from the
suppliers to the agency invoice to the client. These activities constitute a
service and not a purchase and resale of tangible personal property.
(2)
Materials and supplies purchased by the agency and consumed in the operation of
the agency are taxable except when such materials or supplies are purchased and
are exempt by reason of R 205.69 or 205.103. When an advertising agency goes
beyond the rendition of services and enters the business of selling matrices,
sales manuals, record books, advertising novelties, data books, and other
tangible personal property, it is required to be licensed and to remit the
proper tax.
R 205.134 Radio and
television stations. Rescinded.
Rule 84. (1) Sales of tangible
personal property to operators of licensed commercial radio or television
stations are taxable except when such property is used as a component in the direct
production of a film, tape or recording produced for resale or transmission
purposes. Production begins at the time of the electronic processing of the
signal in the studio and ends at the point at which the signal leaves the
studio production equipment and begins transmission to the transmitter.
(2) When a station makes
retail sales of cookbooks or other books, toys, gadgets, nursery stock,
building plans, pictures or other tangible personal property, the persons
owning such station shall also hold a sales tax license and remit the tax.
R 205.135 Isolated vehicle, aircraft, watercraft, and
snowmobile transfers. Rescinded.
Rule 85.
(1) The use tax applies on the transfer of vehicles, aircraft, watercraft, and
snowmobiles between persons other than for resale by registered dealers. The
tax shall be collected by the Michigan secretary of state before the transfer
of any vehicle title or watercraft or snowmobile registration. The tax due on
aircraft shall be paid directly to the revenue division, department of
treasury, by the purchaser.
(2) All vehicles, aircraft, watercraft, and snowmobiles brought into the state
of Michigan for registration purposes within 90 days after the date of purchase
are taxable, unless the unit was properly registered by the purchaser in the
state or country of purchase, thus signifying the intent of having purchased
the unit for first use and consumption in that
jurisdiction.
(3) Exemption from use tax is allowed only under the following conditions:
(a) When the transferee or purchaser is the spouse, mother, father, brother,
sister, or child of the transferor.
(b) When the transfer is a gift to a beneficiary in the administration of an
estate. Sales by an administrator of an estate are taxable.
(c) When a vehicle, aircraft, watercraft, or snowmobile which has once been
subjected to sales or use tax is transferred in connection with the
organization, reorganization, dissolution, or partial liquidation of an
incorporated or unincorporated business in which the beneficial ownership is
not changed.
(3) Vehicles, aircraft, watercraft, or snowmobiles purchased as part of the
total assets of a business are taxable. The tax due shall be computed on the
actual book value of the property at the time of transfer.
(4) The base price to be used in computing the tax liability shall not be less
than its retail dollar value as listed in any recognized guide for use or
appraisal purposes.
(5) Questions regarding taxability of specific transactions shall be referred
to the revenue division, department of treasury.
R 205.137 Air and water pollution control facility.
Rule 87. (1) Tangible personal property purchased for installation as a component part of a water pollution control facility or an air pollution control facility for which a tax exemption certificate is issued by the state tax commission is exempt from sales and use tax. The exemption is effective for dates on and after the date the certificate is issued by the state tax commission. If a tax exemption certificate previously issued is revoked by the state tax commission, the exemption may no longer be claimed beginning on the effective date of the revocation.
(2)
When sales or use tax has been paid on tangible personal property, which
later qualifies for exemption as a result of obtaining a certificate of
exemption from the state tax commission, a refund may be requested by the
purchaser upon submission of both of the following documents to the revenue
division department of treasury:
(a) A copy of the exemption certificate issued by the tax commission indicating the approved cost of the tangible personal property installed and entitled to exemption.
(b) A copy of the seller’s invoice showing the name and address of the seller, identification of purchaser, identification of the items purchased, the date of purchase, and amount of tax paid to seller.
R 205.139 Medical
equipment and appliances. Rescinded.
Rule 89. (1) Retail sales of hearing aids and replacement parts are exempt from tax.
(2) Retail sales of any apparatus, device, appliance, or equipment used to
replace or substitute for any part of the human body, or used to assist the
disabled person to lead a reasonably normal life, are exempt if purchased on a
written prescription or order issued by a licensed health professional. Repair
and replacement parts for such items are also
exempt.
(3) A “licensed health professional” means a physician, dentist, nurse,
podiatrist, optometrist, or other individual licensed, certified, or authorized
by the director of the department of public health to practice that specific
profession in his or her respective state.
(4) To support the exemption claimed for prescription sales when filing the required
tax return, the seller shall keep a record showing the date the prescription
was issued, the name of the person issuing it, the name of the individual for
whose consumption it was issued, a brief description of the property sold, and
the amount charged to the customer. The prescription should be attached to the
seller’s copy of the sales invoice or retained in such a manner as will permit
the department to verify the authenticity of the exemption.
(5) Examples of the kind of medical appliances that may qualify for exemption
if sold pursuant to a written prescription or order are as follows:
Artificial
eyes
Oxygen
equipment
Artificial
limbs
Pacemakers
Braces
Post-surgical
Bust forms
Canes
Pressure
Pads Corrective shoes
Specially
built Hospital Beds
Crutches
Stoma
appliances (colostomy, ileostomy, Dialysis machine, ureterostomy, catheters)
Hydraulic
(patient) lifts
Trusses
Hypodermic
syringes & needles
Walkers
Orthotic
supports (bandages, belts, Wheelchairs, and similar supplies)
(6) Sales of nonprescription apparatus, devices, or equipment, are taxable.
Repair and replacement parts are also taxable.
R 205.142 Exemption for Diesel Fuel Used in Certain Vehicles Operated for Hire.
Rule 92. Sales or use tax does not apply on retail sales or purchases of diesel fuel for use in passenger vehicles of a capacity of 10 or more operated for hire under a certificate of authority issued by the state transportation department. “Diesel fuel” means that term as defined in section 2 of the motor fuel tax act, 2000 PA 403, MCL 207.1002.