Internet Retailing

Required State License(s):  

A sales or use tax license is required.   You may call the Michigan Department of Treasury at (517) 636-4660.

Personalized sales tax returns and a payment schedule will be mailed to within four to six weeks after the registration has been processed. If you have questions about this process, please call the Michigan Department of Treasury at (517) 636-4730.  

Other Possible License(s):   "Great Lakes States Tax Enforcement Pact." This compact is a mutual tax enforcement agreement designed to increase compliance with each state's sales and use tax laws. The member states (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) have agreed to exchange information and cooperate in enforcement efforts.  

The use tax, is imposed on goods purchased tax free or at a lower rate in one state for use in another. If the use tax is not collected voluntarily by the seller, customers are required to remit the use tax to their home state [every year, millions of dollars in taxes legally owed to states are lost when individuals and businesses buy goods from out-of-state merchants who do not collect and remit the use tax and the customer fails to file and pay based on those purchases]. Use tax protects in-state sellers against unfair price competition from out-of-state sellers based solely on tax advantages. Forty-five states which impose sales tax also have a complementary use tax.

The states want you to voluntarily register to collect use tax from your customers. If you are selling merchandise into any of the Great Lakes states and aren't registered to collect the use tax, you and your customers may be hearing the "Compact." It also means you can notify the tax agency in your state or any of the five states if you are facing unfair competition due to a competitor's tax advantage.  

If you have a business presence for tax purposes ("nexus"), you are required by law to register. An example of an activity that creates nexus would be making regular delivery of goods and providing repair services to your customers in a state. Even if you do not have nexus, your registration will help stop the tax advantage that lures buyers across state lines. It will also prevent the inconvenience of having your customers contacted directly by state tax collectors seeking to collect use tax.  

The Great Lakes states are exchanging information on interstate sales. If you make sales into one of the states and don't register, you will likely be audited. If nexus is established, you will be liable for all unpaid use tax and interest thereon, plus substantial penalties. If you do not have nexus, your customers could be contacted for payment of use tax, penalty and interest.  

Further Information:

Should comply with U.S. Postal Service regulations.  

Revised: 4/2005