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    Subcontractor (Independent)

    Required State License(s):

    A sales tax license may be required for this type of business. You may call the Michigan Department of Treasury at (517) 636-4660.

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

    A residential builders or maintenance and alteration contractors license is required when contracting to construct, repair, alter, add to, or improve a residential or combination residential and commercial structure.  Contact the Department of Labor & Economic Growth, Bureau of Commercial Services at (517) 241-9288 for licensure information or visit our website at

    Further Information:

    An independent subcontractor is directly involved in the business of constructing, altering, repairing or improving real estate for others. An independent subcontractor provides service to the public; is listed in the yellow pages and/or advertises in the newspapers, trade journals, on TV or on the radio; remits a list of other general contractors or individual who have recently hired their services; and performs specific services for prices which are agreed upon in advance and the independent subcontractor pays expenses incurred in the performance of those services.

    Services provided by an independent subcontractor are NOT TAXABLE. An independent subcontractor is not considered to be selling at retail when they provide materials and other goods as part of their service. They are in fact, seen as the final consumers of those materials. Sales tax on any materials provided as part of the contract work or consumed by the independent subcontractor must be collected by the seller when the independent subcontractor purchases the materials. However, when an independent subcontractor sells at retail, they act as a retailer and need a sales tax license. For example, if a construction company performs contract work and also sells lumber at retail, it must remit sales tax on the gross proceeds of the lumber sales. If, however, the lumber is taken from the sales inventory of the company and used in the company's contact work, the company would be responsible for remitting use tax on the purchase price of the lumber.

    When items are purchased from an out-of-state seller and NO Michigan sales tax has been paid, the independent subcontractor is responsible for remitting use tax on the purchase price.

    NOTE: When a "general contractor" (employer) hires a "subcontractor" (employee), the "general contractor (employer) has full responsibility for that project. However, if the "general contractor" (employer) hires and "independent subcontractor," (non-employee) it is the responsibility of both parties to complete the project that is being constructed, altered, repaired or improved.

    Revised: 04/2007

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