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Sales and Use Tax FAQs

Sales Tax

Individuals or businesses that sell tangible personal property to the final consumer are required to remit a 6% sales tax on their taxable retail sales to the State of Michigan. Sales of electricity, natural or artificial gas and home heating fuels for residential use are taxed at the 4% rate. Michigan does not allow city or local units to impose sales or use taxes.

Use Tax

The use tax is a companion tax to the sales tax. Use tax of 6% must be paid on the total price (including shipping and handling charges) of all taxable items brought into Michigan or purchases by mail from out-of-state retailers. Credit is given for tax paid to another state. Use tax is also applied to certain services such as telecommunications and hotel/motel accommodations.

Sales Tax License

Is there a fee for a sales tax license?

No.

Who needs a sales tax license?

Individuals or businesses that sell tangible personal property to the final consumer need a sales tax license.

How do I obtain a sales tax license?

You may obtain a Michigan sales tax license by completing Form 518, Registration for Michigan Taxes. Additional registration information for the application process can be found by visiting the Michigan Registration Web page.

Do I need a sales tax license if I only plan to make retail sales at a couple of events per year?

If you make retail sales at only one or two events in Michigan per year you may complete the Form 2271, Concessionaire's Sales Tax Return and Payment. If you prefer to obtain a sales tax license you may complete Form 518, Registration for Michigan Taxes.

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Filing Requirements

I can't find my coupons to pay my sales, use and withholding tax. How do I file and pay the tax owed?

Form 160, Combined Return for Michigan Taxes is available on line.

Can I use my annual return to replace my monthly or quarterly returns?

No. The annual return is due February 28th and is used to reconcile, balance and close the year. Please contact Treasury at 517-636-4730 to request replacement returns for your account.

How often do I need to file a tax return for sales, use and withholding taxes?

When you register your business with Treasury, the application requires you to estimate your Sales, Use and Withholding tax liability for the year to determine one of the following filing frequencies:

  • If your annual tax due is less than $750 you would file annually.

  • If your annual tax due for the year is between $750 and $3,600 you would file quarterly.

  • If your annual tax due for the year is over $3,600 you would file monthly

Note: It is your responsibility to notify Treasury if your total tax liability changes so your filing frequency can be adjusted accordingly.

All taxpayers are required to file the Sales, Use & Withholding Annual Reconciliation, form 165, regardless of their filing frequency during the year.

How do I amend my sales, use and withholding tax returns?

To file and amend a sales, use and withholding monthly, quarterly, or annual return, send:

  • A copy of the original return with the corrected tax figures and write "amended return" on the form.
  • Attach a letter of explanation for the amendment. Be sure to write your account number, a contact person and phone number on the correspondence.

Amended monthly/quarterly return information sent without payment should be addressed to:

Customer Contact Division
Michigan Department of Treasury
Lansing MI 48930

If the monthly/quarterly amendment results in additional tax due, send your information and payment to the address listed on the form.

Amended annual return with payment should be addressed to:

Michigan Department of Treasury
Department 78172
P.O. Box 78000
Detroit, MI 48278-0172

Amended annual return without payment should be addressed to:

Michigan Department of Treasury
Customer Contact Division
P.O. Box 30427
Lansing MI 48909

Do I need to file even if I have no tax liability due?

Yes. If you have no tax liability due, a zero return must be filed on the Combined Return for Sales, Use & Withholding form 160.

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General Sales & Use

Are delivery, shipping or handling charges taxable?

Yes, delivery or shipping charges incurred prior to transfer of ownership of tangible personal property are subject to tax. Handling charges are a part of gross proceeds and are taxable. When a customer is billed for delivery or shipping and handling as a combined total, the total charge is taxable.

Can I get a refund of my sales tax when I return an item to the retailer?

Yes, when items are returned for a credit or refund for all or a portion of the purchase price within the time period in the seller's refund policy or 180 days after the initial sale, whichever is sooner. The seller shall also refund or provide a credit for the sales tax. The retailer may request proof of Michigan tax paid.

I paid tax to another state/country on items purchased there. Is use tax still owed to Michigan?

Yes. Michigan allows credit of up to 6% sales or use tax properly paid to another state or local unit of that state. Michigan does not have a provision for credit of purchases delivered or brought into Michigan from foreign countries or U.S. Territories.

Can a customer tell a seller not to charge sales or use tax because they will pay it directly to Michigan?

Yes, if a customer provides a copy of their direct pay permit authorized by the Michigan Department of Treasury to pay tax directly to the State.

Why do some out-of-state businesses collect use tax when other businesses do not?

Michigan, like other states, can require a business to collect and remit use tax only if the business has a physical presence in this state. Examples of a presence in a state would be a store, warehouse, or employees or representatives of the business. They may also volunteer to collect and remit use tax for sales in Michigan.

Why is the use tax sometimes referred to as the remote sales tax?

Use tax is generally applied to purchases from an out-of-state remote seller of merchandise made through catalogs, telephone orders or the Internet.

Note: Some entities doing business in multiple states may be interested in Streamlined Sales Tax (SST). The purpose of the SST Agreement is to simplify the burden of tax compliance.

More information

Register for Streamlined Sales Tax

What is the correct gas tax rate to be deducted on my worksheet for Sales, Use and Withholding Taxes?

DateRate per gallon
12/1/2014 16.8 cents
11/1/2014 18.7 cents
10/1/2014 18.8 cents
9/1/2014 19.6 cents
8/1/2014 21.0 cents
7/1/2014 20.2 cents
6/1/2014 20.2 cents
5/1/2014 19.9 cents
4/1/2014 18.4 cents
3/1/2014 17.7 cents
2/1/2014 17.2 cents
1/1/2014 17.4 cents
12/1/2013 18.2 cents
11/1/2013 19.2 cents
10/1/2013 19.3 cents
9/1/2013 19.9 cents
8/1/2013 21.1 cents
7/1/2013 20.8 cents
6/1/2013 20.5 cents
5/1/2013 20.0 cents
4/1/2013 20.4 cents
3/1/2013 18.1 cents
6/1/2012 20.5 cents
3/1/2012 17.9 cents
9/1/2011 21.3 cents
6/1/2011 17.6 cents
6/1/2010 14.2 cents
9/9/2009 12.4 cents
6/1/2009 9.8 cents
3/1/2009 11.6 cents
10/1/2008 18.5 cents
4/1/2008 16.0 cents
5/1/2007 13.1 cents
5/1/2006 12.7 cents
4/1/2005 9.9 cents
2/2/04 7.9 cents
1/1/03 7.2 cents
8/1/02 5.8 cents
3/1/02 7.9 cents
3/1/01 8.1 cents
9/1/00 6.8 cents
1/1/00 5.7 cents
8/1/99 4.6 cents
5/1/94 5.4 cents

What are the dates and rate changes of Prepaid Diesel Sales Tax?

DateRate per gallon
12/1/2014 20.3 cents
11/1/2014 20.8 cents
10/1/2014 21.1 cents
9/1/2014 21.5 cents
8/1/2014 21.7 cents
7/1/2014 22.0 cents
6/1/2014 22.4 cents
5/1/2014 23.0 cents
4/1/2014 23.0 cents
3/1/2014 21.4 cents
2/1/2014 21.4 cents
1/1/2014 21.4 cents
12/1/2013 21.6 cents
11/1/2013 22.0 cents
10/1/2013 21.5 cents
9/1/2013 21.5 cents
8/1/2013 22.0 cents
7/1/2013 22.2 cents
6/1/2013 21.9 cents
5/1/2013 22.5 cents
4/1/2013 22.7 cents

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Sales & Use Tax Exemption

How do I get a tax-exempt number?

The Michigan Department of Treasury does not issue "tax exempt numbers". Sellers should not accept a number as evidence of exemption from sales and use tax. To claim exemption for purchases the buyer must present the seller with a completed Form 3372, Michigan Sales and Use Tax Certificate of Exemption, available on our Web site.

For more information on exemptions see Revenue Administrative Bulletin 2002-15.

What form do I use to claim exemption from sales or use tax?

Form 3372, Michigan Sales and Use Tax Certificate of Exemption is used in claiming exemption from Michigan sales and use tax.

For further information on exemptions refer to Revenue Administrative Bulletin 2002-15.

Are materials purchased for the construction of a building that will be owned by a tax-exempt entity subject to tax?

A contractor is considered the consumer of all the materials they use to fulfill their contract and as such must pay 6% tax on their purchases. There are four exemptions for a contractor making real property improvements for a project involving the following entities:

  • a qualified nonprofit hospital
  • a nonprofit housing entity
  • church sanctuary
  • a component part of an air or water pollution facility

Revenue Administrative Bulletin 1999-2 provides additional information.

Is manufacturing equipment tax exempt?

Tangible personal property used or consumed in industrial processing is tax exempt.

For further information on exemptions refer to Revenue Administrative Bulletin 2000-4.

Are purchases made for agricultural production tax exempt?

The exemption is limited to the consumption of tangible personal property used in tilling, planting, caring for or harvesting things of the soil, in the breeding, raising or caring of livestock poultry or horticultural products for further growth. The exemption does not include tangible personal property affixed to and becoming a structural part of real estate.

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