Sales and Use Tax FAQs

FAQs for Filing Requirements and Filing Deadlines

As of 2015, all businesses are required to file monthly, quarterly and/or annual returns each year along with the appropriate payment(s).

Filer

Due Date for Remitting Return and Payment

Monthly

On or before the 20th day of the following month

Quarterly

On or before the 20th day of the month following the quarter

Annual

February 28th

Electronic Funds Transfer (EFT)

On or before the 20th of the following month
EFT Filing Requirements

Accelerated Electronic Funds Transfer (EFT)

75% of taxpayer's sales tax liability from the immediately preceding month (or the same period last year, whichever is lower) is due on the 20th of the current month. The reconciliation payment, equal to the difference between the tax liability determined for the immediately preceding month minus the amount of tax previously paid for that month is due on the 20th day of the following month.
For example: For the January 2015 period. The December 2014 tax liability equals $1,000,000. A payment of 75%, or $750,000 is due on January 20, 2015 with the reconciliation payment of $250,000 due on February 20, 2015.
Accelerated EFT Filing Requirements

  • Where are my coupons?
    • Starting in 2015, preprinted returns will not be mailed. Please use Form 5080, 2015 Sales, Use and Withholding Taxes Monthly/Quarterly Return.
  • I didn’t file my monthly/quarterly returns. Can I just file the annual return?
    • No. The annual return is due February 28th and is used to reconcile, balance, and close the year. Please contact Treasury at (517) 636-6925 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:
      Note: It is your responsibility to notify Treasury if your total tax liability changes so your filing frequency can be adjusted accordingly.
      • 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
  • I need to amend my sales, use and withholding tax return. What is the process?
    • For the 2014 tax period and prior years, complete a new Form 165, Annual Return for Sales, Use and Withholding Taxes. Check the “amended” box and fill out the explanation indicating the reason for the amendment. 
    • Beginning tax year 2015, amended returns can be easily submitted through MTO. For paper filers, Form 5092 can be used to amend your monthly/quarterly figures and Form 5082 can be used to amend your annual figures. 

FAQs for Exemptions

  • I am a 501(c )(3)/501(c )(4) Organization, how do I claim exemption from Michigan Sales and Use Tax?
    • A nonprofit 501(c)(3) or 501(c)(4) organization must provide the seller with a completed Form 3372, Michigan Sales and Use Tax Certificate of Exemption and a copy of the organizations federal determination letter granting their 501(c)(3) or 501(c)(4). 
  • I am a 501(c)(3)/ 501(c)(4) organization, how to I become exempt from Michigan sales and use tax?
    • Michigan Department of Treasury no longer has an application process for nonprofit organizations to apply for exemption from Michigan sales and use tax.

      Organizations exempted by statute, organizations granted exemption from federal income tax under Internal Revenue Code Section 501(c)(3) or 501(c)(4) or organizations that had received an exemption letter from the Department prior to June 1994 are entitled to sales and use tax exemption in the State of Michigan. Please refer to Revenue Administrative Bulletin (RAB) 1995-3, available on the Department's Web site, /treasury, which explains the exemption from Michigan sales and use tax as it relates to nonprofit entities.

      In order to claim exemption, the nonprofit organization must provide the seller with a completed form 3372, Michigan Sales and Use Tax Certificate of Exemption, which must be supported by evidence of nonprofit eligibility, either the letter issued by the Department (prior to June 1994) or your federal determination as a 501(c)(3) or 501(c)(4) organization. 
  • A customer is providing me with their tax exempt number as proof they do not have to pay sales tax on their purchase, is this correct?
    • The Department of Treasury does not issue tax exempt numbers. 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.
  • I am a retailer, how do I claim a resale exemption with my supplier?
    • In order to claim exemption, a retailer must provide the seller with a completed Form 3372, Michigan Sales and Use Tax Certificate of Exemption, and indicate the purchase is for “Resale at Retail”. Their sales tax license number must be included in the space provided on the exemption claim.

      Please be advised that a seller should not accept a number as evidence of exemption from sales and use taxes.
  • 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.
  • How do I claim an exemption from Sales or Use Tax?
  • Is my “rolling stock” purchase exempt from tax?
    • PLEASE BE ADVISED THAT YOUR FIRST TRACTOR/TRAILER PURCHASES MAY NOT BE EXEMPT FROM MICHIGAN SALES OR USE TAX. THE FOLLOW CRITERIA MUST BE MET:
    • Michigan provides a sales and use tax exemption to interstate (fleet) motor carriers that meet all of the following criteria:
      • You must be an interstate motor carrier. An Interstate Motor Carrier is defined as a person engaged in the business of carrying persons or property, other than themselves, their employees, or their own property, for hire across state lines, whose fleet mileage was driven at least 10% outside of Michigan in thepreceding tax year. Tax year is defined as a full 12 months.
      • You must have purchased, stored, used, or consumed rolling stock, which is defined as a commercial motor vehicle unit that has 2 axles and a gross vehicle weight rating in excess of 10,000 pounds, or a commercial motor vehicle power unit that has 3 or more axles, a trailer designed to be drawn behind the above described power units, and parts affixed to either the power units or trailer.
      • The rolling stock must be used in interstate commerce. The interstate commerce carrier property must be licensed for use in other states and have an International Fuel Tax Agreement (IFTA) decal.

      Interstate (fleet) motor carriers who qualify for exemption may claim exemption from sales or use tax by providing the seller or lessor with the prescribed Form 3372, Michigan Sales and Use Tax Certificate of Exemption. The buyer or lessee would check the box "Rolling Stock purchased by an Interstate Motor Carrier".
  • I sold/purchased a vehicle from a relative. Is tax due on this transaction?
    • An exemption from use tax may be claimed when registering your vehicle in Michigan if “buyer” and “seller” have a qualifying family relationship.

      The ONLY qualifying relationships are: spouse, parent (natural or adoptive), brother or sister, child (natural or adopted), grandparent or grandchild, step relationship, legal ward or legally appointed guardian, and in-laws. Please refer to Form 248, Transferring a Vehicle Title to a Relative, for further information.
  • Is a vehicle purchase for a church tax exempt?
    • ONLY vans or buses may be purchased exempt if the manufacturer's rated seating capacity is 10 or more and it is used primarily for transportation of persons for religious purposes. Churches may not purchase any other type of vehicle exempt.
  • Is manufacturing equipment tax exempt?
    • Michigan provides an exemption from sales or use tax on machinery or equipment used in industrial processing and in their repair and maintenance.

      The exemption does not include tangible personal property affixed to and becoming a structural part of real estate.
      For further information on exemptions refer to Revenue Administrative Bulletin 2000-4.
  • Are purchases made for agricultural production tax exempt?
    • Michigan provides an exemption from sales or use tax on 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. 

FAQs for Sales Tax Licenses

  • Is there a fee for a sales tax license?
    • No.
  • I am a wholesaler, do I need a sales tax license?
    • No. Michigan does not issue sale tax licenses to wholesalers. In order to claim exemption, a wholesaler must provide the seller with a completed Form 3372, Michigan Sales and Use Tax Certificate of Exemption, and indicate the purchase is for “Resale at Wholesale”.
  • How do I register to get a sales tax license?
    • Michigan Business One Stop is a fast, easy and secure way to register a business for taxes in the State of Michigan. It also allows you to perform a variety of tasks to start and operate a business, including applying for permits and licenses.
    • 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.
  • My current sales tax license expires on September 30, 2015. Will a new one be mailed to me prior to the expiration?
    • You will be able to access your new sales tax license under the Correspondence tab on MTO as we approach the 09/30/2015 expiration date.
  • Do I need a sales tax license if I make retail sales as a couple of times a year?
    • If you make retail sales at only one or two events in Michigan per year, you may complete the Form 5089, Concessionaire’s Sales Tax Return and Payment. If you prefer to obtain a sales tax license you make complete Form 518, Registration for Michigan Taxes.

FAQs for Construction

  • Are materials purchased for the construction of a building that will be owned by a tax-exempt entity subject to tax?
    • The only exemption provided in the Sales and Use Tax Statutes for contractors purchasing materials is when materials are affixed and made a structural part of real estate for a qualified nonprofit hospital or a  nonprofit housing entity qualified as exempt under the Sales and Use Tax Acts, made a structural part of a sanctuary for a church, or is a component part of an air or water pollution facility for which a tax exemption certificate has been issued by the State Tax Commission. Please refer to Revenue Administrative Bulletin (RAB) 1999-2.

      A completed Form 3520, Michigan Sales and Use Tax Contractor Eligibility Statement, must be obtained by the contactor from the qualified entity. Form 3520, in addition to Form 3372, Michigan Sales and Use Tax Certificate of Exemption, is required for the contractor to make tax exempt purchases.

FAQs for General Sales and Use Tax

  • Do I need to register for use tax?
    • A person that performs any of these activities must register for use tax.
  • 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 can require a business to remit sales tax or collect and remit use tax 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. For transactions occurring on or after October 1, 2015, an out-of-state seller may be required to remit sales or use tax on sales into Michigan. See Notice of New Sales and Use Tax Requirements for Out-of-State Sellers.
  • Why is the use tax sometimes referred to as the remote sales tax?
  • What are the historical prepaid sales tax fuel rates?
     
    Date Gasoline monthly prepaid sales tax rates
    (in cents)
    Diesel fuel monthly prepaid sales tax rates
    (in cents)
    Historical Prepaid Sales Tax Fuel Rates
    05/01/16 10.0 10.9
    04/01/16 8.1 10.4
    03/01/16 9.0 11.4
    02/01/16 9.5 12.9
    01/01/16 11.0 14.6
    12/01/2015 12.5 14.9
    11/01/2015 12.3 13.8
    10/01/2015 14.2 14.3
    09/01/2015 14.6 15.1
    08/01/2015 15.0 15.4
    07/01/2015 13.8 15.2
    06/01/2015 12.6 14.9
    05/01/2015 12.4 15.5
    04/01/2015 11.8 15.3
    03/01/2015 10.0 16.2
    02/01/2015 12.6 19.6
    01/01/2015 15.6 21.5
    12/01/2014 16.8 20.3
    11/01/2014 18.7 20.8
    10/01/2014 18.8 21.1
    09/01/2014 19.6 21.5
    08/01/2014 21.0 21.7
    07/01/2014 20.2 22.0
    06/01/2014 20.2 22.4
    05/01/2014 19.9 23.0
    04/01/2014 18.4 23.0
    03/01/2014 17.7 21.4
    02/01/2014 17.2 21.4
    01/01/2014 17.4 21.4
    12/01/2013 18.2 21.6
    11/01/2013 19.2 22.0
    10/01/2013 19.3 21.5
    09/01/2013 19.9 21.5
    08/01/2013 21.1 22.0
    07/01/2013 20.8 22.2
    06/01/2013 20.5 21.9
    05/01/2013 20.0 22.5
    04/01/2013 20.4 22.7
    03/01/2013 18.1 NA
    06/01/2012 20.5 NA
    03/01/2012 17.9 NA
    09/01/2011 21.3 NA
    06/01/2011 17.6 NA

FAQs for Internet Purchases

  • Is my mail order or internet purchase subject to tax?
    • Yes, unless a valid exemption applies. Every state with a sales tax has a companion tax for purchases made outside the state. In Michigan, that tax is called the "use tax." Use tax is required by law when a person purchases a good from out of state and the retailer hasn't charged sales tax in their jurisdiction.

      In addition, for transactions occurring on or after October 1, 2015, an out-of-state seller may be required to remit sales or use tax on sales into Michigan. See Notice of New Sales and Use Tax Requirements for Out-of-State Sellers.

      Remote sales are made up of traditional mail order or catalog sales and e-commerce completed using the Internet.