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Who Needs A Sales Tax License?

Who is required to have a sales tax license? - Individuals or businesses that sell tangible personal property to the final consumer need a sales tax license. An application for a sales tax license may be obtained on our web site. In order to register for sales tax, please follow the application process.

City/Local/County Sales Tax - Michigan has no city, local, or county sales tax. The state sales tax rate is 6%.

Retailers - Retailers make sales to the final consumer. Sales tax of 6% on their retail sales must be remitted to the State of Michigan. In addition, retailers must be licensed to collect tax from their customers and remit the sales tax to the State of Michigan.

Wholesalers - Wholesalers sell to other wholesalers or retailers and not to the final consumer. The price at which the seller sells a product does not determine if the seller is a wholesaler. The determination is based on whom the products are sold to by the seller. Wholesalers buy for resale at wholesale. They are not making retail sales; therefore registration for sales tax is not required. Wholesalers claiming an exemption should provide a written statement that they are purchasing for "resale at wholesale".

Contractors - A sales tax license is not required for contractors or subcontractors, since they are the final consumers of the materials they affix to real property. Anyone who is directly engaged in the activity of constructing, altering, repairing, or improving real estate for others is liable for the sales tax on the inventory value of the materials affixed to the property. If the real estate being constructed, altered, repaired, or improved is a nonprofit hospital or nonprofit housing entity, no tax is due on any materials which became affixed to and made a structural part of the hospital or housing entity. This information may be obtained in Revenue Administrative Bulletin 1988-35 and 1999-02.

Services - Businesses repair, improve, or alter tangible personal property owned by others. Businesses, who sell tangible personal property in addition to providing labor or a service, are required to obtain a sales tax license. Any property which goes with the customer in connection with the repair or service is considered a sale at retail and subject to sales tax.

Out-of-State Businesses - 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.