Use Tax

Who is required to register for use tax? A person who has any of the following activities must remit use tax. There is no cost for use tax registration. In order to register for use tax, please follow the application process.

Individuals and Businesses - Use tax (purchases) on tangible personal property is similar to sales tax but applies to purchases when Michigan sales tax is not charged. Use tax of 6 percent must be paid on the total price (excluding shipping and handling charges, if separately itemized; see MCL 205.51(1)(d) for details) of all taxable items brought into Michigan or purchases by mail or online from out-of-state retailers. It applies to purchases made in foreign countries as well as other states. Businesses registered for sales or withholding tax may remit use tax (purchases) on their returns. Individuals can pay their use tax liability on their MI-1040 tax return.

Use tax is also due on vehicles, off-road-vehicles, mobile/manufactured homes, aircraft, snowmobiles, and watercraft purchased or transferred by an individual or business from anyone who is not a licensed dealer or a retailer. Tax on vehicles, ORVs, snowmobiles, and watercraft should be paid to the Secretary of State prior to the transfer of the registration. Tax on mobile homes should be paid to the Secretary of State at the point transfer of ownership takes place. For transactions involving aircraft, tax should be paid to the Department of Treasury. More information may be obtained on this topic in Revenue Administrative Bulletins 2017-26 (Tax Base for the Transfer of a Vehicle, ORV, Manufactured Home, Aircraft, Snowmobile, or Watercraft).

There is an exemption allowed for the purchase or transfer of these enumerated items between spouse, mother, father, brother, sister, child, stepparent, stepchild, stepbrother, stepsister, grandparent, grandchild, legal ward or a legally appointed guardian with a certified letter of guardianship. Other specific, less common exemptions are also allowed.

Out-of-state businesses - Businesses located outside of Michigan may voluntarily register to collect Michigan taxes for sales to Michigan residents. This is a use tax (sales & rentals) registration. Michigan's use tax rate is six percent. This tax will be remitted to the state on monthly, quarterly or annual returns as required by the Department. First, review Revenue Administrative Bulletin 2021-21 regarding different types of nexus that can be made in Michigan. Any one of these forms of nexus would require a sales tax registration.

Rentals and Leases - A registered lessor in Michigan has the option of paying six percent Michigan Tax on the acquisition of tangible personal property that is to be leased in Michigan or to collect and remit six percent use tax (sales & rentals) on the total rental receipts. Total rental receipts include all charges, even though separately itemized by the lessor to the lessee, for the leased property. The method chosen may not be changed for the entire life item. Additional information can be found on this topic in Revenue Administrative Bulletin 2024-18.

Telecommunications - Michigan Use Tax Act [MCL 205.93a(a) and (c) imposes six percent use tax and authorizes the taxation of qualifying services provided as part of telephone communications. TO the extent that the telephone communication service (including cost of the service passed on the customer) is intrastate-both originating and terminating in Michigan, fees/charges are taxable. To the extent that the telephone communication is interstate in nature, and either originates or terminates in Michigan and is billed to a Michigan service address or telephone number, fees/charges are taxable unless they meet certain statutory exemption criteria (i.e., wide area telecommunication service, 800 prefix service, an interstate private network, or an international call either inbound or outbound).

Lodging - Use tax (sales & rentals) is due on rooms or lodging furnished by hotelkeepers, motel operators, and other persons furnishing accommodations that are available to the public on the basis of a commercial and business enterprise. No tax is due if the room is rented for a continuous period of more than one month to the same tenant.