Internal Policy Directive 2004-3

Internal Policy Directive 2004-3
November 22, 2004
GENERAL SALES AND USE TAX ACTS: RETURN FILING REQUIREMENT FOR MODEL 4 SELLERS

POLICY ISSUE

When is a Model 4 seller (a seller registered under the Agreement that utilizes a system approved by the Department other than Models 1, 2, or 3) that is not legally required to register in Michigan required to file sales and use tax returns?

POLICY DETERMINATION

A Model 4 seller (a seller that is registered under the Agreement, as defined in the Streamlined Sales and Use Tax Administration Act, MCL 205.803(a), and that utilizes a system approved by the Department other than Models 1, 2, or 3, as defined in the Streamlined Sales and Use Tax Administration Act, MCL 205.821) that is not legally required to register in Michigan shall file its sales tax and use tax returns only on an annual basis, except that any such seller shall submit a return in the month following any month in which such seller accumulates sales and use tax funds for Michigan in the amount of one thousand dollars ($1,000.00) or more.

DISCUSSION

Michigan has participated in the Streamlined Sales and Use Tax Project and, with passage of the Streamlined Sales and Use Tax Administration Act (2004 PA 174, MCL 205.801 et. seq.), anticipates becoming a "member state" under the Streamlined Sales and Use Tax Agreement ("Agreement").

Section 318(D) of the Agreement requires that each member state allow a seller that is registered under the Agreement, which does not have a legal requirement to register in the member state, and is not a Model 1, 2, or 3 seller, to submit its sales and use tax returns annually, and also in the month following any month in which that seller has accumulated tax funds for the state in the amount of one thousand dollars or more. A seller cannot be registered under the Agreement until the Agreement is effective. Section 6 of the General Sales Tax Act, MCL 205.56, and Section 6 of the Use Tax Act, MCL 205.96, provide that the Department of Treasury may prescribe and require the filing of returns as necessary to provide efficient administration.