Revenue Administrative Bulletin 1987-4

Approved: July 23, 1987

REVOCATION OF DECLARATORY RULING #8

RAB-87-4. The Commissioner of Revenue rescinds the amended Declaratory Ruling #8, issued on July 11, 1983, which concerns the Department's position on the responsibilities of a market master, lessor or sales promoter for the proper collection of sales tax. The Department will rely on promulgated rules, R 205.78 and R 205.95, which are provided below. The text of Declaratory Ruling #8, as rescinded, is subsequently provided in this Bulletin. The Commissioner's action is effective as of July 10, 1987.

Current Treatment Under the Rules

Rule 205.78. Farmers, market masters, and other marketers.

Rule 28. (1) Farmers, market masters, and other persons who sell at retail tangible personal property, other than food for home consumption or use, shall secure a license and pay the tax on those sales.

(2) Sales of the property specified in subrule (1) for resale to persons possessing a sales tax license are not taxable.

(3) Where a person selling other than food at retail rents or occupies space in a general market or other place operated for the purpose of transacting sales, that person shall secure a sales tax license, and shall pay the tax on the sales made by that person. If the seller does not have a sales tax license, the market master, as the principal, is responsible for paying the tax on the sales made by that person.

Rule 205.95. Leased departments.

Rule 45. (1) Where an established business leases a portion of its shelves, counters, or floor space to other persons selling tangible personal property to consumers, the sales of tangible personal property by the leased departments shall be included in the tax return of the lessor, who shall pay the tax thereon to the state. A lessor not otherwise subject to the tax shall obtain a license on behalf of the lessee.

(2) When the lessee conducts the leased department in the same manner as an established like business, and gives evidence to the public that he is conducting his department separately from the lessor's business, or if separate business records are kept, the lessee may apply for a sales tax license, if the lessee keeps separate records of his business and files separate returns. The lessor shall be responsible for the tax unless the lessee obtains such a license.

(3) The word "lease", as used in this rule, includes permitted occupancy, regardless of consideration. The liquor commission restrains persons licensed by the commission from subleasing or surrendering any part of the business conducted at or on the licensed premises.

Rescinded Declaratory Ruling #8

Pursuant to R 205.78, Rule 28 and, as applicable, R 205.95, Rule 45, the market master, or lessor of space for the purpose of making sales at retail, shall have the following duties and obligations in respect to the proper collection of Sales Tax on the retail sales conducted on said leased premises or space:

1. A market master or promoter of retail sales activities, who has a Sales Tax license and is authorized to make retail sales on his or her own behalf, has the following responsibilities:

A.     Such person must determine that each lessee (vendor) has a proper Michigan Sales Tax license and shall maintain a record of such license number of each lessee (vendor).

B.     If the lessee (vendor) does not have a proper Sales Tax license, and therefore does not remit Sales Tax on sales made by such vendor (lessee), the licensed market master or promoter or other lessor of space for making retail sales shall be responsible for the payment of tax on such sales.

2. A market master or promoter of retail sales activities who leases space to others for such sales to be made and who makes no sales on his or her own behalf, therefore having no Sales Tax license, has the following responsibilities:

A.     Such market master or promoter of retail sales activities must determine that each lessee (vendor) has a proper Michigan Sales Tax license and shall maintain a record of the license number of each vendor (lessee).
B.     If the lessee (vendor) does not have a proper Sales Tax license, the market master or promoter shall promptly notify the Department of such person's failure to have a Sales Tax license.

In order for a market master or promoter to avoid the responsibility of either paying Sales Tax on sales and notifying the Department of any person's failure to have such Sales Tax license, he or she shall

1. Charge and collect from the lessee (vendor) the prepayment of concessionaires' Sales Tax and process the Department of Treasury form C-5603A which is to be remitted to the Department within 24 hours.