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Revenue Administrative Bulletin 1990-4

Approved: January 11, 1990



RAB-90-4. The purpose of this Bulletin is to explain the use tax base of a vehicle, aircraft, watercraft, mobile home, off-road vehicle (ORV) or snowmobile transferred between persons other than licensed retailers.

Determination of Tax Base

The Michigan Use Tax Act, MCL 205.93, states:

" . . . the price tax base of any vehicle, ORV, mobile home, aircraft, snowmobile, or watercraft subject to taxation under this act . . . shall be not less than its retail dollar value at the time of acquisition thereof as fixed pursuant to rules promulgated by the department."

Department of Treasury Sales and Use Tax Rule, 1979 AC, R 205.135(5), provides:

"The base price to be used in computing the tax liability shall not be less than its retail dollar value as listed in any recognized guide for use or appraisal purposes."

When issuing a use tax assessment, the Department shall determine the use tax base by reference to the retail dollar value provided by the following guides:

Vehicles: N.A.D.A. Official Used Car Guide (Central Edition)
Aircraft: Aircraft Bluebook-Price Digest
Watercraft: BUC Boat Price Guide
N.A.D.A. Boat Appraisal Guide

If the purchase price exceeds the retail dollar value provided by the guide, the tax base of the use tax assessment shall be the purchase price.

Adjustments to the Tax Base

If the item was damaged or needed repairs, or if there is another reason why it does not meet the retail dollar value provided by the guide, the taxpayer may present reliable evidence of those circumstances for the Department's consideration and may request an adjustment to the use tax base.

The taxpayer may present copies of the following items to support a request for adjustment:

  1. A written appraisal of the item from a registered dealer or repair shop, stating the retail value of the item at the time of transfer. The appraisal must specifically identify the item and must be obtained within six months from the date of transfer.
  2. Receipts or estimates from a registered dealer or repair shop listing the cost of repairs and specifically identifying the item. Repair receipts must be for repairs made after the date of transfer. In cases where repairs were not made, repair estimates may be presented regardless of the date the estimates were prepared.
  3. A bill of sale signed by the seller that states the purchase price and describes the conditions of the item, substantiating a market value less than the retail value provided by the guide book.

Statements such as "as is" or "because the buyer was a good friend" are not acceptable in lieu of listing the condition(s) of the item. The Department will deny a request for adjustment if the taxpayer fails to present probative written evidence to support the request.