Michigan State Sales Tax Resale Certificate

Michigan Sales Tax Application

 

Sales Tax

The state of Michigan sales tax is 6%.  Local governments have “No” latitude to collect an optional local tax.  Within the states borders, there are about 337 local tax jurisdictions.  Across the state there is “NO” average local tax; therefore, in conjunction with the state sales tax and the local tax the cities within the state of Michigan is 6%.

 

Sales and Use Tax License

Sales tax permits are mandatory for most businesses in Michigan.  New businesses or if someone is initiating sales for the first time within the state of Michigan, then you will need to know and understand which business permit(s) (if any) are required.  After submitting the application for a Michigan Sales Tax License, one could be ready to conduct business operations within 8-10 days.

 

Note: Note: Businesses that are viewed as having established sales tax nexus within the state of Michigan is also viewed as having a taxable presence within the state.

If anyone “sells or leases a tangible personal property in the state of Michigan to an end user or final customer, the state of Michigan mandates a sales tax license.

 

Resale Certificate

There is no requirement in the state of Michigan for registration with the state in order to obtain a resale certificate. Resellers looking to purchase tax exempt items at retail can fill out, complete and use the Michigan Sales and Use Tax Certificate of Exemption Certificate (Form 3372).

 

Retailers wishing to make purchases with the purpose of resale or execute transactions that is exempt from Michigan sales tax, one is obligated to obtain and have in their possession the necessary Michigan sales tax exemption certificate before you are authorized to make tax-free purchases.

• Sales and Use Tax Certificate of Exemption
• Streamlined Sales Tax Certificate of Exemption
• Streamlined Sales Tax Certificate of Exemption (Multistate)

Note: Uniform sales tax exemption certificates are also acceptable in Michigan, this is a common or general certificate that maybe used across various states.

 

Sales Tax Exemption Certificate – Is no more than a form presented to a vendor at the time of making a sales tax-free purchase.  It is your responsibility to fill out & complete the form but responsibility falls on the vendor to validate that you are indeed qualified to make tax-exempt purchases.

Note:  Michigan has only one specific form to be used when making tax exempt purchases such as prescribe medication.

 

• Michigan Sales and Use Tax Exemption Certificate – available for use to purchase or acquire any item considered to be tax exempt within the state of Michigan. Unlike most other states, Michigan is unique in that it only has one Tax exemption certificate.

When conducting transactions, the purchaser presents the seller with their written certificate and legally documenting the exemption.  Those things that are included in the certificate include:

• Date certificate was created
• Signature of buyer, agent or representative on buyer’s behalf
• Both parties’ names and addresses
• Legal stance of the exemption being utilized
• Buyer’s tax registration and/or a business license number
• Description of items buyer intends to buy or purchase

 

Expiration of Michigan sales tax exemption certificate

In Michigan there are certificates that are valid up to four years, notwithstanding a shorter time period has been agreed upon.

 

Blanket Resale Certificate

In Michigan, the use of blanket certificates are permitted for use.  There is no need for blanket resale certificates to be renewed, just as long as there is not a 12-month gap between purchases.  As long as a vendor maintains on file a single certificate then it may be reused for all exempt purchases made between a specific buyer and that particular vendor. It is not necessary for a new certificate for every transaction between that particular vendor and buyer.

Taxable Items

Within the state of Michigan, sales tax is legally mandated to be collected as a result of selling any/all “tangible goods” and personal property to a customer.  Exceptions to this tax includes:

• automobiles intended for the sale to a family member
• particular equipment used within the agricultural sector
• certain pieces of industrial machinery

 

Services

Within the state of Michigan services are usually not assessed a sales tax.  The exception to this rule is, if a service produces, manufactures, or makes a “tangible product” this would qualify and be viewed as a taxable item; this service would most definitely be required to be accessed a sales tax.

 

Shipping and Handling

Michigan’s guidance as it pertains to shipping and handling cost is very simplistic. Here’s what you should know, if a buyer purchases an item and that item is considered to be a taxable and the buyer has established tax nexus within the state of Michigan then any/all associated shipping and handling fees are also considered to be taxable.  On the other side, if the item is not considered to be taxable, inheritably the shipping and handling fees are also not taxable.

NOTE: If a shipment contains both taxable and non-taxable items, shipping cost should only be applied to the portion of the shipment that is taxable.  Secondly, shipping and handling fees maybe exempt if fees are assessed after ownership of the purchased item has occurred and if the seller is associated with a separate delivery business.

 

Michigan Drop Shipments

In the state of Michigan, drop shipments are normally are subject to state sales tax(es).  Drop shipments is a commonly used business practice of shipping via a third party hired by the vendor (usually located in another state) to be transported to the purchaser.