Definition of "Materialperson" Amended to Include Precast Concrete Products
Public Act 71 of 2011 (PA 2011-71), effective June 28, 2011 amends the General Sales Tax Act. For purposes of the filing of Michigan sales and use tax returns, the definition of "materialperson" has been revised to include those who are primarily engaged in the sale of precast concrete products or conduit or fitting products used in the collection, conveyance, or distribution of water or sewage. A materialperson may include the amount of taxable sales from materials furnished on a credit sale basis for the purpose of making an improvement to real property in the first quarterly return due following the date of the credit sale.
The General Sales Tax Act typically requires taxpayers to file a sales tax return and remit the amount due each month, based on the amount of all sales and gross proceeds of the taxpayer's business for the preceding month. Taxpayers who remitted $720,000 or more in the previous year are subject to an accelerated payment schedule, which requires two monthly payments. Enacted in 1998, this schedule eased the accelerated payment requirement that had been in place in since 1993. Later in 1998, an additional change was made to allow a materialperson to file quarterly returns for sales made on a credit basis, since payments for credit sales are usually received several months after the sales take place.
Under the definition of "materialperson", only a person who sells lumber and building material-related products is eligible for quarterly filing. Evidently, at least one business involved in the sale of precast concrete products filed quarterly sales tax returns until 2004, when the Department of Treasury determined that the taxpayer did not qualify as a materialperson because it did not sell lumber. Since businesses that sell precast concrete products also make most of their sales on a credit basis, they can experience cash-flow problems due to the monthly and accelerated filing requirements. Therefore, the legislature determined that a precast concrete product dealer also should be considered a materialperson.