Single Mixed Transaction Rule Proposed; Other Administrative Amendments Proposed
The Michigan Department of Treasury has proposed a new sales and use tax rule regarding single mixed transactions. A "single mixed transaction" would be defined as a transaction in which a combination of taxable and nontaxable services, taxable and nontaxable personal property, or taxable and nontaxable services and personal property is sold for a single price. If the transaction was principally a transfer of taxable services or taxable tangible personal property, the entire transaction would be deemed taxable. However, if the transaction was principally the transfer of nontaxable services or nontaxable personal property, the entire transaction would be exempt.
The following factors would be used to determine whether a single mixed transaction was principally the sale of a service or of personal property:
· what the buyer sought as the object of the transaction;
· what the seller or service provider is in the business of doing;
· whether the taxable item was provided as a retail enterprise with a profit-making motive;
· whether the taxable item was available for sale without the exempt item;
· the extent to which the nontaxable item has contributed to the value of the taxable item; and
· any other factors relevant to the particular transaction.
The Department of Treasury has also proposed to rescind the following sales and use tax rules: R205.5 ("Tangible Personal Property"),
R205.9 ("Sales for purposes of resale"), and
The Department of Treasury has proposed to amend the following rules:
R205.1 ("Sales tax licenses"),
R205.8 ("Consumer; use; conversion"),
R205.15 ("Trade-in deduction"),
R205.16 ("Returned goods"),
R205.20 ("General application"),
R205.22 ("Discounts generally; discounts on certain motor vehicle sales"),
R205.26 ("Use tax registration"),
R205.28 ("Use tax included in gross proceeds"), and
R205.136 ("Food for human consumption").