Three Rules Rescinded - Nine Rules Amended
The Michigan Department of Treasury has amended and repealed several sales and use tax rules in order to conform to current law. The rescinded rules include: R205.5 Tangible Personal Property, R205.9 Sales for Purposes of Resale and R205.23 Records
Sales tax licenses: R205.1 is amended to reflect that a sales tax license expires on September 30 of each year. Also, the amended rule advises that a person licensed to sell at retail is not automatically exempt from sales tax on its own purchases.
Consumer: R205.8 is amended to clarify that a "consumer" includes a person acquiring, for consideration, tangible personal property through the mail or catalog or over the Internet. The term also includes (1) a person acquiring tangible personal property if engaged in the business of constructing, altering, repairing, or improving the real estate of others, and (2) a person who converts tangible personal property or services that were exempt to a use that is not exempt. A seller is deemed a consumer when one of the following occurs: (1) the seller removes goods from inventory for personal use or consumption or in the conduct of the seller’s business; or (2) the seller converts tangible personal property acquired for an exempt use to a nonexempt use.
Trade-in deduction: R205.15 is amended to reflect that sellers of automotive parts must remit tax on the total sales price, including the value placed on the used part traded in and the part sold. No refund or reduction in tax is allowed based on any payment or credit given to a customer for a part traded in.
Returned goods: R205.16 has been revised to state that if a seller provides a full refund or credit of the purchase price and tax on returned goods, the seller may claim a refund or credit of the tax paid to the department within four years of the date for the filing of the original return for the period in which the tax was due. In regards to a seller providing a partial refund or credit on returned goods, the seller’s claim for refund of the tax paid on that portion of the purchase price refunded must also be made within four years of the date for the filing of the original return for the period in which the tax was due. A refund or credit of tax will not be given on returned goods without proof that Michigan tax was paid on the original sale.
General application: R205.20 is amended to provide that the administrative rules must be read and interpreted in their entirety, taking into account the effect of all pertinent legislation, rules, and court decisions.
Use tax registration: R205.26 is amended to reflect that the following activities are among those that require a use tax registration:
· a business within the state buying tangible personal property from nonregistered sellers;
· a provider of interstate telecommunications services having nexus with the state; and
· a provider of laundering or textile cleaning services under a sale, rental, or service agreement with a term of five days or more that has nexus with the state.
Use tax included in gross proceeds: R205.28 is amended to read that the use tax act requires a seller to collect use tax as a separate line item and prohibits the inclusion of such charge as part of the sales price or purchase price.
Discounts: R205.22 is amended to conform to the definition of "sales price" contained in the Streamlined Sales and Use Tax (SST) Agreement. A discount or rebate offered by the seller, with no reimbursement by a third party, reduces the sales price. However, a discount or rebate does not reduce the sales price when the following conditions are found:
· the seller receives consideration from a party other than the purchaser and the consideration is directly related to the price reduction;
· the seller is obligated to pass the price reduction to the purchaser;
· the amount of consideration attributable to the sale is fixed and determinable by the seller at the time of sale; and
· the purchaser presents documentation to the seller claiming a price reduction granted by a third party with the understanding that the third party will reimburse the seller, or the purchaser identifies him/herself as a member of a group entitled to a reduction or discount, or the price reduction is identified as a third-party discount on the invoice received by the purchaser.
Food for human consumption: R205.136 is amended to include the definition of "prepared food" as found in the SST Agreement. Prepared food means (1) food sold in a heated state or that is heated by the seller; (2) two or more food ingredients mixed by the seller for sale as a single item; or (3) food sold with eating utensils provided by the seller.