Bill Summary – FastDemocracy

HOUSE BILL NO. 5862
     June 26, 2024, Introduced by Reps. Smit and Rigas and referred to the Committee on Tax Policy.
          A bill to amend 1933 PA 167, entitled
    "General sales tax act,"
    by amending section 1 (MCL 205.51), as amended by 2023 PA 20.
                      THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
       Sec. 1. (1) As used in this act:
       (a) "Person" means an individual, firm, partnership, joint
 venture, association, social club, fraternal organization,
 municipal or private corporation whether or not organized for
 profit, or not, company, limited liability company, estate, trust,
 receiver, trustee, syndicate, the United States, this state,
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 county, or any other group or combination acting as a unit, and
 includes the plural as well as the singular number, unless the
 intention to give a more limited meaning is disclosed by the
 context.
       (b) "Sale at retail" or "retail sale" means a sale, lease, or
 rental of tangible personal property for any purpose other than for
 resale, sublease, or subrent.
       (c) "Gross proceeds" means sales price.
       (d) "Sales price" means the total amount of consideration,
 including cash, credit, property, and services, for which tangible
 personal property or services are sold, leased, or rented, valued
 in money, whether received in money or otherwise, and applies to
 the measure subject to sales tax. Sales price includes the
 following subparagraphs (i) to (vii) and excludes subparagraphs (viii)
 to (xv):(xvi):
       (i) Seller's cost of the property sold.
       (ii) Cost Except as otherwise provided in subparagraph (xvi),
 cost of materials used, labor or service cost, interest, losses,
 costs of transportation to the seller, taxes imposed on the seller
 other than taxes imposed by this act, and any other expense of the
 seller.
       (iii) Charges by the seller for any services necessary to
 complete the sale, other than the following:
       (A) An amount received or billed by the taxpayer for
 remittance to the employee as a gratuity or tip, if the gratuity or
 tip is separately identified and itemized on the guest check or
 billed to the customer.
       (B) Labor or service charges involved in maintenance and
 repair work on tangible personal property of others if separately
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 itemized.
       (iv) Except as otherwise provided in subparagraph (xv),
 delivery charges. A seller is not liable under this act for
 delivery charges allocated to the delivery of exempt property.
       (v) Except as otherwise provided in subparagraph (xv),
 installation charges.
       (vi) Except as otherwise provided in subparagraphs (xi), (xii),
 and (xiv), credit for any trade-in.
       (vii) Except as otherwise provided in subparagraph (x),
 consideration received by the seller from third parties if all of
 the following conditions are met:
       (A) The seller actually receives consideration from a party
 other than the purchaser and the consideration is directly related
 to a price reduction or discount on the sale.
       (B) The seller has an obligation to pass the price reduction
 or discount through to the purchaser.
       (C) The amount of the consideration attributable to the sale
 is fixed and determinable by the seller at the time of the sale of
 the item to the purchaser.
       (D) One of the following criteria is met:
       (I) The purchaser presents a coupon, certificate, or other
 documentation to the seller to claim a price reduction or discount
 where the coupon, certificate, or documentation is authorized,
 distributed, or granted by a third party with the understanding
 that the third party will reimburse any seller to whom the coupon,
 certificate, or documentation is presented.
       (II) The purchaser identifies himself or herself to the seller
 as a member of a group or organization entitled to a price
 reduction or discount. A preferred customer card that is available
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 to any patron does not constitute membership in a group or
 organization.
       (III) The price reduction or discount is identified as a third
 party price reduction or discount on the invoice received by the
 purchaser or on a coupon, certificate, or other documentation
 presented by the purchaser.
       (viii) Interest, financing, or carrying charges from credit
 extended on the sale of personal property or services, if the
 amount is separately stated on the invoice, bill of sale, or
 similar document given to the purchaser.
       (ix) Any taxes legally imposed directly on the consumer that
 are separately stated on the invoice, bill of sale, or similar
 document given to the purchaser.
       (x) Beginning January 1, 2000, employee discounts that are
 reimbursed by a third party on sales of motor vehicles.
       (xi) Beginning November 15, 2013, credit for the agreed-upon
 value of a titled watercraft used as part payment of the purchase
 price of a new titled watercraft or used titled watercraft
 purchased from a watercraft dealer if the agreed-upon value is
 separately stated on the invoice, bill of sale, or similar document
 given to the purchaser. This subparagraph does not apply to leases
 or rentals.
       (xii) Beginning December 15, 2013, credit for the agreed-upon
 value of a motor vehicle or recreational vehicle used as part
 payment of the purchase price of a new motor vehicle or used motor
 vehicle or recreational vehicle purchased from a dealer if the
 agreed-upon value is separately stated on the invoice, bill of
 sale, or similar document given to the purchaser. This subparagraph
 does not apply to leases or rentals. Except as otherwise provided
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 under subparagraph (xiv), for purposes of this subparagraph, the
 agreed-upon value of a motor vehicle or recreational vehicle used
 as part payment is limited as follows:
       (A) Beginning December 15, 2013, subject to sub-subparagraphs
 (B) and (C), the lesser of the following:
       (I) $2,000.00.
       (II) The agreed-upon value of the motor vehicle or
 recreational vehicle used as part payment.
       (B) Beginning January 1, 2015 and each January 1 thereafter
 through December 31, 2018, the amount under sub-subparagraph (A)(I)
 is increased by an additional $500.00 each year.
       (C) Beginning January 1, 2019, subject to sub-subparagraphs
 (D) and (E), the lesser of the following:
       (I) $5,000.00.
       (II) The agreed-upon value of the motor vehicle used as part
 payment.
       (D) Beginning January 1, 2020 and each January 1 thereafter,
 the amount under sub-subparagraph (C)(I) is increased by an
 additional $1,000.00 each year.
       (E) Beginning on January 1 in the year in which the amount
 under sub-subparagraph (C)(I) exceeds $14,000.00 and each January 1
 thereafter, there is no limitation on the agreed-upon value of the
 motor vehicle used as part payment.
       (xiii) Beginning January 1, 2017, credit for the core charge
 attributable to a recycling fee, deposit, or disposal fee for a
 motor vehicle or recreational vehicle part or battery if the
 recycling fee, deposit, or disposal fee is separately stated on the
 invoice, bill of sale, or similar document given to the purchaser.
       (xiv) Beginning January 1, 2018, credit for the agreed-upon
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 value of a recreational vehicle used as part payment of the
 purchase price of a recreational vehicle purchased from a dealer if
 the agreed-upon value is separately stated on the invoice, bill of
 sale, or similar document given to the purchaser. This subparagraph
 does not apply to leases or rentals.
       (xv) Delivery or installation charges if such charges are
 separately stated on the invoice, bill of sale, or similar document
 provided to the purchaser, and the seller maintains its books and
 records to show separately the transactions used to determine the
 tax levied by this act. This subdivision does not apply to delivery
 or installation charges involving or relating to the sale of
 electricity, natural gas, or artificial gas by a utility.
       (xvi) A credit card surcharge. As used in this subparagraph,
 "credit card surcharge" means a surcharge or other fee imposed for
 the use of a credit card.
       (e) "Business" includes an activity engaged in by a person or
 caused to be engaged in by that person with the object of gain,
 benefit, or advantage, either direct or indirect.
       (f) "Tax year" or "taxable year" means the fiscal year of the
 state or the taxpayer's fiscal year if permission is obtained by
 the taxpayer from the department to use the taxpayer's fiscal year
 as the tax period instead.
       (g) "Department" means the department of treasury.
       (h) "Taxpayer" means a person subject to a tax under this act.
       (i) "Tax" includes a tax, interest, or penalty levied under
 this act.
       (j) "Textiles" means goods that are made of or incorporate
 woven or nonwoven fabric, including, but not limited to, clothing,
 shoes, hats, gloves, handkerchiefs, curtains, towels, sheets,
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 pillows, pillow cases, pillowcases, tablecloths, napkins, aprons,
 linens, floor mops, floor mats, and thread. Textiles also include
 materials used to repair or construct textiles, or other goods used
 in the rental, sale, or cleaning of textiles.
       (k) "New motor vehicle" means that term as defined in section
 33a of the Michigan vehicle code, 1949 PA 300, MCL 257.33a.
       (l) "Recreational vehicle" means that term as defined in
 section 49a of the Michigan vehicle code, 1949 PA 300, MCL 257.49a.
       (m) "Dealer" means that term as defined in section 11 of the
 Michigan vehicle code, 1949 PA 300, MCL 257.11.
       (n) "Watercraft dealer" means a dealer as that term is defined
 in section 80102 of the natural resources and environmental
 protection act, 1994 PA 451, MCL 324.80102.
       (o) "Utility" means either of the following:
       (i) A person regulated by the Michigan public service
 commission as a utility.
       (ii) A person that operates equipment or facilities for
 producing, generating, transmitting, delivering, or furnishing
 electricity within this state for the public for compensation,
 regardless of the person's owner, ownership structure, or
 regulation by the Michigan public service commission.
       (2) If the department determines that it is necessary for the
 efficient administration of this act to regard an unlicensed
 person, including a salesperson, representative, peddler, or
 canvasser as the agent of the dealer, distributor, supervisor, or
 employer under whom the unlicensed person operates or from whom the
 unlicensed person obtains the tangible personal property sold by
 the unlicensed person, irrespective of whether the unlicensed
 person is making sales on the unlicensed person's own behalf or on
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 behalf of the dealer, distributor, supervisor, or employer, the
 department may so regard the unlicensed person and may regard the
 dealer, distributor, supervisor, or employer as making sales at
 retail at the retail price for the purposes of this act.
         (3) Notwithstanding anything to the contrary in this act, the
 following applies only to delivery and installation charges
 described in subsection (1)(d)(iv) or (v), except that this
 subsection does not apply to delivery and installation charges
 involving or relating to the sale of electricity, natural gas, or
 artificial gas by a utility:
         (a) Not later than 90 days after the effective date of the
 amendatory act that added this subsection, July 25, 2023, the
 department shall cancel all outstanding balances related to such
 delivery and installation charges on notices of intent to assess
 that were issued under section 21 of 1941 PA 122, MCL 205.21, for
 the tax levied under this act and that were issued before the
 effective date of the amendatory act that added this
 subsection.April 26, 2023.
         (b) Not later than 90 days after the effective date of the
 amendatory act that added this subsection, July 25, 2023, the
 department shall cancel all outstanding balances related to such
 delivery and installation charges on final assessments that were
 issued under section 22 of 1941 PA 122, MCL 205.22, for the tax
 levied under this act, and that were issued before the effective
 date of the amendatory act that added this subsection.April 26,
 2023.
         (c) After the effective date of the amendatory act that added
 this subsection, Beginning April 26, 2023, the department shall not
 issue any new assessments for the tax levied under this act on such
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 delivery and installation charges for any tax period before the
 effective date of the amendatory act that added this subsection
 April 26, 2023, that is open under the statute of limitations
 provided in section 27a of 1941 PA 122, MCL 205.27a.
       (4) Notwithstanding anything to the contrary in this act,
 subsection (1)(d)(xvi) is intended to be retroactive and to apply to
 all periods open under section 27a of 1941 PA 122, MCL 205.27a.
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Statutes affected: 
House Introduced Bill: 205.51