SALES, USE TAX EXEMPT; DELIVERY & INSTALL S.B. 158 (S-1) & 159 (S-1):
REVISED SUMMARY AS PASSED BY THE SENATE
Senate Bill 158 & 159 (Substitute S-1 as passed by the Senate)
Committee: Finance, Insurance, and Consumer Protection (discharged)
Date Completed: 4-24-23 (COMPANION BILL LINK: H.B. 4039 et al.)
CONTENT
Senate Bill 158 (S-1) and Senate Bill 159 (S-1) would amend the General Sales Tax Act and the Use Tax Act, respectively, to modify the definition of "sales price" and "purchase price", as applicable, to eliminate delivery and installation charges from those definitions. The bills' changes would not apply to delivery or installation charges involving or relating to the sale of electricity, natural gas, or artificial gas by a utility.
The General Sales Tax Act levies a 6.0% tax on the gross proceeds (i.e., "sales price") of a business that makes sales at retail. The Use Tax levies a 6.0% tax on the price (i.e., "purchase price") of tangible personal property used, stored, or consumed in Michigan.
"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. "Purchase price" or "price" means the total amount of consideration paid by the consumer to the seller, 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 use tax.
The terms include certain categories of costs and charges, including delivery and installation charges incurred or to be incurred before the completion of the transfer of ownership of tangible personal property from the seller to the purchaser. The bill instead would refer to installation and delivery charges.
The terms exclude from the respective definitions other listed charges, credits, and amounts. Under the bill, delivery or installation charges, except those that involve or relate to the sale of electricity, natural gas, or artificial gas by a utility, would be excluded if those charges were separately stated on the invoice, bill of sale, or similar document provided to the purchaser, and the seller (under Senate Bill 158) or taxpayer (under Senate Bill 159) maintained its books and records to show separately the transaction used to determine the tax levied under the applicable Acts.
(The bills would define a "utility" as either a person regulated by the Michigan Public Service Commission as a utility or a person that operates equipment or facilities for producing, generating, transmitting, delivering, or furnishing electricity within the State for the public for compensation, regardless of the person's owner, ownership structure, or regulation by the Michigan Public Service Commission.)
All the following would apply only to delivery and installation charges, excluding those involved with or related to the sale of electricity, natural gas, or artificial gas by a utility:
-- Within 90 days after the bills' effective dates, the Department of Treasury would have to cancel all outstanding balances related to delivery and installation charges on notices of intent to assess that were issued for the taxes levied under the General Sales Tax Act or Use Tax Act and that were issued before the bill's effective date.
-- Within 90 days after the bills' effective dates, the Department would have to cancel all outstanding balances related to delivery or installation charges on final assessments for the taxes levied under the Acts and that were issued before the bill's effective date.
-- After the bills' effective date, the Department could not issue any new assessments under the Acts on delivery and installation charges for any tax period before the bill's effective date that is open under the statute of limitations under either Act.
(Generally, a deficiency, interest, or penalty may not be assessed after four years after the date set for the filing of the required return or after the date the return was filed, whichever is later. The statute of limitations may be extended under certain circumstances.)
Under the bills, all revenue lost to the State School Aid Fund (SAF) as a result of the above exclusions would have to be deposited into the SAF.
(Senate Bill 158 would also amend the definition of "person" under the General