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Sales tax to be collected from out-of-state online retailers

Following a recent U.S. Supreme Court decision, State Treasurer Nick Khouri announced a change to the state’s sales tax administration that will require many mail order and online retailers located outside of Michigan to pay the 6 percent sales tax on taxable sales into this state.

“This is an important step forward in the fair administration of our tax system” Khouri said. “With more and more shopping being done online, this change will make sure both hometown businesses and out-of-state online retailers are treated equally.”

Shoppers were previously required to track and annually self-report uncollected taxes from mail order and online retailers physically located outside of Michigan. Today’s announcement allows for the more efficient collection of the sales tax by collecting from businesses rather than individuals.

In June, the U.S. Supreme Court overturned a more than 30-year precedent in South Dakota v. Wayfair [1], allowing the Michigan Department of Treasury to collect sales tax from retailers physically located outside the state if the retailer exceeds $100,000 in sales or 200 or more transactions in Michigan within the previous calendar year.

Under the state Treasury Department’s new administrative requirement [2], all applicable mail order and online retailers physically located outside of Michigan must pay state sales tax and file tax returns for taxable sales made after Sept. 30, 2018.

“We will be working closely with our retail and business partners to ensure a smooth transition to the new rule,” Khouri said.

The state Treasury Department estimates more than $200 million in additional state revenues will be collected annually under the new sales tax rule.

Individuals and businesses can learn more about Michigan’s sales tax requirements at www.michigan.gov/taxes [3]. Additional information will be posted as it becomes available on the website [4].