SR Client Question: Do I owe Michigan sales tax when I buy a vehicle from a business I own?
The transfer of vehicles from a business entity to the owner of the business is addressed in Revenue Administrative Bulletin 1991-1 and makes, in most instances, the transfer or “sale” of a vehicle from a business to its owner exempt from owing State of Michigan sales tax on the transaction.
To prove the validity of the transaction’s tax exemption, plan to supply the State of Michigan with:
- a copy of the vehicle’s original invoice showing sales tax was paid when purchased,
- stock certificate, tax return or other documentation that establishes you as 100% owner of the business when the vehicle was purchased; and,
- a copy of the sales agreement showing the distribution of the vehicle were part of the sale.
If you have further questions regarding a business-to-owner transaction, please contact your ShindelRock tax professional.