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September 1, 2004
Governor Jennifer Granholm signed legislation
effective September 1, 2004 conforming Michigan law to the Streamlined Sales and
Use Tax Agreement intended to unify the States. It will go into effect after at
least 10 states comprising at least 20% of the total population of all states
imposing a state sales tax have petitioned for membership and have been found to
be in compliance with the requirements of the Agreement.
Among other things, the bills (1) make numerous definitional changes, (2)
eliminate certain exemptions, (3) add provisions relating to bad debt
reductions, (4) add sourcing provisions, and (5) change the date that returns
are due.
DUE DATE OF RETURN
The due date of sales and use tax returns is changed from the 15th to the
20th day of each month.
EXEMPTIONS
The exemptions allowed for the sale of diesel fuel to an interstate motor
carrier and for the storage,
registration, or transfer of certain vehicles or aircraft are eliminated. Rather
than an exemption, a seller must collect tax on the transaction and the taxpayer
may then claim a credit for the amount of tax paid.
FOOD
The exemption for "food products" is amended to exempt "food and food
ingredients". In addition, prescription dietary supplements are exempt from
sales and use taxes.
DRUGS
The existing exemption for prescription drugs is modified to provide the drug
must be for human use.
OTHER MEDICAL PROVISION
All prosthetic devices, durable medical equipment, and mobility enhancing
equipment are exempt. In addition, sales of insulin and oxygen for human use are
exempt.
Also specifically exempted is certain rental receipts, charges for technical
support or for adapting or modifying prewritten computer software programs,
sales of computer software originally designed for the exclusive use and special
needs of the purchaser, and sales of certain commercial advertising elements.
BAD DEBTS
The credit for bad debts is amended. See me if you have any bad debts.
AMENDED AND NEWLY ENACTED DEFINITIONS
Numerous definitions were added while some existing definitions were amended or
repealed. If you have questions, give me a call.
SOURCING RULES
Sales will be sourced generally to the destination of the product sold, with a
default to origin-based sourcing in the absence of that information. Special
sourcing rules apply to sales of vehicles, transportation equipment, and
telecommunications. Call the office for specific information.
There are also special rules for sourcing of leases and rentals. Be sure and
check on the details.
AMNESTY
Effective July 1, 2004, a seller will be granted amnesty for uncollected or
unpaid sales or use taxes if the seller was not licensed in the state at any
time during the 12-month period prior to Michigan's participation under the
Agreement, the seller obtains a license within a 12-month period beginning on
the date of Michigan's participation under the Agreement, and the seller is
registered under the Agreement. There other rules and qualifications. Please
contact the office if you need to know more information.
As usual, there are other provisions which are complex and to specific to cover
here where a general overview is made.
Always check into any areas to make sure that you are or are not affected.
Call Millian Toms at 248-541-2052 with any questions.
or
milliantoms@aol.com
Millian M. Toms
is a Royal Oak-based CPA and business advisor. She is also an active
member of the community including The Optimists and Greater Royal
Oak Chamber of Commerce.
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