Consistent with the Wayfair ruling, Michigan amended its nexus standards as described in the recent Revenue Administrative Bulletin.
Beginning September 30, 2018, a seller that has sales in Michigan (both taxable and non-taxable) in excess of $100,000, or a seller that has at least 200 separate sales transactions in Michigan (both taxable and non-taxable) in the previous calendar year, is deemed to have sufficient nexus and is therefore required to pay sales or use tax on all of its taxable sales in the state and to file all required returns.
The Bulletin requires remote and out-of-state sellers to review their 2017 calendar year sales to determine if they satisfy the economic nexus thresholds and therefore have sufficient economic
presence in Michigan as of September 30, 2018. Sellers who meet the nexus requirement by exceeding either of the thresholds are not liable for any tax, penalty, or interest for transactions occurring on or before September 30, 2018.
To assist remote and out-of-state sellers in understanding the application of the revised requirements, the Michigan Department of Treasury included two illustrations in the Bulletin:
Example 1: Seller has no physical presence, representational, attributional, or click-through nexus in Michigan. Seller had $100,001 of sales into Michigan between January 1, 2017, and December 31, 2017. Seller has nexus in Michigan effective after September 30, 2018, and must begin reporting and remitting tax on all taxable sales from October 1, 2018, forward. Once a seller has nexus due to its economic presence it must remit tax until a calendar year passes in which it does not meet either of the economic nexus thresholds discussed in this RAB.
Example 2; Assume the same facts as Example 1; however, Seller has only $10,000 of sales and fewer than 200 transactions into Michigan from January 1, 2018, through December 31, 2018. Seller must report and remit tax for all taxable sales made after September 30, 2018, through December 31, 2018. Seller no longer has nexus due to its economic presence beginning on January 1, 2019, and may therefore cease remitting and reporting tax after that date.
If you are or have in interest in a business that sells into Michigan and have questions regarding your exposure for Michigan sales and use taxes, please contact us to discuss your situation.