Each state has specific guidelines explaining when businesses must file sales tax returns. What are the economic thresholds that require a business or online seller to pay sales tax in the state of Michigan? Use TaxJar’s sales tax guide and calculator and learn more about the taxation guidelines in the state and estimate your business’ potential sales tax liabilities. TaxJar’s guide outlines economic thresholds, enabling sellers and businesses to discover if they now have a tax obligation in Michigan.
Do you need to collect sales tax in Michigan?
Businesses and remote sellers need to collect sales tax in Michigan if they have either physical or economic nexus in the state. Physical nexus means a business has a tangible presence or activity in the state. Economic nexus means that a business has met Michigan’s economic threshold requirement for total revenue or the number of transactions.
Do you have physical nexus in Michigan?
Michigan considers a seller to have physical nexus if they “sell tangible personal property to a consumer.” Learn more about the Michigan Department of Treasury’s guidelines about sales tax nexus.
Do you have economic nexus in Michigan?
Effective October 1, 2018, Michigan considers vendors who make more than $100,000 in sales or have more than 200 transactions in the state in the previous calendar year to have economic nexus. This means, according to Michigan state tax laws, these vendors are obligated to collect sales tax from buyers in the state.
Read Michigan’s economic nexus guidance for sellers. TaxJar also offers additional insights about economic nexus in each state.
Is what you’re selling taxable?
Services in Michigan are generally not taxable. However, if the service you provide includes creating or manufacturing a product, you may need to collect sales tax on products.
Tangible products are taxable in Michigan, although a few products are exempt. These tax exemptions include vehicles sold to relatives, some industrial machinery, and some equipment used in agriculture.
Is SaaS taxable in Michigan?
SaaS is non-taxable in Michigan unless there is a downloadable component.
How to get a sales tax permit in Michigan
Register online at the Michigan Department of Treasury Or visit our registration page to request that TaxJar manage your Michigan registration for you. You need the following information to register for a sales tax permit in Michigan:
- Personal and business identification information
- Major business activity
- Business entity type
- Locations of offices or other places of business
There’s no charge to register for a Michigan sales tax permit, but other business registration fees may apply.
Use the Streamlined Sales Tax™ Registration System (SSTRS)
Michigan is a Streamlined Sales Tax™ Member state. The Streamlined Sales Tax™ Registration System seeks to simplify the process of registering for a tax permit for online sellers who have nexus across multiple states. The system allows businesses to apply for a license in any member state, providing a central hub for this purpose. Businesses can also opt to contract with a Certified Service Provider™ (CSP™ ) through the system. The CSP serves as a sales tax concierge, providing sales tax assistance to businesses in all the states where they are registered through the SSTRS.
Collecting sales tax
There are no local sales tax rates in Michigan, so businesses only need to charge buyers in Michigan the 6% state sales tax rate on regular taxable items. This is true whether you are based in Michigan or considered a “remote seller” (i.e. based outside of Michigan but have sales tax nexus in Michigan).
Should you collect sales tax on shipping charges in Michigan?
If you have sales tax nexus in Michigan and the item you are selling to a buyer in Michigan is taxable, then you are required to charge sales tax on shipping and handling charges.TaxJar offers a detailed explanation about when businesses must charge sales tax on shipping in Michigan.
When are returns due?
When you file and pay Michigan sales tax depends on your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Michigan?
States assign your business a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Michigan, you will be required to file and remit sales tax either monthly, quarterly, or annually. All taxpayers, even those on a monthly or quarterly schedule, are required to file an annual sales tax return by the final day of February in the year following the taxable period.
Michigan sales tax returns are almost always due the 20th of the month following the reporting period. (The exception is the annual sales tax return, which is due the last day of February of the year following the taxable period.) If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Filing sales tax
When it comes time to file sales tax in Michigan, you must:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to calculate how much sales tax you owe in Michigan
Calculating how much sales tax you should remit to the state of Michigan is easy with TaxJar’s Michigan sales tax report.Connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Michigan sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to file and pay sales tax in Michigan
You have three options for filing and paying your Michigan sales tax:
- File online – File online at the Michigan Department of Treasury. You can remit your payment through their online system.
- File by mail – You can use Form 5080 and file and pay through the mail, though this form is only applicable for monthly or quarterly filers.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.
