Michigan sales tax filing update January 2020: Marketplace facilitator laws

Michigan passed a law requiring Marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective January 1, 2020.

• Amazon, eBay, Etsy and Walmart will begin this collection on January 1, 2020.

In this article, we summarize Michigan's state guidance on the following questions:

I've never registered for a Michigan license. Do I need to register for a sales tax license in Michigan now?

• If you are a retailer with a physical presence in Michigan or you are a remote seller who has crossed the economic nexus threshold for Michigan ($100,000/year in gross revenue, are purchasing wholesale, or have more than 200 separate sales transactions in Michigan in the last calendar year), then you will need to register for a Michigan sales tax license. 
• If you've imported your sales across all platforms into your TaxJar account, you can determine if you have economic nexus in the state by running the Sales & Transactions Checker.

If you do not meet any of the criteria that create nexus in Michigan (physical, economic or otherwise), you won't need to register for a sales tax license in this state.

I have already registered for a license in Michigan and all of my sales are Marketplace-only sales. Should I cancel my existing registration?

If there is no presence in the state and the economic threshold is not met, then the marketplace seller may not need to remain registered.

• You may want to retain your sales tax license if you also hold a Michigan Resale Certificate. 
• We always recommend checking directly with the state or a sales tax consultant who can provide more detailed advice specific to your business scenario prior to canceling your registration. 

Do I need to collect taxes on my Michigan sales on other platforms?

Yes--if you have nexus in the state (physical or economic) and you make sales to customers in Michigan on platforms outside of the marketplace that is automatically collecting and remitting, you will also need to collect tax on your end on the Michigan orders that are processed on the other platforms.

Do I still need to file returns in Michigan?

If 100% of Michigan sales are coming from marketplace facilitators and there is no physical nexus in Michigan, then no return is required.

Returns must be filed if there is a physical presence in the state and marketplace facilitator sales are made.

• Sellers with inventory stored in Michigan need to register/remain registered for the General Excise Tax, if physical or economic nexus is present, then the wholesale rate must be charged to the marketplace facilitator and then remitted to the state.

I still need to file returns in Michigan. How do I do this without paying double tax on the sales that were collected and remitted by my Marketplace?

If you make sales on other platforms in addition to the Marketplace, you'll need to make sure you remit the tax you collected for those sales when you file. 

Please note: TaxJar Reports will only show jurisdictional breakdowns for non-marketplace sales. 

To file your return, yourself: 

• Your TaxJar Reports will have all of the information you need to file. Here's how to file using your Reports. 
• Marketplace totals will be listed at the top of your Michigan Report, and are displayed separately  from your overall "Gross Sales." Do not include marketplace sales on your monthly, quarterly, or semi-annual returns.
• For Michigan Annual frequency and Annual Reconciliation returns, you will need to itemize exemptions and deductions for the year.

If you're enrolled in AutoFile:

• Our AutoFile system automatically separates the Marketplace sales from Gross sales on your return, just as the state requires.
• Your return will be filed on time, every time.