SALES TAX EXEMPTION CERT. - S.B. 1175: COMMITTEE SUMMARY
Senate Bill 1175 (as introduced 3-23-00)
Sponsor: Senator Joanne G. Emmons
Committee: Finance
Date Completed: 4-12-00
CONTENT
The bill would amend the General Sales Tax Act to revise the Act's requirements regarding the acceptance by a taxpayer of an exemption certificate; and extend from three years to four years the period during which a blanket exemption certificate may apply.
The Act requires a taxpayer (anyone acting as a seller/retailer) to collect the sales tax on transfers of tangible personal property, and remit the tax to the State. The Act contains provisions under which certain sales to nonprofit organizations, churches, schools, farmers, industrial processors, etc. are exempt from the tax. If an exemption from the tax is claimed, the taxpayer must keep a record of the sale, including the name and address of the buyer, the sale date, the article purchased and its use, the sale amount, and the buyer's sales tax license number if the buyer has a license. If a taxpayer maintains the required records, and accepts an exemption certificate from the buyer in "good faith" on a Department of Treasury form, the taxpayer is not liable for collection of any unpaid tax if it is found that the sale did not qualify for an exemption. "Good faith" means that the taxpayer exercised reasonable care and effort to determine that the purchaser was entitled to the exemption being claimed. The bill would delete this provision, and provides instead that "good faith" would mean that the taxpayer had received a completed and signed exemption certificate from the buyer.
In addition, under the bill, a taxpayer's record of an exempt sale would have to indicate the type of exemption claimed. The bill would delete the requirement that a record include the use to be made of the article.
Further, the Act provides for a blanket exemption certificate, on a form prescribed by the Department of Treasury, that covers all tax-exempt transfers between a taxpayer and a buyer. A blanket exemption certificate applies for a three-year period, or for less than three years as stated on the certificate if that period is agreed to by the buyer and the taxpayer. The bill would extend the period to four years, or less than four years as stated on the certificate if that period were agreed to by the buyer and the taxpayer.
MCL 205.67 - Legislative Analyst: G. Towne
FISCAL IMPACT
This bill would reduce the required oversight standards retailers must follow when transacting sales that a purchaser claims are exempt from the sales tax. It is therefore estimated that this bill would have a small negative impact on sales tax collections; however, not enough information exists to provide a meaningful dollar estimate of this impact at this time.
- Fiscal Analyst: J. WortleyS9900\s1175sa
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.