December 12, 2007, Introduced by Rep. Bieda and referred to the Committee on Tax Policy.
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending sections 2, 2b, 3a, 3b, 3c, 4d, 4i, 7, 13, 14a, and 14b
(MCL 205.92, 205.92b, 205.93a, 205.93b, 205.93c, 205.94d, 205.94i,
205.97, 205.103, 205.104a, and 205.104b), sections 2 and 7 as
amended by 2007 PA 103, section 2b as amended by 2006 PA 428,
section 3a as amended by 2007 PA 93, section 3b as added by 2002 PA
456, sections 3c, 13, 14a, and 14b as added and section 4d as
amended by 2004 PA 172, and section 4i as added by 1986 PA 41; and
to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Person" means an individual, firm, partnership, joint
venture, association, social club, fraternal organization,
municipal or private corporation whether or not organized for
profit, company, limited liability company, estate, trust,
receiver, trustee, syndicate, the United States, this state,
county, or any other group or combination acting as a unit, and the
plural as well as the singular number, unless the intention to give
a more limited meaning is disclosed by the context.
(b) "Use" means the exercise of a right or power over tangible
personal property incident to the ownership of that property
including transfer of the property in a transaction where
possession is given. Converting tangible personal property acquired
for a use exempt from the tax levied under this act to a use not
exempt from the tax levied under this act is a taxable use.
(c) "Storage" means a keeping or retention of property in this
state for any purpose after the property loses its interstate
character.
(d) "Seller" means the person from whom a purchase is made and
includes every person selling tangible personal property or
services for storage, use, or other consumption in this state. If,
in the opinion of the department, it is necessary for the efficient
administration of this act to regard a salesperson, representative,
peddler, or canvasser as the agent of a dealer, distributor,
supervisor, or employer under whom the person operates or from whom
he or she obtains tangible personal property or services sold by
him or her for storage, use, or other consumption in this state,
irrespective of whether or not he or she is making the sales on his
or her own behalf or on behalf of the dealer, distributor,
supervisor, or employer, the department may so consider him or her,
and may consider the dealer, distributor, supervisor, or employer
as the seller for the purpose of this act.
(e) "Purchase" means to acquire for a consideration, whether
the acquisition is effected by a transfer of title, of possession,
or of both, or a license to use or consume; whether the transfer is
absolute or conditional, and by whatever means the transfer is
effected; and whether consideration is a price or rental in money,
or by way of exchange or barter. Purchase includes converting
tangible personal property acquired for a use exempt from the tax
levied under this act to a use not exempt from the tax levied under
this act.
(f) "Purchase price" or "price" means the total amount of
consideration paid by the consumer to the seller, including cash,
credit, property, and services, for which tangible personal
property or services are sold, leased, or rented, valued in money,
whether received in money or otherwise, and applies to the measure
subject to use tax. Purchase price includes the following
subparagraphs
(i) through (vi) (vii) and excludes subparagraphs
(vii)
(viii) through (viii) (ix):
(i) Seller's cost of the property sold.
(ii) Cost of materials used, labor or service cost, interest,
losses, costs of transportation to the seller, taxes imposed on the
seller other than taxes imposed by this act, and any other expense
of the seller.
(iii) Charges by the seller for any services necessary to
complete the sale, other than the following:
(A) An amount received or billed by the taxpayer for
remittance to the employee as a gratuity or tip, if the gratuity or
tip is separately identified and itemized on the guest check or
billed to the customer.
(B) Labor or service charges involved in maintenance and
repair work on tangible personal property of others if separately
itemized.
(iv) Delivery charges incurred or to be incurred before the
completion of the transfer of ownership of tangible personal
property subject to the tax levied under this act from the seller
to the purchaser.
(v) Installation charges incurred or to be incurred before the
completion of the transfer of ownership of tangible personal
property from the seller to the purchaser.
(vi) Credit for any trade-in.
(vii) Consideration received by the seller from third parties
if all of the following conditions are met:
(A) The seller actually receives consideration from a party
other than the purchaser and the consideration is directly related
to a price reduction or discount on the sale.
(B) The seller has an obligation to pass the price reduction
or discount through to the purchaser.
(C) The amount of the consideration attributable to the sale
is fixed and determinable by the seller at the time of the sale of
the item to the purchaser.
(D) One of the following criteria is met:
(I) The purchaser presents a coupon, certificate, or other
documentation to the seller to claim a price reduction or discount
where the coupon, certificate, or documentation is authorized,
distributed, or granted by a third party with the understanding
that the third party will reimburse any seller to whom the coupon,
certificate, or documentation is presented.
(II) The purchaser identifies himself or herself to the seller
as a member of a group or organization entitled to a price
reduction or discount. A preferred customer card that is available
to any patron does not constitute membership in a group or
organization.
(III) The price reduction or discount is identified as a third
party price reduction or discount on the invoice received by the
purchaser or on a coupon, certificate, or other documentation
presented by the purchaser.
(viii) (vii) Interest,
financing, or carrying charges from credit
extended on the sale of personal property or services, if the
amount is separately stated on the invoice, bill of sale, or
similar document given to the purchaser.
(ix) (viii) Any
taxes legally imposed directly on the consumer
that are separately stated on the invoice, bill of sale, or similar
document given to the purchaser.
(g) "Consumer" means the person who has purchased tangible
personal property or services for storage, use, or other
consumption in this state and includes, but is not limited to, 1 or
more of the following:
(i) A person acquiring tangible personal property if engaged in
the business of constructing, altering, repairing, or improving the
real estate of others.
(ii) A person who has converted tangible personal property or
services acquired for storage, use, or consumption in this state
that is exempt from the tax levied under this act to storage, use,
or consumption in this state that is not exempt from the tax levied
under this act.
(h) "Business" means all activities engaged in by a person or
caused to be engaged in by a person with the object of gain,
benefit, or advantage, either direct or indirect.
(i) "Department" means the department of treasury.
(j) "Tax" includes all taxes, interest, or penalties levied
under this act.
(k) "Tangible personal property" means personal property that
can be seen, weighed, measured, felt, or touched or that is in any
other manner perceptible to the senses and includes electricity,
water, gas, steam, and prewritten computer software.
(l) "Textiles" means goods that are made of or incorporate
woven or nonwoven fabric, including, but not limited to, clothing,
shoes, hats, gloves, handkerchiefs, curtains, towels, sheets,
pillows, pillowcases, tablecloths, napkins, aprons, linens, floor
mops, floor mats, and thread. Textiles also include materials used
to repair or construct textiles, or other goods used in the rental,
sale, or cleaning of textiles.
(m) "Interstate motor carrier" means a person who operates or
causes to be operated a qualified commercial motor vehicle on a
public road or highway in this state and at least 1 other state or
Canadian province.
(n) "Qualified commercial motor vehicle" means that term as
defined in section 1(i), (j), and (k) of the motor carrier fuel tax
act, 1980 PA 119, MCL 207.211.
(o) "Diesel fuel" means that term as defined in section 2(p)
of the motor fuel tax act, 2000 PA 403, MCL 207.1002.
(p) "Sale" means a transaction by which tangible personal
property or services are purchased or rented for storage, use, or
other consumption in this state.
(q) "Convert" means putting a service or tangible personal
property acquired for a use exempt from the tax levied under this
act at the time of acquisition to a use that is not exempt from the
tax levied under this act, whether the use is in whole or in part,
or permanent or not permanent. A motor vehicle purchased for resale
by a new vehicle dealer licensed under section 248(8)(a) of the
Michigan vehicle code, 1949 PA 300, MCL 257.248, and not titled in
the name of the dealer shall not be considered to be converted
prior to sale or lease by that dealer.
Sec. 2b. As used in this act:
(a) "Alcoholic beverage" means a beverage suitable for human
consumption that contains 1/2 of 1% or more of alcohol by volume.
(b) "Bundled transaction" means the purchase of 2 or more
distinct and identifiable products, except real property and
services to real property, where the products are sold for a single
nonitemized price. A bundled transaction does not include the sale
of any products in which the sales price varies, or is negotiable,
based on the selection by the purchaser of the products included in
the transaction. As used in this subdivision:
(i) "Distinct and identifiable products" does not include any
of the following:
(A) Packaging, such as containers, boxes, sacks, bags, and
bottles or other materials such as wrapping, labels, tags, and
instruction guides, that accompany the purchase of the products and
are incidental or immaterial to the purchase of the products,
including grocery sacks, shoeboxes, dry cleaning garment bags, and
express delivery envelopes and boxes.
(B) A product provided free of charge with the required
purchase of another product. A product is provided free of charge
if the sales price of the product purchased does not vary depending
on the inclusion of the product provided free of charge.
(C) Items included in purchase price.
(ii) "Purchase price" means the price paid by the seller for
the property.
(iii) "Sales price" means that term as defined in section 1 of
the general sales tax act, 1933 PA 167, MCL 205.51.
(iv) "Single nonitemized price" does not include a price that
is separately identified by product on binding sales or other
supporting sales-related documentation made available to the
purchaser in paper or electronic form, including, but not limited
to, an invoice, bill of sale, receipt, contract, service agreement,
lease agreement, periodic notice of rates and services, rate card,
or price list.
(v) Bundled transaction does not include any of the following:
(A) The purchase of tangible personal property and a service
if the tangible personal property is essential to the use of the
service and is provided exclusively in connection with the service
and the true object of the transaction is the service.
(B) The purchase of services if 1 service is provided that is
essential to the use or receipt of a second service and the first
service is provided exclusively in connection with the second
service and the true object of the transaction is the second
service.
(C) A transaction that includes taxable and nontaxable
products and the purchase price of the taxable products is de
minimis. As used in this sub-subparagraph, "de minimis" means the
seller's purchase price or sales price of the taxable products is
10% or less of the total purchase price or sales price of the
products. A seller shall use the full term of a service contract to
determine if the taxable products are de minimis. A seller shall
use either the purchase price or the sales price of the products to
determine if the taxable products are de minimis. A seller shall
not use a combination of the purchase price and sales price of the
products to determine if the taxable products are de minimis.
(D) The retail sale of exempt tangible personal property and
taxable tangible personal property if all of the following
conditions are satisfied:
(I) The transaction includes food and food ingredients,
prescription or over-the-counter drugs, durable medical equipment,
mobility enhancing equipment, or prosthetic devices.
(II) Where the seller's purchase price or sales price of the
taxable tangible personal property is 50% or less of the total
purchase price or sales price of the bundled tangible personal
property. A seller may not use a combination of the purchase price
and sales price of the tangible personal property when making the
50% determination for a transaction.
(c) (b)
"Computer" means an
electronic device that accepts
information in digital or similar form and manipulates it for a
result based on a sequence of instructions.
(d) (c)
"Computer software" means
a set of coded instructions
designed to cause a computer or automatic data processing equipment
to perform a task.
(e) (d)
"Delivered
electronically" means delivered from the
seller to the purchaser by means other than tangible storage media.
(f) (e)
"Delivery charges" means
charges by the seller for
preparation and delivery to a location designated by the purchaser
of tangible personal property or services. Delivery charges
include, but are not limited to, transportation, shipping, postage,
handling, crating, and packing. Beginning September 1, 2004,
delivery charges do not include the charges for delivery of direct
mail if the charges are separately stated on an invoice or similar
billing document given to the purchaser. If a shipment includes
both exempt property and taxable property, the seller shall
allocate the delivery charge using 1 of the following methods:
(i) Multiply the delivery price by a fraction, the numerator of
which is the total sales prices of the taxable property and the
denominator of which is the total sales prices of all property in
the shipment.
(ii) Multiply the delivery price by a fraction, the numerator
of which is the total weight of the taxable property and the
denominator of which is the total weight of all property in the
shipment.
(g) (f)
"Dietary supplement"
means any product, other than
tobacco, intended to supplement the diet that is all of the
following:
(i) Required to be labeled as a dietary supplement identifiable
by the "supplemental facts" box found on the label as required by
21 CFR 101.36.
(ii) Contains 1 or more of the following dietary ingredients:
(A) A vitamin.
(B) A mineral.
(C) An herb or other botanical.
(D) An amino acid.
(E) A dietary substance for use by humans to supplement the
diet by increasing the total dietary intake.
(F) A concentrate, metabolite, constituent, extract, or
combination of any ingredient listed in sub-subparagraphs (A)
through (E).
(iii) Intended for ingestion in tablet, capsule, powder,
softgel, gelcap, or liquid form, or if not intended for ingestion
in 1 of those forms, is not represented as conventional food or for
use as a sole item of a meal or of the diet.
(h) (g)
"Direct mail" means
printed material delivered or
distributed by United States mail or other delivery service to a
mass audience or to addresses on a mailing list provided by the
purchaser or at the direction of the purchaser when the cost of the
items is not billed directly to the recipients, including tangible
personal property supplied directly or indirectly by the purchaser
to the direct mail seller for inclusion in the package containing
the printed material but not including multiple items of printed
material delivered to a single address.
(i) (h)
"Drug" means a compound,
substance, or preparation, or
any component of a compound, substance, or preparation, other than
food or food ingredients, dietary supplements, or alcoholic
beverages, intended for human use that is 1 or more of the
following:
(i) Recognized in the official United States pharmacopoeia,
official homeopathic pharmacopoeia of the United States, or
official national formulary, or in any of their supplements.
(ii) Intended for use in the diagnosis, cure, mitigation,
treatment, or prevention of disease.
(iii) Intended to affect the structure or any function of the
body.
(j) (i)
"Durable medical
equipment" means equipment for home
use, other than mobility enhancing equipment, dispensed pursuant to
a prescription, including durable medical equipment repair or
replacement
parts, for that equipment, that does all of the
following:
(i) Can withstand repeated use.
(ii) Is primarily and customarily used to serve a medical
purpose.
(iii) Is not useful generally to a person in the absence of
illness or injury.
(iv) Is not worn in or on the body.
(k) "Durable medical equipment repair or replacement parts"
includes all components or attachments used in conjunction with
durable medical equipment.
(l) (j)
"Electronic" means
relating to technology having
electrical, digital, magnetic, wireless, optical, electromagnetic,
or similar capabilities.
(m) (k)
"Lease or rental" means
any transfer of possession or
control of tangible personal property for a fixed or indeterminate
term for consideration and may include future options to purchase
or extend. This definition applies only to leases and rentals
entered into after September 1, 2004 and has no retroactive impact
on leases and rentals that existed on that date. Lease or rental
does not include the following subparagraphs (i) through (iii) and
includes subparagraph (iv):
(i) A transfer of possession or control of tangible personal
property under a security agreement or deferred payment plan that
requires the transfer of title upon completion of the required
payments.
(ii) A transfer of possession or control of tangible personal
property under an agreement requiring transfer of title upon
completion of the required payments and payment of an option price
that does not exceed $100.00 or 1% of the total required payments,
whichever is greater.
(iii) The provision of tangible personal property along with an
operator for a fixed or indeterminate period of time, where that
operator is necessary for the equipment to perform as designed. To
be necessary, an operator must do more than maintain, inspect, or
set up the tangible personal property.
(iv) An agreement covering motor vehicles or trailers if the
amount of consideration may be increased or decreased by reference
to the amount realized upon sale or disposition of the property as
defined in 26 USC 7701(h)(1).
(n) (l) "Mobility
enhancing equipment" means equipment, other
than durable medical equipment or a motor vehicle or equipment on a
motor vehicle normally provided by a motor vehicle manufacturer,
dispensed pursuant to a prescription, including repair or
replacement parts for that equipment, that is all of the following:
(i) Primarily and customarily used to provide or increase the
ability to move from 1 place to another and is appropriate for use
at home or on a motor vehicle.
(ii) Not generally used by a person with normal mobility.
(o) (m)
"Prescription" means an
order, formula, or recipe,
issued in any form of oral, written, electronic, or other means of
transmission by a licensed physician or other health professional
as defined in section 3501 of the insurance code of 1956, 1956 PA
218, MCL 500.3501. For a hearing aid, prescription includes an
order, instruction, or direction of a hearing aid dealer or
salesperson licensed under article 13 of the occupational code,
1980 PA 299, MCL 339.1301 to 339.1309.
(p) (n)
"Prewritten computer
software" means computer
software, including prewritten upgrades, that is delivered by any
means and that is not designed and developed by the author or other
creator to the specifications of a specific purchaser. Prewritten
computer software includes all of the following:
(i) Any combination of 2 or more prewritten computer software
programs or portions of prewritten computer software programs.
(ii) Computer software designed and developed by the author or
other creator to the specifications of a specific purchaser if it
is sold to a person other than that specific purchaser.
(iii) The modification or enhancement of prewritten computer
software or portions of prewritten computer software where the
modification or enhancement is designed and developed to the
specifications of a specific purchaser unless there is a
reasonable, separately stated charge or an invoice or other
statement of the price is given to the purchaser for the
modification or enhancement. If a person other than the original
author or creator modifies or enhances prewritten computer
software, that person is considered to be the author or creator of
only that person's modifications or enhancements.
(q) (o)
"Prosthetic device" means
a replacement, corrective,
or supportive device, other than contact lenses and dental
prosthesis, dispensed pursuant to a prescription, including repair
or replacement parts for that device, worn on or in the body to do
1 or more of the following:
(i) Artificially replace a missing portion of the body.
(ii) Prevent or correct a physical deformity or malfunction of
the body.
(iii) Support a weak or deformed portion of the body.
(r) (p)
"Tobacco" means
cigarettes, cigars, chewing or pipe
tobacco, or any other item that contains tobacco.
Sec. 3a. (1) The use or consumption of the following services
is taxed under this act in the same manner as tangible personal
property is taxed under this act:
(a)
Except as provided in section 3b, intrastate telephone,
telegraph,
leased wire, and other similar communications, including
local
telephone exchange and long distance telephone service
telecommunications
services that both originates and
terminates
originate
and terminate in this state, and
telegraph, private line,
and
teletypewriter service between places in this state, but
excluding
telephone service by coin-operated installations,
switchboards,
concentrator-identifiers, interoffice circuitry and
their
accessories for telephone answering service, including, but
not limited to, intrastate private communications services,
ancillary services, conference bridging service, 900 service, pay
telephone service other than coin-operated telephone service, and
value-added nonvoice data service, but excluding 800 service, coin-
operated telephone service, fixed wireless service, 1-way paging
service, prepaid calling service, telecommunications nonrecurring
charges, and directory advertising proceeds.
(b) Rooms or lodging furnished by hotelkeepers, motel
operators, and other persons furnishing accommodations that are
available to the public on the basis of a commercial and business
enterprise, irrespective of whether or not membership is required
for use of the accommodations, except rooms and lodging rented for
a continuous period of more than 1 month. As used in this act,
"hotel" or "motel" means a building or group of buildings in which
the public may obtain accommodations for a consideration,
including, without limitation, such establishments as inns, motels,
tourist homes, tourist houses or courts, lodging houses, rooming
houses, nudist camps, apartment hotels, resort lodges and cabins,
camps operated by other than nonprofit organizations but not
including those licensed under 1973 PA 116, MCL 722.111 to 722.128,
and any other building or group of buildings in which
accommodations are available to the public, except accommodations
rented for a continuous period of more than 1 month and
accommodations furnished by hospitals or nursing homes.
(c)
Except as provided in section 3b, interstate telephone
communications
telecommunications services that either originate or
terminate in this state and for which the charge for the service is
billed to a service address in this state or phone number by the
provider
either within or outside this state including, calls
between
this state and any place within or without the United
States
of America outside of this state. This subdivision does not
apply
to a wide area telecommunication service or a similar type
service,
an 800 prefix service or similar type service, an
interstate
private network and related usage charges, or an
international
call either inbound or outbound. but
not limited to,
ancillary services, conference bridging service, 900 service, pay
telephone service other than coin-operated telephone service, and
value-added nonvoice data services, but excluding interstate
private communications service, 800 service, coin-operated
telephone service, fixed wireless service, 1-way paging service,
prepaid calling service, telecommunications nonrecurring charges,
and international telecommunications service.
(d) The laundering or cleaning of textiles under a sale,
rental, or service agreement with a term of at least 5 days. This
subdivision does not apply to the laundering or cleaning of
textiles used by a restaurant or retail sales business. As used in
this subdivision, "restaurant" means a food service establishment
defined and licensed under the food law of 2000, 2000 PA 92, MCL
289.1101 to 289.8111.
(e) The transmission and distribution of electricity, whether
the electricity is purchased from the delivering utility or from
another provider, if the sale is made to the consumer or user of
the electricity for consumption or use rather than for resale.
(f) For a manufacturer who affixes its product to real estate
and maintains an inventory of its product that is available for
sale to others or who makes its product available for sale to
others by publication or price list, the direct production costs
and indirect production costs of the product affixed to the real
estate that are incident to and necessary for production or
manufacturing operations or processes, as defined by the
department.
(g) For a manufacturer who affixes its product to real estate
but does not maintain an inventory of its product available for
sale to others or make its product available for sale to others by
publication or price list, the sum of the materials cost of the
property and the cost of labor to manufacture, fabricate, or
assemble the property, but not the cost of labor to cut, bend,
assemble, or attach the property at the site for affixation to real
estate.
(2) If charges for intrastate telecommunications services or
telecommunications services between this state and another state
and other billed services not subject to the tax under this act are
aggregated with and not separately stated from charges for
telecommunications services that are subject to the tax under this
act, the nontaxable telecommunications services and other
nontaxable billed services are subject to the tax under this act
unless the service provider can reasonably identify charges for
telecommunications services not subject to the tax under this act
from its books and records that are kept in the regular course of
business.
(3) If charges for intrastate telecommunications services or
telecommunications services between this state and another state
and other billed services not subject to the tax under this act are
aggregated with and not separately stated from telecommunications
services that are subject to the tax under this act, a customer may
not rely upon the nontaxability of those telecommunications
services and other billed services unless the customer's service
provider separately states the charges for nontaxable
telecommunications services and other nontaxable billed services
from taxable telecommunications services or the service provider
elects, after receiving a written request from the customer in the
form required by the provider, to provide verifiable data based
upon the service provider's books and records that are kept in the
regular course of business that reasonably identify the nontaxable
services.
(4) All of the following apply in the case of a bundled
transaction that includes telecommunications service, ancillary
service, internet access, or audio or video programming:
(a) If the purchase price is attributable to products that are
taxable and products that are nontaxable, the portion of the
purchase price attributable to the nontaxable products may be
subject to tax unless the provider can identify by reasonable and
verifiable standards that portion from its books and records that
are kept in the regular course of business for other purposes,
including, but not limited to, nontax purposes.
(b) If the purchase price is attributable to products that are
subject to tax at different tax rates, the total purchase price may
be treated as attributable to the products subject to tax at the
highest tax rate unless the provider can identify by reasonable and
verifiable standards the portion of the purchase price attributable
to the products subject to tax at the lower rate from its books and
records that are kept in the regular course of business for other
purposes, including, but not limited to, nontax purposes.
(c) The provisions of this subsection apply unless otherwise
provided by federal law.
(5) (4)
As used in this section:
(a) "Ancillary services" means services that are associated
with or incidental to the provision of telecommunications services,
including, but not limited to, detailed telecommunications billing,
directory assistance, vertical service, and voice mail services.
(b) "Coin-operated telephone service" means a
telecommunications service paid for by inserting money into a
telephone that accepts direct deposits of money to operate.
(c) "Conference bridging service" means an ancillary service
that links 2 or more participants of an audio or video conference
call and may include the provision of a telephone number, but does
not include the telecommunications services used to reach the
conference bridge.
(d) "Detailed telecommunications billing service" means an
ancillary service of separately stating information pertaining to
individual calls on a customer's billing statement.
(e) "Directory assistance" means an ancillary service of
providing telephone number information or address information.
(f) (a)
"Fabricate" means to
modify or prepare tangible
personal property for affixation or assembly.
(g) "Fixed wireless service" means a telecommunications
service that provides radio communication between fixed points.
(h) "International" means a telecommunications service that
originates or terminates in the United States and terminates or
originates outside the United States, respectively. United States
includes the District of Columbia and any possession or territory
of the United States.
(i) "Interstate" means a telecommunications service that
originates in 1 United States state, territory, or possession and
terminates in a different United States state, territory, or
possession.
(j) "Intrastate" means a telecommunications service that
originates in a United States state, territory, or possession and
terminates in the same Unites States state, territory, or
possession.
(k) (b)
"Manufacture" means to
convert or condition tangible
personal property by changing the form, composition, quality,
combination, or character of the property.
(l) (c)
"Manufacturer" means a
person who manufactures,
fabricates, or assembles tangible personal property.
(m) "Paging service" means a telecommunications service that
provides transmission of coded radio signals for the purpose of
activating specific pagers, which may include messages or sounds.
(n) "Pay telephone service" means a telecommunications service
provided through any pay telephone.
(o) "Prepaid calling service" means the right to access
exclusively telecommunications services that must be paid for in
advance and that enables the origination of calls using an access
number or authorization code, whether manually or electronically
dialed, and that is sold in predetermined units or dollars that
decline with use in a known amount.
(p) "Private communications service" means a
telecommunications service that entitles the customer to exclusive
or priority use of a communications channel or group of channels
between or among termination points, regardless of the manner in
which that channel or group of channels are connected, and includes
switching capacity, extension lines, stations, and any other
associated services that are provided in connection with the use of
that channel or group of channels.
(q) "Telecommunications nonrecurring charges" means an amount
billed for the installation, connection, change, or initiation of
telecommunications service received by the customer.
(r) "Telecommunications service" means the electronic
transmission, conveyance, or routing of voice, data, audio, video,
or any other information or signals to a point, or between or among
points, including a transmission, conveyance, or routing in which
computer processing applications are used to act on the form, code,
or protocol of the content for purposes of transmission,
conveyance, or routing without regard to whether that service is
referred to as voice over internet protocol services or is
classified by the federal communications commission as enhanced or
value added. Telecommunications service does not include any of the
following:
(i) Data processing and information services that allow data to
be generated, acquired, stored, processed, or retrieved and
delivered by an electronic transmission to a purchaser where the
purchaser's primary purpose for the underlying transaction is the
processed data or information.
(ii) Installation or maintenance of wiring or equipment on a
customer's premises.
(iii) Tangible personal property.
(iv) Advertising, including, but not limited to, directory
advertising.
(v) Billing and collection services provided to third parties.
(vi) Internet access service.
(vii) Radio and television audio and video programming
services, including, but not limited to, cable service as defined
in 47 USC 522(6) and audio and video programming services delivered
by commercial mobile radio service providers as defined in 47 CFR
20.3, regardless of the medium, including the furnishing of
transmission, conveyance, and routing of those services by the
programming service provider.
(viii) Ancillary services.
(ix) Answering services, if the primary purpose of the
transaction is the answering service rather than message
transmission.
(x) Digital products delivered electronically, including, but
not limited to, software, music, video, reading materials, or ring
tones.
(s) "Value-added nonvoice data service" means a
telecommunications service in which computer processing
applications are used to act on the form, content, code, or
protocol of the information or data primarily for a purpose other
than transmission, conveyance, or routing.
(t) "Vertical service" means an ancillary service that is
offered in connection with 1 or more telecommunications services
that offers advanced calling features that allow customers to
identify callers and to manage multiple calls and call connections,
including conference bridging services.
(u) "Voice mail service" means an ancillary service that
enables the customer to store, send, or receive recorded messages,
but does not include any vertical services that the customer may be
required to have in order to utilize the voice mail service.
(v) "800 service" means a telecommunications service that
allows a caller to dial a toll-free number without incurring a
charge for the call, typically marketed under the designation
"800", "855", "866", "877", or "888" toll-free calling, or any
subsequent number designated by the federal communications
commission.
(w) "900 service" means an inbound toll telecommunications
service purchased by a subscriber that allows the subscriber's
customers to call in to the subscriber's prerecorded announcement
or live service, typically marketed under the designation "900"
service, and any subsequent number designated by the federal
communications commission, but does not include a charge for
collection services provided by the seller of the
telecommunications services to the subscriber, or the service or
product sold by the subscriber to the subscriber's customer.
Sec. 3b. (1) The use or consumption of mobile
telecommunications
wireless services is subject to the tax levied
under this act in the same manner as tangible personal property
regardless
of where the mobile telecommunications wireless services
originate, terminate, or pass through, subject to all of the
following:
(a)
Mobile telecommunications wireless
services provided to a
customer, the charges for which are billed by or for the customer's
home service provider, are considered to be provided by the
customer's home service provider if the customer's place of primary
use
for the mobile telecommunications wireless services is in this
state. If the customer's place of primary use for mobile
telecommunications
wireless services is outside of this state, the
mobile
telecommunications wireless
services are not subject to the
tax levied under this act.
(b) A home service provider is responsible for obtaining and
maintaining a record of the customer's place of primary use.
Subject to subsection (2), in obtaining and maintaining a record of
the customer's place of primary use, a home service provider may do
all of the following:
(i) Rely in good faith on information provided by a customer as
to the customer's place of primary use.
(ii) Treat the address used for a customer under a service
contract or agreement in effect on August 1, 2002 as that
customer's place of primary use for the remaining term of the
service contract or agreement, excluding any extension or renewal
of the service contract or agreement.
(c) Notwithstanding section 9 and subject to subsection (5),
if the department chooses to create or provide a database that
complies with the provisions of 4 U.S.C. 119, a home service
provider shall use that database to determine the assignment of the
customer's place of primary use to this state. If a database is not
provided by the department, a home service provider may use an
enhanced zip code to determine the assignment of the customer's
place of primary use to this state. A home service provider that
uses a database provided by the department is not liable for any
tax that otherwise would be due solely as a result of an error or
omission in that database. A home service provider that uses an
enhanced zip code is not liable for any tax that otherwise would be
due solely as a result of an assignment of a street address to
another state if the home provider exercised due diligence to
ensure that the appropriate street addresses are assigned to this
state.
(d) If a customer believes that the amount of the tax levied
under this act or that the home service provider's record of the
customer's place of primary use is incorrect, the customer shall
notify the home service provider in writing and provide all of the
following information:
(i) The street address of the customer's place of primary use.
(ii) The account name and number for which the customer
requests the correction.
(iii) A description of the error asserted by the customer.
(iv) Any other information that the home service provider
reasonably requires to process the request.
(e) Not later than 60 days after the home service provider
receives a request under subdivision (d) or subsection (5)(b), the
home service provider shall review its record of the customer's
place of primary use and the customer's enhanced zip code to
determine the correct amount of the tax levied under this act. If
the home service provider determines that the tax levied under this
act or its record of the customer's place of primary use is
incorrect, the home service provider shall correct the error and
refund or credit any tax erroneously collected from the customer. A
refund under this subdivision shall not exceed a period of 4 years.
If the home service provider determines that the tax levied under
this act and the customer's place of primary use are correct, the
home service provider shall provide a written explanation of that
determination to the customer. The procedures prescribed in this
subdivision and in subdivision (d) are the first course of remedy
available to a customer requesting a correction of the provider's
record of place of primary use or a refund of taxes erroneously
collected by the home service provider.
(2) If the department makes a final determination that the
home service provider's record of a customer's place of primary use
is incorrect, the home service provider shall change its records to
reflect that final determination. The corrected record of a
customer's place of primary use shall be used to calculate the tax
levied under this act prospectively, from the date of the
department's final determination. The department shall not make a
final determination under this subsection before the department has
notified the customer that the department has found that the home
service provider's record of the customer's place of primary use is
incorrect and the customer has been afforded an opportunity to
appeal that finding. An appeal to the department shall be conducted
according to the provision of section 22 of 1941 PA 122, MCL
205.22.
(3) Notwithstanding section 8 and subject to section 5, if the
department makes a final determination under subsection (2) that a
customer's place of primary use is incorrect, a home service
provider is not liable for any taxes that would have been levied
under this act if the customer's place of primary use had been
correct.
(4)
If charges for mobile telecommunications wireless services
and other billed services not subject to the tax levied under this
act are aggregated with and not separately stated from charges for
mobile
telecommunications wireless
services that are subject to the
tax
levied under this act, the nontaxable mobile telecommunications
wireless services and other billed services are subject to the tax
levied under this act unless the home service provider can
reasonably identify billings for services not subject to the tax
levied under this act from its books and records kept in the
regular course of business.
(5)
If charges for mobile telecommunications wireless services
and other billed services not subject to the tax levied under this
act are aggregated with and not separately stated from charges for
mobile
telecommunications wireless
services that are subject to the
tax levied under this act, a customer may not rely upon the exempt
status
for those mobile telecommunications wireless services and
other billed services unless 1 or more of the following conditions
are satisfied:
(a) The customer's home service provider separately states the
charges
for mobile telecommunications wireless
services that are
exempt and other exempt billed services from taxable mobile
telecommunications
wireless services.
(b) The home service provider elects, after receiving a
written request from the customer in the form required by the home
service
provider, to identify the exempt mobile telecommunications
wireless services and other exempt billed services by reference to
the home service provider's books and records kept in the regular
course of business.
(6) This section is repealed as of the date of entry of a
final judgment by a court of competent jurisdiction that
substantially limits or impairs the essential elements of sections
116 to 126 of title 4 of the United States Code, 4 U.S.C. 116 to
126, and that final judgment is no longer subject to appeal.
(7) For an air-ground radiotelephone service, the tax under
this act is imposed at the location of the origination of the air-
ground radiotelephone service in this state as identified by the
home service provider or information received by the home service
provider from its servicing carrier.
(8) All of the following apply in the case of a bundled
transaction that includes telecommunications service, ancillary
service, internet access, or audio or video programming:
(a) If the purchase price is attributable to products that are
taxable and products that are nontaxable, the portion of the
purchase price attributable to the nontaxable products may be
subject to tax unless the provider can identify by reasonable and
verifiable standards that portion from its books and records kept
in the regular course of business for other purposes, including,
but not limited to, nontax purposes.
(b) If the purchase price is attributable to products that are
subject to tax at different tax rates, the total purchase price may
be treated as attributable to the products subject to tax at the
highest tax rate unless the provider can identify by reasonable and
verifiable standards the portion of the purchase price attributable
to the products subject to tax at the lower rate from its books and
records kept in the regular course of business for other purposes,
including, but not limited to, nontax purposes.
(c) The provisions of this subsection shall apply unless
otherwise provided by federal law.
(9) (8)
As used in this section:
(a) "Air-ground radiotelephone service" means that term as
defined
in 47 C.F.R. CFR part 22.
(b) "Commercial mobile radio service" means that term as
defined
in 47 C.F.R. CFR 20.3.
(c) "Charge", "charges", or "charge for mobile
telecommunications
wireless services" means any charge for, or
associated with, the provision of commercial mobile radio service,
or any charge for, or associated with, a service provided as an
adjunct to a commercial mobile radio service, that is billed to a
customer by or for the customer's home service provider regardless
of whether individual transmissions originate or terminate within
the licensed service area of the home service provider.
(d) "Customer" means 1 of the following, but does not include
a reseller or a serving carrier:
(i) The person who contracts with the home service provider for
mobile
telecommunications wireless
services.
(ii) If the end user of mobile telecommunications wireless
services is not the contracting party, then the end user of the
mobile
telecommunications wireless
service. This subparagraph
applies only for the purpose of determining the place of primary
use.
(e) "Enhanced zip code" means a United States postal zip code
of 9 or more digits.
(f) "Home service provider" means the facilities-based carrier
or reseller that enters into a contract with a customer for mobile
telecommunications
wireless services.
(g) "Licensed service area" means the geographic area in which
a home service provider is authorized by law or contract to provide
commercial mobile radio services to its customers.
(h)
"Mobile telecommunications wireless
services" means
commercial
mobile radio services that originate and terminate in
the
same state or originate in 1 state and terminate in another
state.
Mobile telecommunications services do not include prepaid
mobile
telecommunications services or air-ground radiotelephone
service.
a telecommunications service
that is transmitted,
conveyed, or routed, regardless of the technology used, whereby the
origination or termination points of the transmission, conveyance,
or routing are not fixed, including, but not limited to,
telecommunications services that are provided by a commercial
mobile radio service provider.
(i) "Place of primary use" means the residential street
address or the primary business street address within the licensed
service area of the home service provider at which a customer
primarily
uses mobile telecommunications wireless
services. For
mobile wireless services, place of primary use shall be within the
licensed service area of the home service provider.
(j)
"Prepaid mobile telecommunications wireless calling
service"
means the advance purchase of exclusive mobile
telecommunications
services, which enables the origination of calls
using
an access number or authorization code, whether manually or
electronically
dialed, if the remaining units of service are known
by
the provider of the service on a continuous basis a
telecommunications service that provides the right to utilize
mobile wireless service as well as other nontelecommunications
services, including the download of digital products delivered
electronically, content, and ancillary services, which shall be
paid for in advance and that is sold in predetermined units or
dollars that decline with use in a known amount.
(k)
"Reseller" means a telecommunications wireless services
provider
who purchases telecommunications wireless services from
another
telecommunications wireless
services provider and then
resells
the telecommunications wireless
services, uses the
telecommunications
wireless services as a component part of a
mobile
telecommunications wireless
service, or integrates the
telecommunications
wireless services into a mobile
telecommunications
wireless service. Reseller does not include a
serving carrier.
(l) "Serving carrier" means a facilities-based
telecommunications
wireless services provider that contracts with a
home
service provider for mobile telecommunications wireless
services to a customer outside of the home service provider's or
reseller's licensed service area.
(m) "Telecommunications service" means the electronic
transmission, conveyance, or routing of voice, data, audio, video,
or any other information or signals to a point, or between or among
points, including a transmission, conveyance, or routing in which
computer processing applications are used to act on the form, code,
or protocol of the content for purposes of transmission,
conveyance, or routing without regard to whether that service is
referred to as voice over internet protocol services or is
classified by the federal communications commission as enhanced or
value added. Telecommunications service does not include any of the
following:
(i) Data processing and information services that allow data to
be generated, acquired, stored, processed, or retrieved and
delivered by an electronic transmission to a purchaser where the
purchaser's primary purpose for the underlying transaction is the
processed data or information.
(ii) Installation or maintenance of wiring or equipment on a
customer's premises.
(iii) Tangible personal property.
(iv) Advertising, including, but not limited to, directory
advertising.
(v) Billing and collection services provided to third parties.
(vi) Internet access service.
(vii) Radio and television audio and video programming
services, including, but not limited to, cable service as defined
in 47 USC 522(6) and audio and video programming services delivered
by commercial mobile radio service providers, as defined in 47 CFR
20.3, regardless of the medium, including the furnishing of
transmission, conveyance, and routing of those services by the
programming service provider.
(viii) Ancillary services.
(ix) Answering services, if the primary purpose of the
transaction is the answering service rather than message
transmission.
(x) Digital products delivered electronically, including, but
not limited to, software, music, video, reading materials, or ring
tones.
Sec. 3c. (1) Except for the defined telecommunications
services in section 3b and subsection (3), the sale of
telecommunications service sold on a call-by-call basis shall be
sourced to each level of taxing jurisdiction where the call
originates and terminates in that jurisdiction or each level of
taxing jurisdiction where the call either originates or terminates
and in which the service address is also located.
(2) Except for the defined telecommunications services in
section 3b and subsection (3), a sale of telecommunications
services sold on a basis other than a call-by-call basis is sourced
to the customer's place of primary use.
(3) The sale of the following telecommunications services
shall be sourced to each level of taxing jurisdiction as follows:
(a) A sale of post-paid calling service is sourced to the
origination point of the telecommunications signal as first
identified by either the seller's telecommunications system, or
information received by the seller from its service provider, where
the system used to transport such signals is not that of the
seller.
(b) A sale of prepaid calling service or prepaid wireless
calling service is sourced in accordance with section 20. However,
for
a sale of mobile telecommunications service that is a prepaid
telecommunications
wireless calling service, the rule provided in
section 20(1)(e) shall include as an option the location associated
with the mobile telephone number.
(c) A sale of a private communication service is sourced as
follows:
(i) Service for a separate charge related to a customer channel
termination point is sourced to each level of jurisdiction in which
the customer channel termination point is located.
(ii) Service where all customer termination points are located
entirely within 1 jurisdiction or levels of jurisdiction is sourced
in the jurisdiction in which the customer channel termination
points are located.
(iii) Service for segments of a channel between 2 customer
channel termination points located in different jurisdictions and
which segment of channel is separately charged is sourced 50% in
each level of jurisdiction in which the customer channel
termination points are located.
(iv) Service for segments of a channel located in more than 1
jurisdiction or levels of jurisdiction and which segments are not
separately billed is sourced in each jurisdiction based on the
percentage determined by dividing the number of customer channel
termination points in the jurisdiction by the total number of
customer channel termination points.
(d) The sale of an ancillary service is sourced to the
customer's place of primary use.
(e) The sale of internet access service is sourced to the
customer's place of primary use.
(4) As used in this section:
(a)
"Air-to-ground radiotelephone service" means a radio
service,
as that term is defined in 47 CFR part 22, in which common
carriers
are authorized to offer and provide radio
telecommunications
service for hire to subscribers in aircraft.
"Ancillary services" means services that are associated with or
incidental to the provision of telecommunications services,
including, but not limited to, detailed telecommunications billing,
directory assistance, vertical service, and voice mail services.
(b) "Call-by-call basis" means any method of charging for
telecommunications services where the price is measured by
individual calls.
(c)
"Communications channel" "Channel" means a
physical or
virtual path of communications over which signals are transmitted
between or among customer channel termination points.
(d) "Customer" means the person or entity that contracts with
the seller of telecommunications services. If the end user of
telecommunications services is not the contracting party, the end
user of the telecommunications service is the customer of the
telecommunications service for purposes of this section. Customer
does not include a reseller of telecommunications service or for
mobile
telecommunications wireless
service of a serving carrier
under an agreement to serve the customer outside the home service
provider's licensed service area.
(e) "Customer channel termination point" means the location
where the customer either inputs or receives the communications.
(f) "End user" means the person who utilizes the
telecommunications service. In the case of an entity, "end user"
means the individual who utilizes the service on behalf of the
entity.
(g)
"Home service provider" means the facilities-based carrier
or
reseller that enters into a contract with a customer for mobile
telecommunications
services.
(h)
"Mobile telecommunications services" means commercial
mobile
radio services that originate and terminate in the same
state
or originate in 1 state and terminate in another state.
Mobile
telecommunications services do not include prepaid mobile
telecommunications
services or air-ground radiotelephone service.
(g) (i)
"Place of primary use"
means the street address
representative of where the customer's use of the
telecommunications service primarily occurs, which must be the
residential street address or the primary business street address
of
the customer. For mobile telecommunications wireless services,
place of primary use must be within the licensed service area of
the home service provider.
(h) (j)
"Post-paid calling
service" means the
telecommunications service obtained by making a payment on a call-
by-call basis either through the use of a credit card or payment
mechanism such as a bank card, travel card, credit card, or debit
card, or by charge made to a telephone number that is not
associated with the origination or termination of the
telecommunications service. A post-paid calling service includes a
telecommunications service, except a prepaid wireless calling
service, that would be a prepaid calling service except it is not
exclusively a telecommunications service.
(i) (k)
"Prepaid calling service"
means the right to access
exclusively telecommunications services, which must be paid for in
advance and that enables the origination of calls using an access
number or authorization code, whether manually or electronically
dialed, and that is sold in predetermined units or dollars of which
the number declines with use in a known amount.
(j) "Prepaid wireless calling service" means a
telecommunications service that provides the right to utilize
mobile wireless service as well as other nontelecommunications
services, including the download of digital products delivered
electronically, content, and ancillary services, which shall be
paid for in advance and that is sold in predetermined units or
dollars that decline with use in a known amount.
(k) (l) "Private
communication service" means a
telecommunications service that entitles the customer to exclusive
or priority use of a communications channel or group of channels
between or among termination points, regardless of the manner in
which the channel or channels are connected, and includes switching
capacity, extension lines, stations, and any other associated
services that are provided in connection with the use of such
channel or channels.
(l) (m)
"Service address" means
the following:
(i) The location of the telecommunications equipment to which a
customer's call is charged and from which the call originates or
terminates, regardless of where the call is billed or paid.
(ii) If the location in subparagraph (i) is not known, service
address means the origination point of the signal of the
telecommunications services first identified by either the seller's
telecommunications system or in information received by the seller
from its service provider, where the system used to transport the
signals is not that of the seller.
(iii) If the location in subparagraphs (i) and (ii) is not known,
the service address means the location of the customer's place of
primary use.
(m) "Telecommunications service" means the electronic
transmission, conveyance, or routing of voice, data, audio, video,
or any other information or signals to a point, or between or among
points, including a transmission, conveyance, or routing in which
computer processing applications are used to act on the form, code,
or protocol of the content for purposes of transmission,
conveyance, or routing without regard to whether the service is
referred to as voice over internet protocol services or is
classified by the federal communications commission as enhanced or
value added. Telecommunications service does not include any of the
following:
(i) Data processing and information services that allow data to
be generated, acquired, stored, processed, or retrieved and
delivered by an electronic transmission to a purchaser if the
purchaser's primary purpose for the underlying transaction is the
processed data or information.
(ii) Installation or maintenance of wiring or equipment on a
customer's premises.
(iii) Tangible personal property.
(iv) Advertising, including, but not limited to, directory
advertising.
(v) Billing and collection services provided to third parties.
(vi) Internet access service.
(vii) Radio and television audio and video programming
services, including, but not limited to, cable service as defined
in 47 USC 522(6) and audio and video programming services delivered
by commercial mobile radio service providers, as defined in 47 CFR
20.3, regardless of the medium, including the furnishing of
transmission, conveyance, and routing of those services by the
programming service provider.
(viii) Ancillary services.
(ix) Answering services, if the primary purpose of the
transaction is the answering service rather than message
transmission.
(x) Digital products delivered electronically, including, but
not limited to, software, music, video, reading materials, or ring
tones.
Sec. 4d. (1) The following are exempt from the tax under this
act:
(a) Sales of drugs for human use that can only be legally
dispensed by prescription or food or food ingredients, except
prepared food intended for immediate human consumption.
(b) The deposit on a returnable container for a beverage or
the deposit on a carton or case that is used for returnable
containers.
(c) Food or tangible personal property purchased under the
federal food stamp program or meals sold by a person exempt from
the tax under this act eligible to be purchased under the federal
food stamp program.
(d) Fruit or vegetable seeds and fruit or vegetable plants if
purchased at a place of business authorized to accept food stamps
by the food and nutrition service of the United States department
of agriculture or a place of business that has made a complete and
proper application for authorization to accept food stamps but has
been denied authorization and provides proof of denial to the
department of treasury.
(e) Live animals purchased with the intent to be slaughtered
for human consumption.
(2) Food or drink heated or cooled mechanically, electrically,
or by other artificial means to an average temperature above 75
degrees Fahrenheit or below 65 degrees Fahrenheit before sale and
sold from a vending machine, except milk, nonalcoholic beverages in
a sealed container, and fresh fruit, is subject to the tax under
this act. The tax due under this act on the sale of food or drink
from a vending machine selling both taxable items and items exempt
under this subsection shall be calculated under this act after
December 31, 1994 based on 1 of the following as determined by the
taxpayer:
(a) Actual gross proceeds from sales at retail.
(b) Forty-five percent of proceeds from the sale of items
subject to tax under this act or exempt from the tax levied under
this act, other than from the sale of carbonated beverages.
(3) "Food and food ingredients" means substances, whether in
liquid, concentrated, solid, frozen, dried, or dehydrated form,
that are sold for ingestion or chewing by humans and are consumed
for their taste or nutritional value. Food and food ingredients do
not include alcoholic beverages and tobacco.
(4) "Prepared food" means the following:
(a) Food sold in a heated state or that is heated by the
seller.
(b) Two or more food ingredients mixed or combined by the
seller for sale as a single item.
(c) Food sold with eating utensils provided by the seller,
including knives, forks, spoons, glasses, cups, napkins, straws, or
plates, but not including a container or packaging used to
transport the food.
(5) Prepared food does not include the following:
(a) Food that is only cut, repackaged, or pasteurized by the
seller.
(b) Raw eggs, fish, meat, poultry, and foods containing those
raw items requiring cooking by the consumer in recommendations
contained in section 3-401.11 of part 3-4 of chapter 3 of the 2001
food code published by the food and drug administration of the
public health service of the department of health and human
services, to prevent foodborne illness.
(c) Food sold in an unheated state by weight or volume as a
single item, without eating utensils.
(d) Bakery items, including bread, rolls, buns, biscuits,
bagels, croissants, pastries, doughnuts, danish, cakes, tortes,
pies, tarts, muffins, bars, cookies, and tortillas, sold without
eating utensils.
(6) "Prepared food intended for immediate consumption" means
prepared food.
Sec. 4i. (1) A seller required to collect the tax under this
act shall be exempt from collecting the tax on sales of tangible
personal property if the tangible personal property is part of a
drop shipment and if the taxpayer complies with the requirements of
subsection (3).
(2) As used in this section, "drop shipment" means the direct
delivery of tangible personal property to a purchaser in Michigan
by a person who has sold the property to another person not
licensed under this act but possessing a resale or exemption
certificate or other written evidence of exemption authorized by
another state, or any other acceptable information evidencing
qualification for a resale exemption, for resale to the Michigan
purchaser.
(3) For each transaction for which an exemption is claimed
under subsection (1), the taxpayer shall provide the following
information to the department annually in any reasonable form:
(a) The name, address, and, if readily available, the federal
taxpayer identification number of the person to whom the property
is sold for resale.
(b) The name, address, and, if readily available, the federal
taxpayer identification number of the person to whom the property
is shipped in Michigan.
(4) A person making a drop shipment is a seller.
Sec. 7. (1) Each person storing, using, or consuming in this
state tangible personal property or services is liable for the tax
levied under this act, and that liability shall not be extinguished
until the tax levied under this act has been paid to the
department.
(2) A person who acquires tangible personal property or
services for any tax-exempt use who subsequently converts the
tangible personal property or service to a taxable use, including
an interim taxable use, is liable for the tax levied under this
act. If tangible personal property or services are converted to a
taxable use, the tax levied under this act shall be imposed without
regard to any subsequent tax-exempt use. The payment to the
department of the tax, interest, and any penalty assessed by the
department relieves the seller, who sold the property or services
with regard to the storing, use, or consumption on which the tax
was paid from the payment of the amount of the tax that he or she
may be required under this act to collect from the purchaser.
(3) Beginning January 1, 2009, except as limited by subsection
(4), a consumer is relieved from liability, including liability for
tax, penalty, and interest, for having failed to pay the correct
amount of tax imposed under this act in the following
circumstances:
(a) The consumer's seller or the seller's certified service
provider, as defined in the streamlined sales and use tax
administration act, 2004 PA 174, MCL 205.801 to 205.833, relied on
erroneous data contained in the taxability matrix.
(b) The consumer relied on erroneous data contained in the
taxability matrix.
(4) Liability relief under subsection (3) is limited to the
erroneous classification in the taxability matrix of terms included
in the streamlined sales and use tax agreement's library of
definitions as taxable or exempt, included in sales price, excluded
from sales price, or excluded from the definition.
(5) As used in this section:
(a) "Penalty" means an amount imposed for noncompliance that
is not fraudulent, willful, or intentional and that is in addition
to the correct amount of tax imposed under this act and in addition
to interest.
(b) "Taxability matrix" means the taxability matrix published
by the department pursuant to the streamlined sales and use tax
administration act, 2004 PA 174, MCL 205.801 to 205.833.
Sec. 13. (1) A purchaser of direct mail other than a holder of
a direct pay permit under section 8 shall provide to the seller at
the
time of purchase either a direct mail an exemption form as
prescribed by the department or information indicating the taxing
jurisdictions to which the direct mail is delivered to recipients.
(2)
Upon receipt of the direct mail exemption
form, the seller
is relieved of all obligation to collect, pay, or remit the
applicable tax and the purchaser is then obligated to pay the
applicable tax on a direct pay basis.
(3)
A direct mail An exemption
form remains in effect for all
subsequent sales of direct mail by the seller to the purchaser
until revoked in writing.
(4) Upon receipt of information from the purchaser indicating
the taxing jurisdictions to which the direct mail is delivered to
recipients, the seller shall collect the tax according to that
delivery information. In the absence of bad faith, the seller is
relieved of any further obligation to collect the tax if the seller
collected the tax using the delivery information provided by the
purchaser.
(5) If the purchaser does not have a direct pay permit and
does
not provide the seller with a direct mail an exemption form or
delivery information as required in subsection (1), the seller
shall collect the tax in the same manner as provided in section 19.
Nothing in this subsection limits a purchaser's obligation for the
tax under this act.
(6) A purchaser who provides the seller with documentation of
a
direct pay permit is not required to provide a direct mail an
exemption form or delivery information.
Sec. 14a. (1) A person in the business of selling tangible
personal property and liable for any tax under this act shall keep
accurate and complete beginning and annual inventory and purchase
records of additions to inventory, complete daily sales records,
receipts, invoices, bills of lading, and all pertinent documents in
a form the department requires. If an exemption from use tax is
claimed by a person because the sale is for resale at retail, a
record shall be kept of the sales tax license number if the person
has a sales tax license. These records shall be retained for a
period of 4 years after the tax imposed under this act to which the
records apply is due or as otherwise provided by law.
(2) If the department considers it necessary, the department
may require a person, by notice served upon that person, to make a
return, render under oath certain statements, or keep certain
records the department considers sufficient to show whether or not
that person is liable for the tax under this act.
(3) A person knowingly making a sale of tangible personal
property for the purpose of resale at retail to another person not
licensed under this act is liable for the tax imposed under this
act unless the transaction is exempt under the provisions of
section 4i.
(4) If a taxpayer fails to file a return or to maintain or
preserve proper records as prescribed in this section, or the
department has reason to believe that any records maintained or
returns filed are inaccurate or incomplete and that additional
taxes are due, the department may assess the amount of the tax due
from the taxpayer based on information that is available or that
may become available to the department. That assessment is
considered prima facie correct for the purpose of this act and the
burden of proof of refuting the assessment is upon the taxpayer.
(5) For purposes of this act, exemption certificate includes a
blanket exemption certificate on a form prescribed by the
department that covers all exempt transfers between the taxpayer
and the buyer for a period of 4 years or for a period of less than
4 years as stated on the blanket exemption certificate if that
period is agreed to by the buyer and taxpayer.
(6)
This section applies when this state is a member state of
the
streamlined sales and use tax agreement.
Sec. 14b. (1) If an exemption from the tax under this act is
claimed, the seller shall obtain identifying information of the
purchaser and the reason for claiming the exemption at the time of
the purchase or at a later date. The seller shall obtain the same
information for a claimed exemption regardless of the medium in
which the transaction occurred.
(2) A seller shall use a standard format for claiming an
exemption electronically as adopted by the governing board under
the streamlined sales and use tax agreement.
(3) A purchaser is not required to provide a signature to
claim an exemption under this act unless a paper exemption form is
used.
(4) A seller shall maintain a proper record of all exempt
transactions and shall provide them when requested by the
department.
(5) A seller who complies with the requirements of this
section is not liable for the tax under this act if a purchaser
improperly claims an exemption. A purchaser who improperly claims
an exemption is liable for the tax due under this act. This
subsection
does not apply if a seller fraudulently does any of the
following:
(a)
Fraudulently fails to collect the tax. or
solicits
(b) Solicits a purchaser to make an improper claim for
exemption.
(c) Accepts an exemption form when the purchaser claims an
entity-based exemption if both of the following occur:
(i) The subject of the transaction sought to be covered by the
exemption form is actually received by the purchaser at a location
operated by the seller.
(ii) The state in which the location operated by the seller is
located provides an exemption form that clearly and affirmatively
indicates that the claimed exemption is not available in that
state.
(6) A seller who obtains a fully completed exemption form or
captures the relevant data elements as outlined in this section
within 90 days after the date of sale is not liable for the tax
under this act.
(7) If the seller has not obtained an exemption form or all
relevant data elements, the seller may, within 120 days after a
request for substantiation by the department, either prove that the
transaction was not subject to the tax under this act by other
means or obtain a fully completed exemption form from the
purchaser, taken in good faith. The department may, in its
discretion, allow a seller additional time to comply with this
subsection.
(8) A seller is not liable for the tax under this act if the
seller obtains a blanket exemption form for a purchaser with which
the seller has a recurring business relationship. Renewals of
blanket exemption forms or updates of exemption form information or
data elements are not required if there is a recurring business
relationship between the seller and the purchaser. For purposes of
this section, a recurring business relationship exists when a
period of not more than 12 months elapses between sales
transactions.
Enacting section 1. Sections 12 and 14 of the use tax act,
1937 PA 94, MCL 205.102 and 205.104, are repealed.