HOUSE BILL NO. 4540

May 02, 2019, Introduced by Reps. Afendoulis, Webber, Tate and Yancey and referred to the Committee on Tax Policy.

"General sales tax act,"

(MCL 205.51 to 205.78) by adding section 2d.

the people of the state of michigan enact:

Sec. 2d. (1) Notwithstanding anything to the contrary in this act, a marketplace facilitator that sells or facilitates the sale of tangible personal property or services subject to the tax under this act for delivery into this state is presumed to be engaged in the business of making sales at retail of tangible personal property or taxable services in this state, is subject to the tax under this act, shall include the gross proceeds from such sales in the gross proceeds of its business for purposes of calculating the tax due under this act subject to subsection (5), shall collect and remit applicable sales tax, and shall follow all applicable procedures and requirements of this act, if the marketplace facilitator makes or facilitates sales of tangible personal property or taxable services, on its own behalf or on behalf of 1 or more marketplace sellers, or both, for delivery into this state exceeding $100,000.00 or in 200 or more separate transactions in the previous calendar year or the current calendar year.

(2) A marketplace facilitator that is presumed to be engaged in the business of making sales at retail of tangible personal property or taxable services in this state under subsection (1) is required to collect and remit the tax due under this act on all taxable sales made by the marketplace facilitator or facilitated for marketplace sellers to a purchaser in this state regardless of whether the marketplace seller for whom sales are facilitated has or is required to have a license under section 3 or would have been required to collect or remit sales tax had the sale not been facilitated by the marketplace facilitator. Nothing in this section shall be construed to interfere with the ability of a marketplace facilitator and a marketplace seller to enter into agreements with each other regarding the fulfillment of the requirements of this act.

(3) The department may grant a waiver from the requirements of this section if either of the following requirements is met:

(a) A marketplace facilitator demonstrates, to the satisfaction of the department, that substantially all of its marketplace sellers have a current and valid license under section 3.

(b) A marketplace seller has sufficient nexus with this state to require licensure under section 3 and the department determines that collection of sales tax by the marketplace seller with regard to transactions facilitated by the marketplace facilitator would result in the appropriate and efficient collection of tax under this act.

(4) If the department grants a waiver under subsection (3), the tax levied under this act on sales that are facilitated by a marketplace facilitator for a marketplace seller must be collected from the marketplace seller and the marketplace seller must include the gross proceeds from such sales in the gross proceeds of its business for purposes of calculating the tax due under this act. The department shall promulgate rules that establish the criteria for obtaining a waiver under subsection (3), the process and procedure for a marketplace facilitator or a marketplace seller to apply for a waiver, and the process for notifying an affected marketplace facilitator and marketplace seller of a waiver obtained under subsection (3).

(5) A marketplace facilitator shall report the sales it facilitates separately from the sales made directly by the marketplace facilitator, or affiliates of the marketplace facilitator, to purchasers in this state by filing a separate marketplace facilitator return on a form prescribed by the department.

(6) A class action shall not be brought against a marketplace facilitator in any court of this state on behalf of purchasers arising from or in any way related to an overpayment of sales tax collected on sales facilitated by the marketplace facilitator, regardless of whether that claim is characterized as a tax refund claim. Nothing in this subsection affects a purchaser's right to seek a refund as provided under section 12.

(7) Nothing in this section affects the obligation of a purchaser to remit use tax under the use tax act, 1937 PA 94, MCL 205.91 to 205.111, for a taxable transaction on which a marketplace facilitator or seller does not collect and remit sales tax.

(8) Except as otherwise provided in this subsection, if a marketplace facilitator is presumed to be engaged in the business of making sales at retail of tangible personal property or taxable services in this state under subsection (1), the department shall solely audit the marketplace facilitator for sales made by marketplace sellers that were facilitated by the marketplace facilitator. The department shall not audit a marketplace seller for sales facilitated by a marketplace facilitator unless a waiver is granted under subsection (3) and the tax levied under this act must be collected from the marketplace seller under subsection (4) or to the extent that the marketplace facilitator seeks relief under subsection (9).

(9) A marketplace facilitator is relieved of liability under this section for failure to collect and remit the correct amount of tax to the extent that the failure was due to incorrect or insufficient information given to the marketplace facilitator by the marketplace seller. The relief under this subsection does not apply if the marketplace seller is an affiliate of the marketplace facilitator.

(10) A marketplace facilitator is relieved of liability under this section if the marketplace facilitator demonstrates, to the satisfaction of the department, that the tax levied under this act on a sale facilitated by the marketplace facilitator was paid to the department by the marketplace seller.

(11) This section applies regardless of whether the marketplace facilitator has a physical presence in this state.

(12) As used in this section:

(a) "Affiliate" means an affiliated person as that term is defined in section 2b.

(b) "Marketplace facilitator" means a person that meets the requirements of subparagraph (i), but does not include a person described in subparagraph (ii) or (iii):

(i) A person is a marketplace facilitator if the person does all of the following:

(A) Contracts with a marketplace seller to facilitate for consideration, regardless of whether deducted as fees from the transaction, the sale of the marketplace seller's products through a physical or electronic marketplace operated by the person.

(B) Engages directly or indirectly, through 1 or more affiliates, in transmitting or otherwise communicating the offer and acceptance between a purchaser and the marketplace seller.

(C) Either directly or indirectly through agreements or arrangements with third parties collects the payment from a purchaser and transmits the payment to the marketplace seller.

(ii) Marketplace facilitator does not include a person who operates a platform or forum that provides internet advertising services, including listing products for sale, if the person does not also engage directly or indirectly, through 1 or more affiliates, in the activities described in subparagraph (i).

(iii) A person is not a marketplace facilitator with respect to the sale of or charges for rooms, lodgings, or accommodations described in section 3a of the use tax act, 1937 PA 94, MCL 205.93a, if the rooms, lodgings, or accommodations are provided by a hotel keeper, motel operator, or other person that is registered under section 5 of the use tax act, 1937 PA 94, MCL 205.95, or licensed under section 3 and the hotel keeper, motel operator, or other person provides the rooms, lodgings, or accommodations for occupancy under a brand belonging to the hotel keeper, motel operator, or other person.

(c) "Marketplace seller" means a person that makes retail sales through a physical or electronic marketplace operated by a marketplace facilitator.

Enacting section 1. As provided in section 5 of 1846 RS 1, MCL 8.5, this amendatory act is severable.

Enacting section 2. This amendatory act takes effect 90 days after the date it is enacted into law. An obligation to collect sales tax under this amendatory act does not apply retroactively.