LANSING, Mich. (AP) — Michigan’s 6 percent sales tax will soon be applied to many companies with no physical location in the state, according to the Michigan Department of Treasury.
The department announced Monday that sales tax will be collected from online out-of-state retailers that exceed $100,000 in sales or have 200 or more transactions in Michigan within the previous calendar year. The rule change beginning Oct. 1 will bring in an extra $200 million per year in state revenue, according to the state agency’s estimates.
“We will be working closely with our retail and business partners to ensure a smooth transition to the new rule,” State Treasurer Nick Khouri said.
The move follows a recent U.S. Supreme Court ruling that gave states authority to require online retailers without a physical presence in the state to collect sales tax on their behalf.
Michigan already requires large retailers with a presence in the state, such as Amazon and Overstock, to charge the tax. Gov. Rick Snyder signed a bill in 2015 that required out-of-state companies with some sort of physical presence in Michigan, such as a warehouse or distribution center, to collect sales taxes.
Michigan shoppers are already supposed to keep track of online, mail order or out-of-state purchases and self-report on tax returns. But the requirement isn’t widely enforced, and many residents fail to comply.
“This is an important step forward in the fair administration of our tax system” Khouri said. “With more and more shopping being done online, this change will make sure both hometown businesses and out-of-state online retailers are treated equally.”
Snyder’s administration is recommending that the extra revenue from the sales tax go toward road improvements. The decision on how to allocate the extra funding will be up to the Legislature.