Michigan House Oks Taxes On Out-Of-State Online Retailers
Many out-of-state websites that facilitate online sales in Michigan would have to collect and remit the 6 percent sales tax under legislation approved unanimously Wednesday by the state House.
The bills, which were referred to the Senate for consideration next, would bring in an additional $80 million to $120 million in sales and use taxes annually, according to the nonpartisan House Fiscal Agency. Much of that revenue would go to public schools.
A portion of the legislation would codify the state Treasury Department's 2018 guidance that requires out-of-state sellers to pay taxes if they exceed $100,000 in sales or have 200 or more transactions into Michigan — which came after a U.S. Supreme Court decision that enabled states to require online retailers to collect sales taxes on purchases from states where they have no physical presence.
The bills also would require "marketplace facilitators" — the Amazons, eBays and Etsys of the online world — that meet one of the thresholds to pay sales and use taxes on behalf of independent sellers regardless of how many transactions the seller has done in Michigan.
"This just levels the playing field," said state Rep. Lynn Afendoulis, a Republican from Grand Rapids Township.
Afendoulis said a constituent who sells pinball machines is losing business when customers buy through third parties to avoid the 6 percent sales tax, and that her legislation "allows us to stand in support of Michigan businesses, to make them and our states even more successful."
The Department of Treasury estimates that Michigan will collect $225 million this fiscal year because of the high court decision. Requiring online marketplaces to also collect and remit taxes for independent sellers on their sites would generate $62 million this budget year and $96 million in the 2020-21 fiscal year, said Eric Bussis, director of the state Office of Revenue and Tax Analysis.
This story has been corrected to reflect that the Department of Treasury estimates that Michigan will collect $225 million this fiscal year, not $222 million.