State Rep. Lynn Afendoulis today led the House Tax Policy Committee in approving a plan bringing sales tax fairness to Michigan retailers.
The plan puts current Michigan practice started in October 2018 – based on a U.S. Supreme Court decision commonly known as the Wayfair ruling – into state law, leveling the playing field for retailers regardless of whether they have a store or other physical presence in the state. The bill package extends that to third-party sales facilitators, such as Amazon and eBay, requiring them to collect and remit sales tax for the sellers who sell on their marketplaces.
The plan calls for out-of-state online retailers selling to customers in Michigan to collect and send the 6 percent sales tax to the state. The measure applies to retailers, including marketplaces, with at least $100,000 in annual sales or more than 200 separate transactions.
“This isn’t a new tax – it’s a fairness issue with an existing tax,” said Afendoulis, chair of the Tax Policy Committee and a key sponsor of the bipartisan legislation. “Retailers who have a physical presence in Michigan, and retailers who don’t but only sell online, are required to collect and remit the sales tax. The same should hold true for the facilitators through which so many sellers operate.”
Afendoulis, of Grand Rapids Township, said the Tax Policy Committee studied the issue for several weeks to come up with a “thoughtful, thorough and effective” policy. House Bills 4540-4543 next advance to the House Ways and Means Committee for further consideration.
“The retail world is rapidly changing,” Afendoulis said. “Main Street isn’t simply a line of shops anymore. It also represents the lines of fiber optics buried beneath our streets, connecting buyers with sellers around the world. This creates tremendous opportunities for both buyers and sellers, but our state law must adapt to keep pace.”
The legislation will erase a competitive disadvantage for Michigan retailers, who now suffer when shoppers locate an item in a brick-and-mortar store but then buy online through a third party to avoid paying state sales tax, which also cuts into funding for schools and other essential public services.
“Our changes address this competitive disadvantage suffered by business owners – including small, family-owned shops – who are simply trying to provide for their families and create jobs for others,” Afendoulis said. “I am honored to be part of a thoughtful, bipartisan process with Representatives Tenisha Yancey, Michael Webber and Joe Tate, and am grateful for the hard work by all stakeholders that went into these bills.”