SOUTH DAKOTA V. WAYFAIR DECISION LEADS TO SALES TAX LAW CHANGES IN MICHIGAN

Pursuant to the South Dakota v. Wayfair ruling, the Michigan Department of Treasury has announced that beginning Oct. 1, 2018, remote sellers, regardless of in-state presence, who meet certain requirements, must pay sales tax on transactions of taxable sales in the state. The Supreme Court decision in June has led to several states enacting new legislation pertaining to the collection of sales tax based on "economic presence". 

After Sept. 30, 2018, a seller that has sales into Michigan (both taxable and non-taxable) exceeding $100,000, or a seller that completes 200 or more separate transactions of sales into this state (both taxable and non-taxable) in the previous calendar year, has economic nexus in Michigan and is required to remit sales or use tax on all of its taxable sales into Michigan and file all required returns. 

Remote sellers must review their 2017 calendar year sales (i.e., Jan. 1, 2017-Dec. 31, 2017) to determine if they have exceeded either of the economic nexus thresholds, and therefore have nexus in Michigan after Sept. 30, 2018. Remote sellers that only have nexus due to exceeding either of these economic thresholds are not liable for any tax, penalty, or interest for any transactions occurring on or before Sept. 30, 2018. 

Once a seller has nexus due to its economic presence it must remit tax until a calendar year passes in which it does not meet either of the economic nexus thresholds ($100,000 sales or 200 or more separate sales transactions).