Bills Introduced in the Michigan House of Representatives Would Amend the Sales Tax Act and the Use Tax Act
House Bill 5004 would amend the sales tax act and House Bill 5005 would amend the use tax act. Both bills contain both affiliate and click-through nexus provisions relating to the sales and use tax collection responsibilities of remote sellers. Both bills have been introduced in the Michigan House of Representatives.
The bills would amend the definition of a person engaging in business in the state by including a seller with an "affiliated person" that has a physical location in the state, conducts business in the state, or is subject to the Michigan sales or use tax, and directly or indirectly, does any of the following:
· sells a similar line of products as the seller, under the same or similar business name;
· uses its employees or facilities in the state to advertise and promote sales by the seller;
· maintains an office, distribution facility, or other similar place of business to deliver tangible personal property sold by the seller to customers in Michigan;
· uses trademarks or service marks that are similar to those used by the seller;
· delivers, installs, assembles, or performs maintenance or repair services for the seller's customers;
· allows the seller's customers to pick up or return tangible personal property sold by the seller at a distribution facility or other similar place of business maintained by the affiliated person; or
· performs any other activities associated with the seller's ability to establish or maintain a market in Michigan.
The click-through provisions provide that a seller is engaged in business in the state if it enters into an agreement with one or more Michigan residents under which the resident, for a commission or other consideration, directly or indirectly, refers potential customers, whether by a link on an Internet website, in-person oral presentation, or otherwise, to the seller. The cumulative gross receipts from sales by the seller to customers who are referred to the seller by residents with an agreement with the seller must be greater than $10,000 during the immediately preceding 12 months.
The presumption of nexus, from the activities of an affiliated person or the sales from resident referrals, can be rebutted by showing that the affiliated person or the state residents with whom the seller has an agreement did not engage in solicitation or any other activity related to the seller's ability to establish or maintain a market in the state.