News & Events


The Department of Treasury has announced for transactions occurring on and after Oct. 1, 2015, out-of-state retailers are required to remit sales or use tax on sales into Michigan if the seller has nexus under affiliate and click-through nexus requirements.

AFFILIATE NEXUS

Effective Oct. 1, 2015, a seller that sells tangible personal property to a purchaser in Michigan is presumed to be engaged in the business of making sales at retail in Michigan if the seller or a person (including an affiliated person) other than a common carrier, engages in or performs any of the following activities in Michigan:

  • Sells a similar line of products as the seller and does so under the same business name, or a similar business name, as the seller.
  • Uses its employees, agents, representatives, or independent contractors in Michigan to promote or facilitate sales by the seller to purchasers in Michigan.
  • Maintains, occupies, or uses an office, distribution facility, warehouse, storage place, or similar place of business in Michigan to facilitate the delivery or sale of tangible personal property sold by the seller to the seller's purchasers in Michigan.
  • Uses, with the seller's consent or knowledge; trademarks, service marks, or trade names in Michigan that are the same as or substantially similar to those used by the seller.
  • Delivers, installs, assembles, or performs maintenance or repair services for the seller's purchasers in Michigan.
  • Facilitates the sale of tangible personal property to purchasers in Michigan by allowing the seller's purchasers to pick up or return tangible personal property sold by the seller at an office, distribution facility, warehouse, storage place, or similar place of business maintained by that person in Michigan.
  • Shares management, business systems, business practices, or employees with the seller, or in the case of an affiliated person, engaged in intercompany transactions related to the activities occurring with the seller to establish or maintain the seller's market in Michigan.
  • Conducts any other activities in Michigan that were significantly associated with the seller's ability to establish and maintain a market in Michigan for the seller's sales of tangible personal property to purchasers in Michigan.

"Affiliated person" means either of the following: (1) any person that is a part of the same controlled group of corporations as the seller; or (2) any other person that bears the same ownership relationship to the seller as a corporation that is a member of the same controlled group of corporations. A "controlled group of corporations" means that term as defined in IRC § 1563(a).

The "affiliate" presumption can be rebutted by a demonstration that a seller's or person's activities in Michigan are not significantly associated with the seller's ability to establish or maintain a market in Michigan for the seller's sales of tangible personal property to purchasers in Michigan.
CLICK-THROUGH NEXUS
The click-through provision states that a seller is presumed to be engaged in business in Michigan if the seller enters into an agreement with one or more residents under which the resident, for a commission or other consideration, directly or indirectly, refers potential customers, by a link on an Internet website, in-person oral presentation, or otherwise, to the seller, if both of the following conditions are satisfied:

  1. the cumulative gross receipts from sales by the seller to purchasers in Michigan who are referred to the seller by all residents of Michigan with an agreement with the seller are greater than $10,000 during the immediately preceding 12 months; and
  2. the seller's total cumulative gross receipts from sales to purchasers in Michigan exceed $50,000 during the immediately preceding 12 month, if the statements are provided and obtained in good faith.
  3. An agreement under which a seller buys advertisements from a person in Michigan, to be delivered through television, radio, print, the Internet, or any other medium is not an agreement described in this presumption unless the advertisement revenue paid to the person in Michigan consists of commissions or other consideration that is based upon completed sales of tangible personal property.

    The above provisions regarding affiliate and click-through nexus apply to transactions occurring on or after their effective date and without regard to the date the seller and the resident entered into an agreement. The 12 months before the bill's effective date are included as part of the immediately preceding 12 months for purposes of the presumption involving a business agreement.

    For more information or questions on this topic, please contact your professional at UHY LLP.