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The General Sales Tax Act exempts the "sale of rolling stock purchased by an interstate motor carrier or for rental or lease to an interstate motor carrier and used in interstate commerce." The Use Tax Act exempts "the storage, use, or consumption of rolling stock used in interstate commerce and purchased, rented, or leased by an interstate fleet motor carrier." Both Acts have the same three requirements for property to qualify for the rolling stock exemption:
1.    The property must be "rolling stock";
2.    The rolling stock must be purchased, rented, or leased by an "interstate motor carrier"; and,

3.    The rolling stock must be "used in interstate commerce."

An "interstate motor carrier" is defined as:
A person engaged in the business of carrying persons or property, other than themselves, their employees, or their own property, for hire across state lines, whose fleet mileage was driven at least 10% outside of this state in the immediately preceding tax year. If a person does not have an immediately preceding tax year on which to base its fleet mileage, pursuant to the statutory definition, it is not eligible for the exemption. Rolling stock must be used in interstate commerce to qualify for the exemption. Rolling stock may be used in interstate commerce in two ways: (1) the rolling stock physically crosses state lines or (2) the rolling stock does not physically cross state lines, but it carries persons or properties that originated from, or are destined for, locations outside of Michigan.

Three types of property may qualify as "rolling stock" for purposes of the exemption:
1.    Qualified trucks. A "qualified truck" is a commercial motor vehicle power unit that has either (1) 2 axles and a gross vehicle weight rating gin excess of 10,000      pounds, or (2) 3 or more axles regardless of its gross vehicle weight rating. Gross vehicle weight rating is the value specified by the manufacturer as the loaded      weight of a single vehicle.
2.    Trailers designed to be drawn behind a qualified truck.

3.    Parts or other tangible personal property affixed to or to be affixed to and directly used in the operation of either a qualified truck or trailer. This also includes      parts or other property that are purchased and affixed to a truck or trailer after the original purchase. Items that may be exempt include, but are not limited to, GPS      systems, in-cab heaters, alternate power units, straps, chains, and refrigeration units.

In the case where purchases occurred but the exemption wasn't utilized, a refund opportunity could exist on sales or use tax paid. Analyze past purchases, as Michigan generally allows for a four year look- back period on overpaid taxes.


For more information or questions on this exemption, please contact your local UHY LLP professional or visit us on the web at www.uhy-us.com.

By Susan Wagner