Legislation that eliminates sales and use taxes on material delivery services has been signed into law by Governor Whitmer. The bills, which have immediate effect, give much needed clarity on sales tax issues and will benefit the construction industry.
House Bills 4039 and 4253 would amend the General Sales Tax Act and the Use Tax Act, respectively, to exempt certain delivery and installation costs from the sales price (in the Sales Tax Act) and the purchase price (in the Use Tax Act). Specifically, sales and use taxes could not be imposed on delivery or installation charges if those charges were separately stated on the invoice, bill of sale, or similar document provided to the purchaser and the seller maintained its books and records to show separately the transactions used to determine the tax levied by the applicable act.
Another positive aspect to the legislation is the bills would require the Department of Treasury to cancel any outstanding balances on notices of intent to assess or final assessments that were issued before the applicable bill’s effective date that are related to delivery or installation charges that would be exempted under the bills. The department would be required to cancel these balances within 90 days of the bill’s effective date and would be prohibited from issuing any new assessments on these activities for any tax period before the bill took effect.
We have heard from a few members that the Department of Treasury was looking back and charging sales and use tax on these items unfairly. So if you currently have a case pending with the state’s Treasury Department regarding this, you should see that dropped within 90 days. If you have any issues with that, please do not hesitate to contact the MITA office.
If you have any questions or concerns, please contact Rob Coppersmith, Executive Vice President, at firstname.lastname@example.org; or Lance Binoniemi, Vice President of Government Affairs, at email@example.com.
Please visit https://thinkmita.org/long-term-sustainable-funding/ for more information on our Long-Term Sustainable Funding Campaign and how you can get involved.