As of April 26, 2023, Sellers of tangible personal property in Michigan should no longer tax delivery installation if separately stated on an invoice (subject to the limitations in the notice). The notice issued by the Michigan Department of Treasury regarding the changes in the treatment of delivery and installation charges previously included as part of the sales tax or use tax base.
The Notice is straightforward but there are some points to keep in mind for any taxpayers this could impact.
Sellers of tangible personal property should not refund the tax associated with sales prior to April 26, 2023 (unless the entire sale is refunded) according to the Notice. This is because this change is not retroactive.
Purchasers of tangible personal property should look over all invoices dated today or after and request the seller remove any tax on delivery or installation in Michigan.
Purchasers that self-assess Michigan use tax should not assess use tax on delivery and installation as of today (subject to the limitations in the Notice).
Taxpayers currently under audit for Michigan sales or use tax should speak with the auditor about how they will change or correct their preliminary audit assessments. This could include changes to the exceptions, error rate calculations, strata. It is very possible in some instances they should be required to redo their audit workpapers due to the impact of this change.
Any taxpayer that has received a notice of intent to assess or a final determination this year and is currently appealing or has the right to appeal should contact Treasury as indicated in the Notice to alert Treasury that a correction is required. Do not assume their calculations are correct. Ask to see the revisions.
Contributed by: David M. Barrons, CPA | Barrons State Tax