Friday, November 2, 2007

Michigan Use Tax - What Is This?

As the law stands as this post is written, effective December 1, 2007 many service providers will be required to collect and submit a 6% Use Tax to the State of Michigan for the services they perform.

On October 1, 2007 Governor Jennifer Granholm signed into law Public Act 93 of 2007, extending the Use Tax to include select services in an effort to increase much needed state revenue. The service providers affected will be required to submit the 6% Use Tax similar to the way that Sales Tax is collected.

To clarify and define which service providers will be affected, the Act references codes published by the Federal government. These industry definitions, the North American Industry Classification System (NAICS) of 2002, are to be used by service providers to identify if they are required to submit the tax. It is important to note that a service is subject to the new tax based on the description of that service in the applicable NAICS code, and not on the classification of the establishment providing the service (You can find the complete NAICS classification system here)


In late November, the Michigan Department of Treasury added a section to its web site designed to help businesses determine if they are subject to this tax. The Department says they will be updating it frequently as more information becomes available.

New wrinkle: Oakland County Executive L. Brooks Patterson is leading a massive campaign to overturn this new tax, as are some business coalitions. Certain members of state government are also saying that this is leading to unintended consequences.

Bottom line: There is a lot of uncertainty here, and I will be using this blog to try to keep people up to date on it. For now, this is what I can say:

  • This tax may be overturned. But since it isn't a certainty, you need to determine if you will need to collect it.
  • The start date of this tax may be delayed until January 1. But since that isn't a certainty, you should be ready for December 1.
  • Look at the state web site on the use tax and it will give you an idea if it affects you.

Please contact me if you need more assistance.



the services that your business performs are subject to this new Use Tax, please contact our office at (248) 203-0080.

Very truly yours,



Maddox Ungar Silberstein, PLLC.