Is Your Online Business Overpaying Michigan Sales Tax?

Updated: Sep 14


The answer is possibly due to the Marketplace Facilitators Tax Law.

Who does this affect?

Third-party sellers on websites such as Amazon, Etsy, Walmart, UberEATS, Shopify, etc.


Why?

States are missing out on sales tax revenue from small sellers that do not meet economic nexus rules for their state.


When?

Effective January 1st, 2020 for Michigan.


Action Required?

Check your statements if you use a marketplace facilitator. Make sure that you are not remitting sales tax on items that the marketplace facilitator is already paying tax on. Amend your 2020 sales tax returns if needed.

Effective January 1st, 2020, Michigan has followed many other states by adopting the Marketplace Facilitators Tax Law. The Marketplace Facilitators Tax places the responsibility of the collection and remittance of sales tax from Michigan buyers on the marketplace facilitator (ex. Amazon, Etsy, etc.) instead of on the third-party seller (your business). The marketplace facilitator would need to have economic nexus in the state of Michigan to meet the filing requirement*. For example, if you are a third-party seller on Amazon or Etsy then the marketplace facilitator would be required to collect the sales tax from your Michigan buyers and remit it back to the state. If you find on your statements from your marketplace facilitator that they have collected and paid Michigan sales tax, you should verify whether you have already paid sales tax on that same transaction. If you have already paid on your Michigan sales tax monthly or quarterly flings, you are able to amend those returns to receive the sales tax refund.

Please feel free to reach out to us if you have additional questions on this law or need assistance in amending sales tax returns.

*A marketplace facilitator would have economic nexus in the state of Michigan if in the previous calendar year, they had or facilitated more than $100,000 in sales in Michigan or if they had or facilitated at least 200 Michigan transactions.

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