Michigan Laws 205.104b – Exemption claimed by purchaser; duties of seller; process to claim exemption after purchase
Current as of: 2023 | Check for updates
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Terms Used In Michigan Laws 205.104b
- Business: means all activities engaged in by a person or caused to be engaged in by a person with the object of gain, benefit, or advantage, either direct or indirect. See Michigan Laws 205.92
- Department: means the department of treasury. See Michigan Laws 205.92
- Electronic: means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. See Michigan Laws 205.92b
- Person: means an individual, firm, partnership, joint venture, association, social club, fraternal organization, municipal or private corporation whether or not organized for profit, company, limited liability company, estate, trust, receiver, trustee, syndicate, the United States, this state, county, or any other group or combination acting as a unit, and the plural as well as the singular number, unless the intention to give a more limited meaning is disclosed by the context. See Michigan Laws 205.92
- Purchase: means to acquire for a consideration, whether the acquisition is effected by a transfer of title, of possession, or of both, or a license to use or consume; whether the transfer is absolute or conditional, and by whatever means the transfer is effected; and whether consideration is a price or rental in money, or by way of exchange or barter. See Michigan Laws 205.92
- Sale: means a transaction by which tangible personal property or services are purchased or rented for storage, use, or other consumption in this state. See Michigan Laws 205.92
- Seller: means the person from whom a purchase is made and includes every person selling tangible personal property or services for storage, use, or other consumption in this state. See Michigan Laws 205.92
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
- Tax: includes all taxes, interest, or penalties levied under this act. See Michigan Laws 205.92
- Use: means the exercise of a right or power over tangible personal property incident to the ownership of that property including transfer of the property in a transaction where possession is given. See Michigan Laws 205.92
(1) If an exemption from the tax under this act is claimed, the seller shall obtain identifying information of the purchaser and the reason for claiming the exemption at the time of the purchase or at a later date. The seller shall obtain the same information for a claimed exemption regardless of the medium in which the transaction occurred. If the seller is a person described in section 14a(6)(a) or (b), obtaining the purchaser’s license number issued by the Michigan liquor control commission satisfies the requirements of this subsection.
(2) A seller shall use a standard format for claiming an exemption electronically as adopted by the governing board under the streamlined sales and use tax agreement.
(3) A purchaser is not required to provide a signature to claim an exemption under this act unless a paper exemption form is used.
(4) A seller shall maintain a proper record of all exempt transactions and shall provide the record if requested by the department.
(5) A seller who complies with the requirements of this section is not liable for the tax under this act if a purchaser improperly claims an exemption. A purchaser who improperly claims an exemption is liable for the tax due under this act. This subsection does not apply if a seller does any of the following:
(a) Fraudulently fails to collect the tax under this act.
(b) Solicits a purchaser to make an improper claim for exemption.
(c) Accepts an exemption form when the purchaser claims an entity-based exemption if both of the following occur:
(i) The subject of the transaction sought to be covered by the exemption form is actually received by the purchaser at a location operated by the seller.
(ii) The state in which the location operated by the seller is located provides an exemption form that clearly and affirmatively indicates that the claimed exemption is not available in that state.
(6) A seller who obtains a fully completed exemption form or captures the relevant data elements as outlined in this section within 120 days after the date of sale is not liable for the tax under this act.
(7) If the seller has not obtained an exemption form or all relevant data elements, the seller may either prove that the transaction was not subject to the tax under this act by other means or obtain a fully completed exemption form from the purchaser, by the later of the following:
(a) 120 days after a request by the department.
(b) The date an assessment becomes final.
(c) The denial of a claim for refund.
(d) In the instance of a credit audit, the issuance of an audit determination letter or informal conference decision and order of determination.
(e) The date of a final order of the court of claims or the Michigan tax tribunal, as applicable, with respect to an assessment, order, or decision of the department.
(8) The department may, in its discretion, allow a seller additional time to comply with subsection (7).
(9) A seller is not liable for the tax under this act if the seller obtains a blanket exemption form for a purchaser with which the seller has a recurring business relationship. Renewals of blanket exemption forms or updates of exemption form information or data elements are not required if there is a recurring business relationship between the seller and the purchaser. For purposes of this section, a recurring business relationship exists when a period of not more than 12 months elapses between sales transactions.
(10) A purchaser that fails to claim an exemption at the time of purchase by notifying the seller of the exemption and providing a complete and proper claim of exemption may submit a claim for a refund to the department for the tax related to that purchase if all of the following conditions are met:
(a) The claim for a refund is made within 4 years of the date of purchase.
(b) The purchaser submits to the department an accurate record of the purchase, including, but not limited to, a paper, electronic, or digital receipt, invoice, or purchase order related to the sale, that includes the date of the purchase and the amount of sales tax paid to the seller for which the purchaser is seeking a refund under this subsection.
(c) The purchaser submits to the department a form signed by the seller as prescribed by the department that contains information required by the department to substantiate the refund claim. The form must contain a statement that the seller reported and paid the tax on the sale for which the purchaser is seeking a refund under this subsection and that the seller has not claimed, and will not claim, a refund of that tax.
(d) The purchaser submits to the department a proper exemption claim on a form as prescribed by the department under this subsection.
(e) The purchaser submits to the department any additional information that the department requires related to the purchaser’s claim for refund under this subsection.