HB-5132, As Passed House, May 25, 2016HB-5132, As Passed Senate, May 25, 2016
December 9, 2015, Introduced by Rep. Farrington and referred to the Committee on Tax Policy.
A bill to amend 1933 PA 167, entitled
"General sales tax act,"
(MCL 205.51 to 205.78) by adding section 21a; and to repeal acts
and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 21a. (1) For sales of advertising and promotional direct
mail all of the following apply:
(a) If the purchaser provides the seller with a direct payment
authorization issued under section 8 of the use tax act, 1937 PA
94, MCL 205.98, or an exemption form as prescribed by the
department for claiming direct mail, the seller, in the absence of
bad faith, is relieved of all obligation to collect, pay, or remit
any applicable tax under this act on any transaction involving
advertising and promotional direct mail to which the direct payment
authorization or exemption form applies, and the purchaser shall
source the sale to the jurisdictions to which the advertising and
promotional direct mail is to be delivered to the recipients and
shall report and pay any applicable tax due.
(b) If the purchaser provides the seller with information
indicating the jurisdictions to which the advertising and
promotional direct mail is to be delivered to recipients, the
seller shall source the sale to the jurisdictions to which the
advertising and promotional direct mail is to be delivered and
shall collect and remit the applicable tax due. In the absence of
bad faith, the seller is relieved of any further obligation to
collect any additional tax on the sale of advertising and
promotional direct mail if the seller sourced the sale and
collected the tax in accordance with the delivery information
provided by the purchaser.
(c) If the purchaser does not provide the seller with a direct
payment authorization, an exemption form prescribed by the
department, or any information indicating the jurisdictions to
which the advertising and promotional direct mail is to be
delivered, the sale shall be sourced in accordance with section
19(1)(e).
(2) Except as otherwise provided under this subsection, sales
of other direct mail shall be sourced in accordance with section
19(1)(c). If the purchaser provides the seller with a direct
payment authorization issued under section 8 of the use tax act,
1937 PA 94, MCL 205.98, or an exemption form as prescribed by the
department for claiming direct mail, the seller, in the absence of
bad faith, is relieved of all obligation to collect, pay, or remit
any applicable tax under this act on any transaction involving
other direct mail to which the direct payment authorization or
exemption form applies and the sale shall be sourced to the
jurisdictions to which the other direct mail is to be delivered to
the recipients and the purchaser shall report and pay any
applicable tax due.
(3) This section only applies to a transaction characterized
as a sale of services if the service is an integral part of the
production and distribution of direct mail.
(4) This section does not apply to any transaction that
includes the development of billing information or the provision of
any data processing service that is more than incidental,
regardless of whether advertising and promotional direct mail is
included in the same mailing.
(5) If a transaction is a single transaction that includes a
component in addition to advertising and promotional direct mail,
this section only applies if the primary purpose of the transaction
is to attract public attention or to sell, popularize, or secure
financial support for the sale of the product or service.
(6) Nothing in this section limits a purchaser's obligation
for sales or use tax due to any state to which the direct mail is
delivered or limits a purchaser's right under any other law for a
credit or refund of sales or use taxes paid to any other
jurisdiction.
(7) As used in this section:
(a) "Advertising and promotional direct mail" means direct
mail the primary purpose of which is to attract public attention to
a product, service, person, business, or organization, or to
attempt to sell, popularize, or secure financial support for a
product, service, person, business, or organization.
(b) "Other direct mail" means any direct mail that is not
advertising and promotional direct mail regardless of whether
advertising and promotional direct mail is included in the same
mailing. Other direct mail includes, but is not limited to, any of
the following:
(i) Transactional direct mail that contains personal
information specific to the addressee such as invoices, bills,
statements of account, and payroll advices.
(ii) Any legally required mailings such as privacy notices,
tax reports, and stockholder reports.
(iii) Any other nonpromotional direct mail delivered to
existing or former shareholders, customers, employees, or agents
such as newsletters and informational pieces.
Enacting section 1. Section 21 of the general sales tax act,
1933 PA 167, MCL 205.71, is repealed.
Enacting section 2. This amendatory act takes effect 90 days
after the date it is enacted into law.