HOUSE BILL NO. 5746

May 23, 2024, Introduced by Reps. Filler, Farhat, Wilson and Martus and referred to the Committee on Tax Policy.

A bill to amend 1937 PA 94, entitled

"Use tax act,"

by amending section 5c (MCL 205.95c), as added by 2019 PA 144.

the people of the state of michigan enact:

Sec. 5c. (1) Notwithstanding anything to the contrary in this act, a marketplace facilitator that has nexus in this state shall collect and remit the tax due under this act on all taxable sales made by the marketplace facilitator or facilitated for marketplace sellers to a purchaser in this state regardless of whether the marketplace seller for whom sales are facilitated has nexus with this state.

(2) A marketplace facilitator is a person liable for the tax imposed under this act, regardless of whether the marketplace facilitator makes only facilitated sales for marketplace sellers or a combination of direct and facilitated sales and has all the rights and duties of a taxpayer under this act.

(3) A marketplace facilitator shall report its direct sales and the sales it facilitates to purchasers in this state in a manner as prescribed by the department.

(4) A class action shall not be brought against a marketplace facilitator in any court of this state on behalf of purchasers arising from or in any way related to an overpayment of use tax collected and remitted on sales facilitated by the marketplace facilitator, regardless of whether that claim is characterized as a tax refund claim. Nothing in this subsection affects a purchaser's right to seek a refund as provided under section 14b.

(5) Nothing in this section affects the obligation of a purchaser to remit the tax imposed by this act for a taxable transaction on which a marketplace facilitator or marketplace seller does not remit sales or use tax.

(6) Except as otherwise provided in this subsection or subsection (10), if a marketplace facilitator is required to collect and remit tax under subsection (1), the department shall audit only the marketplace facilitator for sales made by marketplace sellers that were facilitated by the marketplace facilitator. The Except as otherwise provided in subsection (10), the department shall not audit a marketplace seller for sales facilitated by a marketplace facilitator required to collect and remit tax under subsection (1) unless the marketplace seller fails to provide the marketplace facilitator with sufficient information to the extent that the marketplace facilitator is not liable under subsection (7).

(7) A marketplace facilitator is relieved of liability under this section for failure to collect and remit the correct amount of tax to the extent that the marketplace facilitator demonstrates, to the satisfaction of the department, that the failure was due to incorrect or insufficient information given to the marketplace facilitator by the marketplace seller. The relief under this subsection does not apply if the marketplace seller is an affiliate of the marketplace facilitator.

(8) A marketplace facilitator is relieved of liability under this section if the marketplace facilitator demonstrates, to the satisfaction of the department, that the tax levied under this act on a sale facilitated by the marketplace facilitator was paid to the department by the marketplace seller or provides a claim of exemption provided by the marketplace seller's purchaser.

(9) A Except as otherwise provided in subsection (10), a marketplace seller is not liable for the tax imposed by this act on sales made through a marketplace facilitator required to collect and remit tax under subsection (1) unless the marketplace seller fails to provide the marketplace facilitator with sufficient information to the extent that the marketplace facilitator is not liable under subsection (7).

(10) Notwithstanding anything to the contrary in this section, all of the following apply regarding a qualified delivery network sale:

(a) The marketplace seller is liable for the tax imposed by this act on the qualified delivery network sale.

(b) The department may audit the marketplace seller for the qualified delivery network sale.

(c) Subject to both of the following provisions, a delivery network company may, in the form and manner prescribed by the department, deduct or exclude from its tax liability under this section the amount of tax under this act that the delivery network company paid to the marketplace seller in connection with the qualified delivery network sale:

(i) The delivery network company may not claim a deduction or exclusion under this subdivision if the marketplace seller did not charge the delivery network company for the tax imposed under this act on the qualified delivery network sale.

(ii) The amount of the deduction or exclusion under this subdivision may not exceed the amount of tax under this act that was charged by the marketplace seller to the delivery network company in connection with the qualified delivery network sale.

(11) (10) This section applies regardless of whether the marketplace facilitator has a physical presence in this state.

(12) (11) As used in this section:

(a) "Affiliate" means an affiliated person as that term is defined in section 5a.

(b) "Delivery network company" means a marketplace facilitator that maintains a website or mobile application used to facilitate delivery services that are performed or otherwise conducted by a delivery network courier.

(c) "Delivery network courier" means, except as otherwise provided in subdivision (d), an individual who provides delivery services through a delivery network company by doing any of the following:

(i) Using a personal means of transportation, such as a motor vehicle, bicycle, scooter, or other similar modes of transportation. As used in this subparagraph, "bicycle" and "motor vehicle" mean those terms as defined in sections 4 and 33 of the Michigan vehicle code, 1949 PA 300, MCL 257.4 and 257.33, respectively.

(ii) Using public transportation.

(iii) Walking.

(d) Delivery network courier does not include a common carrier or a motor carrier as that term is defined in section 1 of the motor carrier fuel tax act, 1980 PA 119, MCL 207.211.

(e) "Delivery services" means the pickup and delivery of tangible personal property, by a delivery network courier, from a marketplace seller located in this state to a customer located in this state, which may include the selection, collection, and purchase of the tangible personal property in connection with the delivery. Delivery services does not include a delivery requiring more than 75 miles of travel from the marketplace seller to the customer.

(f) (b) "Marketplace facilitator" means a person that meets the requirements of subparagraph (i), but does not include a person described in subparagraph (ii), (iii), or (iv):

(i) A person is a marketplace facilitator if the person facilitates a retail sale by a marketplace seller by listing or advertising for sale by a marketplace seller in a marketplace, tangible personal property or taxable services and either directly or indirectly through agreements or arrangements with third parties or its affiliates collecting payment from the customer and transmitting that payment to the marketplace seller for consideration.

(ii) Marketplace facilitator does not include a person who operates a platform or forum that provides internet, print, electronic, or any other form of advertising services, including listing tangible personal property or services for sale, if the person does not also engage directly or indirectly, through 1 or more affiliates, in the activities described in subparagraph (i).

(iii) A person is not a marketplace facilitator with respect to the sale of or charges for rooms, lodgings, or accommodations described in section 3a if the rooms, lodgings, or accommodations are provided by a hotelkeeper, motel operator, or other person that is registered under section 5 or licensed under section 3 of the general sales tax act, 1933 PA 167, MCL 205.53.

(iv) A person is not a marketplace facilitator with respect to the sale of telecommunications services as described in section 3a.

(g) (c) "Marketplace seller" means a person that makes retail sales through a physical or electronic marketplace operated by a marketplace facilitator.

(h) "Qualified delivery network sale" means a sale that meets all of the following requirements:

(i) The sale is made as part of delivery services facilitated by a delivery network company.

(ii) The sale is sourced to this state under section 20(1)(b).

(iii) The tax imposed by this act on the sale is paid by the delivery network company to the marketplace seller in connection with the delivery services.