Bills taxing Amazon, other online marketplaces head to Whitmer
Michigan is poised to start taxing online marketplace facilitators such as Amazon, eBay and Etsy after the state Senate unanimously approved Wednesday the legislation and sent it to Gov. Gretchen Whitmer.
The package of four bills by Rep. Lynn Afendoulis, R-Grand Rapids, would impose a state sales and use tax on online sales facilitators, extending those taxes already levied on out-of-state retailers.
Afendoulis has said the sales and use taxes imposed on third-party marketplace facilities would ensure “tax fairness” among online retailers and generate millions of dollars more in taxes each year.
The legislation further puts into practice the 2018 Wayfair decision, a U.S. Supreme Court ruling that allowed states to collect sales and use taxes from out-of-state retailers who sold to Michigan customers.
After the Wayfair decision, the Michigan Treasury Department issued rules effective October 2018 imposing the sales and use tax on out-of-state or remote sellers, but stopped short of imposing the taxes on so-called marketplace facilitators.
The Wayfair tax is expected to bring in $225 million this fiscal year and $240 million next year.
If implemented by Jan. 1, 2020, the state expects the new sales and use tax imposed on marketplace facilitators to generate $60 million more in the remaining months of fiscal year 2020 and $96 million in fiscal year 2021.
Of the sales tax collected, 73% goes toward the School Aid Fund, 10% to state revenue sharing for communities and the rest is put in the General Fund, the state's main checkbook account.
The legislation would only apply to out-of-state businesses and facilitators whose sales exceeded $100,000 in the prior calendar year or if the seller had more than 200 separate transactions in the state the previous year.
Marketplace sellers who already pay sales or use tax in Michigan would not be taxed a second time to sell through a facilitator.