Snyder signs bill requiring online sales tax collection
Lansing — Gov. Rick Snyder on Thursday signed legislation requiring some Internet retailers like Amazon.com to collect and remit Michigan’s 6 percent sales tax for online purchases made by Michiganians.
The new law takes effect Oct. 1 and affects companies that have warehouses, other businesses and advertisements in Michigan.
But absent action by Congress, online retailers like Overstock.com will not have to charge Michigan’s sales tax because they lack a physical presence in the state.
“We still need federal action to really get where we need to be on this topic,” Snyder said.
The two-bill package, passed by the Legislature last month, is expected to generate about $60 million in additional tax revenue — cash the state needs to weather lower-than-expected income tax receipts and surging tax credit refunds owed to businesses.
The state Treasury Department estimates $289.4 million in sales tax from Internet purchases went uncollected in the 2014 fiscal year. Some retailers with stores in Michigan, such as Wal-Mart and Meijer, already collect the tax for online purchases by Michigan residents.
“This is a critical issue for retailers that have invested in Michigan,” said James Hallan, president and CEO of the Michigan Retailers Association.
Snyder said his signature of the bill is “not at all” increasing taxes since the sales tax is already owed but going unpaid by consumers shopping on tax-free websites.
“What this is is a collections issue,” said Snyder, an accountant by trade. “There’s taxes owed.”
Taxpayers are legally supposed to remit unpaid sales taxes as a use tax on their income tax forms. In 2013, 108,600 taxpayers voluntarily paid $5.87 million in sales taxes they owed on their income tax forms.