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Michigan to force online retailers to collect sales tax

Jan 16, 2015

Amazon.com is one of the online retailers which will be regulated by the newly-passed Main Street Fairness legislation.
Credit User soumit / flickr.com

Michigan residents who buy from Amazon.com and other online stores will be forced to pay the state's 6 percent sales tax starting October 1 of this year.

Gov. Rick Snyder signed the so-called "Main Street Fairness" legislation (Public Acts 553 and 554 of 2014) into law this Thursday. It will require Internet retailers with a "physical presence" in Michigan to collect and remit sales tax on Michigan purchases. Internet retailers subject to this law include Amazon, Overstock.com and eBay, among others.

The bill, which received bi-partisan support, is intended to "promote simplification in the administration and collection of sales and use taxes". On his website, Snyder further explains his rationale for signing the law:

This Main Street Fairness legislation levels the playing field for local businesses, helping Michigan job providers better compete with online retailers. Local, brick-and-mortar businesses drive our economy and without implementing this fix, they will continue to serve as showrooms for online retailers.

Currently, online shoppers are supposed to voluntarily pay unassessed taxes on Internet purchases when filing their state tax returns. But few comply. Through mandating tax collection by the retailers themselves, this law will generate an estimated $60 million a year.

The Republican-led Legislature passed the legislation last month in conjunction with a $1.3 billion road funding plan. Unlike other parts of the plan, the Internet sales tax measures aren't contingent on voters also approving a sales tax increase on the May statewide ballot.

- Ari Sandberg, Michigan Radio Newsroom