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Tax Law

Marketplace Monday: Michigan Legislature Approves Marketplace Collection Law

As we near the end of 2019, Michigan appears to be closing in on being the 39th state to pass a state tax marketplace collection law. The legislation passed a Republican-led Senate unanimously last week, and it is headed to the Governor who is expected to sign the bill.

In addition to marketplace collection requirements, the legislation also codifies Michigan’s Wayfair guidance issued in 2018. Remote sellers are required to collect Michigan sales tax under guidance and legislation if they have more than $100,000 in sales or 200 transactions in Michigan. Marketplace facilitators would also be subject to the same threshold.

For marketplace facilitators, the legislation would be effective January 1, 2020.

Why this is important: Michigan is one of the last states in 2019 to potentially enact a marketplace collection law. Only a handful of states have not yet enacted marketplace collection laws. However, it is anticipated that these remaining states may propose and enact such legislation in 2020.

What to prepare for: Because Michigan’s marketplace collection law will become effective in less than 30 days if it is signed by the Governor, marketplaces will have a short time period to prepare for turn on of sales tax. It is important to take steps now to prepare for a January 1, 2020 turn on date.