The House Tax Policy Committee began debate on a two-bill
package that would require internet companies to collect sales tax on items
sold to Michigan customers. The Michigan Main Street Fairness Act is
co-sponsored by state Reps. Eileen Kowall (R-White Lake) and Jim Ananich
(D-Flint).
Under current law, states can only collect sales taxes from
retailers that have a physical presence in their state. Michigan residents are
required to pay a 6 percent sales tax on online orders through their income tax
form, however, many people fail to do so. The Michigan Main Street Fairness Act
would require online retailers to collect sales tax or maintain an office,
distribution facility, warehouse, storage place or similar place of business in
the state to facilitate delivery to the buyer.
During the committee discussion, the House Fiscal Agency
indicated that the state would not collect a great deal of revenue unless
federal legislation is enacted. The U.S. Senate is considering a proposal
to require all Internet companies to collect state and local sales taxes on
purchases. In May of 2012, Gov. Snyder indicated his support for the federal
Marketplace Fairness Act as a way to level the playing field between
brick-and-mortar shops and online retailers.
Meanwhile, the Michigan Department of Treasury indicated the state could
potentially lose $491 million in the 2013-14 fiscal year from the lack of sales
tax collection on mail-order and the Internet orders. House Tax policy Committee
Chairman Rep. Jeff Farrington (R-Utica) indicated the panel could pass the
legislation as early as May 15.