Michigan to tax more online purchases

Michigan will collect sales tax from out-of-state online retailers in the wake of a U.S. Supreme Court ruling. Pictured in this photo taken June 30, 2014, is the Supreme Court building in Washington. The Supreme Court agreed Monday to weigh new limits on the ability of workers to band together to dispute pay and workplace issues. (AP Photo/Pablo Martinez Monsivais)

LANSING, MI -- Michigan's six percent sales tax will soon be applied to companies with no physical location in the state, the Department of Treasury announced Monday.

In 2015, Gov. Rick Snyder signed a bill requiring out-of-state companies with some sort of a "nexus" in the state, such as a warehouse or distribution center, to collect and remit those taxes starting Oct. 1, 2015. That was a legal line the state could toe up to, and it looped in big retailers like Amazon.

But a recent U.S. Supreme Court ruling overturned old cases and determined that states could collect sales tax from online retailers even if those retailers did not have a physical presence in the state.

The Michigan Department of Treasury plans to do so through an administrative requirement, collecting sales tax from companies that do more than $100,000 in sales or do 200 or more transactions in Michigan in the previous calendar year.

"This is an important step forward in the fair administration of our tax system," said State Treasurer Nick Khouri in a press release.

"With more and more shopping being done online, this change will make sure both hometown businesses and out-of-state online retailers are treated equally."

Technically, Michigan residents are all supposed to keep track of any online, mail order or out-of-state purchases and give the state 6 percent sales or use tax on our tax returns. However, many people fail to do so and it's not widely enforced.

Now the state is collecting sales tax from the out-of-state companies, which are likely to pass the cost on to consumers through an added charge.

The Department of Treasury estimates the rule change will bring in an extra $200 million per year in state revenue.

The Associated Press contributed to this report.

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