Tax Law Blog

The Michigan Use Tax Act has several notable exemptions, one of which is the agricultural exemption.  The agricultural use tax exemption covers “[p]roperty sold to a person engaged in a business enterprise and using and consuming the property . . . in the breeding, raising, or caring for livestock, poultry, or horticultural products.”  MCL § 205.94(1)(f).  This establishes two requirements for the use tax exemption:

If your business is currently undergoing a use tax audit, then take notice.

The statute of limitations for use tax audits is set forth in the Revenue Act.  Specifically, MCL 205.27a states that:

Every year, the Michigan Department of Treasury audits Michigan businesses for compliance with the Sales and Use tax laws. Oftentimes, those audits result in tax assessments that are disputed by the taxpayer. But, how does a taxpayer navigate the audit process and challenge a tax assessment?

Let’s take a look at the basics.

Suppose you visit your local electronics store and purchase a new TV.  You pay for the TV, but notice that the retailer did not charge sales tax.  Are you now liable for use tax?

The answer is “no” according to a recent Court of Appeals ruling. Andrie, Inc. v. Department of Treasury.  But, let’s look at the details.

The personal property tax (“PPT”) is one of Michigan’s oldest forms of taxation, dating back to the 1890s. However, during the last decade, the PPT has been a constant source of contention.  Advocates include local governments, which argue that the PPT is a vital source of revenue.  Opponents include many businesses, which contend that the PPT is a competitive disadvantage and impediment to attracting and retaining businesses in Michigan.