Under Michigan Sales/Use Tax Statutes, a casual seller, i.e., not a licensed new or used vehicle dealer, is not responsible for collecting and remitting sales tax on the sale of a used motor vehicle. Instead, the buyer is subject to Michigan use tax when registering the title with the Michigan Secretary of State office.
The Michigan Department of Treasury has established a system to cross-reference amounts reported to the Michigan Secretary of State as the sales price for a used vehicle transfer to the National Automotive Dealers Association (NADA) database for the retail value of used vehicles. Under Michigan law, the use tax payable on a used vehicle transfer is 6% on the greater of the purchase price or the retail value of the vehicle at the time of transfer.
Based on this comparison, when the reported sales price is less than the NADA value, the Michigan Treasury will send a series of notices with the intent of either supporting the reported price, or collecting the delinquent use tax. The first mailing is expected in mid-August. The notices explain the assessment process and options for supporting a value less than NADA amounts.