The General Sales Tax Act and the Use Tax Act have been amended. Effective April 26, 2023, delivery and installation charges are exempt from Michigan sales tax and use tax if both of the following conditions are met:
- The charges are separately stated on the invoice, bill of sale, or similar document provided to the purchaser; and
- The seller (taxpayer) maintains its records to show separately the transactions used to determine the sales or use tax, as applicable.
Delivery charges are charges by the seller for preparation and delivery to a location designated by the purchaser, including transportation, shipping, postage, handling, crating, and packing.
Delivery and installation charges that involve the sale of electricity, natural gas or artificial gas by a utility remain subject to sales tax and use tax.
Unpaid assessment balances
Additionally, the Treasury will cancel within 90 days any outstanding balances on notices of assessments issued before the effective date and related to delivery or installation charges that are now exempt under the amendments. While Treasury will be proactive in locating and canceling assessments, taxpayers with outstanding balances for delivery or installation charges are encouraged to contact Treasury at Treas-TCB-Technical@michigan.gov.
Taxpayers cannot receive a refund for sales tax or use tax on delivery or installation charges that were remitted to the Treasury before the effective date of April 26, 2023. Neither will purchasers be able to seek refunds for sales or use tax paid on delivery or installation charges.
Businesses should update their sales tax and use tax processes so that tax is not applied to exempt delivery or installation charges. For assistance, contact Yeo & Yeo.