All states that have a sales tax also have a companion tax for purchases that are made outside of those states. In Michigan, this companion tax is called Use Tax, also known as remote sales tax. It is a six percent tax that may be due on catalog, telephone, and internet purchases from out-of-state sellers, as well as purchases made in a foreign country while traveling when you intend to bring those items back to Michigan. Use Tax must be paid on the total price paid to the seller, including any shipping and handling charges.
Examples of purchases where sales tax may not be collected include purchases made through the internet, mail-order catalogs, or from out-of-state sellers. You should review your records to determine whether Michigan sales tax was charged at the time of purchase. If Michigan sales tax was paid at the full six percent rate, no additional tax is due. If you paid less than six percent in sales tax, you may owe the difference as Use Tax.
For purchases totaling less than $1,000, you may choose to enter either the total amount of qualifying purchases or use the Michigan Use Tax Table, if applicable. If a single out-of-state purchase exceeds $1,000, you must report the actual purchase amount rather than using the table.
Program Entry
To report Use Tax within the program, go to:
- State Section
- Edit Michigan Return
- Use Tax
For more information regarding Michigan use tax, please refer to MI-1040 instructions.