Michigan Sales And Use Tax Certificate Of Exemption printable pdf download

Sales and Use Tax Exemptions and Requirements

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MICHIGAN DEPARTMENT OF TREASURY

Revenue Administrative Bulletin 1996 - 6

Approved: December 5, 1996

SALES AND USE TAX EXEMPTIONS AND REQUIREMENTS

(Replaces Revenue Administrative Bulletin 1990-32)

RAB-96-6. This bulletin illustrates the recommended sales and use tax exemption claim formats acceptable to the Michigan

Department of Treasury (Department), incorporating the amendments to the General Sales Tax Act and Use Tax Act of Public

Acts 132, 156, and 424 of 1994 and Public Act 254 of 1995.

BACKGROUND

Section 17 of the General Sales Tax Act [MCL 205.67; MSA 7.538] lists the information that must be included in supporting a

claim for exemption from sales tax:

"If an exemption from sales tax is claimed because the sale is for resale or for any of the other exemptions or

deductions granted under this act, a record shall be kept of the name and address of the person to whom the sale is

made, the date of the sale, the article purchased, the use to be made of the article, and the amount of the sale, and if

that person has a sales tax license, that number shall also be included."

Section 14 of the Use Tax Act [MCL 205.104; MSA 7.555(14)] and Department of Treasury Sales and Use Tax Administrative

Rule, 1979 AC, R 205.23(5), reiterate these requirements.

Public Act 132 of 1994 amended Section 17 of the General Sales Tax Act by adding the following:

"If a taxpayer maintains the records required under this section, and accepts an exemption certificate from the buyer

in good faith on a form prescribed by the department, the taxpayer is not liable for collection of the unpaid tax after a

finding that the sale did not qualify for exemption under this act. As used in this section, "good faith" means that

the taxpayer exercised reasonable care and effort to determine that the purchaser was entitled to the exemption being

claimed (emphasis added)."

Section 17 of the General Sales Tax Act was also amended by Public Act 254 of 1995 to include the following:

For purposes of this section, exemption certificate includes a blanket exemption certificate on a form prescribed by

the department that covers all exempt transfers between the taxpayer and the buyer for a period of 3 years or for a

period of less than 3 years as stated on the blanket exemption certificate if that period is agreed to by the buyer and

taxpayer.

TAX EXEMPTION NUMBERS

The Michigan Department of Treasury does not issue "tax exemption numbers" for any type of organization. Sellers should not

accept a "number" as evidence of exemption from sales and use taxes. (However, a sales tax license number may support a tax

exemption claim based on "for resale at retail" as described later in this bulletin.)

CERTIFICATE OF EXEMPTION-SINGLE PURCHASE

The Department's prescribed form for the Certificate of Exemption is included in this bulletin. The Department will also accept

any exemption certificate contained in a Sales and Use Tax Administrative Rule, the Uniform Sales and Use Tax Certificate

approved by the Multistate Tax Commission and as discussed later in this bulletin, a purchase order issued by the purchaser.

Collectively, these items are referred to as "exemption claims", and represent the only acceptable formats.

An exemption claim must be presented by the purchaser to the seller. Whether or not an exemption is allowed depends on the

type of organization purchasing the item(s), the activity of the purchaser or the proposed use of the item(s). Characterization by

the purchaser that the sale is exempt is not, in itself, proof of exemption.

If the seller accepts, in good faith, the exemption claim, the seller will not be liable for collection of the unpaid tax after a finding

that the sale did not qualify for exemption. As defined by Public Act 132 of 1994, "good faith" means the seller exercised

reasonable care and effort to verify the buyer's entitlement to the exemption.

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Michigan Sales And Use Tax Certificate Of Exemption

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