Michigan Sales and Use Tax on CMC rental and supplies

[Dave]

Just ordered a Wizard on a rental program and wonder if any Michiganders have input on what is taxable and non-taxable for sales and uses on the deal.

1.) Program licensing Fee?

2.) Monthly rental payments ...in Indiana I had color copiers which were digital equipment and after going through a state audit found out that I was correctly not paying sales tax on the rental fee because it was considered manufacturing equipment. I took raw materials ...paper and toner ...and through a process produced a value added product that I then charges sales tax on where applicable. Would a CMC be similar?

3.) Additional corners?

4.) Blades?

5.) Of course the mat board is a raw material and is tax exempt.

I do realize that each state is different but wondered if anyone in Michigan has gone through the hoops to determine just what is and what is not taxable. If I call the state I'm sure they'll just say everything is taxable.

Thanks for any input.

 

[Dave]

Well ...each state is different, but I did get clarification from the state of Michigan.

Any software licensing fees, rental payments, blades, board etc. are not taxable. Any cost associated with directly producing a value added product where applicable sales tax is charged is not taxable. This exemption applies whether it is part and parcel of the product or machinery or a tool necessary for its production.

Sales and use tax must be paid on any office supplies, furniture and fixtures or periodicals.

 

[JFeig]

You found out prior to my return to the shop.

The real question will be - do we charge tax on some of the items that traditionally we did not collect sales tax on.

Examples:

delivery charges and installation
design charges
labor only activities
shipping crates

 

[Tim Hayes.]

Dave,
I have a similar situation, but here in Virginia. I suggest that you call Wizard and they can walk you through the issue as they have dealt with it before.
Best,
Tim

 

[JFeig]

Tim and everyone outside Mich.........

We just had a mini shutdown of the state over the legleslature not being able to balance a budget......... The State of Michigan income tax was raised from 3.9% to 4.35% and a lot of prior sales tax exempt services are now taxable. They resolved the issue temporally this morning about 4:30am. The additional services included under the sales tax has not been firmed up 100%.

 

[Dave]

Tim ...I did call Christina at Wizard but she said each state is different and couldn't guide me. Actually the folks at the Michigan Treasury Dept. were quite helpful ...not to mention I liked what I heard.

The state of Michigan is in a state of flux now on the ancillary charges Mr. Feig pointed out.