Instate

As a result of the passage of Public Acts 576 and 477 of the Public Acts of 1996, certain interstate commerce carrier property qualifies for exemption or partial exemption from Michigan sales tax when the property is purchased, leased, or rented in Michigan. The following information is being provided as an explanation of the exemption provision:

SALES TAX (sale completed in Michigan by registered dealer): Effective 1/1/97, a partial exemption is provided from sales tax on the percentage of "qualified trucks and trailers" use outside Michigan by an "interstate motor carrier".

A. "Qualified truck" means a commercial motor vehicle power unit that has 2 axles and a gross vehicle weight rating in excess of 10,000 lbs. or a commercial motor vehicle power unit that has 3 or more axles. A "qualifying trailer" is one designed to be drawn behind either of the described power units.

B. An "interstate motor carrier" is a person engaged in the business of carrying persons or property, other than themselves, their employees, or their own property for hire across state lines and whose fleet mileage was driven at least 10% outside of this state in the immediately preceding tax year. Preceding tax year is defined as the period beginning October 1st and ending the following September 30th. In computing fleet mileage, trucks used solely in only one state must be disregarded.

If the person does not qualify as an interstate motor carrier or the property purchased is not a qualified truck/trailer, tax is due on the full selling price of the truck/trailer. A person in their first year of business cannot be an interstate motor carrier as there is no "preceding tax year" on which to make a determination (tax is due on full selling price). A Michigan dealer must provide the Department of State branch office with the exemption percentage claimed by the purchaser at the time of applying for title. (See exemption computation in Use Tax section below).

Public Acts 116 and 70 of 1999 provide a full (non apportioned) sales and use tax exemption to interstate commerce carrier property and parts affixed to interstate commerce carrier property purchased, leased, or rented after April 30, 1999. Please refer to the requirements listed below:

In order to be eligible for exemption, the following requirements must be met.

1. You must be an interstate motor carrier.

Interstate Motor Carrier is defined as a person engaged in the business of carrying persons or property, other than themselves, their employees, or their own property, for hire across state lines, whose fleet mileage was driven at least 10% outside of Michigan in the preceding tax year. Tax year is defined as the period beginning October 1 and ending the following September 30.

2. The interstate motor carrier property must be rolling stock.

Rolling Stock is defined as a commercial motor vehicle power unit that has 2 axles and a gross vehicle weight rating in excess of 10,000 pounds, or a commercial motor vehicle unit that has 3 or more axles, a trailer designed to be drawn behind the above described power units, and parts affixed to either the power units or trailers.

USE TAX (property purchased, rented, or leased inside of Michigan or purchased in Michigan from a non dealer): Effective January 1, 1997, an exemption from use tax for qualified trucks/trailers purchased, rented, or leased in this state is provided on the percentage of qualified trucks' and trailer's use outside Michigan by an interstate motor carrier. An item is deemed purchased in this state if delivery required to complete the sale is made to a Michigan address. An item is deemed to be rented or leased in this state if the rental or lease agreement is entered into or possession is given at a Michigan address.

The exempt percentage is computed using mileage of qualified trucks (excluding trucks used solely in one state) as follows:

Outstate

As a result of the passage of Public Act 477 of the Public Acts of 1996, certain interstate commerce carrier property qualifies for exemption from Michigan use tax for property acquired after December 31, 1992 and before May 1, 1999. In order to be eligible from exemption, all criteria must be met and documented as follows:

A. You must be an "interstate motor carrier".

"Interstate Motor Carrier" is defined as a person engaged in the business of carrying persons or property, other than themselves, their employees, or their own property, for hire across state lines, whose fleet mileage was driven at least 10% outside of Michigan in the preceding tax year. Tax year is defined as the period beginning October 1 and ending the following September 30.

B. The interstate motor carrier property must be "rolling stock".

"Rolling Stock" is defined as a commercial motor vehicle power unit that has 2 axles and a gross vehicle weight rating in excess of 10,000 pounds, or a commercial motor vehicle unit that has 3 or more axles, a trailer designed to be drawn behind the above described power units, and parts affixed to either the power units or trailers.

C. The interstate commerce carrier property must have been acquired after December 31, 1992 and before May 1, 1999.

D. The interstate commerce property must have been purchased, leased, or rented outside of Michigan.

The property is deemed purchased outside of Michigan if delivery required to complete the sale is made to a non Michigan address. The property is rented/leased outside Michigan if the rental or lease agreement is entered into and possession given at a non Michigan address.

If tax was paid in error on acquisitions made after January 1, 1997, a request for refund must be made within the four year statutory period.  Refunds can no longer be made for periods prior to January 1, 1997.