No, that’s not a typo. As a result of Michigan’s new business tax, retailers are paying taxes on the 6% sales tax they collect from customers.
Under the Michigan Business Tax (MBT) enacted in June, sales taxes must be counted along with sales under gross receipts, which are then subject to a gross receipts tax.
“It defies logic that you would tax somebody on something they don’t keep, that’s a pass-through,” said Eric Rule, director of governmental affairs for the Michigan Retailers Association. “Nobody anticipated that.”
Scott Schrager, director of legislative affairs for the Michigan Department of Treasury, said sales tax was always treated this way under the Single Business Tax, which the MBT is replacing. “The difference is that under the Single Business Tax, it was only important for those taxpayers that used a gross receipts method,” Schrager said. “Under the MBT, everyone pays gross receipts tax.”
Despite that clarification, the department has said it will look into the matter.