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HB 5688

Sales tax: other; deduction or exclusion and audit of qualified delivery network sales; provide for. Amends sec. 2d of 1933 PA 167 (MCL 205.52d).

2025-2026 Regular Session Introduced by Mike Hoadley and 1 co-sponsor

HB 5688 creates a new qualified delivery network sale category that lets delivery networks deduct the tax they paid to sellers, preventing double taxation.

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Bill Summary · HB 5688

Summary of HB 5688 (Michigan, 2025-2026)

Purpose and Intent

  • HB 5688 amends the General Sales Tax Act (1933 PA 167) to address “qualified delivery network sales” and allow a delivery network company or marketplace seller to handle sales tax collection and remittance for those specific transactions.
  • The bill is intended to prevent double taxation in certain third-party delivery transactions and clarify tax treatment for deliveries arranged through a delivery network.

Key Provisions and Changes

  1. Marketplace Facilitators generally remit tax

    • Reaffirms that a marketplace facilitator with nexus in Michigan must remit sales tax on all taxable sales made by the facilitator or facilitated for marketplace sellers to purchasers in Michigan, regardless of nexus of the seller.

  2. Audit framework

    • The Department of Treasury would audit either the marketplace facilitator for sales it makes or facilitates, and (with some exceptions) not audit the marketplace seller unless information provided by the seller is insufficient.

  3. Liability relief mechanics (general)

    • Facilitators can be relieved of liability for underpayment if the shortfall results from incorrect or insufficient information provided by a marketplace seller (affiliates are excluded from relief).

  4. Qualified Delivery Network (QDN) sales (new category)

    • Creates a new category: “qualified delivery network sale.”
    • Delivery network company (a type of marketplace facilitator) may deduct or exclude from its tax liability the amount of tax paid to the marketplace seller in connection with a QDN sale, subject to specific limits.
    • Conditions for the deduction/exclusion:
      • The marketplace seller must have charged the delivery network company for the tax on the QDN sale.
      • The deduction cannot exceed the tax amount charged by the marketplace seller to the delivery network company.
    • Audit dimension: Department may audit both the marketplace seller and the delivery network company for QDN sales.

  5. Definitions (selected)

    • Delivery network company: A marketplace facilitator operating a platform used to provide delivery services via a delivery network courier.
    • Delivery network courier: An individual delivering goods via personal transportation or other means (excluding common carriers or motor carriers as defined by state tax law).
    • Delivery services: Pickup and delivery of tangible property from a Michigan marketplace seller to a Michigan customer, with a cap of 75 miles for typical delivery travel.
    • Qualified delivery network sale: A sale that is part of delivery services facilitated by a delivery network company, sourced to Michigan under the act, and where the tax is paid to the marketplace seller in connection with the delivery services.
    • Marketplace facilitator and marketplace seller: As defined in existing law, with the facilitator generally handling advertising/listing and payment transmission for the marketplace seller’s sales.

  6. Operational scope and timing

    • The QDN-related provisions apply to sales made on and after the amendatory act’s effective date.
    • The act applies regardless of whether the marketplace facilitator has a physical presence in Michigan.

Affected Parties

  • Primary: Marketplace facilitators (e.g., platforms that host third-party sellers and process payments) with nexus in Michigan.
  • Also affected: Marketplace sellers that participate in deliveries via delivery network companies.
  • Department of Treasury: Would administer audits for QDN sales and oversee the deductions/exclusions for tax paid by marketplace sellers to delivery network companies.

Procedural and Timeline Aspects

  • Enactment and effective date: The bill’s specific effective date is not stated in the provided text; the fiscal analysis references first full year of operation (FY 2026-27), implying an implementation timeline aligned with enactment in 2026.
  • Legislative process: Introduced March 10, 2026; referred to the Committee on Economic Competitiveness; subsequently progressed through committee and House approval with the House passing on April 14, 2026, and granting immediate effect.

Fiscal Impact

  • Estimated revenue loss: Approximately $2.0 million in the first full year (FY 2026-27), with ongoing losses growing with inflation and growth in third-party delivery services.
  • Revenue impact: Primarily affects state sales tax revenue, with distributions split between the School Aid Fund, local revenue sharing, and the general fund.
  • Administrative costs: Likely to increase Department of Treasury costs, but may be absorbed within current appropriations; additional audits could be pursued but would require appropriation if costs exceed current levels.

Stakeholder Reactions (as of the analysis)

  • Support: Instacart, Department of Treasury, Detroit Regional Chamber, DoorDash, Mackinac Center, Michigan Chamber of Commerce.
  • Opposition: Michigan Association of Secondary School Principals, Michigan Association of Superintendents and Administrators, Oakland Schools, and related education organizations.

Bottom Line

HB 5688 creates a targeted exception and new framework for qualified delivery network sales, allowing delivery network companies to deduct or exclude the tax amount paid to marketplace sellers for these sales, while enabling audits of both the delivery network and the seller. The measure aims to prevent double taxation in certain third-party delivery scenarios and aligns tax treatment with a broader delivery ecosystem, at a projected state revenue cost in the low millions in the near term.

Compiled from official sources — confirm details with the bill’s official record.

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