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SB 965

Use tax: definitions; definition of marketplace facilitators; expand. Amends secs. 5 & 5c of 1937 PA 94 (MCL 205.95 & 205.95c).

2025-2026 Regular Session Introduced by Roger Hauck

Marketplace facilitators with nexus must collect/remit use tax on all sales, direct or facilitated, in Michigan, shifting liability and reporting to platforms.

SENATOR REMOVED AS SPONSOR: JOSEPH BELLINO
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Bill Summary · SB 965

Summary of SB 965 (Michigan, 2025-2026)

Purpose and intent

SB 965 amends the Michigan Use Tax Act (1937 PA 94) to expand and clarify how use tax obligations apply to marketplace facilitators and the businesses that use their platforms. The bill defines and regulates marketplace facilitators, assigns liability for tax collection and remittance, and adjusts audit and relief provisions to reflect marketplace-facilitated sales. The overarching goal is to ensure tax collection on sales conducted through online or other marketplace platforms, even when the seller itself lacks nexus in the state.

Key provisions and changes

  • SECTION 5 (registration, nexus, and administration)

    • Requires subjects of the use tax to register with the Department, disclose information about agents and physical presence in Michigan, and source sales properly under section 20.
    • Excludes sellers with a general sales tax license from extra registration under the use tax act.
    • Mandates collection of use tax from consumers for taxable sales.

  • SECTION 5 (additional administrative rules)

    • Adds administrative requirements related to foreign corporations seeking authority to do business, tying authority to registration for use tax purposes.
    • Requires dissolution or withdrawal filings to include a tax-status certificate and imposes penalties if not obtained.

  • SECTION 5 (lessor elections)

    • Allows lessors of tangible personal property (including aircraft) to elect to pay use tax on lease receipts instead of full tax on acquisition, with timing rules for aircraft leases.

  • SECTION 5 (streamlined agreement)

    • Clarifies that sellers under the streamlined sales and use tax agreement who are not otherwise subject to use tax are exempt from registering under this act.

  • SECTION 5c ( marketplace facilitators and liability)

    • Determines that a marketplace facilitator with nexus must collect and remit tax on all taxable sales made by the facilitator or facilitated for marketplace sellers to purchasers in Michigan, regardless of the seller’s nexus status.
    • Establishes that a marketplace facilitator is liable for taxes on both direct and facilitated sales and has the same duties as a taxpayer.
    • Requires marketplace facilitators to report direct and facilitated sales to purchasers in Michigan per Department rules.
    • Inserts a prohibition on class-action lawsuits against marketplace facilitators for overpayments of use tax related to facilitated sales, while preserving a purchaser’s right to refunds under section 14b.
    • States that purchasers remain obligated to remit tax on transactions where no tax is remitted by the facilitator or seller.
    • Limits auditing to the marketplace facilitator for facilitated sales unless information from the seller is insufficient to determine liability.
    • Creates relief provisions for facilitators if incorrect tax collection resulted from information supplied by a seller (not applicable if the seller is an affiliate).
    • Provides relief for facilitators if tax was already paid to the department by the seller or via an exemption claim.
    • Clarifies that a marketplace seller is not liable for taxes on facilitator-facilitated sales unless the seller provides insufficient information to the facilitator.
    • Applies whether or not the facilitator has physical presence in Michigan.
    • Defines key terms:
    • Affiliate
    • Marketplace facilitator (with specific inclusions and exclusions)
      • Includes entities that list or advertise for sale, collect payment, and remit to the seller, directly or via affiliates.
      • Excludes certain platforms that purely provide advertising without the facilitator’s own collection/remittance activities.
      • Excludes platforms offering rooms/lodging (hotels/motels) and telecommunications services from marketplace-facilitator status if certain licensing conditions apply.
    • Marketplace seller (retail sales through a facilitator’s marketplace)
    • Residential dwelling unit (definition used for lodging-related exemptions)

Who or what would be affected

  • Marketplace facilitators: Entities that operate platforms enabling sales (online marketplaces, app-based platforms) would bear primary tax collection and remittance responsibility for taxable sales made through their platforms in Michigan.
  • Marketplace sellers: Businesses that utilize marketplace platforms may have reduced direct nexus-related tax liability audit exposure, but must furnish necessary information to facilitators to determine liability.
  • Consumers in Michigan: Use tax collection and remittance on facilitated and direct sales would be expanded; class-action protections for overpayment disputes are introduced.
  • Tax administration: Department of Treasury (or the relevant Michigan department) regulatory framework expands to auditing and reporting requirements for marketplace-facilitated sales.

Procedural and timeline considerations

  • Introduction and referral: Introduced May 14, 2026; referred to the Committee on Regulatory Affairs.
  • Sponsorship: Initially sponsored by Senator Joseph Bellino; co-sponsored by Senator Roger Hauck. Note: The sponsor listed in action history indicates changes in sponsorship.
  • Effective dates: The bill text does not specify an explicit effective date within the excerpt provided; typical enactment would follow passage and signing, with potential phased implementation depending on department regulations. Additional amendments or sunset provisions could be added during floor debates or committee work.

Practical implications

  • Michigan would expand use tax compliance to include marketplace facilitators with nexus, aligning with trends in other states.
  • Direct and facilitated sales would be subject to tax collection, potentially expanding tax revenue and simplifying compliance for remote sellers.
  • The act introduces notable limitations on litigation against facilitators and clarifies liability pathways for sellers and buyers, aiming to reduce enforcement complexity and disputes.

If you’d like, I can compare SB 965 to existing Michigan use tax rules or to similar U.S. state marketplace facilitator laws for a broader context.

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

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