STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6320

November 7, 1985

TAXATION:

Sales tax on retail sale of tires, including federal excise tax

The sales tax shall be collected upon the entire gross proceeds from the retail sale of tires, including the amount of the federal manufacturers excise tax.

Honorable Ernest W. Nash

State Representative

The Capitol

Lansing, Michigan 48909

You have requested my opinion on the question 'whether federal excise tax when listed on a bill of sale as a separate cost item, should be subject to state sales tax.' Specifically, you ask if the Michigan Department of Treasury may collect sales tax on the federal excise tax charged upon the sale of truck tires.

It is a firmly established rule of tax law that a state sales tax may not be exacted on that part of the sale price which represents another federal tax which first attaches the moment a retail sale is made. Conversely, the sales tax is imposed upon the entire sales price including another federal tax which attaches prior to the retail sale. Standard Oil Co v Michigan, 283 Mich 85, 95; 276 NW 908 (1937); Cunningham Drug Stores, Ins v Commissioner of Revenue, 319 Mich 467; 29 NW2d 915 (1947). Consequently, Michigan sales tax is due upon that portion of gross proceeds from retail sales which represents manufacturers excise taxes as distinguished from retail excise taxes.

The federal tax upon tires is imposed by the Internal Revenue Code of 1954 (IRC) Sec. 4071; 68A Stat 482 (1954); 26 USC 4071, upon sale 'by the manufacturer, producer, or importer.' IRC, Sec. 4071(b) (1954), further provides that if a tire manufacturer, producer or importer sells tires at retail, the federal excise tax attaches prior to the time of the retail sale. Thus, the federal tax attaches prior to sale by the retailer to the consumer.

It is my opinion, therefore, that Michigan sales tax shall be collected upon the entire gross proceeds from the retail sale of truck tires, including the amount of the federal manufacturers excise tax.

Frank J. Kelley

Attorney General