The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)


STATE OF MICHIGAN

JENNIFER M. GRANHOLM, ATTORNEY GENERAL

CREDIT UNIONS:

TAXATION:

TAX COLLECTION:

TAX EXEMPTION:

Tax on retail sales to state-chartered credit unions.

Michigan sales tax must be collected and paid by a retailer on retail sales in Michigan of tangible personal property to a credit union chartered under Michigan law.


Opinion No. 7062

October 4, 2000


Honorable Gary C. Peters
State Senator
The Capitol
Lansing, MI


You have asked whether Michigan sales tax must be collected and paid by a retailer on all retail sales in Michigan of tangible personal property to a credit union chartered under Michigan law.

The General Sales Tax Act, 1933 PA 167, MCL 205.51 et seq; MSA 7.521 et seq, prescribes specific taxes to be paid to the state for the "privilege" of engaging in certain business activities. Section 2(1) imposes a privilege tax upon persons engaged in the retail sale of tangible personal property. Howard Pore, Inc v State Comm'r of Revenue, 322 Mich 49, 54; 33 NW2d 657 (1948). The sales tax imposed upon retailers is equal to 6% of the gross proceeds of all sales at retail. The legal incidence of the sales tax is imposed upon the retailer for the privilege of doing business, even though the economic burden falls chiefly upon the consumer. Federal Reserve Bank of Chicago v Dep't of Revenue, 339 Mich 587, 594; 64 NW2d 639 (1954) (emphasis added); Nat'l Bank of Detroit v Dep't of Revenue, 334 Mich 132, 138; 54 NW2d 278 (1952).

Michigan law considers the person on whom the legal incidence of a tax is imposed the "taxpayer," i.e., the person ultimately responsible for payment of the tax, regardless of the fact that collection responsibilities may be imposed upon others or the economic burden is passed on to others. The identity of the person responsible for payment of a tax is essential to the resolution of many issues, including (a) who has standing to contest a tax, (b) who may demand a refund for overpayment of taxes, and (c) who may claim constitutional or statutory exemptions from a tax. See Sims v Firestone Tire & Rubber Co, 397 Mich 469, 473; 245 NW2d 13 (1976); and OAG, 1981-1982, No 5998, p 420 (October 19, 1981).

Under the General Sales Tax Act, retailers are authorized to exclude from taxable gross sales, the sale of tangible personal property to certain persons, organizations and institutions. Sections 4a-4z. The Legislature has expressly provided in these sections of the General Sales Tax Act that purchases made by certain persons, organizations and institutions are "exempt from sales tax." Univ of Michigan v Dep't of Treasury, 217 Mich App 665, 672-673; 553 NW2d 349 (1996); R C Mahon Co v Dep't of Revenue, 306 Mich 660, 664-665; 11 NW2d 280 (1943). But the General Sales Tax Act provides no exemption for the retail sales of tangible personal property to state-chartered credit unions.

The Credit Unions Act, 1925 PA 285, MCL 490.1 et seq; MSA 23.481 et seq, authorizes the organization, operation and supervision of state-chartered credit unions. In this Act, the Legislature has provided that state-chartered credit unions "shall not be subject to taxation except as to real estate owned." Section 22. The question thus becomes whether the General Sales Tax Act subjects credit unions to a sales tax. Because the incidence of the state sales tax is fixed upon retailers, no tax is levied upon the purchaser under the General Sales Tax Act. In the example you pose in which a retailer sells tangible personal property to a credit union, the taxpayer is the retailer, not the state credit union. Federal Reserve Bank of Chicago, supra, 339 Mich at 597; Nat'l Bank of Detroit, supra, 334 Mich at 138. Thus, the credit union, as a purchaser, is not subjected to the state sales tax.

It is my opinion, therefore, that Michigan sales tax must be collected and paid by a retailer on retail sales in Michigan of tangible personal property to a credit union chartered under Michigan law.

JENNIFER M. GRANHOLM
Attorney Genera