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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)



Opinion No. 5998

October 19, 1981


Sales tax imposed on merchant seller

The state sales tax is imposed upon merchant sellers.

Honorable Joe Conroy

State Representative

State Capitol

Lansing, Michigan

You have requested my opinion on the following question:

Is the merchant seller of tangible personal property or the buyer of that property the taxpayer of the Michigan sales tax?

Const 1963, art 9, Sec. 8 provides, in part:

'The Legislature shall not impose a sales tax on retailers at a rate of more than 4% of their gross taxable sales of tangible personal property.' (Emphasis added.)

The Legislature has enacted the General Sales Tax Act, 1933 PA 167, MCLA 205.51 et seq; MSA 7.521 et seq. In 1933 PA 167, supra, Sec. 2 the Legislature has, in part, provided:

'There is hereby levied upon and there shall be collected from all persons engaged in the business of making sales at retail, as hereinbefore defined, an annual tax for the privilege of engaging in such business equal to 4% of the gross proceeds thereof. . . .' (Emphasis added.)

The Michigan Supreme Court has reviewed 1933 PA 167, Sec. 2, supra, in Sims v Firestone Tire & Rubber Co 397 Mich 469, 473; 245 NW2d 13, 15 (1976) and ruled:

'The constitutional and statutory language impose the direct legal incidence of the tax upon the retailer for the 'privilege' of engaging in retail business. Federal Reserve Bank of Chicago v Department of Revenue, 339 Mich 587; 64 NW2d 639 (1954). For the purposes of the act the retailer, not the consumer, is the taxpayer.' (Emphasis added.)

In Laurentide Leasing Co v Schomisch, 382 Mich 155; 169 NW2d 322 (1969), the court held that 1933 PA 167, Sec. 2, supra, did not impose a liability on the part of the buyer of the tangible personal property.

It should be noted that 1933 PA 167, supra, Sec. 23 provides, in part:

'Nothing contained in the act shall be deemed to prohibit any taxpayer from reimbursing himself by adding to his sale price any tax levied hereunder.'

It is my opinion, therefore, that merchant sellers are neither agent collectors of the Michigan sales tax nor remitters of sales taxes collected, but, rather, they are, in fact, the taxpayers under the General Sales Tax Act, supra, and are liable for the payment of the tax.

Frank J. Kelley

Attorney General

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