Mich. Admin. Code R. 205.54 - Automobile and other vehicle sales

Rule 4.

(1) Sales of new and used automobiles, buses, trucks, tractors, trailers, housetrailers, motorcycles, motor scooters, and other vehicles for consumption or use are subject to the tax on the full retail sales price. The sales price includes the total amount of consideration, including cash, credit, property, and services, for which the vehicle is sold, whether received in money or otherwise, and without any deductions for federal taxes, freight, handling, delivery, commissions, repossessions, advertising, future free service, or any expense incurred as part of the cost of doing business. The sales tax must be paid to the secretary of state when the application of title is submitted by the dealer.

(2) In calculating the retail sales price of a motor vehicle subject to tax, if separately stated on the invoice, bill of sale, or similar document given to the purchaser, the following may be excluded:

(a) The agreed-upon value of a vehicle used as partial payment to a dealer, subject to the limitations set forth in R 205.15.

(b) Interest, financing, or carrying charges from credit extended on the sale of the vehicle.

(c) Taxes legally imposed directly on the consumer.

(3) Unless otherwise exempt, vehicle transfers between individuals are subject to use tax on the purchase price of the vehicle. In addition, equalization tax as computed under section 9 of the streamlined sales and use tax revenue equalization act, 2004 PA 175, MCL 205.179, is imposed to the extent that the retail dollar value at the time of acquisition exceeds the purchase price of the vehicle. The use tax and equalization tax due in a vehicle transfer between individuals is payable to the secretary of state when the application for title is submitted by the purchaser.

(4) When a vehicle is sold by a dealer, the sales price, together with the amount of sales tax to be paid to the secretary of state, must be indicated on the invoice, sales order, the statement of this state's retail sales tax paid as provided by the secretary of state, and on the records of the dealer. Authorized discounts are deductible only when given to the purchaser by the dealer at the time of sale and shown on the invoice, sales order, the statement of sales tax paid as provided by the secretary of state, and on the records of the dealer. See R 205.22.

(5) The sale of a vehicle for delivery and use outside this state is not subject to tax if all the following conditions exist:

(a) The dealer delivers and assumes all responsibility for delivery without knowledge that the vehicle will be returned to this state, except for a temporary use in this state.

(b) Title to the vehicle passes to the purchaser at a point outside this state.

(c) A vehicle registration for this state is not required.

(d) The dealer's records substantiate subdivisions (a) to (c) of this subrule.

(6) For a vehicle sold and delivered in this state to a person securing special registration under section 226 of the Michigan vehicle code, 1949 PA 300, MCL 257.226, to register and use that vehicle in a state that does not impose use tax upon registration in that state or that does not have a sales tax reciprocity agreement with this state, no tax is collected upon the sale and delivery of that vehicle in this state.

(7) Unless otherwise exempt, tax is levied on any vehicle sold and delivered in this state if the purchaser intends to register and use that vehicle in another country or does not qualify for special registration issued by the secretary of state. (See MCL 257.226.) A vehicle purchased and remaining in this state for a period of more than 30 days is subject to sales tax even if the purchaser is not a legal resident of this state or the vehicle will be registered in another state. If the purchaser is not a resident and is actively serving in the Armed Forces of the United States, the sale may be exempt from tax if that purchaser provides a sworn statement of nonresidency from that purchaser's commanding officer and registers the vehicle in the purchaser's state of residency or domicile.

(8) For a vehicle sold and delivered in this state to a person securing special registration under section 226 of the Michigan vehicle code, 1949 PA 300, MCL 257.226, to register and use that vehicle in a state having a sales tax reciprocity agreement with this state, tax is imposed on the lesser of the tax to be imposed on the vehicle by the state in which the vehicle will be registered and the amount of Michigan sales tax due on the sale of the vehicle. In computing the tax due in each state under this provision, the value of any trade-in should be deducted in accordance with the respective law of each state. See R 205.15.

(9) When a vehicle that has been sold is returned to the dealer voluntarily by the purchaser and the dealer refunds money or other consideration given by the purchaser, the dealer may receive a refund or credit for the amount of sales tax paid to the state on the portion of the original price that was refunded. When a vehicle that has been sold is returned to the manufacturer under 1986 PA 87, MCL 257.1401 to 257.1410, and the manufacturer certifies the amount of money or consideration paid by the purchaser that has been refunded, less an allowance for the purchaser's use of the vehicle, a refund for the amount of sales tax paid to the state may be issued to the manufacturer.

(10) Each new vehicle dealer is allowed a maximum number of tax-free demonstrators in a calendar year in accordance with the total number of new cars and trucks sold in the current calendar year or the immediately preceding calendar year as follows:

(a) Zero to 25	2 tax-free demonstrators
(b) 26-100	7 tax-free demonstrators
(c) 101-500	20 tax-free demonstrators
(d) 501 or more 25 tax-free demonstrators

(11) To qualify as a demonstrator the vehicle must be registered in the name of a dealer as provided on an affidavit prescribed the department of treasury.

(12) A vehicle dealer that is engaged in the business of renting or leasing vehicles shall pay tax on the vehicle at the time of purchase, unless that dealer elects to pay use tax on rental receipts. See R 205.132(5).

(13) The annual surety bond required of each new and used vehicle dealer under this state's vehicle code must provide for indemnification or reimbursement to the state for sales or use tax deficiencies for the year in which the bond was in effect upon the entry of a final judgment in a court of record against the dealer.

Notes

Mich. Admin. Code R. 205.54

1979 AC; 2023 MR 15, Eff. 8/11/2023