Thursday, October 11, 2007

More On Transportation Related Taxes

Last week, I wrote about the impact of the new Michigan Service Tax on transportation companies, the exemption for those providing freight transportation and the taxes on warehouse and courier services. Well, even though there is talk about repealing the tax (the political battle continues), the law is the law until or unless it is repealed. Under the law as it now stands, here is one more item to consider.

Every business that has added the words "logistics" to its name, or provides transportation consulting of any nature, will also need to examine this new law. Consulting Services as described in NAICS industry code 5416 are taxable services. Do you know what that covers? You would not without checking the definition section 5416.

The section 5416 definitions include: logistics management; inventory planning and control; freight rate consulting and auditing; efficiency management; customs consulting: and consulting for each of these categories. This is a summary, not a complete list.

Once again, the new regulations have not been written interpreting this law or telling us how the tax will be enforced. As with my comments on warehousing, it will be important to carefully define the services your business provides and for the description of these services to be carefully written in contracts and purchase orders. The descriptions you use may determine whether your activities are subject to this new tax, or not.

Businesses that may be taxed need to consider how to change their billing processes, and to look at their purchase orders, bill descriptions and contracts now, in order to determine what needs to be changed or amended before the December 1 effective date.


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