New Tax on All Warehousing and Some Transportation

On October 1, 2007, a series of new tax laws were passed in Michigan, including a new "Tax on Services". Assuming that all of the bills passed by the Michigan Legislature are signed into law, warehousing, courier, messenger and limousine services will be taxed, but trucking services will be excluded (House Bill No 5198).

Effective December 1, it will be necessary to account for this service tax on any of the "taxable" activities in Michigan, whether you are providing it or paying for it. From the wording of the bill, freight transportation including charges for stops in transit should be exempt from the tax.

Since new regulations have not yet been written defining or interpreting these new laws, it will be important to carefully define the services a business provides, or pays for, 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.