Use tax: collections; collection of use tax by small businesses; modify. Amends sec. 4f of 1937 PA 94 (MCL 205.94f).
Impact
If enacted, the bill is expected to streamline tax collection processes for small businesses by offering them more favorable conditions. By allowing deductions based on timely tax remittance, SB 697 aims to improve cash flow and reduce the overall tax burden on businesses that collect use tax. This change could significantly affect how small businesses manage their finances and their operational costs related to tax compliance in Michigan.
Summary
Senate Bill 697 aims to amend the 1937 PA 94, also known as the Use Tax Act, specifically focusing on the provisions concerning the collection of use tax by sellers. The bill introduces modifications that allow sellers who are not subject to certain conditions to deduct specific percentages of the tax collected from purchasers when they remit these taxes to the state. Notably, if the tax is remitted on time, the deduction can be as high as 0.75%, capped at $20,000 depending on the total amount collected, thereby incentivizing timely payments.
Contention
There are potential points of contention surrounding the bill, particularly related to its impact on state revenue. While proponents argue that the deductions could encourage compliance and support small businesses, opponents may express concerns about the long-term effects on state funding from tax revenues. Critics could argue that the deductions effectively reduce the state's capacity to fund essential services, particularly during economic downturns, suggesting a careful evaluation of the fiscal implications of such changes in tax policy.
Sales tax: collections; certain requirements imposed on marketplace facilitators related to tax collections; provide exceptions and waivers. Amends sec. 5c of 1937 PA 94 (MCL 205.95c).