Small Business Challenges in 2016
While NFIB has been successful
in halting past attempts to expand the sales tax to services, bureaucrats
at the Michigan Department of Treasury seem to always be on a “fishing
expedition” for more revenue by reclassifying items that were previously
considered services as products so they can now be subject to the sales and use
tax. A recent example of this activity is Treasury’s reclassification of
previously exempted services involving remotely accessed software or “Cloud
Computing” to that of a product and requiring sales and use tax to be
paid. Although Treasury has lost at almost every court level when challenged on
this move, they continue to invoke their reclassification scheme on businesses.
Many small businesses that use these services (such as payroll and tax
processing) are now required to pay sales and use tax on the service fees in
order to avoid a costly court fight with Treasury.
NFIB will continue to push
legislation that would clarify that remotely accessed software services are
just that, “services”, and not a product subject to the Michigan sales tax.
