Overview of the Exemption
Michigan exempts from sales tax the sale of tangible property used for the production, manufacturing, or recycling of aggregate by the property if the aggregate is used as an ingredient or component part for construction, maintenance, repair, or reconstruction of real property in Michigan.
Eligibility for Industrial Processing Exemption
The bill specifies that property is eligible for an industrial processing exemption if it performs an industrial processing activity upon an aggregate product or material that will be used as an ingredient or component part for the construction, maintenance, repair, or reconstruction of real property in Michigan, provided that the aggregate product or material is subject to the use tax.
Cancellation of Outstanding Tax Balances
The bill requires the Department of Treasury to:
- Cancel any outstanding balances on notices of intent to assess or final assessments that were issued before the bill’s effective date and are related to the industrial processing activities and property that are exempted under the bill.
- Cancel those balances within 90 days of the bill’s effective date.
- Prohibit issuing any new assessments on those activities and property for any tax period before the bill took effect.
Updated Definitions Under the General Sales Tax Act
Finally, the bill adds new language to the definitions of “industrial processing” and “industrial processor” in the General Sales Tax Act to include:
“Converting or conditioning tangible personal property for use in the manufacturing of a product to be affixed to and made a structural part of real estate located in another state.”
Frequently Asked Questions
What is the purpose of Michigan’s aggregate sales tax exemption?
The exemption aims to support industrial processing by removing sales tax on tangible property used to produce, manufacture, or recycle aggregate materials used in Michigan’s real property projects.
Who qualifies for the industrial processing exemption?
Businesses or entities that use tangible property to perform industrial processing on aggregate materials that will be used in Michigan construction, maintenance, repair, or reconstruction qualify, if the aggregate is subject to use tax.
Does the exemption apply to past tax assessments?
Yes. The Michigan Department of Treasury must cancel outstanding tax balances related to the exempted industrial processing activities and property, provided those assessments were issued before the bill’s effective date.
How soon will outstanding tax assessments be canceled?
The Department of Treasury is required to cancel qualifying outstanding balances within 90 days of the bill’s effective date.
What changes were made to the definitions under the General Sales Tax Act?
The definitions of “industrial processing” and “industrial processor” now include the conversion or conditioning of property used to manufacture products that will become a structural part of real estate outside Michigan.