A retailer of cell-phone service contracts, cell phones, and related equipment was subject to Michigan use tax on the full purchase price of phones that it purchased from Verizon and subsequently gave away for free with service plans. The retailer purchased the phones for resale and converted them to a taxable use when it gave them away with service plans. The retailer had an exclusive agreement to sell Verizon cell-phone service contracts and received a fixed commission from Verizon for each service plan sold. The retailer conceded that it owed use tax on the purchase of the cell phones but argued that the purchase price subject to tax for the phones was zero because Verizon reimbursed plaintiff for the cost of the cell phones that it gave away to customers. The court concluded that Verizon did not provide reimbursements to the retailer, but rather only paid commissions to the retailer on the sale of service contracts. As a result, the retailer owed use tax on the full purchase price of cell phones it purchased from Verizon. There are a few states that require sales tax to be charged on the full MSRP of the mobile phone given to customers in exchange for a cell service contract. (Emery Electronics v. Department of Treasury, Michigan Court of Appeals, No. 342250, February 12, 2019)