Michigan Issues Guidance on Sales and Use Tax Refund Procedures

The Michigan Department of Treasury (Department) has issued a bulletin providing guidance on how sellers and purchasers can request refunds of Michigan sales and use tax. If a seller did not owe sales tax but paid it anyway, they may request a refund from the Department but must demonstrate that it either did not collect tax from its purchaser or that it refunded the purchaser. If the seller is unable to do so, a refund will not be issued. There is not a specific form for a seller to request the refund, but the claim must include the following elements:

  • Taxpayer (seller) identifying information (name, address, contact name, phone number, email address)
  • Tax type
  • Account number
  • Printed name and contact information of person filing the claim
  • The transactions for which a refund is claimed, including date and return on which the tax was reported and paid
  • Proof that the purchaser has been refunded the tax it paid (if applicable) or that no tax was collected from the purchaser

The seller must file the refund claim within four years of the date set for filing of the original tax return covering the period in which it paid the tax in error. Note that a refund claim for seller-collected use tax must document the same elements set forth in the list above. Sellers are under no obligation to seek a refund on behalf of the purchaser. Additionally, sellers are not required to refund erroneous collections to purchasers so long as they paid the tax to the Department.

If a purchaser pays tax directly to the Department or another State of Michigan department, the purchaser can seek a refund directly from the Department. If the purchaser did not present an exemption claim to the seller at the time of purchase, the purchaser may seek a refund directly from the Department by using Form 5633 (Purchaser Refund Request for a Sales or Use Tax Exemption). The Department notes that the use of Form 5633 only applies to refund claims based on a failure to assert an exemption at the time of purchase. It does not apply to refund claims related to returns of taxable property, retroactive changes in law or any reason other than the failure to claim an exemption at the time of purchase. (Revenue Administrative Bulletin 2023-24, Michigan Department of Treasury, December 19, 2023)

Posted on January 11, 2024