United States

Michigan issues guidance on the application of sales tax to cloud computing


On Jan. 6, 2016, the Michigan Department of Treasury issued a notice to taxpayers conceding that the department’s stated policy in RAB 1999-5 is inconsistent with the decision of the Michigan Court of Appeals in Auto-Owners Insurance Company v. Department of Treasury and, therefore, invalid. The now invalid policy stated that access to software over the internet is taxable without the delivery of either the code that enables the program to operate or a desktop client.

Your business may request a refund for use tax paid for a product falling within the Auto-Owners decision by filing an amended return and a written refund request with the department. If the tax was paid to a vendor, you will need to request a refund from the vendor, and the vendor may then request a refund from the department.

Tom Chrzanowski

Senior Manager

Tom helps businesses with in-depth state tax analysis, including nexus studies, audits, controversies, sales tax refunds and taxability of digital goods. Reach him at tom.chrzanowski@rsmus.com.

Areas of focus: State and Local TaxSales and Use Tax