Recent Sales and Use Tax Developments
Titling
Titling in Another Country. Sales tax at Michigan six (6%) percent rate must be charged
unless the transaction meets the Export Sales rule described in Chapter III
2. h. above.
Titling in Another State. If a 14 day in-transit permit is purchased, sales tax is due at
the rate of the destination state or the six (6%) percent Michigan rate,
whichever is lower based on the following:
- If the State is reciprocal with Michigan the Michigan dealer should charge the tax rate the destination State charges, and if the destination State allows a trade-in allowance, it should be allowed when computing the tax due. All states are reciprocal with Michigan except Arkansas, Indiana, Maryland, Mississippi, Oklahoma, West Virginia, District of Columbia, North Carolina and Nebraska.
- If the State is not reciprocal with Michigan then the Michigan dealer should not charge sales tax.
- The dealer must prepare an RD-108 for the sale which shows the out-of-state address of the purchaser and a statement that the vehicle will be removed from Michigan for titling and registration in another state.
- The following States do not have a sales tax and sales tax should not be charged by the Michigan dealer: Alaska, Delaware, Montana, New Hampshire, New Mexico and Oregon. If a 14-day in-transit permit is not purchased the purchaser pays tax at the Michigan rate and may have to pay tax again which the vehicle is registered in another state.
Recent Sales and Use Tax Developments