Michigan Governor Rick Snyder recently signed into law Senate Bill 669 (“SB 669”), which statutorily defines the term “actively solicits” for purposes of determining nexus under the state’s corporate income tax laws. The amendment, provided by SB 669, repeals the authority previously granted to the Michigan Department of Treasury (“Department”) to define the term through guidance. Effective January 1, 2012, amended Section 621 (MCL 206.621) will define “actively solicits” to mean either of the following:
- Speech, conduct, or activity that is purposefully directed at or intended to reach persons within this state and that explicitly or implicitly invites an order for a purchase or sale; or
- Speech, conduct, or activity that is purposefully directed at or intended to reach persons within this state that neither explicitly nor implicitly invites an order for a purchase or sale, but is entirely ancillary to requests for an order for a purchase or sale.
Under Michigan law, a taxpayer who “actively solicits” sales in the state and has gross receipts of at least $350,000 sourced to Michigan has substantial nexus with the state and is subject to the state’s income tax.
TECHNICAL INFORMATION CONTACT:
Eric L. Stein
Principal
Ryan
512.476.0022
eric.stein@ryan.com