and I utilize the benefit of discounted AAA rates at participating hotels. I presume a
participating hotel receives some form of compensation from AAA when I take
advantage of the discounted AAA rate. Is this the type of group/organization
membership contemplated by MCL 205.51(1)(d)(vii)(D)(II)?
.
Particularly in the context of hotels because of the benefit they receive by filling
unfilled rooms, but maybe also applicable to sellers of TPP as well, consider
discussion of whether all the conditions are met in a fact pattern like this… The
normal room rate is $110 per night. The AAA room rate is $100 per night. But
AAA does not provide $10 of consideration to the hotel, they only provide $6.
That is, the hotel is willing to take a $4 haircut on the rate in order to get a AAA
member in as a guest because they are wanting to fill rooms that might
otherwise go unoccupied. It could be interpreted that the sales tax base is either
of the following, so guidance is welcomed here:
•
$106 – The hotel actually received $106 as $100 from the guest and $6
from AAA, and everything received, from whatever source, is part of the
sales price.
•
$100 – MCL 205.51(1)(d)(vii) does not cause inclusion of the $6 from
AAA because not all conditions are met. The consideration received
from AAA is not directly related to a price reduction or discount on the
sale because the discount was $10 instead of just the $6 from AAA.
Note that $110 should not be a possible answer because even though
the normal rate is $110, the hotel only received $106 and the other $4
differential was a discount they provided out of their own pocket.
•
o
The example in this subrule is appreciated. Possibly there could be some discussion
(whether through the example or on its own) of what tax could/should be charged to
the customer. It is understood that a seller’s liability exists even if they don’t charge any
or all of the sales tax to the customer. But in a case where the base for the seller’s
liability exceeds the price charged to the customer (because the difference will be made
up by third-party consideration), can the seller charge the customer tax on the whole
base? From your example, if the seller’s base is $10, can they charge $0.60 tax to the
customer even though the receipt/invoice to the customer only shows an $8 sale price?
•
R 205.26 –
Consider whether there should be any discussion about the interplay of the use tax
o
registration requirement of MCL 205.95 and the changes brought about at MCL
205.27a(13) by Public Act 3 of 2014 regarding the statute of limitations for taxes that
are reported on a combined return, as use tax is with sales and withholding tax. While a
seller holding a sales tax license does not need to register for use tax, what about a
business not registered as a seller because, for instance, all their sales are of nontaxable
services. Presuming they are registered for and remitting Michigan withholding tax, they
cannot be audited for use tax for more than the four year statute of limitations,
regardless of whether they are registered for use tax. I understand this rule cannot
contradict the use tax registration requirement at MCL 205.95, but I am wondering how
much could be written into this rule to reflect the reality of lack of consequence for
failure to register for use tax as long as the taxpayer is filing combined SUW returns?
Arguably, even filing without registering for any of S, U, or W starts the running of the
statute for purposes of deficiency assessments, so the only real consequence for lack of
use tax registration would be if there is a civil or criminal penalty specifically associated