Michigan Office of Administrative Hearings and Rules  
MOAHR-Rules@michigan.gov  
AGENCY REPORT TO THE  
JOINT COMMITEE ON ADMNINISTRATIVE RULES (JCAR)  
1. Agency Information  
Agency name:  
Treasury  
Division/Bureau/Office:  
Bureau of Tax and Economic Policy  
Name of person completing this form:  
David Matelski  
Phone number of person completing this form:  
517-335-7424  
E-mail of person completing this form:  
matelskid@michigan.gov  
Name of Department Regulatory Affairs Officer reviewing this form:  
Sarah Rowley  
2. Rule Set Information  
MOAHR assigned rule set number:  
2022-9 TY  
Title of proposed rule set:  
Sales and Use Tax Rules  
3. Purpose for the proposed rules and background:  
The general purpose of the amendments to the rules is to revise, update, rename, rescind and create  
certain Sales and Use Tax Rules.  
4. Summary of proposed rules:  
The purpose of the rules is to update and modernize the sales and use tax rules to make them  
consistent with current law.  
5. List names of newspapers in which the notice of public hearing was published and  
publication dates:  
The Mining Journal – December 1, 2022  
Grand Rapids Press – December 1, 2022  
Detroit News and Free Press – December 1, 2022  
6. Date of publication of rules and notice of public hearing in Michigan Register:  
12/1/2022  
7. Date, time, and location of public hearing:  
12/12/2022 09:00 AM at Michigan Department of Treasury, Austin Building, State Treasurer's Board  
Room , 430 W. Allegan St., Lansing, MI 48922  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 2  
8. Provide the link the agency used to post the regulatory impact statement and cost-benefit  
analysis on its website:  
https://ARS.apps.lara.state.mi.us/Transaction/RFRTransaction?TransactionID=1368  
9. List of the name and title of agency representative(s) who attended the public hearing:  
Dave Matelski, Administrator, Tax Policy Division, Michigan Department of Treasury  
10. Persons submitting comments of support:  
No comments of support were received.  
11. Persons submitting comments of opposition:  
No comments of opposition were submitted for the general rule set. However, the following persons  
submitted comments of opposition to a specific rule:  
Douglas E. Needham, P.E., Executive Director, Michigan Aggregates Association (MAA)  
Patrick Dean, President, Dean Transportation  
Eric Toomey, Director of Accounting, Dean Transportation  
Curt Macysyn, Executive Director, National School Transportation Association (NSTA)  
David Schulte, Superintendent, Shiawassee RESD  
Paul Hungerford, Superintendent, Gratiot-Isabella RESD  
Eric Hoppstock, Superintendent, Berrien RESA  
12. Persons submitting other comments:  
The following persons submitted other comments, including requests for clarification or proposed  
revisions:  
Michael R. Bannasch, CPA  
13. Identify any changes made to the proposed rules based on comments received during the  
public comment period:  
Name &  
Organization public hearing  
Comments made at Written  
Agency Rationale Rule number  
for Rule Change & citation  
and Description changed  
of Change(s)  
Comments  
Made  
1
Patrick Dean,  
President, Dean  
Transportation  
Opposition –  
Comment reflects 205.132(3)  
Claims that rule misunderstanding (c), and (4)  
“contravenes of the effect of  
existing statutory subrule (4). Based  
language and on comment,  
would impose use however, Treasury  
tax on the lessor modified the rule  
of school buses” to provide more  
contrary to 2018 clarity that certain  
PAs 673 and 679. transactions  
involving the  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 3  
provision of  
school buses (with  
or without an  
operator) qualify  
as leases such that  
they would be  
exempt beginning  
March 29, 2019.  
The subrule does  
not expressly  
address taxability  
as that would be  
controlled by  
statute (e.g., MCL  
205.54a(1)(t)  
and/or MCL  
205.94(1)(ff)).  
Recognition as a  
“lease” facilitates  
the exemption  
from sales and/or  
use tax under  
those statutes as it  
provides an  
exception to the  
following position  
stated in Revenue  
Administrative  
Bulletin (RAB)  
2020-16: “If an  
operator is  
supplied along  
with property, and  
the operator is  
necessary for the  
equipment to  
perform as  
designed, then the  
transaction is a  
service and not a  
lease of property.”  
See also, MCL  
205.92b(m)(iii).  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 4  
Discuss the  
2
Michael R.  
Subrule 1: The  
205.26(1) and  
Bannasch, CPA  
consequences of Department does (6)  
lack of not believe that  
registration and incorporating  
clarify when a penalties,  
sale is made into especially  
Michigan, but the potential criminal  
transfer of  
sanctions, is well  
ownership occurs suited for a rule,  
outside Michigan. which is binding  
on both taxpayers  
and the  
Department.  
No changes were  
made regarding  
the transfer of  
ownership as the  
rule lays out the  
general principle  
and determining  
ownership is based  
on specific facts  
and circumstances  
which are better  
handled in a  
bulletin or other  
guidance.  
Subrule 6: This  
subrule was added  
based on the  
general comment  
regarding clarity  
in registration  
requirements and  
is based on MCL  
205.95(5).  
3
Michael R.  
Subrule 3: Seeks Added additional 205.68(3)  
Bannasch, CPA  
additional  
example to  
example to  
address, and  
address specific consistent with,  
circumstance. comment.  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 5  
4
5
Michael R.  
Bannasch, CPA  
Subrule 1: Clarify Subrule 1: revised 205.1(1)  
to account for  
online license  
application.  
consistent with  
comment.  
Michael R.  
Include reference Modified subrule 205.13(2) and  
Bannasch, CPA  
in Subrule 2 to  
address ORVs  
2 consistent with (5)  
comment and to  
and manufactured harmonize with  
housing. Explain statute. Added a  
how “retail dollar new Subrule 5 to  
value” is  
determined.  
explain “retail  
dollar value”  
determination.  
6
Michael R.  
Bannasch, CPA  
Subrule 2: Clarify Modified Subrule 205.16(2)  
policy concerning 2 to address, and  
refunds for  
consistent with,  
comment.  
returned goods  
made after the  
period in the  
seller’s stated  
refund policy or  
after the 180 day  
period referenced  
in the statute.  
7
Michael R.  
Clarify provision Modified rule to 205.22(2)(d)  
Bannasch, CPA  
applicable to a  
“member of a  
group or  
address, and  
consistent with,  
comments.  
(iii)  
organization  
entitled to a  
reduction or  
discount.”  
Clarify seller’s  
tax base where  
seller receives  
consideration  
from third party.  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 6  
8
Michael R.  
Remove Subrule Modified rule title 205.54  
Bannasch, CPA  
3 for the reason in response to  
that the R. 205.54 comment on  
is related to auto subrule 3 to better  
dealers whereas reflect the content  
the current draft to be covered by  
of Subrule 3  
refers to vehicle  
sales between  
individuals.  
Comment  
the rule.  
9
Michael R.  
Change proposed 205.55  
Bannasch, CPA  
requests rule be rule title.  
renamed to better  
reflect auto repair  
shops that might  
be subject to the  
rule.  
10  
Michael R.  
Subrules 1:  
Modified Subrule 205.62(1), (6)  
Bannasch, CPA  
Expound on type 1 in part to clarify and (8)  
of sales that are lessor election.  
exempt under  
MCL 205.54x.  
Department does  
not believe  
reciting  
Subrule 6: Clarify exemptions under  
taxable MCL 205.54x in  
demonstrations. these subrules is  
warranted as rule  
Subrule 8: Clarify points to the  
retail value.  
specific statute.  
Subrule 6: Change  
made to note that  
personal use is an  
example of a  
taxable use.  
Subrule 8:  
Modified to  
address, and  
consistent with,  
comment.  
14.Date report completed:  
6/20/2023  
MCL 24.242 and 24.245  
;