Michigan RAB Rundown: What You Might Have Missed



The Michigan Department of Treasury Revenue Administrative Bulletin (RAB) webpage is not always the busiest of sites. However, December of 2021 saw a lot of activity regarding sales and use, income and Michigan business taxes. In case you missed those end-of-year updates, here’s a quick rundown of the most pressing December RABs:

  1. Michigan Nexus Taxes. RABs 2021-21 and 2021-22 address the state of nexus taxes in Michigan. In RAB 2021-21, the MI Treasury addresses the constitutional parameters under which the State of Michigan can require remote sellers to remit sales and use taxes, citing the 2018 U.S. Supreme Court decision in South Dakota v. Wayfair, which serves as the impetus for every new nexus tax law implemented across the country since. The new RAB also describes the ways in which remote sellers can establish nexus with the State of Michigan, how tax is reported and remitted as either sales or use tax and the filing requirements for remote sellers. In RAB 2021-22, the treasury addresses the relationship between marketplace facilitators and sellers and, with regard to those types of transactions, who bears the nexus tax collection. Spoiler alert – it’s the facilitator. To the RABs credit, it does define what constitutes a facilitator versus a seller and how economic thresholds are calculated for each, among other things. Greater detail can be found in the full document, for those with a vested interest in this topic.
  2. Car insurance premium refunds. Are vehicle insurance premiums included in the computation of the Michigan Individual Income Tax base? What about total household resources or household income? Where, oh where, do these refunds belong? The treasury addresses these concerns in RAB 2021-23, and the answer to those questions is no, on both counts.  
  3. Are any of your clients a surviving spouse? If so, RAB 2021-24 addresses the retirement and pension benefits deduction applicable to this very specific tax situation under Part 1 of the Michigan Income Tax Act (MITA). The sticking point on this are the new limitations placed on the pension benefits deduction based on the date of birth of the oldest spouse. The RAB outlines the MITA definition of retirement or pension benefits as well as general limitations, providing multiple examples of implementation.
  4. Homesteading in Michigan? RAB 2021-25 provides an explanation and procedure for calculating the homestead property tax credit under MITA when there is an adjustment of property taxes in a prior year. This is pretty straightforward for those familiar with the homestead tax, but clients might need assistance in interpreting what those changes mean for their bottom line.
  5. Did you know that Michigan leads the nation in production of several crops, contributing more than $104.7 billion annually to the state economy and is second in diversity only to California? If not, then now you know. Michigan provides its agricultural taxpayers a few reprieves to preserve this bountiful farmland as well, including the farmland preservation tax credit. In RAB 2021-26, the final in this collection of last minute RABs, eligibility for this credit is addressed, specifically purchase of development rights (PDR), the handling of the tax credit under MITA, new agreements, successors in title and more. 

Did you miss these RABs at the end of 2021? Follow the MICPA on Facebook, LinkedIn and Twitter for more updates on important industry updates like these!

Source: MICPA

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