Sales Tax Nexus letter from Michigan

Anybody else receiving these?

[wingslevel]

We are on our second one already. You know the format, "if you have revenues over $350,000 and any nexus in MI - gotcha". They even threaten that if you don't respond they'll assess tax! In our case they got the corporate name wrong.

The nexus definition would apply to affiliates. Seems just too risky to keep up an affiliate program anymore - aren't there about ten states now that will consider an affiliate as nexus for sales tax liability?

Poor Michigan, such a financial train wreck that they have marshaled the bureaucrats and sic'ed them on the e-commerce community.

We are going to see nothing but more of these in the future as one after another state scrambles for cash.

<added> Michigan Business Tax [michigan.gov] Use on page search for references to Nexus

[edited by: lorax at 10:22 am (utc) on Apr 27, 2010]

[jwolthuis]

I'm in Michigan. Your post lacks details, such as:

(a) do you have nexus in mi?
(b) do you have revenues over 350k in mi?

It seems that their definition would apply to a very small number of eCommerce merchants. I also question the "poor Michigan" and "train wreck" references. Who are you exactly referring to?

[wingslevel]

Michigan has the highest unemployment rate in the country and their budget deficit exceeds $2 billion for 2009. With mounting debt and a shrinking tax base, the state is in a bleak place, at least fiscally. Michigan has had their credit rating cut three times in the last year and they rank 50th in the nation in that category. Sorry, but I am going to stick with "train wreck". Jwolthuis, my condolences to you and your kids who are going to be paying off this debt for many years to come.

My post wasn't really about me, but, I don't qualify for nexus in Michigan. I do, though, consider it invasive for another state to be sending me threatening letters.

My post was really about these poor states that are desperate for cash and how they might affect our industry. They are going to be increasingly aggressive in their efforts to raise cash. The favorite target will be revenue sources that don't actually vote in their state because that is "free" (without political cost) money. Another example of this is hotel occupancy tax.

Not to pick on Michigan alone, the pioneer at trying to use affiliate networks to establish nexus was none other that New York (they have a $30 billion deficit) - remember when they went after Amazon?

How all of this will affect us ecommerce folks is still to be decided, but I viewed that Michigan nexus letter as a shot across the bow. Stay tuned.

[wingslevel]

Thought this was a fairly balanced and informative piece:

[newrules.org...]

note it lists 10 states and Michigan is not even included.