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Online Sales Tax Money Starting to Trickle In

August 14, 2018

Michigan is starting to see a bump from online sales tax revenue. Data reported last week by the Senate Fiscal Agency (SFA) shows use tax collections in July 2018 were 40.2 percent above the July 2017 level, and $47.7 million above the forecasted level.

Year-to-date use tax collections through July 2018 were up 21.5 percent from fiscal-year 2016-17 and $111.0 million above the forecasted level. 

The SFA reported that the increase is partially due to new rules for how businesses with both a traditional storefront and online sales should report sales and use tax liabilities. 

As the state closes in on the end of Fiscal Year (FY) 2018, General Fund (GF) collections were $217.1 million above and School Aid Fund (SAF) collections $28.2 million below expectations for the month of July, according to monthly revenue numbers released Thursday by the SFA. 

For the month of July alone, GF collections were $7.9 million above expectations and SAF tax collections were $22.9 million below expectations. 

Taxes earmarked for the GF and SAF, Michigan government’s two largest pots of money, totaled $2.2 billion in July 2018, a 5.5 percent increase from the July 2017 level.

Year-to-date revenue collections are 5.1 percent above the FY ’17 level and 1.1 percent above the May 2018 Consensus Revenue Estimating Conference estimates. Weaker-than-expected revenue from individual income tax withholding and the sales tax was somewhat offset by higher-than-expected collections from the use tax and business taxes, the SFA reported. 

Net income tax revenue totaled $793.8 million in July 2018 — up 2.8 percent from July 2017. 

July 2018 sales tax receipts are 0.4 percent below July 2017 and $27.0 million below expectations. 

Combined business tax collections from the Single Business Tax, Michigan Business Tax (MBT), and Corporate Income Tax (CIT) were $81.8 million in July 2018 and $16.4 million above the level expected for the month — reflecting net CIT revenue $4.8 million above expectations and MBT refund payments that were $6.0 million less than expected. 

Most taxpayers who still file the MBT do so to collect refundable tax credits. When these refunds will be claimed and processed will significantly affect the accuracy of monthly MBT estimates. As of July 2018, year-to-date MBT revenue totaled a negative $613.5 million, compared to July 2017 year-to-date MBT revenue of negative $704.0 million.

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