When claiming an exemption, ensure Michigan Form 3372 (Sales and Use Tax Certificate of Exemption) is correctly executed.
Specific charges for technical support or for adapting prewritten software to a user's needs are exempt if they are separately stated and identified on the invoice.
Out-of-state vendors must collect tax if they have a physical presence or meet economic thresholds ($100,000 in annual sales or 200+ transactions in Michigan).
Maintenance contracts for custom software (designed for a specific user's needs) are generally considered non-taxable services. Critical Factors and Exemptions
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When a transaction includes both taxable software and exempt services, Michigan uses this test to determine if the primary "object" of the sale is a service or a product. If the software is merely incidental to a professional service, the whole transaction may be exempt. Compliance Tips To protect against audit risks, businesses should: