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Mich Sales tax on Mobile phone service

Customer Question
My cell phone company is...
My cell phone company is located out West somewhere ( they keep their address under cover all contacts are by phone) The company is Virgin Mobile. They charge my credit card 6% Michigan sales tax for their monthly service charge.
        (1) Isn't Phone service a "service" Mich. Sales tax is not on services how come they are collecting it? Is this legal?
        (2) Are they turning in this money?
Submitted: 11 years ago.Category: Tax
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Answered in 1 hour by:
10/16/2006
Tax Professional: Ed Johnson, Tax Preparer replied 11 years ago
Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10,760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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DearCustomer

They really are not charging sales tax. They are charging use tax. Sales tax is on tangible property. However, michigan and others have a use tax which is charged for services and tangible product purchased outside the state for use in Michigan. The rate is the same as sales tax. The correct sales tax terminology in Michigan law is Sales and Use TAx.

The only way you can know if they are paying, is to check with the Michigan Sales tax deivision of the treasurery and ask them.

You can also demand that you be provided a copy of the sales tax certificate for Virgin Mobile (demand it of Virgin Mobile, not the treasurey).

Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10,760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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