The Michigan legislature chose to amend the Use Tax Act instead of the Sales Tax Act to impose a Use Tax on a specific list of services.  Because we have a large list of services that are taxable and an even larger list of services that are not taxable, a bundling of both taxable and non taxable services on an individual transaction or engagement will be common.

Both the Michigan Supreme Court in Catalina Marketing and Michigan's membership in the Streamline Sales Tax Project have provided some guidance on how to handle bundled transactions.

The De Minimis Rule

If a transaction includes both taxable services and exempt services, the tax will not apply if the taxable services were incidental to the primary purpose or object of the transaction.

The Apportionment Rule 

If a transaction includes both taxable services and exempt services, the tax will apply to the taxable portion based on records to support the apportionment.

The Primary Object Rule 

If a transaction includes both taxable services and exempt services, the tax will apply to the entire transaction if the primary factor is to provide a taxable service.

The Department of Treasury needs to promulgate guidance on how to administer rules for bundled transactions.