At the Michigan Business Tax - Basic seminar in Pontiac on Wednesday, the most hostile reception was given to the discussion of inclusion of sales tax collected in the Modified Gross Receipts Tax Base.  Following is the latest.

“Gross receipts” is broadly defined to include “sales tax” collected by a retailer to be submitted to the state.  Actually you will not find it in the law.  By its absence, it is included in 'gross receipts".  Gross receipts includes the "entire amount received" from "any activity" including sales tax collected as well as any other taxes collected.

Following is Treasury's position from FAQ M6:

The seller of tangible personal property is the person legally liable for payment of sales tax. A seller that is reimbursed sales tax by the purchaser of tangible personal property must include in its gross receipts the "entire amount received" from "any activity" unless the amount received is statutorily exempted under MCL 208.1111. Therefore, a taxpayer that receives sales tax from a purchaser as part of a transaction not otherwise exempt under the Michigan Business Tax must include in gross receipts the amount received from the sale of tangible personal property as well as the sales tax received.

The legislature is back in action.  Senate Bill 1038, which has passed the Senate, adds an exclusion from gross receipts for "taxes, fee, surcharges".  The legislation is currently in the House Tax Policy Committee where Treasury is opposing the "taxes, fees, surcharges" language and in its place they want a list of excluded taxes.  The current list includes sales tax, use tax, motor fuel taxes, tobacco taxes, taxes on beer, wine and alcohol, telecommunications taxes and utility taxes.  The cost to remove all the listed taxes is estimated by Treasury at $80 Million.  Treasury is not actively opposed to the exclusions, however the cost is a big obstacle.