Online shopping sales tax starts October 1

A new law takes effect Thursday that will make your purchases at websites like Amazon.com and Overstock.com a bit more expensive.

Time is running out to buy items from certain online stores without having to pay Michigan’s 6% sales tax.

“It’s a victory for the home team and allows everybody to compete on an equal footing”, said Jim Hallan, president and CEO of the Michigan Retailers Association.

“It’s really good for the brick and mortar retailers, the ones who have been at a competitive disadvantage all of these years because they collect the 6 percent sales tax while their out of state online competitors have not been”, said Charles Ballard, MSU Economist.

The state Treasury Department has estimated $445 million in sales and use tax revenue from remote purchase could go uncollected this fiscal year.

With the law sales tax will be collected when you check out online, but until the law kicks in shoppers in Michigan are on the honor system. Michigan and other states can not get at much of it, though, without the approval of federal legislation. But Treasury spokesman Terry Stanton said the department has let retailers know about the October. 1 change.

Gov. Rick Snyder in January signed a bill requiring out-of-state companies with a few sort of a “nexus” in the state, such as a warehouse or distribution center, to collect and remit those taxes starting October 1.