Yes. Under the MBT, a taxpayer, other than an insurance company, has nexus with Michigan and is subject to the MBT if "the taxpayer has a physical presence in this state for a period of more than 1 day during the tax year or if the taxpayer actively solicits sales in this state and has gross receipts of $350,000 or more sourced to this state." MCL 208.1200(1). In other words, there are two nexus standards under the MBT. A person may have nexus with the state if that person has physical presence in the state for more than one day during the tax year. Alternatively, a person may have nexus with the state if the person actively solicits sales in this state and has Michigan gross receipts of $350,000 or more.
RAB 2007-6 defines "actively solicits" to mean purposeful solicitation of persons within this state. Solicitation means (1) speech or conduct that explicitly or implicitly invites an order; and (2) activities that neither explicitly nor implicitly invite an order, but are entirely ancillary to requests for an order. Solicitation is purposeful when it is directed at or intended to reach persons within Michigan or the Michigan market.
Active solicitation includes, but is not limited to, solicitation through (1) the use of mail, telephone, and e-mail; (2) advertising, including print, radio, internet, television, and other media; and (3) maintenance of an internet site over or through which sales transactions occur with persons within Michigan. Sending mail orders catalogs to Michigan residents is a common example of active solicitation.
Active solicitation, coupled with $350,000 in Michigan gross receipts, constitutes nexus under the MBT. Thus, a mail order company without physical presence in Michigan that actively solicits sales in Michigan and has over $350,000 in Michigan gross receipts will have nexus under the MBT.
If the only in-state activity of the mail order company is the solicitation of orders for sales of tangible personal property through mail order catalogs where the orders are sent outside the state for approval or rejection and are filled by shipment or delivery from a point outside the state, then the mail order company falls within the protection of PL 86-272 and will not be subject to the business income tax component of the MBT. However, that taxpayer will still be subject to the modified gross receipts tax component of the MBT.
A taxpayer that was not subject to the SBT but is now subject to the MBT must register using Form 518. The taxpayer must also file an annual return and may be subject to quarterly estimated tax payments. See MBT FAQs A3, A4, and A6 for further information on annual returns and quarterly estimates.
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