Fi4. Does the purchase of tangible personal property through an 800 number answered outside of Michigan and delivered from a warehouse outside of Michigan qualify as a direct production expenditure if the seller collects and remits Michigan sales/use tax?
While a qualifying direct production expenditure must be subject to taxation in this state, the company from whom the tangible personal property is purchased must have the required physical presence in Michigan to meet the standard of being an expenditure "made in this state". Purchases of tangible personal property generally are "made in this state" if acquired from a source established for at least one year within Michigan that has a bricks and mortar storefront and at least one full time employee. It is not sufficient that the transaction is subject to Michigan sales/use or other tax if the other requirements are not also satisfied. However, if the seller does have the required physical presence in Michigan, and as long as the tangible personal property is shipped to the seller's Michigan storefront or the transaction has some other nexus with the seller's physical presence, it is irrelevant that the 800 number phone call may have been answered outside of Michigan, or that the tangible personal property is shipped from a warehouse that is located outside Michigan.