Thursday is a crazy retail day when Michigan shoppers face two big changes. You could call it the day of chips and taxes.
Michigan’s new “Main Street Fairness” law starts on Oct. 1 and big name online retailers, including Amazon, will start collecting that 6% sales tax.
And on Oct. 1, we’re going to be hearing even more about chip technology for our credit cards. Some retailers will be able to accept those chips immediately on Thursday, some won’t.
Here are five things you need to know on Michigan sales taxes and chips:
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1) Michigan’s sales tax on goods you buy online isn’t new.
But many times you had to self-report that tax, if the retailer didn’t automatically charge it. Honestly now, did you ever calculate your sales tax for Internet purchases when you filed your Michigan income tax? Many people didn’t do it. About 117,000 people reported untaxed online purchases on their 2013 tax returns, paying $6.7 million in sales tax. State officials estimated that represented only 2.5% of what was really due.
2) The new Michigan law levels the playing field.
Some big name retailers had already been collecting sales tax if you bought something online or on the phone. Beginning Oct. 1, Internet retailers with any physical presence in Michigan must collect that state sales tax at the point of sale. Amazon has a fulfillment center in Brownstown Township. Officials said the tax would apply to Amazon and Overstock, among others.
Traditional retailers had argued that tax-free Internet sales unfairly undermined their business.
An Amazon spokesperson would only say Tuesday that Amazon would begin collecting sales tax in Michigan on Thursday and added “as analysts have noted, Amazon offers low prices with or without sales tax.”
3) When it comes to chips, Oct. 1 is another day of big buzz.
Thursday marks the date of a liability shift when retailers who don’t have chip-enabled technology at the cash register could face more financial liability in the event of fraud. Major retailers, like Target and Walmart, already put the chip technology in place at the register. But experts say smaller retailers are unlikely to upgrade for quite some time.
The liability shifts from the card issuer to the one with the lesser technologies in place. So it could depend if the card issuer or the retailer is liable. Card issuers could still face some responsibility, if they did not roll out the chip cards.
4) What happens if your credit card issuer doesn’t send a chip card to you in October or even November or December?
Nothing. Remember, the consumer’s liability for fraudulent purchases doesn’t change on Oct. 1. You still have the same protections. Retailers also are keeping the swipe machines so you can use your old magnetic strip on the card to swipe the card if your card doesn’t have a chip.
Visa noted that based on experience rolling out chip technology in other countries, it can take two to three years after the liability shift date to reach a point where 60% to 70% of transactions at the register are made with a chip card at a chip terminal. It could be four to five years to hit a 90% level.
5) How do you know if you have a chip card?
Look at the front of the card for a metallic looking box on the left hand side. That’s the chip. The industry expects that about 63% of credit cards should have the new EMV chips by the end of 2015. What’s EMV? EMV is named for the original developers — Europay, MasterCard and Visa.
MasterCard said currently about 40% of all U.S. MasterCard-branded cards are chip cards. MasterCard’s data indicated that more than 350,000 U.S. merchant locations accept chip payments. And roughly one quarter of national and regional merchants — including restaurants — have already started to accept chip cards.
Date: September 29, 2015