Testimony — Janelle Fritts, Tax Foundation, on Substitute for House Bill 5139 (June 11, 2026)

Summary

Testimony from Janelle Fritts, Senior Policy Analyst, Tax Foundation, on the Substitute for House Bill 5139 (Neutral), submitted to the Michigan House Committee on Economic Competitiveness on June 11, 2026. The Tax Foundation states that it does not take a position on legislation and shares information on relying on marketplace facilitators for use tax collection and remittance. It states that requiring individual sellers to register for, collect, and remit the use tax creates substantial complexity and compliance costs. It also states that the Substitute for HB 5139 would relieve short-term rental hosts of those requirements when bookings are made through a marketplace facilitator, putting Michigan on par with many other states, including Indiana and Wisconsin.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

                        1325 G ST, NW, SUITE 950, WASHINGTON, DC 20005
                        202-464-6200 | taxfoundation.org




          Tax Foundation Testimony on the Substitute for House Bill 5139 (Neutral)
         Submitted to the Michigan House Committee on Economic Competitiveness

                                               June 11, 2026

                                Janelle Fritts, Senior Policy Analyst
                                          Tax Foundation

Members of the Committee on Economic Competitiveness:

I’m writing with regard to the Substitute for House Bill 5139, which has been placed on the
committee calendar for Thursday, June 11. While the Tax Foundation does not take a position
on legislation, I wanted to share information on the benefits of relying on marketplace
facilitators for use tax collection and remittance, especially in industries like tourism, where
many small sellers do not have the expertise to comply with all use tax registration, collection,
and remittance requirements. I also wanted to provide you with a Tax Foundation report that
addresses important points to keep in mind when designing marketplace facilitator laws:
https://taxfoundation.org/research/all/state/marketplace-facilitator-laws/.

When all lodging bookings were run directly through hotels physically located in the state,
relying on each seller to collect and remit the state’s sales tax was a relatively straightforward
process. Today, however, many visitors book hotels or other short-term rentals online through
third party platforms (accommodations intermediaries). Under this system, requiring individual
sellers to register for, collect, and remit the use tax creates substantial complexity and
compliance costs. These compliance costs could prevent prospective short-term rental hosts
from entering the market, thereby limiting the availability of short-term rental options and
making existing options less affordable for consumers.

After the US Supreme Court’s Wayfair decision in 2018, every state with a statewide sales tax
adopted a so-called marketplace facilitator law obligating platforms to collect and remit taxes
on behalf of their sellers in certain circumstances. In Michigan, there is currently an exception
for use taxes on accommodations bookings, where certain sellers are automatically liable for
use tax collection and remittance. House Bill 5139 solves this issue by making marketplace
facilitators the default collectors for such transactions. Shifting the compliance burden to
facilitators makes sense, as, in most cases, such entities are already collecting and remitting
use taxes for other states. Marketplace facilitators also have more capacity to track and comply
with changing tax requirements, ensuring Michigan receives its proper tax revenue.

As currently drafted, the Substitute for HB 5139 would make an important adjustment to
Michigan’s marketplace facilitator laws by relieving short-term rental hosts of the burden of use
tax registration, collection, and remittance requirements when bookings are made through a
marketplace facilitator. This treatment would put Michigan on par with many other states,
including Indiana and Wisconsin.

Thank you for your consideration of these comments. Please do not hesitate to let me know if
you have any questions or if we can be of assistance to you or your colleagues.

Best regards,



Janelle Fritts
Senior Policy Analyst
Tax Foundation


File and source

File

2026-06-11_testimony_hb-5139-janelle-fritts-tax-foundation_69783.pdf

Size

98,974 bytes

SHA-256

04cf1554169d116577c9a0aadba176e7b4a2f1ee74fd5aa4086931b0602be80b

Our copy

2026-06-11_testimony_hb-5139-janelle-fritts-tax-foundation_69783.pdf

Original

No public link identified.