Modernizing Michigan’s Marketplace Facilitator Tax: House Bill 5139 (Substitute)

Summary

A policy brief titled "Modernizing Michigan's Marketplace Facilitator Tax: House Bill 5139 (Substitute)", which closes with the names of a housing policy analyst and a managing director of technology policy. It states that Michigan's current Market Facilitator statute excludes accommodation providers, so short-term rental platforms are not treated as the seller responsible for collecting and remitting taxes. The brief says HB 5139 would require platforms to collect 100% of taxes by eliminating a carveout for hosts registered to collect their own sales taxes, and would not affect hotel taxing. It states that the substitute breaks the tie-bar requiring passage of HB 5138 and HB 5140 first. The brief argues the bill would reduce the compliance burden on hosts and standardize tax collection for short-term rentals.

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Full text

Modernizing Michigan's Marketplace Facilitator Tax:
House Bill 5139 (Substitute)

Michigan’s current Market Facilitator statute excludes accommodation providers,
so unlike other online marketplaces, short-term rental (STR) platforms are not
treated as the seller responsible for collecting and remitting taxes. As a result, tax
collection responsibilities for STR bookings vary across platforms and hosts. By
making platforms directly responsible, HB 5139 standardizes tax collection
reason procedures for bookings through platforms without affecting independent STR
FOUNDATION __ hosts or hotels.

What This Bill Does

e Requires Platforms to Collect 100% of Taxes: Eliminates a carveout for hosts
registered to collect their own sales taxes, which has prevented online platforms and
other marketplace facilitators from collecting Michigan state lodging taxes in the
past.

e Does not impact hotel taxing: The bill only covers platform-facilitated residential
and short-term rental listings. Hotel collection responsibility is left in place as is.

What is Included in the Substitute

e Separates HB 5139 from the broader package: The substitute breaks the Tie-bar
that would require passage of HB 5138 and HB 5140 before HB 5139 could take
effect.

Why These Provisions Are Beneficial

e Reduces compliance burden on hosts: Instead of tax collection and reporting
falling to individual hosts, online booking platforms will handle these
responsibilities uniformly. Hosts that operate independently of platforms will face
no change in their tax collection process.

e Standardizes tax collection for short-term rentals: By eliminating confusion
about the lodging carveout, this bill would give online platforms the needed clarity
to collect taxes on each transaction without needing to confirm the status of a host’s
sales tax registration each time. This will not only create clarity but likely lead to
greater tax revenue for the state and localities.

Bottom Line: This bill, as substituted, updates Michigan’s accommodations tax code to
streamline collections at the platform level and create certainty for both online platforms
and hosts.

Eliza Terziev, Housing Policy Analyst, eliza.terziev@reason.org
Caden Rosenbaum, Esq., Managing Director of Technology Policy, caden.rosenbaum@reason.org

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Original

www.house.mi.gov