rick snyder bill signing

Gov. Rick Snyder on Thursday signed so-called "Main Street Fairness" legislation that will extend sales tax collections to online purchases.

(Emily Lawler | MLive.com)

LANSING, MI -- Gov. Rick Snyder on Thursday signed legislation expanding the situations where Michiganders have to pay sales and use taxes for online purchases.

"We want a fair, level playing environment for people to be successful. That's the way it should be," Snyder said.

Michigan consumers now are charged a 6 percent sales tax on in-state purchases and are supposed to report any online or out-of-state spending and pay it on their annual taxes.

However, many people fail to do this.

SB 658 and SB 659, now Public Acts 553 and 554 of 2014, allow the state to collect sales tax for purchases made through online retailers with a physical presence in Michigan. This is what the state can control, and a tact that several states have taken in the absence of federal legislation that could cast a wider net for taxes on all online interstate commerce.

It's billed as "Main Street Fairness" legislation. The legislation goes into effect with the start of the new fiscal year on Oct. 1, 2015.

"We still need federal action to really get to where we should be on this topic," Snyder said.

The state can collect an estimated $60 million annually with the legislation signed this week, but Snyder said the state could collect more than $100 million annually if the federal government acted. Still, he bristled at people who framed this as a tax increase, saying instead it was a collections issue.

"Some people like to talk about are you increasing taxes? We are not at all," Snyder said.

Some tea party and conservative groups have come down against the measures, saying they are a tax increase.

Sen. Jim Ananich sponsored the legislation. One problem businesses were seeing is that a customer would come try out their products but then go buy them online to avoid sales tax.

"This really is about fairness. . . it's leveling the playing field so that Michigan businesses can compete with businesses all over the world," Ananich said.

Former Rep. Eileen Kowall sponsored similar legislation in the house. She said it was the local businesses donating to little league teams and paying taxes that help operate cities' police forces.

"Buying local, the money stays local. And it helps to shore up our local communities, the bricks and mortar," Kowall said.

Emily Lawler is a Capitol/Lansing business reporter for MLive. You can reach her at elawler@mlive.com, subscribe to her on Facebook or follow her on Twitter: @emilyjanelawler.