Public Act 46 of 2022, which created an exemption for qualified heavy equipment rental personal property (QHERPP), was signed by Governor Whitmer on March 23, 2022. Effective on January 1, 2023, owners of QHERPP may be required to collect a 2% excise tax on the rental price.
Below are some key points in understanding the excise tax, your qualifications for the exemption, and how to file.
What Is Qualified Heavy Equipment Rental Personal Property?
Qualified heavy equipment rental personal property is any construction, earthmoving, or industrial equipment that is mobile and rented to customers by a qualified renter. This does not include handheld tools or equipment designed for oil and gas exploration, mining, or forestry.
QHERPP but is not limited to:
- Construction, earthmoving, or industrial equipment that is mobile, including attachments or other ancillary equipment for that equipment
- A self-propelled vehicle not designed for highway use
- Industrial electrical generation
- Lift equipment
- Material handling equipment
- Heading ventilation or air conditioning equipment
- Compressors, generators, or pumps
- Equipment for shoring, shielding, or ground trenching
- Other equipment not licensed with the Michigan Secretary of State
- Portable containers, and office trailers
- Other equipment used to support a construction or industrial jobsite
Which Rental Businesses Have to Collect and Remit This Tax?
Businesses that meet the following qualifications may be required to collect this tax:
- Engaged in a line of business described in the 2017 NAICS Code 532412 and 532310; and
- Maintains a rental business location within the state; and
- Receives more than 50% of its annual gross receipts from the rental of QHERPP from rentals to the public or has an affiliate that meets this test; and
- Claimed an exemption from business personal property taxes by timely filing Form 5819 – Qualified Heavy Equipment Rental Personal Property Tax Exemption Claim. For more on Michigan’s PPT exemptions, read our blog post.
What Forms Do I Need to File If I Have to Collect and Remit The Tax?
Each quarter you will need to file Form 5815 – and remint payment with Form 5851 – Heavy Equipment Owners Excise Tax Quarterly Payment Voucher. These Forms are due on the last day of the month following the end of each quarter (April 30, July 31st, October 31, and January 31). If you have multiple business locations from which property is rented, a separate form and payment must be submitted for each location.
All qualified heavy equipment renters who elect to apply for this personal property tax exemption will now have to collect this new tax from their renters.
Questions about this tax exemption or how it applies to your business?