2020 Form 5081, Page 4
• Tilling, planting, draining, caring for, maintaining, or A bad debt deduction may be claimed by a third-party lender
harvesting things of the soil, or if the retailer who reported the tax and the lender financing
the sale timely execute and maintain a separate written
• Breeding, raising, or caring for livestock, poultry, or
election designating which party may claim the deduction.
Certain additional conditions must be met. See MCL 205.54i,
(ii) To the extent that the property is affixed to and made
205.99a, and RAB 2019-3.
a structural part of real estate for others and used for an
Line 5g: Food for Human/Home Consumption. Enter the
exempt purpose in (i), tangible personal property sold to a
total of retail sales of grocery-type food, excluding tobacco,
contractor that is one of the following:
marihuana products, and alcoholic beverages. Prepared food
• Agricultural land tile
is subject to tax. See MCL 205.54g and MCL 205.94d for
• Subsurface irrigation pipe more information.
• Portable grain bins Line 5h: Government Exemption. Direct sales to the
United States government or the state of Michigan or its
• Grain drying equipment and its fuel or energy source
political subdivisions are exempt.
However, the following sales from (i) or (ii) are not exempt:
Line 5i: Michigan Motor Fuel Tax. Motor fuel retailers
• Food, fuel, clothing, or similar property for personal
may deduct the Michigan motor fuel taxes that were included
living or human consumption, or
in gross sales on line 1 and paid to the State or the distributor.
• Property permanently affixed to and becoming a
Line 5j: Direct Payment Deduction. Enter sales made to
structural part of real estate unless it is agricultural land
purchasers that claimed direct pay exemption from sales
tile, subsurface irrigation pipe, a portable grain bin, or
and use taxes. With the exemption claim, the purchaser must
grain drying equipment. Certain property that can be
include the following statement: “Authorized to pay use tax
disassembled and reassembled may be exempt.
on purchases of tangible personal property directly to the
Some specific types of exempt property and exempt uses of State of Michigan under Account Number [listing either the
property are clarified in the statute. If property is used for Federal Employer Identification Number or the Michigan
both an exempt and a taxable purpose, the property is only Treasury Registration Number]. If using Michigan Sales and
exempt to the extent that it is used for an exempt purpose. Use Tax Certificate of Exemption (Form 3372), check the box
In such cases, the exemption is limited to the percentage of in Section 3 for “Other” and include the above statement as
exempt use to total use determined by a reasonable formula the explanation. MCL 205.98.
or method approved (but not required to be pre-approved)
Line 5k: Other Exemptions and/or Deductions. Identify
by Treasury. For more information, see MCL 205.54a and
exemptions or deductions not covered in items 5a through 5j
on this line. Examples of exemptions or deductions are:
Line 5d: Interstate Commerce. Enter sales made in
• A llowable trade-in values on vehicle sales. Motor vehicle,
interstate commerce. To claim such a deduction, the
recreational vehicle, and watercraft dealers may be eligible
property must be delivered by the business to the out-of-state
to deduct the value of a trade-in under MCL 205.51(d).
purchaser. Property transported out-of-state by the purchaser
Deduction for motor vehicles is subject to limitation.
does not qualify as interstate commerce. Documentation of
Taxes paid to Secretary of State are not reported here.
out-of-state shipments must be retained in business records to
Instead, they are reported on the Vehicle Dealer
support this deduction.
Supplemental Schedule (Form 5086, e-file only).
Line 5e: Nontaxable Services Billed Separately. Enter
• Credit for the core charge attributable to a recycling fee,
charges for nontaxable services billed separately, such as
deposit, or disposal fee for a motor vehicle or recreational
repair or maintenance, if these charges were included in
vehicle part or battery if the recycling fee, deposit, or
gross receipts on line 1. Costs, such as delivery or installation
disposal fee is separately stated on the invoice, bill of sale,
charges, that are incurred before the completion of the
or similar document given to the purchaser.
transfer of ownership of taxable property are included in the
• Direct sales, not for resale, to certain nonprofit agencies,
tax base and may not be subtracted.
churches, schools, hospitals, and homes for the care of
Line 5f: Bad Debts. Bad debts may be eligible for a
children and the aged, to the extent the property is used to
deduction if the following criteria are met:
carry out the nonprofit purpose of the organization. For
• The debts are charged off as uncollectible on business
sales to certain nonprofit agencies, the exemption is
books and records at the time the debts become
limited based on the sales price of property used to raise
funds or obtain resources. All sales must be paid for
directly from the funds of the exempt organization to
• T he debts are deducted on the return for the period
during which the bad debts are written off as
• Assessments imposed under the Convention and Tourism
Act, the Convention Facility Development Act, the
• The debts are or would be eligible to be deducted for
Regional Tourism Marketing Act, or the Community
federal income tax purposes.
Convention or Tourism Marketing Act. Hotels and motels