Mich. Admin. Code R 205.112 — Premiums and gifts

Rule 62. (1) Unless an exemption applies, donors of tangible personal property are
regarded as consumers of that tangible personal property and the sale of that property to
them is taxable. Similarly, the sale to an employer of tangible personal property for free
distribution to its employees may also be taxable, under R 205.76. The sale of goods to
be given away for advertising purposes is also taxable.
(2) If goods purchased for resale are subsequently given away or used by the
retailer, the retailer is liable for use tax on the purchase price of the goods, unless
otherwise exempt.
(3) The redemption of scrips, whether in the form of punch cards, certificates, box
tops, tokens, proofs of purchase, points, or similar promotional consideration for
premiums is a taxable sale at retail and sales tax must be paid on the redemption value of
the scrips. Sales tax does not apply if the consideration is redeemed for cash rather than
Courtesy of Michigan Administrative Rules
for tangible personal property. Premiums acquired for resale purposes are not subject to
sales or use tax.
(4) Purchasers of tangible personal property to be awarded as prizes, the winning of
which depends upon chance or skill, are regarded as consumers of that property and the
tax applies to sales of the property to them. Similarly, purchasers of tangible personal
property for use in games, promotions, and similar operations, in which each customer
receives some merchandise or prize regardless of skill or chance, are regarded as the
consumers of that property and the tax applies to sales of the property to them.