Mich. Admin. Code R 205.68 — Containers, cartons, and wrapping materials

Rule 18. (1) As used in this rule, “containers” means the articles and devices in
which tangible personal property is placed for shipment and delivery, such as wrapping
materials, bags, cans, twines, gummed tapes, barrels, boxes, tote boxes, pallets, racks,
bottles, drums, carboys, cartons, sacks, and materials from which the containers are
manufactured.
(2) Sales of containers to persons engaged in rendering a service are taxable.
(3) Sales of containers that will be resold with the product are eligible for a resale
exemption. If a separate charge is made for the sale of a container to a person, other than
for resale, it is taxable. Sales of containers that are not resold with the property it contains
are taxable.
Example 1: ABC manufactures golf balls. ABC sells its golf balls for resale to
retailers. When a retailer places an order, ABC packages its golf balls by the dozen
into boxes that are intended to be sold with the golf balls. When ABC receives an
order from a retailer it places multiple boxes of golf balls into a larger box for
shipment. The box that is sold with the golf balls is eligible for the resale exemption.
Courtesy of Michigan Administrative Rules
However, the larger box used to ship multiple boxes of golf balls is taxable because it
is not resold. ABC shall pay sales tax when it purchases the larger box or remit use tax
on the purchase price of the box.
Example 2: Same facts as Example 1 except that ABC packages a gross of golf
balls, a dozen boxes of a dozen golf balls, for shipment to retailers with the packaging
into the larger box occurring before the packages of golf balls first come to rest in
finished goods inventory. The larger box, and associated packing materials such as
popcorn, styrofoam, and peanuts, are exempt as it was used in the packaging before
the golf ball boxes came to rest in finished goods inventory.
(4) Sales of containers to a person, such as a manufacturer, wholesaler, jobber, or
retailer, who uses the containers to ship or deliver goods, and retains the ownership or
legal right of possession of the containers, are taxable.
(5) Sales or purchases, for a single use only, of bracings, blocking, skidding,
shoring, and other materials, commonly known as dunnage are taxable when used in the
shipment of a product to a customer.
(6) Deposits on a returnable container for a beverage, or the deposit on a carton or
case which is used for returnable beverage containers, are not taxable when sold in
conjunction with a sale of a beverage.