State Can't Bag Double Tax On Grocery Delivery Apps Under Repeat Senate Bill

(Source: MIRS.news, Published 05/15/2025) Sometimes shopping from hometown grocery stores through delivery service apps, like Instacart and DoorDash, means a sales tax is charged twice. SB 229 by Senate Regulatory Affairs Chair Jeremy Moss (D-Southfield) looks to prevent such double taxation.

In June 2024, the same proposal passed unanimously in the Senate, but was not voted on in the House chamber before the end of last term.

In April, University of Michigan research found that 39 percent of residents in Detroit – the state's most populous city – said they used online grocery store delivery, especially if they faced transportation obstacles or had disabilities or "major health challenges."

During Thursday’s Senate Regulatory Affairs committee meeting, Moss explained that third-party delivery services, like the Shipt and Instacart apps, remit sales taxes while processing customers' orders.

"Major retailers like Meijer . . . have the ability to update or modify their point-of-sale software and systems to turn off the collection of the sales tax when the driver comes to pick it up, because it's already been remitted once it's on the app and ordered," Moss said. "But there are smaller retailers, like your hometown grocery store…(that) don't have the capabilities to afford a system to modify their existing point-of-sale system."

Instead of pressuring small retailers to have more advanced systems, Moss' SB 229 would allow the delivery service to claim on their annual returns to the state Treasury the second sales tax they were charged.

According to the Senate Fiscal Agency (SFA), SB 229 could possibly reduce Michigan's sales tax revenue by about $2 million in the next fiscal year.

SB 229 was moved to the Senate floor by Thursday’s panel unanimously, receiving endorsements from the Detroit Regional Chamber, DoorDash and Instacart.

"In this situation, both DoorDash and the merchant end up remitting sales tax to the state on the same transaction," said Evan Marolf, DoorDash's legislative policy advisor, to the committee on the current issue. "Obviously, it's an issue for small businesses in particular, but it even happens for us with some of our larger retailers on the platform."

Speaking to the committee via Zoom, Marolf noted that North Carolina "has adopted similar fixes to the same issue." He added that SB 229 "maintains the integrity of Michigan's sales tax system."

In other Senate news, the Senate Regulatory Affairs panel moved SB 157, setting Michigan's own pet cemetery regulatory act, ensuring that land dedicated to be a pet cemetery cannot be repurposed for other things without distinct court approval to lift the dedication.

Sens. Dan Lauwers (R-Brockway), Roger Hauck (R-Union Twp.) and Joseph Bellino Jr. (R-Monroe) opposed the bill, and Sen. Michael Webber (R-Rochester Hills) chose not to vote on it.