On May 8, 2023, the Michigan Sales and Use Tax Acts were amended to allow an industrial processing tax exemption for property used for the production, manufacturing, or recycling of “aggregate” materials, which include common variety building materials like sand, gravel, crushed stone, slag, recycled concrete, recycled asphalt, and geosynthetic aggregates.

Previously, the exemption only included property that became ingredients or component parts of the finished product to be sold ultimately at retail. The amendments broaden that definition to include property that will be used as ingredients or component parts of finished products to be sold ultimately at retail or affixed to and made structural parts of real estate located in another state. The amendments also specify that property is eligible for an industrial processing exemption if it performs an “industrial processing activity” upon materials that will be used as an ingredient or component part for the construction, maintenance, repair, or reconstruction of real property in Michigan, if those materials are subject to the use tax.

The Michigan Department of Treasury is required to cancel all outstanding balances arising from these industrial processing activities and property on notices of intent to assess and final assessments issued before May 8, 2023, for the sales tax or use tax. The department also cannot issue any new assessments for the sales tax or use tax on those industrial processing activities and property for any open tax periods before May 8, 2023.

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