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Compliance October 26, 2007
ICI Pleads for Repeal of MI Legislation Taxing Investment Advice Services
The Investment Company Institute (ICI) has issued a statement strongly urging the state of Michigan to repeal a portion of recently enacted legislation that imposes a sales tax on investment advice services.
Reported by Rebecca Moore
Michigan House Bill No. 5198 provides for the assessment of taxes “on the storage, use, or consumption in this state of tangible personal property and certain services.’ Among the personal services listed is “investment advice services, as described in the NAICS (North American Industry Classification System) industry code 52393.”
The taxation of advice services would be effective as of December 1, 2007.
The ICI statement said that, in a letter to two Michigan officials, ICI stated the imposition of this service tax would harm Michigan residents by discouraging them “from seeking financial advice to ensure their retirement security.” The Institute also strongly urged that the sales tax not be extended to tax any services offered by the investment company industry.
The ICI stated the localized service taxes on investment company services would mean:
- additional costs to Michigan investors seeking to save for their retirement and other long-term needs through mutual funds;
- placing Michigan-based mutual fund firms at a competitive disadvantage with fund firms outside the state; and
- logistical obstacles to administering the tax efficiently and fairly.
The ICI statement, with a link to their letter, is here.