4586: Schedule of Business Activity Protected Under Public Law 86-272 (2024)
Michigan · Michigan Treasury · Used for tax years 2024
Michigan Form 4586 is a Michigan Business Tax schedule that reports business activities to help determine whether Public Law 86-272 protects a business from the business income tax. It includes information about Michigan activities and a certification of protection. This protecti
Who files this form
Form 4586 provides information to help a business and the Michigan Department of Treasury determine whether Public Law 86-272 protects its activity from the Business Income Tax portion of the Michigan Business Tax.
The protection generally applies to out-of-state businesses whose Michigan activity is limited to soliciting orders for sales of tangible personal property. Orders must be sent outside Michigan for acceptance or rejection and, if accepted, filled by shipment or delivery from outside Michigan.
A member of a unitary business group claiming protection must file Form 4581 or Form 4586, as applicable, and report its individual activity.
Entities incorporated in Michigan, and individuals domiciled in or resident in Michigan, are not protected under this law.
What you'll need
Have the following information available to complete the schedule:
- Taxpayer name and Federal Employer Identification Number (FEIN) or TR Number.
- Details of the business's Michigan activities during the tax year, including activities performed by employees, representatives, and independent contractors.
- The tax type and tax year of the most recent Michigan Sales, Use and Withholding Tax, Michigan Business Tax, or Single Business Tax return filed, if applicable.
- The location of any Michigan regional office maintained during the tax year.
Review the list of unprotected activities in the instructions before completing the certification.
How to file
- Enter the taxpayer name and FEIN or TR Number. Enter the FEIN or TR Number on page 2 as well.
- In Part 1, check all protected activities that apply to the business in the current tax year.
- In Part 2, check all applicable items. Provide the most recent return information and regional office location where requested.
- Review the unprotected activities in the instructions. In Part 3, check the certification box to certify that the business is protected and does not conduct unprotected activities.
- Include completed Form 4586 as part of the tax return filing.
The supplied text does not specify a mailing address or electronic filing method.
Common mistakes
- Assuming protection covers both parts of the tax. Public Law 86-272 does not protect a business from the Modified Gross Receipts Tax.
- Relying on a previous year's protection. Protection must be evaluated each tax year. The text warns that unprotected activity at any time during a tax year removes protection for all Michigan-attributable income for that year.
- Certifying without reviewing unprotected activities. The certification states that you have reviewed that list and that the business does not conduct those activities. Treasury may review the business's activity and determine that it is not protected.
- Assuming any home office qualifies. An in-home office must meet the restrictions in the instructions. An office that does not qualify can cause loss of protection.
Questions people ask
Does this protection mean my business has no Michigan nexus?
No. The text distinguishes nexus from tax protection. Public Law 86-272 does not prevent Michigan from finding that an out-of-state business has nexus.
Can my business have employees in Michigan and still be protected?
Yes. Having Michigan employees alone does not rule out protection. Employees who merely solicit sales may conduct protected activities, subject to the limits described in the text.
Are sales of services protected?
No. The protection applies to solicitation of sales of tangible personal property, not services. Leasing, renting, or licensing tangible personal property is also not protected.
What happens if only some unitary business group members are protected?
If one member has Michigan nexus and exceeds the protections of Public Law 86-272, all members, including protected members, must be included in calculating the group's Business Income Tax base and apportionment formula. If all members claim protection, the group does not calculate a Business Income Tax liability.