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Michigan has forty-eight specific state and local
taxes. Wease Halloran has extensive litigation and appellate experience
with Michigan taxes.
Corporate Officer Liability
The Department has authority to assess
officers, members, managers, and/or partners for the tax liabilities
of a corporation, limited liability company, limited liability
partnership, limited partnership or a partnership. The
Corporate Officer Liability process begins when a corporation fails to
file returns and/or pay taxes due to the State of Michigan. Department
staff will perform an investigation in order to identify all
individuals who may be held personally liable for the corporation's
failure to file returns and/or submit payment. The time limits to
protest such assessments are severely limited.
Exemptions
Exemptions are strictly construed
in favor of the taxing authority and the burden of proving
entitlement to an exemption rests on the taxpayer. Each
Michigan tax has its individual provisions for specific exemptions.
Nexus
Persons have nexus with Michigan
and are subject to the MBT if the taxpayer has a physical
presence in this state for a period of more than one day during the tax
year or if the taxpayer
actively solicits sales in this state and has gross
receipts of $350,000 or more sourced to this
state. In other words, there are two alternative nexus
standards under the MBT.
Penalties
Michigan has discretionary and non-discretionary penalties.
- Discretionary penalties include
civil tax fraud, intentional disregard, and negligence. In every case
involving a tax deficiency the Michigan Department of Treasury will
determine whether discretionary penalties apply.
Facts, circumstances and taxpayer intent are supposed
to be examined using the best information available. If the
examination reveals that a discretionary penalty
applies, then a determination is made as to which
penalty applies.
- Non-discretionary penalties
include failure to file tax returns, failure to pay a tax, and failure
to file an informational return. Except for the information returns,
these penalties are a percentage of tax due after subtracting credits
and prepayments. The maximum penalty of
25% or 50% is a combined maximum for failure to file and/or pay.
The penalties for failure to file/pay are applied at
the stated rate per month or fraction of a month.
Successor Liability
If a taxpayer purchases an active or closed business (including stock of goods or even the
transfer of a liquor license), the purchaser may be held liable as a successor for the unpaid taxes.
A purchaser may avoid the possible liability at the time of the purchase by requiring the seller to
provide a Tax Clearance Certificate from the Collection Division stating that no taxes
are due. Otherwise, the purchaser must set aside (escrow) sufficient money to pay the taxes,
interest, and penalties owed by the seller. The purchaser’s liability for the seller’s tax debts is
limited to the fair market value of the business or assets less the sale proceeds applied to debts
for which there is a superior secured interest.
Voluntary Disclosure
Except as applied to estimated tax returns,
taxpayer-initiated disclosure means any voluntary
disclosure of a tax deficiency when there has been no prior contact by
the department.
No penalty will be applied to tax deficiencies on amended returns,
providing:
(1) There has been no contact by the department, (2) The taxpayer is
not under investigation by the department for the tax period involved
and (3) The taxpayer or agent pays the tax deficiency and interest
without further action by the
department.
No penalty will be applied to tax deficiencies paid with the filing of
a delinquent return providing: (1) There has been no contact by the
department, (2) The taxpayer is not under investigation by the
department, (3) The tax period of the return(s) includes the taxpayer's
first filing period for that tax and (4) The taxpayer or agent pays the
tax deficiency and interest without further action by the
department.
A taxpayer is required to file a written request or statement to be
considered for the taxpayer-initiated
disclosure exception from penalty.
Determining whether legal
counsel is right for you and your matter can only be done through
personal contact. Initial meetings are always at no charge.
Ideally, the best time to contact us is when you
first receive notice from the taxing department. Addressing tax issues
early in the audit or administrative appeal process enables us to
provide the best analysis and planning to resolve the issue. However, we
will consult with you at any point in the litigation or appeals
process. Wease Halloran has the depth of experience and focus that is
unparalleled in the Michigan legal market.
- Michigan Department of Treasury Audit Defense & Informal Conference
- Michigan Court of Claims Litigation
- Tax Appeals before the Michigan Tax Tribunal
- Appeals to the Michigan Court of Appeals and Michigan Supreme Court
Contact Wease Halloran to schedule an appointment to discuss your particular state and local tax matter. |
