New law will improve offer in compromise program for Michigan taxpayers

  • August 21, 2014
  • David Shindel

paying taxesOn June 27, 2014, Michigan Governor Snyder signed legislation to provide an offer in compromise program in Michigan for any tax administered under the Revenue Act. This is another big step in making Michigan and its tax collection agency more business friendly. The power for the Department of Treasury to compromise a tax will begin on January 1, 2015.

The change would authorize the State Treasurer to compromise the payment of a tax, if doubt existed as to liability or collectability or if there were a substantial probability that a compromise would further the fair and efficient administration of the tax. The bill would do the following: 

  • Provide that a taxpayer’s Federal compromise of tax would be prima facie evidence that the taxpayer was entitled to a compromise of a comparable Michigan tax liability. 
  • Allow the Department of Treasury to revoke a compromise if it were induced by fraud or perjury, or if the taxpayer failed to comply with any tax payment agreement within five years after the compromise was made. 
  • Require the State Treasurer to file a written report if a tax liability were compromised, unless the compromise related to a civil case involving less than $25,000. 
  • Require the State Treasurer, within 90 days after the bill’s effective date, to establish guidelines for the program; administrative procedures; procedures for an independent administrative review of the rejection of a proposed offer-in-compromise; procedures for the appeal of a rejection; application fees; and procedures to allow for payment plans. 
  • Require the Department to disclose return information to the public as necessary to permit inspection of any accepted offer-in-compromise.

For more detailed information, visit the State of Michigan’s website and view the bill in its entirety