Michigan Extends Statute of Limitations

Michigan has enacted legislation that provides additional time periods for extending the four-year statute of limitations during which the Department of Treasury can assess Michigan corporate income tax, personal income tax, sales and use tax, and miscellaneous tax deficiencies, interest, or penalties. The legislation states that the statute of limitations will be extended in instances where the following time periods exceed the statute of limitations: the period pending the completion of an appeal of a final assessment; a period of 90 days after the issuance of a decision and order from an informal conference; a period of 90 days after the issuance of a court order resolving an appeal of a decision of the department in a case in which a final assessment was not issued prior to appeal; and for the period of an audit that started after September 30, 2014, and was conducted within a specified time frame established by law. The legislation strikes references in the law to suspending the statute of limitations. It states that the statute of limitations is extended for the periods currently stipulated in the law as well as the additional time periods. The statute of limitations also applies to taxpayers claiming refunds. In addition, it now requires completion of audit fieldwork within 1 year and the final assessment to be issued within 9 months of issuance of the written preliminary audit determination. These time frames are subject to agreement of extension of the statute of limitations by both parties.

The legislation requires the department to provide a responsible person of a business with notice of any amount collected from any other responsible person determined to be liable. The department may not assess a responsible person more than four years after the date of the assessment issued to a business. Before assessing a responsible person as liable for a tax assessed to a business, the department must assess a purchaser or succeeding purchaser of the business who is personally liable. The department may assess a responsible person notwithstanding the liability of a purchaser or succeeding purchaser if the purchaser or succeeding purchaser fails to pay the assessment for sales and use tax, tobacco products tax, motor fuel tax, motor carrier fuel tax, income tax withholding, and any other tax that a person is required to collect on behalf of a third person. The legislation defines “responsible person” as an officer, member, manager of a manager-managed limited liability company, or partner for the business who controlled, supervised, or was responsible for the filing of returns or payment of any of the taxes during the time period of default and who, during the time period of default, willfully failed to file a return or pay the tax due. (Act 3 (S.B. 337), Laws 2014, effective February 6, 2014)

Posted on February 24, 2014