Governor Snyder signed a Public Act into law at the end of 2017 permitting a taxpayer and the Michigan Department of Treasury to engage in a settlement process during administrative appeals of Michigan sales tax and corporate and individual income tax assessments. Taxpayers and the Department had previously been unable to settle tax disputes at the administrative level because Michigan law did not permit the Department to “compromise” taxes.
When an assessment or other dispute was in litigation, however, in either the Michigan Tax Tribunal or Court of Claims, the case was capable of “settlement” in negotiations with the Department via the attorney with the Attorney General’s office assigned to the case.
A process for initiating settlement discussions is provided in MCL 205.21(e), but the Department has not yet issued further guidance regarding standards for negotiating a settlement. Therefore, it is not known yet whether this new process will be beneficial to taxpayers, nor the number of matters that might be resolved using the new procedure. It would seem to provide a new avenue for resolving tax disputes, and may reduce the additional time and expenses of a taxpayer’s professional fees, and costs and efforts on the Department’s side of the equation, by avoiding the filing of litigation solely to permit the settlement process.
For more information, please contact Tom Hammerschmidt in the Firm’s Ann Arbor, Michigan office at (734) 623-1602, or any member of Dickinson Wright’s state and local tax team.