May 17, 2017, Introduced by Reps. Byrd and Chirkun and referred to the Committee on Tax Policy.
A bill to amend 1964 PA 284, entitled
"City income tax act,"
by amending section 4 of chapter 1, sections 64a, 73, 82, 84, 85,
92, and 93 of chapter 2, and section 60 of chapter 3 (MCL 141.504,
141.664a, 141.673, 141.682, 141.684, 141.685, 141.692, 141.693, and
141.760), section 64a of chapter 2 as added and sections 73, 82,
84, 85, 92, and 93 of chapter 2 and section 60 of chapter 3 as
amended by 1996 PA 478, and by adding section 2b to chapter 1 and
sections 86a, 86b, 86c, 86d, 96, and 97 to chapter 2.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
CHAPTER 1
Sec. 2b. Beginning January 1, 2017, notwithstanding any
ordinance of the city to the contrary, a city that levies a tax
authorized by this act shall comply with changes made by the
amendatory act that added this section regardless of whether the
city amends its city income tax ordinance to include those changes.
Sec.
4. (1) The state commissioner of revenue department shall
promulgate
uniform rules pursuant to Act No. 306 of the Public Acts
of
1969, as amended, being sections 24.201 to 24.315 of the
Michigan
Compiled Laws, the administrative
procedures act of 1969,
1969 PA 306, MCL 24.201 to 24.328, governing the form and manner of
appeal
from a final determination special
ruling or a rule adopted
by a city affecting a taxpayer, employee, or other person and
purporting to be made under or in administration of the uniform
city income tax ordinance. The rules shall provide at least 30 days
after
notice of a final assessment, denial of claim for refund,
special
ruling , or
rule of the city , in
which the appeal may be
filed. The rules shall provide to the taxpayer, employer, other
person, or an authorized representative of the person and to the
city an opportunity to present evidence and to examine witnesses
relating to the matter under appeal. The hearing shall be held in
compliance
with Act No. 267 of the Public Acts of 1976, being
sections
15.261 to 15.275 of the Michigan Compiled Laws. the open
meetings act, 1976 PA 267, MCL 15.261 to 15.275. Public notice of
the time, date, and place of the hearing shall be given in the
manner
required by Act No. 267 of the Public Acts of 1976. the open
meetings act, 1976 PA 267, MCL 15.261 to 15.275. Promptly after
completion
of the hearing, the commissioner department shall
affirm, reverse, or modify by written order the action of the city
which is the subject matter of the appeal, and shall furnish a copy
of
the decision and order and opinion to the appellant and to the
authorized official of the city.
(2) A decision and order issued by the department on a special
ruling or a rule adopted by a city may be appealed in the manner
and form and within the time provided by the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. A
hearing conducted by a city pursuant to section 84 or 92 of chapter
2 shall only be appealed as provided in section 93(2) of chapter 2.
CHAPTER 2
Sec. 64a. (1) If a person liable for the tax imposed under
this ordinance sells a business or the stock of goods of a business
or quits a business, the person shall make a final return to the
city or the department within 15 days after the date the business
or stock of goods is sold or the person quits the business. The
purchaser or succeeding purchasers, if any, who purchase a going or
closed business or stock of goods of a going or closed business
shall escrow sufficient money to cover the amount of taxes,
interest, and penalties that may be due and unpaid until the former
owner produces a receipt from the administrator that shows that the
taxes due have been paid, or a certificate that states that taxes
are not due. If the owner provides a written waiver of
confidentiality, the administrator may release to a purchaser a
business's known tax liability for the purposes of establishing an
escrow account for the payment of taxes. If the purchaser or
succeeding purchasers of a business or stock of goods of a business
fail to comply with the escrow requirements of this subsection, the
purchaser is personally liable for the payment of the taxes,
interest, and penalties accrued and unpaid by the business of the
former owner. The purchaser's or succeeding purchaser's personal
liability is limited to the fair market value of the business less
the amount of any proceeds applied to balances due on secured
interests that are superior to any lien provided for in this
ordinance.
(2) If a corporation that is liable for the tax imposed under
this ordinance fails for any reason to file the required returns or
to pay the tax due, any officers of the corporation that have
control or supervision of, or who are charged with the
responsibility for, making the returns or payments are personally
liable for the failure to file or pay. The signature of any
corporate officer on a return or negotiable instrument submitted in
payment of a tax is prima facie evidence of the officer's
responsibility for making the returns and payments. The dissolution
of a corporation does not discharge an officer's liability for a
prior failure of the corporation to make a return or remit a tax
due. The sum due for a liability may be assessed and collected
under this ordinance.
(3) Notwithstanding subsections (1) and (2), for taxes
administered by the department through an agreement entered into
under section 9 of chapter 1 with a city that has a population of
more than 600,000 only, both of the following apply:
(a) If a person liable for a tax administered under this
ordinance sells out a business or its stock of goods or quits the
business, the person shall make a final return within 15 days after
the date of selling or quitting the business. The purchaser or
succeeding purchasers, if any, that purchase a going or closed
business or its stock of goods shall escrow sufficient money to
cover the amount of taxes, interest, and penalties as may be due
and unpaid until the former owner produces a receipt from the
department showing that the taxes due are paid, or a certificate
stating that taxes are not due. Upon the owner's written waiver of
confidentiality, the department shall, within 60 days of receipt of
the request, release to a purchaser a business's known or estimated
tax liability for the purposes of establishing an escrow account
for the payment of taxes. The department may estimate tax liability
based on prior returns and payments. If the department believes
that a return made or payment does not supply sufficient
information for an accurate determination, the department may make
an estimate based on other available information. If the purchaser
or succeeding purchasers of a business or its stock of goods fail
to comply with the escrow requirements of this subsection, the
purchaser is personally liable for the payment of the taxes,
interest, and penalties accrued and unpaid by the business of the
former owner. If the purchaser or succeeding purchasers of a
business or its stock of goods comply with the escrow requirements
of this subdivision, the purchaser shall not be held liable for
more than the known or estimated tax liability disclosed by the
department and held in escrow. However, the purchaser shall not be
held liable if the department has failed to provide the information
requested within 60 days. For a purchaser or succeeding purchaser
that has not complied with the escrow requirements of this
subdivision, the purchaser's or succeeding purchaser's personal
liability is limited to the fair market value of the business less
the amount of any proceeds that are applied to balances due on
secured interests that are superior to any lien filed by or on
behalf of the city.
(b) If a business liable for taxes administered under this
ordinance fails, for any reason after assessment, to file the
required returns or to pay the tax due, any of its officers,
members, managers of a manager-managed limited liability company,
or partners who the department determines, based on either an audit
or an investigation, are responsible persons, are personally liable
for the failure to pay the taxes. The dissolution of a business
does not discharge a responsible person's liability for a prior
failure of the business to file a return or pay the tax due. The
sum due for a liability may be assessed and collected as provided
under this ordinance. The department shall provide a responsible
person assessed under this section with notice of any amount
collected by the department from any other responsible person
determined to be liable under this subsection or purchaser
determined to be liable under subdivision (a) that is attributable
to the assessment. The department shall not assess a responsible
person under this section more than 4 years after the date of the
assessment issued to the business. A responsible person may
challenge the validity of an assessment to the same extent that the
business could have challenged that assessment under this ordinance
when originally issued. The department has the burden to first
produce prima facie evidence to establish that the person is a
responsible person. In a separate proceeding before the circuit
court, a responsible person found to be liable for the assessment
under this section may recover from other responsible persons an
amount equal to the assessment or portion of the assessment based
on that person's proportionate liability for the assessment as
determined in that proceeding. Before assessing a responsible
person as liable under this subsection for the tax assessed to the
business, the department shall first assess a purchaser or
succeeding purchaser of the business personally liable under
subdivision (a) if the department has information that clearly
identifies a purchaser or succeeding purchaser under subdivision
(a) and establishes that the assessment of the purchaser or
succeeding purchaser would permit the department to collect the
entire amount of the tax assessment of the business. The department
may assess a responsible person under this subsection
notwithstanding the liability of a purchaser or succeeding
purchaser under subdivision (a) if the purchaser or succeeding
purchaser fails to pay the assessment.
(4) Notwithstanding any other provision of this ordinance,
upon request of a responsible person that was issued an intent to
assess by the department for liability under subsection (3)(b), the
department shall disclose any documents considered in the
department's audit or investigation in determining that the person
is a responsible person and is personally liable for the assessment
and any other documents that the tribunal or court determines are
necessary for a fair adjudication of a person's liability under
subsection (3)(b).
(5) As used in subsections (3) and (4):
(a) "Business" means a corporation, limited liability company,
limited liability partnership, partnership, or limited partnership.
(b) "Responsible person" means 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 employee withholding taxes owed
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.
The signature, including electronic signature, of any officer,
member, manager of a manager-managed limited liability company, or
partner on returns or negotiable instruments submitted in payment
of taxes of the business during the time period of default is prima
facie evidence that the person is a responsible person. A
signature, including electronic signature, on a return or
negotiable instrument submitted in payment of taxes after the time
period of default alone is not prima facie evidence that the person
is a responsible person for the time period of default but may be
considered along with other evidence to make a prima facie case
that the person is a responsible person. With respect to a return
or negotiable instrument submitted in payment of taxes before the
time period of default, the signature, including electronic
signature, on that document along with evidence, other than that
document, sufficient to demonstrate that the signatory was an
officer, member, manager of a manager-managed limited liability
company, or partner during the time period of default is prima
facie evidence that the person is a responsible person.
(c) "Time period of default" means the tax period for which
the business failed to file the return or pay the tax due under
subsection (3) and through the later of the date set for the filing
of the tax return or making the required payment.
(d) "Willful" or "willfully" means the person knew or had
reason to know of the obligation to file a return or pay the tax,
but intentionally or recklessly failed to file the return or pay
the tax.
Sec. 73. (1) If a taxpayer or employer fails or refuses to
make a return or payment as required, in whole or in part, or if
the administrator or the department has reason to believe that a
return made does not supply sufficient information for an accurate
determination of the amount of tax due, the administrator or the
department may obtain information on which to base an assessment of
the tax. The administrator or the department may examine the books,
papers, and records of any person, employer, taxpayer, or agent or
representative of any person, employer, or taxpayer or audit the
accounts of any person, employer, or taxpayer or any other records
pertaining to the tax, to verify the accuracy and completeness of a
return filed, or, if no return was filed, to ascertain the tax,
withholding, penalties, or interest due under this ordinance.
(2) The administrator or the department may examine any
person, under oath, concerning income which was or should have been
reported for taxation under this ordinance, and for this purpose
may compel the production of books, papers, and records and the
attendance of all parties before him or her, whether as parties or
witnesses, if he or she believes those persons have knowledge of
the income. In addition, for tax years after the 1996 tax year and
for which a city has entered into an agreement with the department
of
treasury pursuant to section 9 of
chapter 1, all of the
following apply to implement this section:
(a)
The department of treasury shall send to the taxpayer or
employer a letter of inquiry stating, in a courteous and
unintimidating manner, the department's opinion that the taxpayer
or employer needs to furnish further information or owes taxes to
the city, and the reason for that opinion. A letter of inquiry
shall also explain the procedure by which the taxpayer or employer
may initiate communication with the department to resolve any
dispute. A letter of inquiry may be served on the taxpayer in any
manner
determined appropriate by the department. of treasury. This
subdivision does not apply in any of the following circumstances:
(i) The taxpayer or employer files a return that shows a tax
due and fails to pay that tax.
(ii) The deficiency resulted from an audit of the taxpayer's
or employer's books and records by the city or the department.
(iii) The taxpayer or employer otherwise affirmatively admits
that a tax is due and owing.
(b) If the dispute is not resolved within 30 days after the
department
of treasury sends the taxpayer or employer a letter of
inquiry or if a letter of inquiry is not required under subdivision
(a), the department, after determining the amount of tax due from a
taxpayer or employer, shall give notice to the taxpayer or employer
of
the department of treasury's department's
notice of intent to
assess the tax. The department shall serve the intent to assess the
tax upon the taxpayer or employer in person, by first-class mail,
or by registered or certified mail to the last known address of the
taxpayer or employer. Proof of mailing the intent to assess is
prima facie evidence of receipt of the intent to assess the tax by
the addressee. The notice shall include all of the following:
(i) The amount of the tax the department of
treasury claims
the taxpayer or employer owes.
(ii) The reason for the deficiency.
(iii) A statement advising the taxpayer or employer of his or
her right to file a protest and to a hearing with the department.
of
treasury.
(c) If the department determines that a claim for refund does
not supply sufficient information for an accurate determination of
refund due, the department shall issue a notice of refund
adjustment or denial. The notice shall be served upon the taxpayer
or employer in person, by first-class mail, or by registered or
certified mail to the last known address of the taxpayer or
employer, and the notice shall include all of the following:
(i) The amount of the adjustment or denial.
(ii) The reason for the adjustment or denial.
(iii) A statement advising the taxpayer or employer of his or
her right to file a protest and to a hearing with the department. A
separate notice is not required under this subdivision if a letter
of inquiry and a notice of intent to assess are issued under
subdivisions (a) and (b).
(3)
A taxpayer or employer has 30 60
days after receipt of a
notice of intent to assess or of refund adjustment or denial within
which
to file a written protest with the department. of treasury.
If
a written protest is received, the department of treasury shall
give the taxpayer or employer or duly authorized representative of
the taxpayer or employer an opportunity to be heard and present
evidence and arguments in his or her behalf. A hearing under this
subsection is not subject to the administrative procedures act of
1969, 1969 PA 306, MCL 24.201 to 24.328.
(4) If a protest to the notice of intent to assess the tax
under
subsection (2) is determined by the department of treasury to
be a frivolous protest or a desire by the taxpayer or employer to
delay or impede the administration of the tax under this ordinance,
a penalty of $25.00 or 25% of the amount of tax under protest,
whichever is greater, shall be added to the tax.
(5) Upon receipt of a taxpayer's written protest filed
pursuant to subsection (3), the department shall set a mutually
agreed upon or reasonable time and place for a hearing and shall
give the taxpayer reasonable written notice of that hearing not
less than 20 days before the hearing. The notice shall specify the
intent to assess or the refund adjustment or denial and the tax
year that is the subject of the hearing. The taxpayer may appear or
be represented by any person before the department at the hearing
and may present testimony and argument. At the party's own expense
and with advance notice to the other party, a taxpayer or the
department, or both, may make an audio recording of the hearing. A
taxpayer that has made a timely request for a hearing may at any
time withdraw that request by filing written notice with the
department. Upon receipt of the request for withdrawal from the
hearing, the department shall issue a decision and order and, where
appropriate, a final assessment, from which a taxpayer may seek an
appeal to the tax tribunal as provided under section 93.
(6) During the course of a hearing conducted by the department
pursuant to subsection (5), the taxpayer by written notice may
convert the taxpayer's protest of an assessment to a claim for a
refund. The hearing shall continue and the department shall render
a decision and order in writing setting forth the reasons and
authority for granting or denying the claim of refund, in whole or
in part, or upholding the intent to assess, in whole or in part. If
the intent to assess is upheld, in whole or in part, the department
shall issue a final assessment setting forth the total amount found
to be due and payable. The decision and order are limited to the
subject of the hearing as included in the notice under subsection
(2)(b).
(7) For audits commenced after January 1, 2018, the department
shall complete fieldwork and provide a written preliminary audit
determination for any tax year no later than 1 year after the audit
commences. Any audit commenced before the period provided in
section 88 may be completed within 1 year and any assessment or
refund determined as a result of the audit may be made within 9
months of the date of the preliminary audit determination
notwithstanding any provision to the contrary unless the taxpayer,
for any reason, requests reconsideration of the preliminary audit
determination or the taxpayer requests a hearing under section 73.
A request for reconsideration by a taxpayer permits, but does not
require, the department to delay the issuance of a final
assessment.
Sec. 82. (1) All taxes imposed in a taxable year before the
1992 taxable year on a taxpayer and money withheld by an employer
under this ordinance and remaining unpaid after the taxes or money
withheld are due bear interest from the due date at the rate of 1/2
of 1% per month until paid. For the 1992 taxable year and each
subsequent taxable year before the 1997 taxable year, all taxes
imposed on a taxpayer and money withheld by an employer under this
ordinance and remaining unpaid after the taxes or money withheld
are due bear interest from the due date at the current monthly rate
of 1 percentage point above the adjusted prime rate per annum per
month until the tax or money is paid. For taxable years after the
1996 taxable year, if the amount of a tax paid is less than the
amount that should have been paid or an excessive claim for credit
has been made, the deficiency and interest on the deficiency at the
current monthly interest rate of 1 percentage point above the
adjusted prime rate per annum from the time the tax was due, and
until paid, are due and payable after a final assessment as
provided in section 85. A deficiency in an estimated payment
required by this ordinance shall be treated in the same manner as a
tax due and is subject to the same current monthly interest rate of
1 percentage point above the adjusted prime rate per annum from the
time the payment was due, until paid. The term "adjusted prime
rate" means the average predominant prime rate quoted by not less
than 3 commercial banks to large businesses, as determined by the
department of treasury. For tax years before the 1997 tax year, the
adjusted prime rate is to be based on the average prime rate
charged by not less than 3 commercial banks during the 12-month
period ending on September 30. One percentage point shall be added
to the adjusted prime rate, and the resulting sum shall be divided
by 12 to establish the current monthly interest rate. The resulting
current monthly interest rate based on the 12-month period ending
September 30 becomes effective on January 1 of the following year.
For tax years after the 1996 tax year, "adjusted prime rate" means
that
term as defined in and determined under section 23(2) of Act
No.
122 of the Public Acts of 1941, being section 205.23 of the
Michigan
Compiled Laws.1941 PA 122,
MCL 205.23.
(2) A person who fails to file a return, pay the tax, or remit
withholding, when due, is liable, in addition to the interest, to a
penalty of 1% of the amount of the unpaid tax for each month or
fraction of a month, not to exceed a total penalty of 25% of the
unpaid tax. If a return is filed or remittance is paid after the
time specified and it is shown to the satisfaction of the city or
the department that the failure was due to reasonable cause and not
to willful neglect, the penalty shall be waived by the
administrator or the department. If the total interest or interest
and penalty to be assessed is less than $2.00, the administrator or
the department shall instead assess $2.00. The taxpayer bears the
burden of affirmatively establishing, by clear and convincing
evidence, that the failure to file or failure to pay was due to
reasonable cause. Reasonable cause exists if, in spite of
exercising ordinary business care and prudence in complying with
filing and payment requirements, the taxpayer was unable to file a
return or pay a tax. Timeliness, facts, and circumstances are
factors that are considered in determining the existence of
reasonable cause.
(3) Except as provided in subsection (4), if any part of the
deficiency or an excessive claim for credit is due to negligence,
but without intent to defraud, a penalty of $10.00 or 10% of the
total amount of the deficiency in the tax, whichever is greater,
plus interest as provided in subsection (1), shall be added. The
penalty becomes due and payable after a final assessment is issued
as provided in section 85. If a taxpayer subject to a penalty under
this subsection demonstrates to the satisfaction of the
administrator or the department that the deficiency or excess claim
for
credit was due to reasonable cause, not due to negligence, the
administrator
or the department shall waive dismiss
the penalty.
Negligence is the lack of due care in failing to do what a
reasonable and ordinarily prudent person would have done under the
particular circumstances. The standard for determining negligence
is whether the taxpayer exercised ordinary care and prudence in
preparing and filing a return and paying the applicable tax in
accordance with the law. The facts and circumstances of each case
will be considered.
(4) If any part of the deficiency or an excessive claim for
credit is due to intentional disregard of this ordinance, but
without intent to defraud, a penalty of $25.00 or 25% of the total
amount of the deficiency in the tax, whichever is greater, plus
interest as provided in subsection (1), shall be added. The penalty
becomes due and payable after a final assessment is issued as
provided in section 85. If a penalty is imposed under this
subsection and the taxpayer subject to the penalty successfully
disputes the penalty, the administrator or the department shall not
impose a penalty prescribed by subsection (3) to the tax otherwise
due. Intentional disregard may be negated by clear and convincing
evidence that the taxpayer acted in good faith.
(5) If any part of the deficiency or an excessive claim for
credit is due to fraudulent intent to evade the tax imposed under
this ordinance, or to obtain a refund for a fraudulent claim, a
penalty of 100% of the deficiency, plus interest as provided in
subsection (1), shall be added. The penalty becomes due and payable
after a final assessment is issued as provided in section 85.
Sec. 84. (1) For tax years before the 1997 tax year and for
tax years after the 1996 tax year and for which a city has not
entered into an agreement pursuant to section 9 of chapter 1, if
the administrator determines that a taxpayer or an employer subject
to the provisions of this ordinance has failed to pay the full
amount of the tax due or tax withheld, he or she shall issue a
proposed assessment showing the amount due and unpaid, together
with interest and penalties that may have accrued thereon. The
proposed assessment shall be served upon the taxpayer or employer
in person, by first-class mail, or by registered or certified mail
to the last known address of the taxpayer or employer. Proof of
mailing the proposed assessment is prima facie evidence of a
receipt of the proposed assessment by the addressee.
(2) A taxpayer or employer has 30 days after receipt of a
proposed assessment within which to file a written protest with the
administrator
or 30 days after receipt of a notice of intent to
assess
from the department of treasury to file a written protest
with
the department of treasury, who
shall then give the taxpayer
or employer or his or her duly authorized representative an
opportunity to be heard and present evidence and arguments in his
or her behalf.
Sec. 85. (1) After the hearing as provided in section 84, the
administrator
or the department shall issue a final assessment
setting forth the total amount found due in the proposed assessment
or notice of intent to assess and any adjustment he or she may have
made as a result of the protest. The final assessment shall be
served
in the same manner as a proposed assessment. or notice of
intent
to assess. Proof of mailing of the
final assessment is prima
facie evidence of receipt of the final assessment by the addressee.
(2)
If a protest under section 73(3) or 84(2) is not filed in
respect
to a proposed assessment, or notice of intent to assess, a
taxpayer or employer is considered to have received a final
assessment 30 days after receipt of the proposed assessment.
Sec. 86a. (1) Notwithstanding section 86, for taxes
administered by the department through an agreement entered into
under section 9 of chapter 1 with a city that has a population of
more than 600,000 only, the department, on behalf of the city, may
recover the tax with interest and penalties without a judgment or
order from a court of competent jurisdiction by imposing a lien as
provided under this section. A lien imposed pursuant to this
section is a lien in favor of the city against all property and
rights of property, both real and personal, tangible and
intangible, owned at the time the lien attaches, or afterwards
acquired by any person liable for the tax, to secure the payment of
the tax. The lien shall attach to the property from and after the
date that any report or return on which the tax is levied is
required to be filed and shall continue for 7 years after the date
of attachment. The lien may be extended for another 7 years by
refiling under subsection (2) if the refiling is done within 6
months prior to the expiration date of the original 7-year period.
The department is the only entity authorized to act under this
section, and the department shall not delegate its authority to act
under this section to the city.
(2) The lien imposed by this section shall take precedence
over all other liens and encumbrances, except bona fide liens
recorded before the date the lien under this ordinance is recorded.
However, bona fide liens recorded before the lien under this
ordinance is recorded shall take precedence only to the extent of
disbursements made under a financing arrangement before the forty-
sixth day after the date of the tax lien recording or before the
person making the disbursements had actual knowledge of a tax lien
recording under this ordinance, whichever is earlier. A lien shall
be recorded and discharged in the same manner required for a state
tax lien under the state tax lien registration act, 1968 PA 203,
MCL 211.681 to 211.687.
(3) A purchaser or succeeding purchaser of property, from a
taxpayer in other than the ordinary course of business, against
which a lien has been properly recorded as provided under
subsection (2) is personally liable for the unpaid taxes that are
due on the lien. The purchaser's liability is limited to the value
of the property less any proceeds that were applied to balances due
on secured interests which are superior to the lien recorded under
subsection (2).
Sec. 86b. (1) Notwithstanding section 86, for taxes
administered by the department through an agreement entered into
under section 9 of chapter 1 with a city that has a population of
more than 600,000 only, the department, on behalf of the city, may
cause a demand to be made on a taxpayer for the payment of a tax
due under this ordinance. If the liability remains unpaid for 10
days after the demand and proceedings are not taken to review the
liability, a warrant may be issued under the official seal of the
city. Except as provided in subsection (5), the department, on
behalf of the city, through any officer or agent or person
authorized to serve process or through authorized employees, may
levy on all property and rights to property, real and personal,
tangible and intangible, belonging to the taxpayer or on which a
lien is provided by law for the amount of the deficiency, and sell
the real and personal property of the taxpayer found within the
state for the payment of the amount due, the cost of executing the
warrant, and the additional penalties and interest. Except as
provided in subsection (6), the officer or agent or person serving
the warrant shall proceed upon the warrant in all respects and in
the same manner as prescribed by law in respect to executions
issued against property upon judgments by a court of record. A
city, through its authorized representative, may bid for and
purchase any property sold pursuant to this section.
(2) A person that refuses or fails to surrender any property
or rights to property subject to levy, upon demand by the
department, on behalf of the city, is personally liable to the city
in a sum equal to the value of the property or rights not
surrendered, but not exceeding the amount due for which the levy
was made, together with costs and interest on the sum at the rate
provided in section 82 from the date of the levy. Any amount, other
than costs, recovered under this subsection shall be credited
against the liability for the collection of which the levy was
made.
(3) In addition to the personal liability imposed by
subsection (2), if a person required to surrender property or
rights to property fails or refuses to surrender the property or
rights to property without reasonable cause, the person shall be
liable for a penalty equal to 50% of the amount recoverable under
subsection (2), none of which penalty shall be credited against the
liability for the collection of which the levy was made.
(4) A person in possession of, or obligated with respect to,
property or property rights subject to levy and upon which a levy
has been made who, upon demand of the department, on behalf of the
city, surrenders the property or rights to property or discharges
the obligation to the department or who pays a liability under
subsection (1) shall have that obligation to a person delinquent in
payment of a tax reduced in an amount equal to the property or
rights to property surrendered or amounts paid to the department,
on behalf of the city.
(5) Property described in section 6334 of the internal revenue
code of 1986, 26 USC 6334, is exempt from levy under this section
for an unpaid tax. The effect of a levy on salary or wages shall be
continuous from the date the levy is first made until the liability
out of which the levy arose is satisfied.
(6) A warrant notice of levy may be served by certified mail,
return receipt requested, on any person in possession of, or
obligated with respect to, property and rights to property, real
and personal, tangible and intangible, belonging to the taxpayer or
on which a lien is provided by law. The date of delivery on the
receipt shall be the date the levy is made. A person may, upon
written notice to the department, on behalf of the city, have all
notices of levy sent to 1 designated office.
Sec. 86c. For taxes under this ordinance administered by the
department through an agreement entered pursuant to section 9 of
chapter 1, the department may request in writing information or
records in the possession of any other department, institution, or
agency of state government for the performance of duties under this
act. Departments, institutions, or agencies of state government
shall furnish the information and records upon receipt of the
department's request.
Sec 86d. (1) If the department files for recording a lien
imposed pursuant to this ordinance against property or rights of
property to satisfy a tax liability and the department determines
that the tax liability out of which the lien arose is satisfied,
the department shall file for recording a release regarding the
property or rights of property in the same manner required for a
state tax lien under the state tax lien registration act, 1968 PA
203, MCL 211.681 to 211.687, not more than 20 business days after
funds to satisfy the tax liability out of which the lien arose have
been applied to the taxpayer's account.
(2) If the department files for recording a lien imposed
pursuant to this ordinance against property or rights of property
to satisfy a tax liability and upon request the department
determines that the taxpayer named on the recorded lien does not
have any interest in certain properties owned by another person,
the department shall file for recording a certificate of
nonattachment regarding the property or rights of property, in the
same manner as required for a state tax lien under the state tax
lien registration act, 1968 PA 203, MCL 211.681 to 211.687, with
all due haste but not more than 5 business days after the
department determines that the lien is recorded or filed against
property or rights of property to which the state does not have a
lien interest under section 86a. The department shall clearly
indicate on the certificate of nonattachment that the taxpayer
named on the recorded lien does not have any interest in the
property or rights of property of the other person.
(3) If a warrant or warrant-notice of levy is issued and
served upon a person to levy on property or rights of property to
satisfy a tax liability and the department determines that the tax
liability out of which the warrant or warrant-notice of levy arose
is satisfied, the department shall serve a release of levy
regarding the property or rights of property on the person that was
served the warrant or warrant-notice of levy not more than 10
business days after funds to satisfy the tax liability out of which
the warrant or warrant-notice of levy arose have been applied to
the taxpayer's account.
(4) If a warrant or warrant-notice of levy is issued and
served upon a person to levy on property or rights of property to
satisfy a tax liability and the department determines that the
property or rights of property are not subject to levy under
section 86a, the department shall serve a release of levy regarding
the property or rights of property on the person that was served
the warrant or warrant-notice of levy with all due haste but not
more than 5 business days after the department determines that the
property or rights of property are not subject to levy under
section 86a, the department shall clearly indicate on the release
of levy that the property or rights of property were not subject to
levy under section 86a.
(5) If a person is required to pay a fee to the department, a
bank, or other financial institution as the result of an erroneous
recording or filing of a lien as described in subsection (2), or an
erroneous issuance and service of a warrant or warrant-notice of
levy as described in subsection (4), the department shall reimburse
the fee to that person.
(6) If the department receives money to satisfy a tax
liability or liabilities or receives information that would cancel
that tax liability or those liabilities and subsequently files a
lien for recording specifying that tax liability or those
liabilities, the department, upon request and upon a determination
by the department that the lien was filed and recorded in error,
with all due haste, but not more than 5 business days after the
department determines that it has erroneously filed a lien for
recording, shall file for recording a certificate of withdrawal for
that tax liability or those liabilities which were satisfied which
states that the recorded lien for that tax liability or those
liabilities was filed in error.
(7) If the department receives money to satisfy a tax
liability or liabilities or receives information that would cancel
that tax liability or those liabilities and subsequently issues a
warrant or warrant-notice of levy specifying that liability or
those liabilities pursuant to this ordinance, upon request and upon
a determination by the department that the warrant or warrant-
notice of levy was issued in error, with all due haste, but not
more than 5 business days after the department determines that it
has erroneously issued a warrant or warrant-notice of levy, the
department shall issue a release of levy for that tax liability or
those liabilities which were satisfied which states that the levy
for that tax liability or those liabilities was issued in error.
Sec. 92. (1) A taxpayer or employer may file a written notice
of appeal with the secretary of the income tax board of review not
more than 30 days after receipt by the taxpayer or employer of a
final assessment, denial in whole or in part of a claim for refund,
decision,
order, or special ruling of the administrator. or the
department.
Upon receipt of the notice of
appeal from a decision
and order issued by an administrator under section 85, the income
tax
board of review shall notify the administrator or the
department,
who shall forward within 15 days to
the income tax
board of review a certified transcript of all actions and findings
taken
by the administrator or the department that relate to the
matter under appeal. The appellant or his or her duly authorized
representative may inspect the transcript.
(2) The income tax board of review shall grant the appellant a
hearing at which the appellant or his or her duly authorized
representative
and the administrator or the department have an
opportunity to present evidence that relates to the matter under
appeal. After conclusion of the hearing, the income tax board of
review by a majority vote of its 3 members shall affirm, reverse,
or modify the final assessment, denial, decision, or order under
appeal and furnish a copy of the decision to the appellant and to
the
administrator. or the department.
(3) The provisions of this ordinance as to the confidential
character of tax data are applicable to proceedings pending before
or submitted to the income tax board of review.
(4) A tax deficiency or refund and any interest or penalties
on a deficiency or refund shall be paid not more than 30 days after
receipt
by the taxpayer or employer or by the city or the
department
of notice of determination by the
income tax board of
review if no further appeal is made.
Sec. 93. (1) A taxpayer, employer, or other person aggrieved
by a rule adopted by the administrator may file a timely appeal to
the
state commissioner of revenue department
in the form and manner
prescribed
by the commissioner.department.
(2) A taxpayer or employer aggrieved by a final assessment,
denial,
decision, or order of issued
by the department under
section 73 or issued by the income tax board of review other than a
decision
under subsection (1) , may
appeal the assessment, denial,
decision, or order to the tax tribunal not more than 35 days after
the final assessment, denial, decision, or order was issued. The
uncontested portion of a final assessment, order, or decision shall
be paid as a prerequisite to appeal. An appeal under this
subsection shall be perfected as provided under the tax tribunal
act,
Act No. 186 of the Public Acts of 1973, being sections 205.701
to
205.779 of the Michigan Compiled Laws, 1973 PA 186, MCL 205.701
to 205.779, and rules promulgated under that act for the tax
tribunal.
(3) Not more than 35 days after a final order of the tax
tribunal, the taxpayer, employer, or other person shall pay the
city the taxes, interest, and penalty found due to the city or the
department, and the city or the department shall refund to the
taxpayer, employer, or other person any amount found to have been
overpaid by the taxpayer, employer, or other person.
Sec. 96. (1) For taxes administered by the department through
an agreement entered into under section 9 of chapter 1 with a city
that has a population of more than 600,000 only, the department, on
behalf of the city, may enter into a voluntary disclosure agreement
pursuant to subsections (2) to (10).
(2) A voluntary disclosure agreement may be entered into with
a person that applies, that is a nonfiler, and that meets 1 or more
of the following criteria:
(a) Has a filing responsibility created by nexus with the
city.
(b) Has a reasonable basis to contest liability, as determined
by the department.
(3) To be eligible for a voluntary disclosure agreement,
subject to subsection (1), a person must meet all of the following
requirements:
(a) Except as otherwise provided in this subdivision, has had
no previous contact by the city or the department or its agents
regarding a tax covered by the agreement. For purposes of this
subdivision, a letter of inquiry requesting information under
section 73(2)(a) that was sent to a nonfiler shall not be
considered a previous contact under this subdivision.
(b) Has had no notification of an impending audit by the
department or its agents.
(c) Is not currently under audit by the department or under
investigation by the department of state police, department of
attorney general, or any local law enforcement agency regarding a
tax under this ordinance.
(d) Is not currently the subject of a civil action or a
criminal prosecution involving the tax covered by the agreement.
(e) Has agreed to register, file returns, and pay all taxes
due in accordance with this ordinance for all periods after the
lookback period.
(f) Has agreed to pay all taxes due for the tax covered under
the agreement for the lookback period, plus interest, within the
period of time and in the manner specified in the agreement.
(g) Has agreed to file returns and worksheets for the lookback
period as specified in the agreement.
(h) Has agreed not to file a protest or seek a refund of taxes
paid to the city for the lookback period based on the issues
disclosed in the agreement or based on the person's lack of nexus
or contacts with the city.
(4) If a person satisfies subsections (2) and (3), the
department shall enter into a voluntary disclosure agreement with
that person providing the following relief:
(a) The department shall not assess any tax, delinquency for a
tax, penalty, or interest covered under the agreement for any
period before the lookback period identified in the agreement.
(b) The department shall not assess any applicable
discretionary or nondiscretionary penalties for the lookback
period.
(c) The department shall provide complete confidentiality of
the agreement and shall also enter into an agreement not to
disclose any of the terms or conditions of the agreement to any tax
authorities or exchange information obtained under this section
with other states regarding the person unless information regarding
the person is specifically requested by another state.
(5) The department shall not bring a criminal action against a
person for failure to report or to remit any tax covered by the
agreement before or during the lookback period if the facts
established by the department are not materially different from the
facts disclosed by the person to the department.
(6) A voluntary disclosure agreement is effective when signed
by the person subject to the agreement, or his, her, or its lawful
representative, and returned to the department within the time
period specified in the agreement. The department shall only
provide the relief specified in the executed agreement. Any verbal
or written communication by the department before the effective
date of the agreement shall not afford any penalty waiver, limited
lookback period, or other benefit otherwise available under this
section.
(7) A material misrepresentation of fact by an applicant
relating to the applicant's current activity in the city renders an
agreement null and void and of no effect. A change in the
activities or operations of a person after the effective date of
the agreement is not a material misrepresentation of fact and shall
not affect the agreement's validity.
(8) The department may audit any of the taxes covered by the
agreement within the lookback period or in any prior period if, in
the department's opinion, an audit of a prior period is necessary
to determine the person's tax liability for the tax periods within
the lookback period or to determine another person's tax liability.
(9) Nothing in subsections (2) to (8) shall be interpreted to
allow or permit unjust enrichment. Any tax collected or withheld
from another person by an applicant shall be remitted to the
department without respect to whether it was collected during or
before the lookback period.
(10) The department shall not require a person that enters
into a voluntary disclosure agreement to make any filings that are
additional to those otherwise required by law.
(11) As used in this section:
(a) "Lookback period" means 1 or more of the following:
(i) The most recent 48-month period as determined by the
department or the first date the person subject to an agreement
under this section began doing business in the city if less than 48
months.
(ii) Notwithstanding subparagraph (i), the most recent 36-
month period as determined by the department or the first date the
person subject to an agreement under this section began doing
business in the city if less than 36 months, if tax returns filed
under this ordinance in another city included sales in the
numerator of the apportionment formula that now must be included in
the numerator of the apportionment formula and those sales
increased the net tax liability payable to that city.
(iii) If there is doubt as to liability for the tax during the
lookback period, another period as determined by the department to
be in the best interest of the city and to preserve equitable and
fair administration of taxes.
(b) "Nonfiler" for a particular tax means, beginning January
1, 2017, a person that has not filed a return for the particular
tax being disclosed for periods beginning after December 31, 2015
for individuals and after December 31, 2016 for all other persons.
(c) "Person" means an individual, firm, bank, financial
institution, limited partnership, copartnership, partnership, joint
venture, association, corporation, limited liability company,
limited liability partnership, receiver, estate, trust, or any
other group or combination acting as a unit.
(d) "Previous contact" means any notification of an impending
audit, review, notice of intent to assess, proposed assessment or
assessment, or a subpoena from the department or the city for a tax
due under this ordinance.
(e) "Unjust enrichment" means the withholding of income tax
under this ordinance that has not been remitted to the department.
(f) "Voluntary disclosure agreement" or "agreement" means a
written agreement that complies with this section.
Sec. 97. (1) Beginning January 1, 2018, for taxes administered
by the department through an agreement entered into under section 9
of chapter 1 with a city that has a population of more than 600,000
only, the department, on behalf of the city, may compromise all or
any part of any payment of a tax due under this ordinance for tax
years beginning after December 31, 2016, including any related
penalties and interest, if 1 or more of the following grounds
exist:
(a) A doubt exists as to liability if the department
concludes, based on evidence provided by the taxpayer, that the
taxpayer would have prevailed in a contested case if the taxpayer's
appeal rights had not expired.
(b) A doubt exists as to collectability if the taxpayer
establishes both of the following:
(i) The amount offered in payment is the most that can be
expected to be paid or collected from the taxpayer's present assets
or income.
(ii) The taxpayer does not have reasonable prospects of
acquiring increased income or assets that would enable the taxpayer
to satisfy a greater amount of the liability than the amount
offered, within a reasonable period of time.
(c) A federal compromise of tax under section 7122 of the
internal revenue code has been granted for the same tax years. If
an offer to compromise a tax is accepted pursuant to this
subdivision, the department may compromise the outstanding balance
of the liability for each year by applying the same percentage as
the federal liability compromised to the total liability.
(2) If the department compromises all or any part of any
payment of a tax as authorized under this section, the department
shall place on file in the office of the mayor and publish on the
department's city tax website a written report outlining the basis
for the compromise and, at a minimum, a statement of each of the
following:
(a) The amount of tax assessed.
(b) The amount of interest or assessable penalty imposed by
law on the person against whom the tax is assessed.
(c) The terms of the compromise and the amount actually paid
in accordance with the terms of the compromise.
(d) The grounds for the compromise.
(3) A compromise under this section is subject to continuing
review by the department. The department may revoke any compromise
made under this section, may reestablish all compromised
liabilities, without regard to any statute of limitations that
otherwise may be applicable, and shall not refund any portion of
the amount offered in compromise, if either of the following
occurs:
(a) The department reasonably determines that the person
receiving the compromise concealed from the department any property
belonging to the taxpayer, the estate of a taxpayer, or any other
person liable for the tax or, with the intent to mislead, withheld,
destroyed, mutilated, or falsified any book, document, or record or
made any false statement, relating to the estate or financial
condition of the taxpayer or other person liable for the tax to
induce the compromise.
(b) The taxpayer fails to comply with any of the terms and
conditions relative to the offer or to file subsequent required
returns and pay subsequent final tax liabilities within 20 days
after the department issues a notice and demand to the person
stating that the continued failure to file or pay the tax may
result in the revocation of the compromise made under this section.
(4) By January 1, 2019 or 180 days after the effective date of
the amendatory act that added this section, whichever is later, the
department shall do all of the following:
(a) Establish guidelines for the offer-in-compromise program
authorized under this section. If appropriate, the guidelines shall
be modeled after those guidelines published by the Internal Revenue
Service of the United States Department of Treasury in regard to
the federal offer-in-compromise program established under section
7122 of the internal revenue code.
(b) Establish guidelines for officers and employees within the
department to use when making decisions on whether an offer-in-
compromise is appropriate.
(c) Establish procedures for an independent administrative
review within the department of any rejection of a proposed offer-
in-compromise made by the taxpayer. In order to initiate a review
under this subdivision, the taxpayer shall make a written request
on a form prescribed by the department within 30 days after the
department issues the rejection. If appropriate, the independent
administrative review procedures shall be modeled after the
guidelines published by the Internal Revenue Service for the
federal offer-in-compromise program established under section 7122
of the internal revenue code.
(5) The department shall disclose return information to
members of the general public to the extent necessary to permit
inspection of any accepted offer-in-compromise under this section
relating to the liability for a tax imposed under this ordinance.
(6) Except for a revocation as provided under subsection (3),
a tax that was compromised is not subject to additional assessment
or collection unless the compromised tax is modified or adjusted as
a result of information received from the Internal Revenue Service
or as a result of an audit performed by the department or the city.
Except as to any additional assessment imposed as provided under
this subsection, a taxpayer shall not request an informal
conference or institute tribunal or judicial proceeding against the
department or the city regarding the taxpayer's tax liability or
the compromise.
(7) On behalf of the city, the department shall not levy
against property to collect a liability while an offer to
compromise is pending unless the department has determined that the
taxpayer's offer to compromise was intended to delay collection of
the tax or a jeopardy assessment has been issued under section 87.
(8) A taxpayer that submits an offer to compromise a tax,
penalty, or interest shall remit with its offer $100.00 or 20% of
the offer, whichever is greater, to the department. The amount
remitted with the offer must be applied to the outstanding balance
of that taxpayer's liability and must not be refunded if the offer
to compromise is rejected or reduced.
(9) Except for the independent administrative review available
as provided under subsection (4)(c), a rejection of an offer to
compromise, in whole or in part, is final and is not subject to
further challenge or appeal under this ordinance.
CHAPTER 3
Sec. 60. (1) Except as provided in subsection (2) or (3), an
employer shall file a return, furnished by or obtainable on request
from the city, and pay to the city the full amount of the tax
withheld on or before the last day of the month following the close
of each calendar quarter, except that if during any calendar month
other than the last month of a calendar quarter the amount withheld
exceeds $100.00, the employer shall deposit the amount withheld
with the city treasurer before the end of the next calendar month.
(2) For tax years after the 1996 tax year and before the 2017
tax year and for which a city has entered into an agreement
pursuant to section 9 of chapter 1, an employer shall file a return
and pay the tax withheld for each calendar month on or before the
fifteenth day of the month to the department following the close of
each calendar month by means of an electronic funds transfer method
approved by the state commissioner of revenue.
(3) For tax years after the 2016 tax year and for which a city
has entered into an agreement pursuant to section 9 of chapter 1,
every person required by this part to deduct or withhold taxes
shall make a report in form and content and at times as prescribed
by the department, to provide a more efficient administration, the
department may require that person to make the return and pay to
the department the tax deducted and withheld at other than monthly
periods.
Enacting section 1. This amendatory act is retroactive and
effective for tax years that begin on and after January 1, 2017.