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Voluntary Disclosure by Taxpayer
The Voluntary Disclosure Act (Public Act 221 of 1998) authorizes the State Treasurer, or a representative, to enter into a voluntary disclosure agreement with nonfilers who have not been previously contacted by the Department and who meet certain other criteria. (Reference MCL 205.30c).
Under a voluntary disclosure agreement, eligible persons may file returns and pay taxes and interest for a limited lookback period of four years without imposition of penalties, in exchange for future tax compliance.
To qualify for voluntary disclosure a person must meet the following criteria:
All taxes and fees administered by the Revenue Act are eligible for inclusion in a voluntary disclosure agreement. Michigan resident taxpayers do not qualify for voluntary disclosure. (Letter Ruling 2002-03)
Revenue Administrative Bulletins (RABs) 2008-4, 2007-6 and 1999-1 describe the jurisdictional standards for Michigan Business Tax, Actively Solicits, and the jurisdictional standards for Use Tax, respectively.
A person qualifying under the above criteria may be eligible for a voluntary disclosure agreement if all of the following requirements are met:
If a person satisfies all the requirements, the Department shall enter into a voluntary disclosure agreement with that person. The agreement will specify the lookback period, and will become effective only when signed by the person subject to the agreement, or its lawful representative, and returned to the Department within the time period specified in the agreement. The Department will not assess tax, penalty or interest for any period before the lookback period identified for that tax as specified in the agreement. Nor will the Department apply penalties for the lookback period. For Michigan Business tax, the lookback period is determined by the date of the initial request to enter into an agreement. The lookback period for Use tax is determined by the registration date designated in the agreement. Lookback period means one or more of the following:
The Department shall keep the agreement confidential and shall not disclose any terms or conditions of the agreement to any tax authorities of any state or governmental authority or to any person except as required by exchange of information agreements.
Please review all qualification requirements for voluntary disclosure carefully before submitting a request to participate in this program. If all requirements are satisfied, submit completed copies of Form 1353, Michigan Department of Treasury Nexus Questionnaire and Form 4133, Voluntary Disclosure Request. Please provide detailed information in both Form 1353 and Form 4133 of the person's activities in Michigan. This information will be used to assist us in determining the appropriate tax(es) you or your client may be liable to the state of Michigan. If you are not able to obtain copies of Form 1353 and Form 4133 from this web site, please call the Discovery and Tax Enforcement Division at the telephone number below to have a copy mailed or faxed to you.
In an effort to maintain the confidentiality of your client, it is not necessary to include the name, address, telephone number, social security number, or federal identification number of the person or company requesting to enter into an agreement. Please mail your request to the Discovery and Tax Enforcement Division using the address below.
Discovery and Tax Enforcement Division
Once a request is submitted to the Discovery and Tax Enforcement Division, the applicant or representative of the applicant is expected to proceed through the voluntary disclosure process in a timely manner. Dates to respond throughout the various stages of the process are identified in either a cover letter or agreement. Delays in responding, without prior notification to the division, will result in termination of the request.
If an applicant's most recent completed calendar or fiscal year is on federal extension, the applicant must submit a copy of the federal extension with the prepared MBT returns. The return for the tax period covered by the federal extension is due by the date established with the extension request. The auditor should be notified of this situation prior to writing the agreement(s) in order to include a provision in the agreement to extend the due date of the return.
A person that does not qualify under the voluntary disclosure legislation may be eligible for a penalty waiver as outlined in RAB 2005-03, Penalty Provisions. This program allows a person to voluntarily disclose a tax deficiency without imposition of penalties by the Department. Limitations to the lookback period are not allowed under this program.
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:
No penalty will be applied to tax deficiencies paid with the filing of a delinquent return providing:
A Taxpayer is required to file a written request or statement to be considered for the taxpayer-initiated disclosure exception from penalty.
How to Make a Taxpayer-Initiated Disclosure
Complete and submit all of the following:
Remit the full amount of tax and interest due along with a check payable to the State of Michigan. Forward the letter, returns/worksheets and payment to the Discovery and Tax Enforcement Division, at the address identified below. (Interest is calculated by multiplying the current interest rate. View the current interest rate)
Upon receipt, the Discovery and Tax Enforcement Division will send a notice verifying receipt of the returns/worksheets.
The Corporate Income Tax (CIT) is effective as of January 1, 2012. The CIT replaces the Michigan Business Tax (MBT); however, MBT taxpayers who have received or been assigned certain certificated credits may elect to continue to file under the MBT rather than the CIT in order to claim such credits.
Flow-through entities (excluding trusts) reasonably expected to accrue more than $200,000 of business income may be required to withhold Michigan income tax at the corporate income tax rate on the distributive share of the business income of any member that is a corporation or another flow-through entity. For more information on withholding requirements, please see the "Withholding" section of this website. http://www.michigan.gov/taxes/0,4676,7-238-43531---,00.html
To view additional details on the Corporate Income Tax, click on the link below.
If you would like additional information regarding the voluntary disclosure program or the taxpayer-initiated disclosure program, contact the Discovery and Tax Enforcement Division at P.O. Box 30140, Lansing, MI 48909, or call (517) 636-4120.
> 1353, Michigan Department of Treasury Nexus Questionnaire - 315731 bytes
> 3-Year MBT Agreement - 34768 bytes
> 4-Year MBT Agreement - 33254 bytes
> 4133, Voluntary Disclosure Request - 119669 bytes
> 4696, Summary of Revenue Administrative Bulletins (RABs) 2007-6 and 2008-4 - 44300 bytes
> Form 4503, Summary of Revenue Administrative Bulletins (RAB) 1999-1 - 221834 bytes
> RAB 2007-6 Michigan Business Tax - "Actively Solicits" Defined - 33947 bytes
> RAB 2008-4, Michigan Business Tax Nexus Standards - 78088 bytes
> Revenue Administrative Bulletin 1998-1 - 148776 bytes
> Revenue Administrative Bulletin 1999-1 - 40266 bytes
> UC 518, Michigan Business Tax Registration Application
> Use Tax Agreement - 87849 bytes
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