It depends on the compensation. "[W]ages, salaries, fees, bonuses,
commissions, other payments made . . . on behalf of or for the benefit of
employees, officers, or directors of the taxpayers, . . . any earnings that are
net earnings from self-employment as defined under section 1402 of the internal
revenue code of the taxpayer or a partner or limited liability company member of
the taxpayer[, including, but not limited to,] payments that are subject to or
specifically exempt or excepted from withholding under [IRC 3401 to 3406,]" must
be reported on a cash basis. MCL 208.1107(2).
In contrast, "payments to a pension, retirement, or profit sharing plan other
than those payments attributable to unfunded accrued actuarial liabilities, and
payments for insurance for which employees are the beneficiaries, including
payments under health and welfare and noninsured benefit plans and payment of
fees for the administration of health and welfare and noninsured benefit plans,"
must be reported on a cash or accrual basis consistent with the taxpayer's
method of accounting for federal income tax purposes. MCL 208.1107(2).
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