Tax Clearance Frequently Asked Questions

 

Is there a fee to submit a request for tax clearance?

No, there is no fee.

 

How long does it take to get a response for a Tax Clearance request that I have submitted?

Treasury will respond to your request within 60 days of receipt of Form 5156. Applications are worked in the order they are received and cannot be expedited.

 

I am not selling or closing my business, but I would like to know that I am up to date on filing returns and owe no business tax to the Michigan Department of Treasury (Treasury). Which option do I select on Form 5156?

Select the first option under the REASON FOR REQUEST section, “I am selling my business or business assets.” You may provide additional details in the blank space provided under PART 2.

 

I am selling my business and need a statement to show my tax obligations. Which option do I select on the Form 5156?

If the sale of the business has not been completed and you want to know what the outstanding liabilities are, select the first option under the REASON FOR REQUEST section, “I am selling my business or business assets”.

 

If I am purchasing a business can I request a Tax Clearance Certificate?

No. Only the seller of the business can request a Tax Clearance Certificate. If you are purchasing a business and desire a Tax Clearance Certificate from the seller, request that they fill out Form 5156.

 

I purchased a business and the seller has asked for my Federal Employer Identification Number (FEIN). Why do they need it?

If the seller has completed the sale of their business and requires a Tax Clearance Certificate they must provide the business name, address and FEIN of the purchaser.

Failure to provide this information on Form 5156 will cause the request to not be processed.

 

How do I know the amount of funds that should be put in escrow?

The amount of money to place in escrow can vary depending on the estimated or actual taxes due. When you complete Form 5156, Request for Tax Clearance Application, Treasury will provide an estimated or actual amount of taxes due. The escrow account should reflect at least the amount(s) stated in the letter.

 

How long should funds be kept in escrow?

Escrowed funds need to be held until the seller provides a Tax Clearance Certificate to the buyer showing that no tax liability exists.

 

What happens if funds to cover outstanding tax liabilities are not placed into an escrow account?

The purchaser and Corporate Officers could be held liable as successors, for any real outstanding debt or liability. The amount placed into the escrow account should be at least what is cited in the Tax Clearance Liability Explanation for Establishing Tax Escrow letter.

 

The letter I received from the Tax Clearance Section indicates that I am not eligible for a Tax Clearance Certificate. Why do I need to fill out a new Form 5156?

Treasury cannot use the information from a previous request for tax clearance. Once the requirements listed in the letter are fulfilled, a new request can be made.

 

Taxpayer Representatives and Preparers

In order for the Tax Clearance Section to discuss your application with a named individual or entitly to act on your behalf, please fill out the AUTHORIZATION FOR DISCLOSURE OF TAX CLEARANCE INFORMATION section at the bottom of page 2 on Form 5156. Please do not submit Form 151, Authorized Representative Declaration/Power of Attorney.

 

The letter I received from the Tax Clearance Section indicates that I am missing returns, but I did not have a filing requirement.

If you did not have a filing requirement for SBT, MBT, or CIT and you are requesting tax clearance, you should file returns with the Business Tax Division to conclusively demonstrate that there is no liability owed. Please send any missing returns to the address located on the return. For information on filing returns or making payments, please visit www.michigan.gov/businesstaxes.