SEVERANCE TAX -
LIABILITY - AUDIT DEFICIENCIES

RAB-89-17. The Michigan Severance Tax Act, MCL 205.303, places the severance tax responsibility on the producer of Michigan oil and gas. The Act also requires the common purchaser to deduct (withhold) the tax from payments paid to the producer and remit same to the Department. (See MCL 205.303(l).)

Generally, any Michigan Department of Treasury audit deficiency will be charged against the producer. However, if the deficiency is due to failure by the common purchaser to withhold the tax or to remit the tax withheld, the Department will charge the deficiency against the common purchaser.