February 06, 2014
LANSING, Mich. - Gov. Rick Snyder today signed legislation updating Michigan’s corporate officer liability law to improve the process for collecting unfiled business taxes.
Senate Bill 337, sponsored by state Sen. Jack Brandenburg, places limits on the personal liability of a business owner or manager for taxes the firm fails to pay to the state.
The measure is a follow up to Senate Bill 64, which Snyder vetoed in January, and resulted from discussions between the Senate, House, Snyder’s administration, and the business community.
“I thank Sen. Brandenburg, members of the Legislature and the business community for working together to pass a bill that provides a better solution for updating Michigan’s corporate officer liability law,” Snyder said. “I am confident the changes in this bill will bring more fairness to the process and help establish a more positive business tax environment, which will help our economy grow and thrive.”
Michigan’s existing corporate officer liability law holds an officer, member, manager or partner, of a business personally liable if the business fails to file a tax return or pay the tax owed by the business if it is determined by the Department of Treasury that the officer had control or supervision of, or responsibility for, making the returns or paying the taxes due to the state.
SB 337 addresses concerns that new officers who were not at a firm or in a position of responsibility at the time a liability was incurred, were being left with potentially significant personal liability when former officers who were in charge or responsible left a company. The bill fixes that problem by redefining the definition of a “responsible person” as the officer, member or partner in a business who controlled, supervised or was responsible for paying the tax when a business failed to file a return.
It also requires the department to release a business’s known tax liability to a purchaser of a business within 60 days, if requested, and limits the buyer’s liability for unpaid taxes. The department is also required to complete audits within specified time limits. Also, if a tax overpayment refund claim is not approved within one year it can be considered denied to allow the taxpayer to make an appeal.
The bill is now Public Act 3 of 2014.
Visit legislature.michigan.gov for more information.
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