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Voluntary Disclosure
Voluntary Disclosure- What Is Voluntary Disclosure?
The Voluntary Disclosure Act (Public Act 221 of 1998) authorizes the State Treasurer, or a representative, to enter into a voluntary disclosure agreement with non-filers 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 look-back period of four years without imposition of penalties, in exchange for future tax compliance.
Qualification Requirements
- Qualification Requirements
To qualify for voluntary disclosure a person must meet the following criteria:
- have not previously filed a tax return for the particular tax being disclosed for periods beginning after December 31, 1988.
- have a filing responsibility under the nexus standards issued by the Department of Treasury after December 31, 1997 -or- have a reasonable basis to contest a liability as determined by the Commissioner for a tax or fee administered under the Revenue Act.
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 but may apply for Taxpayer-Initiated Disclosure. (Letter Ruling 2002-03).
- have not previously filed a tax return for the particular tax being disclosed for periods beginning after December 31, 1988.
Apply for Voluntary Disclosure
- Apply for Voluntary Disclosure
To apply for Voluntary Disclosure, mail or fax Form 4133 Voluntary Disclosure Request Form and Form 1353 Nexus Questionnaire to the following:
Michigan Department of Treasury
Discovery and Tax Enforcement
P.O. Box 30140
Lansing, MI 48909-7640
Fax: 517-763-0258
What is Taxpayer-Initiated Disclosure?
- What is Taxpayer-Initiated Disclosure?
Overview
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.
Qualification Requirements
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:
- There has been no contact by the department. A letter of inquiry is not considered a previous contact. However, a person will not qualify for the penalty waiver under the taxpayer-initiated disclosure after receiving a final letter of inquiry.
- The taxpayer is not under investigation by the department for the tax period involved, and
- The taxpayer or agent pays the tax deficiency and interest without further action by the department.
No penalty will be applied to tax deficiencies paid with the filing of a delinquent return providing:
- There has been no contact by the department,
- The taxpayer is not under investigation by the department,
- The tax period of the return(s) includes the taxpayer's first filing period for that tax, and
- The taxpayer or agent pays the tax deficiency and interest without further action by the department.
A Taxpayer is required to file a written request or statement to be considered for the taxpayer-initiated disclosure exception from penalty.
How to Apply for Taxpayer-Initiated Disclosure
- How to Make a Taxpayer-Initiated Disclosure
Complete and submit all of the following:
- A letter attesting to the qualification requirements for Taxpayer-Initiated Disclosure:
- There has been no contact by the department,
- The taxpayer is not under investigation by the department,
- The tax period of the return(s) includes the taxpayer's first filing period for that tax, and
- The taxpayer or agent pays the tax deficiency and interest without further action by the department.
- The appropriate tax returns or worksheets.
- If the disclosure is for Michigan Business Tax, Corporate Income Tax or individual income tax, completed tax returns must be submitted for all years.
- If the disclosure is for sales, use or withholding tax, a worksheet must be submitted for all periods prior to January 1, 2015. For periods beginning on or after January 1, 2015, returns should be filed online using Michigan Treasury Online (MTO). Example: If you are reporting sales tax, the worksheet must include the taxable sales, the tax amount and the interest amount. Go to Revenue Administrative Bulletins (RAB's) to locate the most current RAB for Interest Rates. View the current interest rate
- If the tax being remitted was not previously collected, complete the worksheet on a quarterly basis. Compute interest from the 20th day of the month following the quarter, to the present date.
- If sales or use tax was collected from the purchaser, or withholding taxes withheld from employee wages, the amounts must be reported on a monthly basis. Compute interest from the 20th day of the following month to the present date.
- If the tax being remitted was not previously collected, complete the worksheet on a quarterly basis. Compute interest from the 20th day of the month following the quarter, to the present date.
- If the disclosure is for Michigan Business Tax, Corporate Income Tax or individual income tax, completed tax returns must be submitted for all years.
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
P.O. Box 30140
Lansing, MI 48909.
For assistance, call 517-636-4120.Upon receipt, the Discovery and Tax Enforcement Division will send a notice verifying receipt of the returns/worksheets.
- A letter attesting to the qualification requirements for Taxpayer-Initiated Disclosure:
About Discovery and Tax Enforcement
- About Discovery & Tax Enforcement
The Discovery and Tax Enforcement Division was created in January 1987, as part of an enhanced enforcement initiative that followed the Tax Amnesty Program of 1986. The division is located within the Tax Compliance Bureau and is comprised of various units with a variety of responsibilities.
Discovery promotes taxpayer education and tax registration and licensing, while helping to maintain voluntary tax compliance.
The Tax Enforcement Unit concentrates on civil and criminal investigation and prosecution of tax fraud cases, working in conjunction with the Michigan State Police, other law enforcement agencies, and the Attorney General.
The Discovery Unit is responsible for developing and conducting projects designed to identify and contact non-filers and under-reporters of the various taxes administered by the Michigan Department of Treasury. Taxpayers are notified of their tax discrepancies using letters of inquiry issued in accordance with MCL 205.21 of the Revenue Act .
The Discovery Unit utilizes information from a variety of sources to identify non-compliant taxpayers.
The Discovery Unit also administers Michigan's Voluntary Disclosure program and the Taxpayer Initiated Disclosure Penalty Waiver program.
The Discovery Unit sends letters of inquiry to non-filers of Michigan taxes offering Michigan's Voluntary Disclosure. Voluntary Disclosure was designed to allow non-resident taxpayers to voluntarily come forward and report unpaid taxes. In exchange for payment of tax and interest and future tax compliance, a limited lookback period and waiver of penalty may be offered.
A person that does not qualify under voluntary disclosure legislation may be able to utilize the Taxpayer Initiated Disclosure program and may be eligible for a penalty waiver as outlined in RAB 2005-03, Penalty Provisions.
For a complete list of frequently asked questions pertaining to all tax types go to www.michigan.gov/taxes and click on "FAQ" in the gray shaded area at the top of the page. Additional information regarding the various taxes can also be obtained at the www.michigan.gov/taxes web site by typing "tax text" in the "Advanced Search" box located in the upper right hand corner of the page and then clicking go.
A list of helpful hints has been prepared to assist you when calling, writing, or making a payment for a letter of inquiry you have received.
- Helpful Hints when Calling, Writing or Making a Payment
Related Documents
1353, Michigan Department of Treasury Nexus Questionnaire
3-Year MBT Agreement
4133, Voluntary Disclosure Request
4696, Summary of Revenue Administrative Bulletins (RABs) 2007-6 and 2008-4
5477, Michigan Nexus Standards for Business Taxes
Form 4503, Summary of Revenue Administrative Bulletins (RAB) 1999-1
RAB 2007-6 Michigan Business Tax - "Actively Solicits" Defined
RAB 2008-4, Michigan Business Tax Nexus Standards
Revenue Administrative Bulletin 1998-1
Revenue Administrative Bulletin 1999-1
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