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CIT Return Adjustments

CIT Return Adjustments

Unless otherwise noted in the “CIT Return Adjustments” FAQs, if additional information is required to adjust or correct an original return that has been filed previously, a complete amended return, including all forms, schedules and attachments, must be submitted. Please remember to provide the reason code for the reason you are amending the return in the appropriate field in the taxpayer information at the top of page.

Below are common reasons why a CIT return may require an adjustment.

  • Small Business Alternative Credit

    Why was my Small Business Alternative Credit (SBAC) adjusted?

    • If the SBAC was adjusted on your Corporate Income Tax (CIT) return, please check if the following information was included with your return:
      • The following forms are required to be filed to claim the SBAC: Form 4891; Form 4893; Form 4894; and if taxpayer is a UBG, Form 4897. If any of these forms are missing, the credit will be denied.
      • If the credit is claimed by a UBG, Form 4894 is required to be filed for each member of the group.
      • If the taxpayer is using a loss adjustment to qualify for, or limit reduction of, the credit, Form 4895 must also be included.
      • A complete amended return, including all forms, schedules and attachments, must be filed in order to correct the original return.
    • If the taxpayer is a UBG: Combine all business income after eliminations for all members and report the total on Form 4893, line 3.  A UBG member’s business income after eliminations can be found on that member’s CIT Data on Unitary Business Group Members (Form 4897), line 26.
    • In order to qualify for SBAC, no shareholder or officer can have allocated income after loss adjustment of over $180,000, as determined on the CIT Schedule of Shareholders and Officers (Form 4894). Form 4894 must be included. See instructions for Form 4893 for a definition of allocated income.
    • If the taxpayer is a UBG: The allocated income disqualifier is based on all items paid or allocable to a shareholder or officer by all members of the UBG. All items paid or allocable to a single individual must be combined when calculating this disqualifier. This is a change from the comparable calculation under the Michigan Business Tax (MBT).
    • If any shareholder or officer has allocated income after loss adjustment of more than $160,000, but less than $180,000, the SBAC must be reduced, as shown on Form 4894. This reduction is based on the officer/shareholder with the largest allocated income.
    • If the taxpayer is a UBG: The allocated income disqualifier is based on all items paid or allocable to a shareholder or officer by all members of the UBG. All items paid or allocable to a single individual must be combined when calculating this disqualifier. This is a change from the comparable calculation under the Michigan Business Tax (MBT).
    • If filing Form 4894 for a short-period return, or if reporting a part-year shareholder or officer:
      • Compensation, director fees, and dividends should be reported on the form as actual amounts received during the period on the form. However,
      • For purposes of determining credit disqualifiers, compensation and director fees must be annualized.

    For purposes of determining active shareholders, compensation, director fees, and dividends must be annualized.

  • Payments

    Why were my Payments adjusted on the Corporate Income Tax (CIT) return?

    • If payments you made were not applied to your return, please submit the following documentation to the CIT Correspondence Address along with a copy of the notice of adjustment you received:
      • If payment(s) was made by check, furnish a legible copy of the front and back of the cancelled check for each missing payment. Be sure to always include the tax period, tax type, account number and/or assessment number(s) on all checks.
      • If payment(s) was made through our Michigan automated system for Electronic Funds Transfer (EFT) debit payments, inform us of the amount, settlement date, and the confirmation number of the transmission. If the EFT payment was made through your bank, provide the amount, settlement date and the bank account number and routing number where the payment was sent from.
        • EFT or Michigan Treasury Online (MTO) online system failure: see Revenue Administrative Bulletin (RAB) 2015-14 for guidance about the alternative method for a taxpayer to file a “same day” tax return and/or to remit payment of tax by EFT or MTO to avoid penalty or interest when an attempt to electronically file a tax return and/or electronically remit a tax payment fails.
    • A taxpayer may remit quarterly estimated payments by check with Form 4913 or may remit monthly or quarterly estimated payments electronically by Electronic Funds Transfer (EFT). When payments are made by EFT, Form 4913 is not required. Treasury now accepts payments by credit card, debit card and electronic check. In order to make EFT payments, visit Michigan Treasury Online (MTO) at https://mto.treasury.michigan.gov, log in or create a user profile, and follow fast pay instructions to make your payment.
    • If payment needs to be submitted to the CIT Unit (i.e., if an Intent to Assess or Final Assessment has not yet been issued), mail payment to:
      • Michigan Department of Treasury
        P.O. Box 30804
        Lansing, MI 48909
      • Be sure to always include the tax period, tax type and account number on all payments.
    • If payment needs to be submitted to the Office of Collections (i.e., if an Intent to Assess or Final Assessment has been issued),  mail payment to:
      • Michigan Department of Treasury
        Office of Collections
        P.O. Box 30199
        Lansing, MI 48909
      • Be sure to always include the tax period, tax type, account number and/or assessment number(s) on all payments.

  • Penalty and Interest

    Why am I being charged penalty and/or interest?

    Explanations of why penalty and interest may have been charged:

    • Late, Non-Remittance, and/or Deficiency Penalty and Interest - Annual tax liability needs to be paid in full by the annual return due date. When annual liability is not paid in full by the due date of the return, penalty and interest is charged on annual liability for three reasons:
      • Late Penalty and Interest: If liability has been paid before the date of your notice but all or a portion was paid after the original due date, late penalty and interest will be charged on the amount of liability paid late.
      • Non-Remittance Penalty and Interest: If all or a portion of liability has not been paid as of the date of your notice, non-remittance penalty and interest will be charged on the unpaid liability. Also, if Treasury made adjustments that decrease the credits or payments applied to your return (below the tax liability line on the return), deficiency penalty and interest will be charged on the difference.
      • Deficiency Penalty and Interest: If Treasury made adjustments to your return that increase your tax liability, deficiency penalty and interest will be charged on the amount by which liability increased.

    Penalty and interest will accrue on the unpaid tax from the original due date of the return.

    • Interest accrues from the time the tax is due until payment is made at one percentage point above the “adjusted prime rate”. The rate is adjusted on July 1 and January 1 and is published on Treasury’s website in Revenue Administrative Bulletins (RABs).
    • Penalty of 5% of the tax due is assessed for the first two months. Penalty increases by an additional 5% per month or fraction thereof, after the second month, to a maximum of 25%.                
    • To calculate late, non-remittance or deficiency penalty and interest, please see the Penalty and Interest Calculator.
    • Extension Penalty and Interest – An extension to file does not grant additional time to pay. To avoid penalty and interest, you must still pay on or before the original due date of the annual return. If the tax due is underestimated and/or sufficient payment is not paid by the original due date, penalty and interest will be due on the unpaid or underpaid amount, as discussed above. NOTE: If a Corporate Income Tax (CIT) extension is filed on time but total payment received by the original due date is less than 90% of the tax liability, a 10% negligence penalty may apply in addition to penalty for failure to pay (5%-25%).

    Underpaid Estimate Penalty and Interest – A taxpayer that reasonably expects its tax liability for the year to be greater than $800 is required to make quarterly estimated payments. To avoid interest and penalty charges, estimated payments must equal at least 85% of the total tax liability for the current year and the amount of each estimated payment must reasonably approximate the tax liability for that quarter. If the prior year’s tax, including surcharge, is $20,000 or less, estimated tax may be based on 100% of the prior year’s total tax liability. If the prior year’s tax liability was reported for a period less than 12 months, this amount must be annualized for safe harbor provision. NOTE: The safe harbor provision is not allowed for initial 2012 CIT tax return.

    See CIT Instruction Booklet for Standard Taxpayers (Form 4890) for due dates of estimated payments for the year in question. Failure to make timely and sufficient estimated payments will result in penalty and interest charged on any underpayment, based on four equal payments totaling 85% of the current year tax liability. To calculate Underpaid Estimate Penalty and Interest, do not use the “Penalty and Interest Calculator” on Treasury’s Web site; you must instead refer to Form 4899.

    • If income was not evenly distributed throughout the year, a taxpayer is eligible to submit an Annualization Worksheet to adjust the amount of payment due each quarter to a schedule other than four equal payments. Submitting the worksheet after underpaid estimate penalty and interest is charged may lead to an adjustment of penalty and interest. Note: Depending on the type of taxpayer, this may require filing a complete amended return, including all forms, schedules and attachments.
      • Standard taxpayers may use the Annualization Worksheet on Part 4 of Form 4899 to calculate and report the annualized estimates due. In order to submit Form 4899 after the original return has been filed, you must complete an amended return along with all necessary forms and attachments, including Form 4899 completed in its entirety and mail to the CIT Return Address.
      • Insurance companies and financial institutions may use the Annualization Worksheet on Part 4 of Form 4899 to calculate and report the annualized estimates due. Because Form 4899 is designed for standard taxpayers, and insurance companies that file the Insurance Company Annual Return for Corporate Income and Retaliatory Taxes (Form 4905) and financial institutions that file the CIT Annual Return for Financial Institutions (Form 4908) compute tax differently, insurance companies and financial institutions must complete a separate schedule showing the entity’s computations for each quarter up to the “Net Tax Liability” line in Part 4. Enter on the “Net Tax Liability” line of Form 4899 the corresponding amounts from the separate schedule and complete the rest of Form 4899. The schedule of calculations, along with Form 4899 completed in its entirety, should be mailed to the CIT Correspondence Address.

  • Unitary Business Group (UBG)

    Why was my Unitary Business Group (UBG) return adjusted?

    • A designated member is a member of a UBG that has nexus with Michigan and files the combined Corporate Income Tax (CIT) return on behalf of the UBG. If the controlling member has nexus, it must act as the designated member. If the controlling member does not have nexus, it must select any other UBG member with nexus to serve as the designated member. The UBG needs to select a designated member with nexus and file an original CIT Return with that determination. If an ineligible designated member is selected, the return will be voided.
    • If you filed a combined return as a UBG and Form 4897 was not completed and attached for each member, the CIT return may be voided.
      • Form 4897 is necessary to obtain data from each member of a UBG and combine data to support the return (Form 4891). Information must be submitted on Treasury-approved forms in order to process the return.
      • Using an alternative method to report member-level information is not acceptable
      • Member forms (the total of all Form 4897s) must accurately reconcile to the UBG’s lead return (Form 4891).
    • Each member’s side of an eliminating entry must be shown on that member’s Form 4897; no “eliminations” Form 4897 or reporting of an “eliminations entity” on a separate Form 4897 is permitted.

    Including Form 4897 with your correspondence is not a sufficient way to correct an adjusted or denied return; a complete amended return, including all forms, schedules and attachments, along with a properly-completed Treasury-approved Form 4897 for each UBG member, must be filed in order to correct the original return.

  • eFile

    Is E-file mandatory for Corporate Income Tax (CIT)?

    • Yes, Michigan has an enforced CIT e-file mandate. Software developers producing CIT tax preparation software and computer-generated forms must support e-file for all eligible Michigan forms that are included in their software package. All eligible CIT returns prepared using tax preparation software or computer-generated forms must be e-filed.
    • Treasury enforces the CIT e-file mandate by not processing computer-generated paper returns that are eligible to be e-filed. A notice will be mailed to the taxpayer, indicating that the taxpayer’s return was not filed in the proper form and content and must be e-filed. Payment received with a paper return will be processed and credited to the taxpayer’s account even when the return is not processed.
    • A list of approved e-file software companies is available on the Web site MIfastfile.org. Select “Corporate Income Tax-Michigan Business Tax”,  and look under “Choosing a Tax Preparation Software”.
      • Companies listed on the site have passed the Treasury Assurance Testing System (ATS) requirements for Software Developers of electronic returns for Treasury. Treasury does not endorse any specific company or its product or services. Meeting the requirements means that the software can provide correct data in the proper format for processing by Treasury's systems. It does not mean that a software package includes every possible schedule or attachment, or that it will meet the needs of all filers.

  • Filing Requirements

    What are the Filing Requirements for the Corporate Income Tax (CIT)?

    • For tax years beginning January 1, 2012, all taxpayers other than financial institutions and insurance companies (described here as standard taxpayers) with nexus and apportioned or allocated gross receipts equal to $350,000 or more and tax liability greater than $100 must file a CIT Annual Return (Form 4891).
    • The law does not require the filing of the CIT return by a taxpayer whose gross receipts apportioned or allocated to Michigan are less than $350,000. A taxpayer whose CIT tax liability is less than or equal to $100 is also not required to file a return or pay the tax. There is not a separate form for reporting that a taxpayer has no filing requirement; however, taxpayers without a filing requirement may choose to file a return to:
      • Create and carry forward available business loss
      • Demonstrate business activity in Michigan along with zero liability in order to establish eligibility for the following year’s estimated payment safe harbor from penalty and interest
    • Also beginning January 1, 2012, under the Corporate Income Tax (CIT), a taxpayer means a C-Corporation, insurance company, financial institution, or a Unitary Business Group liable for tax, interest, or penalty. For additional information, please refer to the “Corporate Income Tax” section of our Web site at michigan.gov/taxes.