Collection Process For Delinquent Taxes

Taxpayers are required to meet certain obligations under Michigan law. You are responsible for filing your tax returns on time with correct payments and ensuring that your returns are correct no matter who prepares them. Remember, you are responsible for the information in your return.

The following information will provide an overview of the Collection Process for Delinquent Taxes.

How To Resolve Tax Debts Prior To Collection

It is important to resolve any outstanding tax you owe as soon as possible. Penalty and interest will be added to your debt and will continue to grow until the amount is paid in full. Penalty charges can range from 25% to 500% of the tax due, depending on the type of the tax!

If you do not pay your taxes, you may receive a LETTER OF INQUIRY, NOTICE OF INTENT TO ASSESS, and/or a BILL FOR TAXES DUE (Final Assessment). This is your opportunity to resolve the debt prior to having the debt referred to collections, by either paying the amount due, appealing the assessment, or entering into an Installment Agreement. Do not wait for the Collection Services Bureau to contact you! You must immediately take action to resolve your debt to avoid collection enforcement action.

Actions We May Take

Under the authority of Public Act 122 of 1941 , as amended, the Collection Services Bureau is responsible for the collection of all delinquent state tax accounts for the State of Michigan. The Department may proceed to collect your delinquent tax debt by using several different enforcement methods. The Collection Services Bureau can use an enforcement action for a minimum of 6 years to collect the debt. The 6 year period, known as the statute of limitations, may be extended by certain actions such as a court judgment.

By law, the Department may use a variety of actions to collect your past-due tax, penalty and interest and may take these actions at any time during the course of collection.

• Liens
  The Collection Services Bureau will file liens on Real and Personal property to protect the State's interest as a creditor. Liens will be filed even when a taxpayer has made payment arrangements and is current with all payments.
  Caution! Once a lien is filed, the taxpayer's credit rating could be harmed and, in most cases, property cannot be sold or transferred until the past-due tax is paid. A lien filed at a county Register of Deeds becomes a public record. Credit reporting agencies may obtain and publish the lien information. A lien filed against an individual or business that is picked up by a credit reporting agency will remain part of that credit history for the next seven to ten years.
• Tax Warrants (Seizure of Business and Personal Property)
  The Department has the authority to issue a Tax Warrant to close your business and/or to seize and sell your personal property (such as business vehicles, business assets, equipment and inventory). The money from the sale of the business assets will be applied to your tax debt. Notification is provided to you of the amount owed at least 10 days before the property is seized. Most seized property cannot be sold by the Department for at least 10 days (perishable items may be sold within 24 hours). Seizure related expenses (such as state personnel costs, locksmith service, towing company assistance, storage facility, advertising and mailing costs) will be charged to you.
• Wage Levies
  The Department may levy against your wages, salaries, bonuses, commissions, and other compensation from your employer. A wage levy requires your employer to deduct a specified amount from your wages to pay the past-due debt. Notification is provided to you of the amount owed at least 10 days before a wage levy is sent to your employer. The employer must continue to deduct the specified amount from your net wages until the amount of the levy is paid. An additional fee (warrant costs) in the amount of $55 is added to the delinquent amount due for each levy served.
• Financial Institution Levies
  The Department may serve a levy against your financial institution (banks, credit unions, brokerage firms, etc.) which requires your financial institution to send any funds being held to the Department up to the total past due tax, penalty and interest amount. You will be notified of the amount you owe at least 10 days before a levy is sent to your financial institution. An additional fee (warrant costs) in the amount of $55 is added to the delinquent amount due for each levy served.
• Other types of Levies
  The Department may levy against assets held by a third party. Examples of this type of levy would be a license held in escrow, rental income or insurance proceeds. You will be notified of the amount you owe at least 10 days before a levy is sent. An additional fee (warrant costs) in the amount of $55 is added to the delinquent amount due for each levy served.
• Offset refunds or other monies owed to you
  Your (or your spouse's) income tax refund or credits may be offset and applied to your tax debt. In addition, we may offset any other money that you receive from the State of Michigan (such as lottery winnings and payments to vendors for services performed) and apply the amount to your tax debt.
• Hold you personally responsible for business taxes
  The Revenue Act provides the Department with the authority to hold officers, members, managers, and/or partners of a corporation, limited liability company, limited liability partnership, limited partnership, or a partnership personally liable for the unpaid taxes and any related penalties and interest. This process is referred to as Corporate Officer Liability.
• Liquor License revocation or renewal
  If the business holds a liquor license and is past due in filing or paying business taxes, the Department of Treasury can request that the Michigan Liquor Control Commission revoke or not renew your liquor license. Taxpayers are prohibited by law from selling any products containing alcohol without a valid liquor license. Wholesalers, manufacturers, or brewers cannot legally sell or deliver products to liquor retailers who do not have a valid liquor license.
• Refer your account to a collection agency
  The Michigan Department of Treasury contracts with two private collection agencies, GC Services LLP and Harris & Harris LTD, to help us collect the delinquent tax, penalty and interest owed to the State of Michigan.
• Other Collection methods, as necessary
  Your account may be referred to the Michigan Department of Attorney General for additional legal actions.

How to Pay

• Make checks payable to "STATE of MICHIGAN"
• Write your assessment number and account number on the check. Your account number is your Social Security or tax identification number.
• Include the payment coupon from the bottom of your billing notice.
• Please allow at least 10 - 14 days for mailing and processing of your payment.
• Please mail your payment to the following address:
  Michigan Department of Treasury - Collection Services Bureau
  P.O. Box 30199
  Lansing, MI 48909

Credit card or Debit card payments are not accepted at this time.

Click here for Collections E-Service

To pay by electronic withdrawal (ACH) from your checking or savings account (EFT), please have your bank account number and the 9 digit routing number for your financial institution available when you call the Office of Collections. If you have any questions about these numbers, please contact your bank or financial institution.

What If I Can't Pay All Of The Debt At This Time?

After you receive your BILL FOR TAXES DUE (FINAL ASSESSMENT) the Department of Treasury may consider an Installment Agreement if your situation meets certain criteria.

For Installment Agreements lasting for 24 months or less, you must complete, sign and return the INSTALLMENT AGREEMENT (Form 990). The agreement requires a proposed payment amount that will be reviewed for approval by Treasury. All highlighted areas of the form are required and must be filled in completely before your request for an Installment Agreement will be considered for approval. Failure to complete the required areas will result in a delay of processing and continued collection efforts will continue.

If you are interested in an Installment Agreement for a period longer than 24 months, please call the Collection Services Bureau for more information.

The Collection Services Bureau will file liens on Real and Personal property to protect the State's interest as a creditor. Liens will be filed even when a taxpayer has made payment arrangements and is current with all payments.

Caution! Once a lien is filed, the taxpayer's credit rating could be harmed and, in most cases, property cannot be sold or transferred until the past-due tax is paid. A lien filed at a county Register of Deeds becomes a public record. Credit reporting agencies may obtain and publish the lien information. A lien filed against an individual or business that is picked up by a credit reporting agency will remain part of that credit history for the next seven to ten years.

If you have been contacted by the Michigan Accounts Receivable Collection System (MARCS), please contact them directly for more information about Installment Agreements.

Treasury is providing an “Offer-In-Compromise” program that began January 1, 2015. This program will allow taxpayers to submit an offer to compromise a tax debt for less than the amount due based on specific criteria. To determine if you qualify visit www.michigan.gov/oic.

What To Do If You Disagree

If you believe you have received a bill for taxes due that you do not owe, send the following information to support your claim:

• A letter explaining why the tax is not due with documents to support the reasons you outline in your letter. Be sure to include your account number (Social Security or tax identification number) on the letter.
• A legible copy of the front and back of your canceled check or money order
• A copy of the billing notice you received from the Michigan Department of Treasury.

Mail the above information to the address that appears on the bill.

Information about how to appeal the bill can be found on the back of the billing notice, or in the Taxpayer Rights Handbook.

Other Helpful Information

Power of Attorney

If you wish to authorize another person or corporation, (tax preparer, accountant, attorney, family member, etc.,) as your representative in tax or debt matters before the State of Michigan, you must complete and file an Authorized Representative Declaration (Power of Attorney) Form 151 with the Collection Services Bureau.

Estimate Penalty and Interest Owed for a Late Payment

Frequently Asked Questions about Delinquent Accounts

Telephone Inquires:

Due to heavy call volumes, there may be a delay in answering your call. To assist our customer service representatives in helping you, please have your account number and tax documents with you when you call. Your account number is your Social Security or tax identification number.

• If you don't understand why you received your bill, please contact the appropriate Tax Division at the number below:

  • Income Tax 517-636-4486

  • Sales, Use and Withholding Taxes 517-636-6925

  • Single Business Tax 517-636-6925

  • Michigan Business Tax 517-636-6925

  • Motor Fuel Taxes 517-636-4600

• To pay your debt or other questions about your delinquent account, call Treasury Collection Services Bureau at 517-636-5265.
• If you are making a payment by electronic withdrawal (EFT), please have your bank account number and the 9 digit bank routing number of your financial institution available. If you have any questions about these numbers, please contact your bank or financial institution.