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  • No. Michigan Department of Treasury cannot set up an installment agreement if a taxpayer or account is in bankruptcy. Treasury can accept voluntary payments from the taxpayer. These payments will not be returned to the taxpayer, even if the debt is ultimately discharged.

  • Billings will be mailed if any of the following are true:

    • New assessments are issued. Both an intent to assess and a final assessment must be system issued before an assessment can be changed to bankruptcy status.
    • The debt was not dischargeable in bankruptcy, which caused the assessment to be changed to a collectible status.
    • Actual returns were filed, assessments were corrected and a letter was issued showing the corrected amount.
    • Treasury is not aware of the bankruptcy.
  • Michigan Department of Treasury's ability to withhold a taxpayer's income tax refund is determined by the chapter under which the bankruptcy was filed:

    • Chapter 7 - The refund is held until a discharge is issued.
    • Chapter 11 (Business Filed) - Bankruptcy will offset an assessed officer's refund when:
      1. The business has defaulted in Chapter 11 plan payments.
      2. The Pre-Petition debt exists and is not included for payment through the business bankruptcy.
      3. The confirmed plan will offset for Post Confirmation debt.
    • Chapter 11 (Corporate Officer filed) - If a plan has been confirmed and there are post-confirmation debts, Treasury will apply corporate officer refunds to post-confirmation assessments.
    • Chapter 13 - Income tax refunds are returned to taxpayers.