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Form 807
Form 807
Possible Reasons for Adjustments to Flow-Through Entity Tax Credit
Flow-Through Entity Has Not Filed Annual FTE Tax Return
Adjustment Reason
The flow-through entity from which you claimed a credit may not have filed their annual FTE tax return (Form 5772) or their return may not have been processed.
Steps to Remedy
Contact the flow-through entity to ensure they filed their return (including supporting Form 5774) and inquire whether it has been processed. The FTE taxpayer can call 517-636-6925 to inquire about the status of their return. Until the FTE tax annual return for the tax year ending with or within your tax year has been processed without adjustments, your claimed credit cannot be granted.
Credit Was Not Fully Funded by Deadline
Adjustment Reason
The credit was not fully funded by deadline, which is the 15th day of 3rd month after the flow-through entity’s tax year. Only a credit funded by that date can be claimed against the same tax year; any remaining credit must be claimed in a later tax year once it is funded.
Steps to Remedy
Contact the flow-through entity and ensure your records match their records, including the timing of their payments.
Credit Claimed Does Not Match Credit Allocated
Adjustment Reason
The amount of credit you claimed does not match the credit allocated to you by one or more flow-through entities on their annual return (specifically, Form 5774, Michigan Flow-Through Entity Tax Schedule for Reporting Member Information).
Steps to Remedy
Ensure you reported the identifying information and amount of credit for each flow-through entity from which you received a credit. Read guidance on tiered / indirect credits.
Contact the flow-through entity and ensure your records match their records as filed on their original or, if applicable, amended return. If your records match, the flow-through entity should contact the Business Taxes Division at Treas-FTE-Customer-Support@michigan.gov or 517-636-6925.
Treasury’s Business Taxes Division may have adjusted the FTE return or reported payments to match Treasury’s records. If the flow-through entity is not appealing those adjustments, ensure your credit is reported consistently with any Treasury corrections.
Participants Not Identified as a Recipient of the FTE Tax Credits Claimed
Adjustment Reason
One or more of your participants have not been identified by the electing flow-through entity as a recipient of the FTE tax credits you claimed. The names or account numbers may not have been accurately reported on the FTE annual return (specifically, Form 5774, Michigan Flow-Through Entity Tax Schedule for Reporting Member Information).
Steps to Remedy
Ensure the Composite return’s information matches the FTE return’s. If information needs to be corrected on the FTE return, the flow-through entity should file an amended return.
If information needs to be corrected on the Composite return, amend that return.
Composite Return Filers May Only Claim the Credit Generated by the Same Company
Adjustment Reason
As the filer of a composite return, you may claim only the FTE tax credit generated by you, the same company. Credits generated by other FTE taxpayers that are attributable to your participants must be claimed on a different return—either the other FTE taxpayer can report the credits on their own composite return, or the participants may file separate returns to claim those credits.
Steps to Remedy
If you made a valid election to report and pay the FTE tax, confirm that you filed your annual FTE tax return and that it has been processed.
Amend your Form 807 to report only FTE credits of your participants that were reported on your own FTE annual return (specifically, Form 5774, Michigan Flow-Through Entity Tax Schedule for Reporting Member Information) for the same tax year.