Internal Policy Directive 2004-6

Internal Policy Directive 2004-6
November 22, 2004
GENERAL SALES AND USE TAX ACTS: ALTERNATIVE FOR "SAME DAY" PAYMENT IF EFT FAILS

POLICY ISSUE

When a taxpayer's attempt to make a sales or use tax payment by electronic funds transfer fails, is there an alternative method for making a "same day" payment so as to avoid penalty and interest?

POLICY DETERMINATION

If an electronic funds transfer ("EFT") of a sales or use tax payment fails for a reason not related to the taxpayer's operations (power failure, bank error, Act of God, or other similar circumstances determined by the Department), payment will be deemed timely if received by EFT (ACH Debit or ACH Credit) on the next business day following the due date on which the reason for the failure is corrected. (Wire transfers are NOT acceptable.) Written notice must be provided to the Department by the taxpayer describing and documenting the EFT failure and containing the following information:

  1. name of taxpayer;
  2. account number of taxpayer;
  3. tax period involved;
  4. identification of specific tax(es) (i.e., sales tax or use tax), remitted late and the amount of each specific tax remitted late, and;

  5. a description of the date, time and manner that the failed EFT was initiated, the reason(s) it failed, and the date that the reason(s) for failure was/were corrected.

DISCUSSION

Michigan has participated in the Streamlined Sales and Use Tax Project and, with passage of the Streamlined Sales and Use Tax Administration Act (2004 PA 174, MCL 205.801 et. seq.), anticipates becoming a "member state" under the Streamlined Sales and Use Tax Agreement ("Agreement"). Section 319(C) of the Agreement anticipates that a member state will provide an alternative method for making "same day" payments if an electronic funds transfer fails.