Frequently Asked Questions: Sales, Use and Withholding Tax Installment Option

General

  • Business taxpayers who have deferred paying their Sales, Use and Withholding (SUW) taxes due to the COVID-19 pandemic can now participate in an installment payment option to satisfy their outstanding tax balance
  • In a special notice issued on May 26, 2020, the state Treasury Department is now allowing business taxpayers scheduled to make SUW tax payments for the February, March, April and May tax periods on June 20, 2020 – including quarterly filers – to either pay their outstanding balance in its entirety or pay their outstanding balance in monthly payments over the next six months. Penalties and interest will be waived on those deferred payments.
  • To take advantage of the installment payment option, monthly filers should submit their outstanding returns for February, March, April and May tax periods by June 20, 2020, to establish their installment balance. Taxpayers can then make six monthly payments on that balance from June to November.
  • Quarterly filers should submit their outstanding first quarter return by June 20, 2020, to establish their installment balance. Taxpayers can then make three payments on that balance in June, September and November.
  • For the SUW tax deadline in July and deadlines through the remainder of the year, businesses must file their monthly or quarterly returns and submit their payments as normally scheduled.
  • To ensure accurate reporting of the payments, each installment payment must be submitted separately from any tax payment otherwise due in that tax period.
  • Businesses do not need to contact or submit any documentation to the state Treasury Department to participate in the installment payment option.
  • Businesses with questions should inquire through self-service options using Michigan Treasury Online or go to www.michigan.gov/askSUW.

Under what authority can the state Treasury Department create this installment payment option?

  • State law enables the state Treasury Department to waive penalties and tax paid after the due date. In addition, state law also allows the state Treasury Department to compromise penalty and interest and to waive penalties where reasonable cause can be established.
  • COVID-19 has caused major and ongoing business disruptions across the state of Michigan. Under the authority outlined within state law, the state Treasury Department is treating SUW tax payments due on June 20, 2020, as automatically eligible for a waiver of penalty and interest.

How does this payment option work?

  • There are two types of SUW tax taxpayers who would be eligible for payment option assistance – monthly filers and quarterly filers.
  • Monthly filers should submit their outstanding returns for February, March, April and May tax periods by June 20, 2020, to establish their installment balance. Taxpayers can then make six monthly payments on that balance from June to November.
  • Quarterly filers should submit their outstanding first quarter return by June 20, 2020, to establish their installment balance. Taxpayers can then make three payments on that balance in June, September and November.

How do I make the installment payments?

  • To ensure accurate reporting of the payments, each installment payment must be submitted separately for any tax payment otherwise due in that tax period.
  • For example, a monthly filer who is participating in the installment payment option will submit two payments every month from June to November. One payment represents the SUW tax that is due for the normally scheduled monthly return, while the other payment would represent the installment option payment.
  • A quarterly filers who is participating in the installment payment option will submit two payments in June, September and November. Again, one payment represents the SUW tax that is due for the normally scheduled quarterly return, while the other payment would represent the installment option payment.
  • Installment payments must be submitted either electronically through Michigan Treasury Online or by a check accompanied with a Sales, Use and Withholding Payment Voucher (Form 5094).
  • Monthly and quarterly fliers should specify February or Quarter 1 when submitting a payment.

Can I pay more than what is due when I submit my payment?

  • Yes. Any overpayment will automatically be applied to the next installment period’s balance. Taxpayers can pay more to reduce any remaining installment balance.  

Do I need to do anything to participate?

  • Businesses do not need to contact or submit any documentation informing the state Treasury Department that they wish to participate in the installment payment option. Taxpayers are automatically eligible to participate in the installment payment option for all SUW tax returns due to be filed by June 20, 2020.

Who is eligible to participate in the installment payment option?

  • Non-accelerated SUW tax filers who are required to submit their deferred returns and payment by June 20, 2020 are eligible to participate.
  • The penalty and interest waiver is limited to tax returns due on June 20, 2020. Any payment or return due after that date will not be eligible for the installment payment option and is subject to penalties and interest.

How does the discount work with the installment payment option?

  • Taxpayers who file their outstanding SUW tax returns and pay their outstanding tax balance in full are eligible for a discount. The discount does not apply to those taxpayers who participate in the installment payment option.

What happens if I miss an installment payment?

  • Payments made consistent with the state Treasury Department’s notice will go towards the installment balance. If a payment is missed, taxpayers can make up that payment the next month. If any balance remains after November 20, 2020, due to missed or insufficient payments, penalties and interest will be assessed. 

Should I pay my outstanding tax balance?

  • Providing an installment payment option enables businesses to spread out their obligations over the next six months. Taxpayers are encouraged to pay their entire balance if able to do so.