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Flow-Through Entity Tax Election Relief in Light of One Big Beautiful Bill Act

Flow-Through Entity Tax Election Relief in Light of One Big Beautiful Bill Act

Notice Regarding Flow-Through Entity Tax Election Relief in Light of Pub. L. 119-21, One Big Beautiful Bill Act (OB3)

Issued: September 15, 2025

Background

On July 4, 2025, Public Law 119-21, also known as the One Big Beautiful Bill Act (OB3), was signed into law. In response to the shifting legal landscape that may impact taxpayers’ desire to elect into the Michigan Flow-Through Entity (FTE) tax, including changes to the federal state and local tax (SALT) deduction limits, Treasury is releasing this notice to advise the public on limited relief that may be available for taxpayers that made elections into the FTE tax.

Limited Relief Available

Under Part 4 of the Income Tax Act, MCL 206.801 et seq., flow-through entities may elect into the Michigan FTE tax by making a payment of tax on or before the last day of the ninth month after the end of the tax year. Once made, an election is binding for three tax years. Recognizing that some taxpayers may have made election payments prior to the enactment of the OB3, Treasury is offering limited relief by allowing taxpayers to request a refund of those payments. A taxpayer who requests and receives a refund of such payments will not be deemed to have made a valid election for that tax year and will therefore not be subject to the requirements of the Michigan FTE tax.

This relief is subject to the following conditions:

  • Only taxpayers electing into the first year of the three-year FTE election period are eligible;

     

  • Only taxpayers that have not yet filed their annual FTE return for the tax period are eligible. Taxpayers who have made an election payment and filed their annual FTE return for that period are not eligible; and

     

  • Requests for relief must be submitted before the end of the election window for the applicable tax year (e.g., September 30th after the tax year for calendar-year filers).

For valid requests, all payments made for the tax period will be refunded, including any estimated payments and extension payments. Treasury will not transfer any payments that qualify for a refund under this relief.

Instructions for Requesting Relief

Taxpayers requesting this relief must submit, in writing, a request for relief that includes the following information: the taxpayer’s entity name, address, federal employee identification number (FEIN), tax year, payment amount(s), and payment confirmation number(s). This request must be mailed to Treasury at the following address:

MICHIGAN DEPARTMENT OF TREASURY
FTE UNIT
P.O. BOX 30825
Lansing, MI 48909