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Notice Regarding the Implementation of 2022 Public Act 148

Issued:  August 26, 2022

Public Act (PA) 148 of 2022 introduces Chapter 18 within Part 3 of the Income Tax Act, MCL 206.721 et seq., to establish a method for reporting and paying[1] the Michigan income tax on final federal adjustments that arise from a partnership level audit or administrative adjustment request for partnerships subject to the federal Bipartisan Budget Act (BBA) of 2015.[2] Generally, Chapter 18 requires the adjustments to be reported and paid in one of two ways – the partnership may report adjustments to members, who must then separately report and pay their share of the applicable Michigan income tax due (i.e., the “push out” method) or, alternatively, the partnership may elect to report and pay any applicable Michigan income tax on behalf of its members (i.e., the “pay up” method).

There are important statutory deadlines under either reporting method, which include the following:

  • A 90-day deadline —
    • For all partnerships, to report certain preliminary information about the adjustments to Treasury and to notify Treasury if it will be making the “pay up” election.
    • For partnerships that “push out” adjustments, to report to each direct partner their share of the adjustments and, if applicable, pay any Michigan income tax on behalf of direct partners previously included on a composite return.[3]
  • A 180-day deadline —
    • For direct members of a partnership under the “push out” method, to report their share of adjustments to Treasury and to pay the Michigan income tax owed on those adjustments.
    • For a partnership that made the “pay up” election, to pay the collective Michigan income tax owed on those adjustments.[4]

The above deadlines are established by reference to the “final determination date” of the federal adjustment.[5] For federal adjustments arising from a partnership level audit, the “final determination date” is generally defined to refer to the first day on which no federal adjustment arising from the audit remains to be finally determined, including the period of any subsequent appeal. In contrast, for federal adjustments arising from an administrative adjustment request, the “final determination date” is generally defined as the date on which the administrative adjustment request was filed with the Internal Revenue Service (IRS). 

Chapter 18 is generally applicable for the reporting of certain federal adjustments for tax years beginning on and after January 1, 2018.[6] Because PA 148 was also given retroactive effect,[7] Chapter 18 will further apply to federal adjustments that have a “final determination date” both prior to and after its date of enactment. While this legislation has therefore created new and, in some cases, immediate obligations for taxpayers in Michigan, the forms, systems, and procedures required for fulfilling those obligations are yet to be fully implemented. Accordingly, this Notice provides additional time for taxpayers to comply with their statutory obligations.

It is expected that the procedures for reporting federal adjustments under Chapter 18 will be available no later than January 1, 2023.  As such, for any federal adjustment that is required to be reported under Chapter 18 and that has a “final determination date” prior to January 1, 2023, the Department will regard as timely any reports, elections, and payments that are made as if January 1, 2023, was the applicable “final determination date.” Penalty and interest on such adjustments is also automatically waived if reported timely pursuant to this Notice.[8] Any payments, if applicable, are therefore only required to include the Michigan income tax that may be owed due to that federal adjustment. Effectively, the 90-day and 180-day deadlines referenced above will be treated as beginning on January 1, 2023, for any federal adjustment subject to Chapter 18 that has a “final determination date” prior to that date.

This Notice is limited to those federal adjustments that are subject to Chapter 18 and that have a “final determination date” prior to January 1, 2023.  This will neither apply to any federal adjustments with a “final determination date” after December 31, 2022, nor any adjustment to a Michigan return that is required to be reported elsewhere under the Income Tax Act.[9]  Taxpayers who fail to report federal adjustments timely as provided in this Notice may be subject to interest and penalty, as applicable, under the Revenue Act.[10] 

Notwithstanding this Notice, some taxpayers may wish to report their federal adjustments immediately and either pay any additional tax or claim any available refund. Before doing so, however, the State Partnership Representative[11] must contact the Business Taxes Division for special instruction by calling (517)636-6925. Partners will not be permitted to report, pay, or claim a refund unless the State Partnership Representative files the partnership’s federal adjustments report. There may be additional processing delays in handling these requests. 

All future instructions and clarification regarding the implementation of Chapter 18 will be posted to the Department’s website at

[1] As this Notice refers to paying Michigan tax, it also generally refers to claiming a refund of Michigan tax, if applicable.

[2] P.L. 114-74. For additional information on the BBA centralized partnership audit rules at the federal level, see

[3] See MCL 206.315.

[4] See MCL 723(4)(b) for calculating the collective tax owed by an electing partnership.

[5] MCL 206.325(4)(b).

[6] MCL 206.725

[7] 2022 PA 148 (“Enacting Section 1: This amendatory act is retroactive and applies to all tax years that begin on and after January 1, 2018.”).

[8] See MCL 205.28(1)(e).

[9] See MCL 206.325(2); MCL 206.687(2)

[10] MCL 205.1 et seq.

[11] MCL 206.723(2).