My March 19th post addressed some filing and compliance issues relating to Michigan Business Tax returns. Although this is the second filing season, problems still exist. Following are the responses received from Treasury.
Treasury advises that they are receiving far more paper returns than expected. They have asked us for input. Practitioners have cited problems with their software. Maybe the law is too complicated or maybe the forms are not clear. I think its a combination of both combined with limited resources at Treasury.
Treasury responses to MACPA members:
In response to problems with extension requests, Treasury said:
The postmark date is used for determining if an extension has been received timely. We had identified the problem related to extension requests from fiscal year returns and are in the process of remedying the problem. Let us know about situations where your members filed what they believed to be their timely filed extension requests for fiscal year returns and were denied incorrectly and we will review them. We expect the problem to be resolved in the next couple of weeks and apologize for the difficulty the problem caused your membership.
In response to MBT notices and appeal rights, Treasury said:
We have two different letters. One is for changes to returns that continue to be entitled to a refund credit forward or have no additional tax due and the other is for tax returns resulting in additional tax due. The tax due letters do not include the appeal rights because taxpayers will get their appeal rights if an intent to assess is issued.
Letters on returns not resulting in additional tax due include appeal rights because the taxpayers will not be receiving a separate notice with their appeal rights. Both letters tell them to contact Customer Contact, but the one with appeal rights, says: "If you do not want an informal conference or to make an appeal...contact Customer Contact" (paraphrase). The reason for this is that we do not want taxpayers to lose their appeal rights if they call Customer Contact (this is the same as it was under SBT and is currently under IT). However, in no cases do Customer Contact representatives refuse to discuss returns with taxpayers, once the identity of the taxpayer has been verified.
In response to thousands of MBT notices being mailed, Treasury said:
We have deployed additional resources to look at our backlog of correspondence to see what can be done to resolve it as quickly as possible.
In regard to penalty waiver requests, Treasury said:
Treasury addresses all penalty waiver requests received. Unfortunately, when we attempt to address penalty waiver requests over the phone, the facts quite often change. We have advised taxpayers in writing that, "The taxpayer does have the right to send a written request for penalty waiver. Their request should include an explanation." All penalty waiver requests are evaluated based on the reasonable request guidelines for penalty waiver.
More on penalties and penalty waivers:
There are more lenient safeguards in place with MBT for the 2008 tax year. Penalty and interest are assessed in accordance with the statute and written requests for waiver will be evaluated based on reasonable cause guidelines. If one of your constituents has facts and circumstances that meet the reasonable cause guidelines, I encourage them to submit a written request for waiver that includes all the facts.