New Tax Must Be Paid by Electronic Funds Transfer
Senate Bill 347 (PA 141 of 2011) amends the Use Tax Act by ending the collection of the Michigan Use Tax of 6% on Medicaid contracted health plans and specialty prepaid health plans, also referred to as Medicaid managed care organizations, 90 days after the effective date of the Health Insurance Claims Assessment (HICA) Act. Senate Bill 348 (PA 142 of 2011) creates the HICA Act which would establish a 1% tax on certain paid health care claims beginning January 1, 2012, with the act being repealed January 1, 2014. Both bills are tie-barred to one another.
These bills are the result of an anticipated action by the federal Centers for Medicare and Medicaid offices to disallow the Use Tax as a means to generate State revenue to be used as a match for federal Medicaid funds. The health insurance paid claims tax is a broad-based tax which should satisfy the federal government as a replacement for the current Use Tax model.
All payments under the HICA Act are required to be remitted to the Michigan Department of Treasury by electronic funds transfer (EFT). Quarterly payments are due April 30, July, 30, October 30, and January 30.
In order to be registered to make payments by EFT, a taxpayer must complete and submit Form 4926, Electronic Funds Transfer Application − Health Insurance Claims Assessment, to the Department of Treasury. An EFT application could take at least four weeks to process.
An annual return must be filed using an online interface to e-file directly to the treasury. The first annual return for tax year 2012 is due February 28, 2013. The annual return will be available at a later date and will be posted on the treasury's website.
A taxpayer who receives a notification letter from the Department of Treasury, but does not believe the he or she is subject to the HICA, should submit to the Department of Treasury a written letter of explanation detailing why the taxpayer believes he or she is not subject to the HICA. Treasury will acknowledge receipt of the letter. A self-determination that a taxpayer is not subject to HICA is not binding on the Department of Treasury and is subject to potential review or audit at a later date.