Treasury Explains New Filing Rules
The Michigan Department of Treasury has issued a notice explaining the Michigan Business Tax (MBT) filing requirements for federally disregarded entities. The notice discusses Public Act 305 of 2011. In Notice to Taxpayers Regarding Federally Disregarded Entities and the Michigan Business Tax, Michigan Department of Treasury, January 26, 2012, an entity that is disregarded for federal income tax purposes is classified as a disregarded entity for MBT purposes.
There are two exceptions:
· An entity disregarded for federal income tax purposes that filed separate from its owner for the 2008, 2009, and 2010 tax years in original returns filed before 2012 or in amended returns filed before December 1, 2011, is not required to amend those returns.
· An entity disregarded for federal income tax purposes that filed separate from its owner for the 2010 MBT tax year in an original return filed before 2012 or in an amended return filed before December 1, 2011, may file separate from its owner for the 2011 tax year.
Therefore, if a federally disregarded entity did not file as a separate entity, then it may not file as a separate entity for the 2008?2011 MBT tax years. However, if the federally disregarded entity did file as a separate entity for the 2008?2010 MBT tax years, it may file an amended MBT return as a disregarded entity if the return is within the statute of limitations.
2011 MBT Returns for Disregarded Entities Filing Separately
If a disregarded entity is eligible to file as a separate entity for the 2011 MBT tax year and does file separately, it must file all required forms and schedules. The disregarded entity must select the organization type under which the parent filed its tax return. Both the disregarded entity and the parent must prepare corresponding pro forma federal returns and attach them to the MBT returns.