Michigan Governor Granholm just signed legislation that will create a tax amnesty program for any unpaid Michigan tax due for periods prior to January 1, 2010. The amnesty period is short-May 15, 2011 to June 30, 2011. Taxpayers must pay the full tax and interest. Penalties will be waived.
Sounds OK, but I could never recommend a client participate in that process given the other programs that are currently available in Michigan.
Michigan currently has voluntary disclosure and “taxpayer initiated” request opportunities that allow both registered and unregistered taxpayers to pay the tax and interest due and petition for abatement of penalties. Under the amnesty program, 2010 liabilities are not eligible for penalty abatement. However, under both the VDA and the taxpayer initiated program, all liabilities for the past 4 years are eligible for penalty abatement. Further, the amnesty program wants all the taxes due. Under the VDA or taxpayer initiated the look back in just 4 years.
Finally, why wait 6 months for this deal. If you owe back taxes to Michigan, act now, don’t wait for this deal. The longer you wait the more risk you take that you will be audited. If that happens, then there will be no penalty abatement and the state might go back several years. Most of the states that have an amnesty program start immediately and don’t wait 6 months to get going.
Let me know if you have any questions.
Ned Lenhart, President
Michigan Tax Amnesty Program
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