July 21, 2004, Introduced by Reps. Zelenko, Stakoe, Meyer, Wenke, Condino, Milosch, Nofs, Sheen, Koetje, LaJoy, Taub, Acciavatti, Ward, DeRoche and Pastor and referred to the Committee on Tax Policy.
A bill to amend 1941 PA 122, entitled
"An act to establish the revenue collection duties of the
department of treasury; to prescribe its powers and duties as the
revenue collection agency of the state; to prescribe certain
powers and duties of the state treasurer; to regulate the
importation, stamping, and disposition of certain tobacco
products; to provide for the transfer of powers and duties now
vested in certain other state boards, commissions, departments
and offices; to prescribe certain duties of and require certain
reports from the department of treasury; to provide procedures
for the payment, administration, audit, assessment, levy of
interests or penalties on, and appeals of taxes and tax
liability; to prescribe its powers and duties if an agreement to
act as agent for a city to administer, collect, and enforce the
city income tax act on behalf of a city is entered into with any
city; to provide an appropriation; to abolish the state board of
tax administration; to prescribe penalties and provide remedies;
and to declare the effect of this act,"
by amending section 21 (MCL 205.21), as amended by 2002 PA 657.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 21. (1) If a taxpayer fails or refuses to make a
2 return or payment as required, in whole or in part, or if the
3 department has reason to believe that a return made or payment
1 does not supply sufficient information for an accurate
2 determination of the amount of tax due, the department may obtain
3 information on which to base an assessment of the tax. By its
4 duly authorized agents, the department may examine the books,
5 records, and papers and audit the accounts of a person or any
6 other records pertaining to the tax.
7 (2) In carrying out this section, the department and the
8 taxpayer shall comply with the following procedure:
9 (a) The department shall send to the taxpayer a letter of
10 inquiry stating, in a courteous and nonintimidating manner, the
11 department's opinion that the taxpayer needs to furnish further
12 information or owes taxes to the state, and the reason for that
13 opinion. A letter of inquiry shall also explain the procedure by
14 which the person may initiate communication with the department
15 to resolve any dispute. This subdivision does not apply in any
16 of the following circumstances:
17 (i) The taxpayer files a return showing a tax due and fails
18 to pay that tax.
19 (ii) The deficiency resulted from an audit of the taxpayer's
20 books and records by this state.
21 (iii) The taxpayer otherwise affirmatively admits that a tax
22 is due and owing.
23 (b) If the dispute is not resolved within 30 days after the
24 department sends the taxpayer a letter of inquiry or if a letter
25 of inquiry is not required pursuant to subdivision (a), the
26 department, after determining the amount of tax due from a
27 taxpayer, shall give notice to the taxpayer of its intent to
1 assess the tax. The notice shall include the amount of the tax
2 the department believes the taxpayer owes, the reason for that
3 deficiency, and a statement advising the taxpayer of a right to
4 an informal conference, the requirement of a written request by
5 the taxpayer for the informal conference that includes the
6 taxpayer's statement of the contested amounts and an explanation
7 of the dispute, and the 30-day time limit for that request.
8 (c) If the taxpayer serves written notice upon the department
9 within 30 days after the taxpayer receives a notice of intent to
10 assess, remits the uncontested portion of the liability, and
11 provides a statement of the contested amounts and an explanation
12 of the dispute, the taxpayer is entitled to an informal
13 conference on the question of liability for the assessment.
14 (d) Upon receipt of a taxpayer's written notice, the
15 department shall set a mutually agreed upon or reasonable time
16 and place for the informal conference and shall give the taxpayer
17 reasonable written notice not less than 20 days before the
18 informal conference. The notice shall specify the intent to
19 assess, type of tax, and tax year that is the subject of the
20 informal conference. The informal conference provided for by
21 this subdivision is not subject to the administrative procedures
22 act of 1969, 1969 PA 306, MCL 24.201 to 24.328, but is subject to
23 the rules governing informal conferences as promulgated by the
24 department in accordance with the administrative procedures act
25 of 1969, 1969 PA 306, MCL 24.201 to 24.328. The taxpayer may
26 appear or be represented by any person before the department at
27 an informal conference, and may present testimony and argument.
1 At the party's own expense and with advance notice to the other
2 party, a taxpayer or the department, or both, may make an audio
3 recording of an informal conference. At the taxpayer's option,
4 if the department fails to issue an order and determination
5 within 180 days after the taxpayer serves notice upon the
6 department, the informal conference may be considered denied. If
7 so denied, the taxpayer may appeal the issues contested as
8 provided under section 22.
9 (e) After the informal conference, the department shall
10 render a decision and order in writing, setting forth the reasons
11 and authority, and shall assess the tax, interest, and penalty
12 found to be due and payable. The decision and order are limited
13 to the subject of the informal conference as included in the
14 notice under subdivision (d).
15 (f) If the taxpayer does not protest the notice of intent to
16 assess within the time provided in subdivision (c), the
17 department may assess the tax and the interest and penalty on the
18 tax that the department believes are due and payable. An
19 assessment under this subdivision or subdivision (e) is final and
20 subject to appeal as provided in section 22. The final notice of
21 assessment shall include a statement advising the person of a
22 right to appeal.
23 (3) If a protest to the notice of intent to assess the tax is
24 determined by the department to be a frivolous protest or a
25 desire by the taxpayer to delay or impede the administration of
26 taxes administered under this act, a penalty of $25.00 or 25% of
27 the amount of tax under protest, whichever is greater, shall be
1 added to the tax.