May 26, 2010, Introduced by Reps. Durhal, Calley, Melton, Johnson, Constan, Huckleberry, Nathan, Slavens, Liss, Young, Womack, Kennedy, Haugh, Terry Brown, Stanley, Sheltrown, Geiss, Bledsoe, Smith, Roberts, Leland, Donigan, Barnett, Hammel, Lemmons, Slezak, Dean, Meadows, Nerat, Cushingberry, Gonzales, Neumann, Spade, Walsh, Valentine, Jackson and Stamas 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 this state; to prescribe certain
powers and duties of the state treasurer; to establish the
collection duties of certain other state departments for money or
accounts owed to this state; 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 sections 24 and 31 (MCL 205.24 and 205.31), section 24
as amended by 2003 PA 201 and section 31 as amended by 2002 PA 657.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 24. (1) If a taxpayer fails or refuses to file a return
or pay a tax administered under this act within the time specified,
the department, as soon as possible, shall assess the tax against
the taxpayer and notify the taxpayer of the amount of the tax. A
liability for a tax administered under this act is subject to the
interest and penalties prescribed in subsections (2) to (5).
(2) Except as provided in subsections (3), (6), and (7), if a
taxpayer fails or refuses to file a return or pay a tax within the
time specified for notices of intent to assess issued on or before
February 28, 2003, a penalty of $10.00 or 5% of the tax, whichever
is greater, shall be added if the failure is for not more than 1
month, with an additional 5% penalty for each additional month or
fraction of a month during which the failure continues or the tax
and penalty is not paid, to a maximum of 50%. Except as provided in
subsections (3), (6), and (7), if a taxpayer fails or refuses to
file a return or pay a tax within the time specified for notices of
intent to assess issued after February 28, 2003, a penalty of 5% of
the tax shall be added if the failure is for not more than 2
months, with an additional 5% penalty for each additional month or
fraction of a month during which the failure continues or the tax
and penalty is not paid, to a maximum of 25%. In addition to the
penalty, interest at the rate provided in section 23 for
deficiencies in tax payments shall be added on the tax from the
time the tax was due, until paid. After June 30, 1994, the penalty
prescribed by this subsection shall not be imposed until the
department submits for public hearing pursuant to the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328, a rule defining what constitutes reasonable cause for
waiver of the penalty under subsection (4), which definition shall
include illustrative examples.
(3) If a person is required to remit tax due pursuant to
section 19(2) and fails or refuses to pay the tax within the time
specified, a penalty of 0.167% of the tax shall be added for each
day during which the failure continues or the tax and penalty are
not paid as follows:
(a) For notices of intent to assess issued on or before
February 28, 2003, to a maximum of 50% of the tax.
(b) For notices of intent to assess issued after February 28,
2003, to a maximum of 25% of the tax.
(4) If a return is filed or remittance is paid after the time
specified and it is shown to the satisfaction of the department
that the failure was due to reasonable cause and not to willful
neglect, the state treasurer or an authorized representative of the
state treasurer shall waive the penalty prescribed by subsection
(2).
(5) For failure or refusal to file an information return or
other informational report required by a tax statute, within the
time specified, a penalty of $10.00 per day for each day for each
separate failure or refusal may be added. The total penalty for
each separate failure or refusal shall not exceed $400.00.
(6) If a taxpayer fails to pay an estimated tax payment as may
be required by the income tax act of 1967, 1967 PA 281, MCL 206.1
to 206.532, a penalty shall not be imposed if the taxpayer was not
required to make estimated tax payments in the taxpayer's
immediately preceding tax year.
(7) Notwithstanding any other provision of this act, for any
return or tax remittance due on August 15, 2003 that was filed or
remitted not later than August 22, 2003, the department shall waive
all interest and penalty for the failure to file or remit for the
period of August 15, 2003 through August 22, 2003.
(8) In addition to any other interest or penalty prescribed
under this section, a taxpayer who has failed to file a return or
pay a tax that was due before January 1, 2010, during a period for
which amnesty is available under section 31(3), is liable for an
additional penalty equal to 25% of the amount of tax due.
Sec. 31. (1) If a taxpayer does not satisfy a tax liability or
makes an excessive claim for a refund as a result of reliance on
erroneous current written information provided by the department,
the state treasurer shall waive all criminal and civil penalties
provided by law for failing or refusing to file a return, for
failing to pay a tax, or for making an excessive claim for a refund
for a tax administered by the department of treasury pursuant to
this act if the taxpayer makes a written request for a waiver,
files a return or an amended return, and makes full payment of the
tax and interest.
(2) For a period to be designated by the state treasurer of
not less than 30 days and not more than 60 days, and ending before
September 30, 2002, there shall be an amnesty period during which
the state treasurer shall waive all criminal and civil penalties
provided by law for failing or refusing to file a return, for
failing to pay a tax, or for making an excessive claim for a refund
for a tax administered by the revenue division of the department of
treasury under this act if the taxpayer makes a written request for
a waiver, files a return or an amended return, and makes full
payment in either a lump sum or installments as provided under
subsection
(9) (11), of the tax and interest due for any prior tax
year.
(3) There shall be an amnesty period lasting 60 days and
ending June 30, 2011, during which the state treasurer shall waive
all criminal and civil penalties provided by law for failing or
refusing to file a return, for failing to pay a tax, or for making
an excessive claim for a refund for a tax administered by the
department of treasury under this act if the taxpayer makes a
written request for a waiver on a form prescribed by the
department, files a return or an amended return, and makes full
payment in either a lump sum or installments as provided under
subsection (10), of the tax and interest due for any prior tax
year.
(4) (3)
This section applies to the
nonreporting and
underreporting of tax liabilities and to the nonpayment of taxes
previously determined to be due, but only to the extent of the
penalties attributable to the taxes that were previously due and
that are paid during the amnesty period provided for in subsection
(2).
(5) (4)
The Subject to subsections
(7), (8), (9), (10), and
(11), the department shall administer this section.
(6) (5)
Subsection (2) (3) does
not apply to taxes due after
June 1, 2001 January 1, 2010.
(7) (6)
There For the fiscal year
ending September 30, 2011,
there is appropriated from the revenues generated by taxes paid
under
subsection (2) (3) the sum of $1,500,000.00 to the department
of treasury for internal administration of the amnesty program
created
by the amendatory act that added amended this subsection or
for other enhanced tax compliance efforts. This appropriation is
allotted
for expenditure on and after October 1,
2001 2010.
Only
general
purpose revenue generated by the amendatory act that added
amended this subsection may be used to finance this appropriation.
(8) Consistent with sound collection purposes and to maximize
the effectiveness and gross collections of this tax amnesty
program, the department of treasury shall, after the effective date
of the amendatory act which added this subsection, issue a request
for proposals and select via a competitive bid process an eligible
collection agency to collect all debt eligible for amnesty and to
provide supplemental administration for the amnesty program created
by subsection (3). The request for proposals to be issued by the
department of treasury shall require that the eligible collection
agency which is selected via a competitive bidding process will
collect all debt eligible for amnesty on a contingency fee basis
which incentivizes performance that inures to the fiduciary
interests of the taxpayers of this state. The department of
treasury shall do all of the following:
(a) Expend the funds necessary for purposes of contracting and
employing personnel for the collection of delinquent state taxes
and other debts that the department of treasury has undertaken to
collect.
(b) Enter into agreements with third parties to publicly
advertise, collect eligible taxes, and supplement the
administration of this section under which contingency and other
fees may be payable to third parties.
(c) Make payments authorized by this subsection to third
parties from payments received by taxpayers under this section.
The competitive selection and award of a contract to an eligible
collection agency as required by this subsection shall be completed
no later than 120 days before the first day of amnesty period
authorized by subsection (3). As used in this subsection, an
"eligible collection agency" means a third-party collection agency
which has contracted for and performed tax amnesty collection
services on behalf of another state within the 5 years immediately
preceding the amendatory act which added this subsection, which has
not previously attempted to collect any of the taxpayer debt for
which amnesty is being sought, and which shall provide collection
and supplemental administration services at a location in this
state within 100 miles of Lansing from a facility located in a
metropolitan statistical area in which the 2009 annual average
unemployment rate exceeded the 2009 annual average unemployment
rate for the state of Michigan as determined by the United States
department of labor bureau of labor statistics.
(9) (7)
The state treasurer shall not waive
criminal and civil
penalties applicable to a tax under subsection (2) if 1 or more of
the following circumstances apply:
(a) If the taxpayer is eligible to enter into a voluntary
disclosure agreement under section 30c for that tax.
(b) If the tax is attributable to income derived from a
criminal act, if the taxpayer is under criminal investigation or
involved in a civil action or criminal prosecution for that tax, or
if the taxpayer has been convicted of a felony under this act or
the internal revenue code of 1986.
(10) (8)
The department shall provide
reasonable notice to
taxpayers that may be eligible for the amnesty program at least 30
days before the start of the designated amnesty period.
Notification shall include, but is not limited to, a description of
the amnesty program on appropriate tax instruction forms and on the
internet.
(11) (9)
Under the amnesty program described
in subsection
(2), a taxpayer may pay tax and interest due in installments if the
taxpayer meets 1 of the following:
(a) The taxpayer is an individual and submits the greater of
$10,000.00 or 50% of the tax and interest due with the request for
waiver
under subsection (2) (3) and pays the remaining tax and
interest
due in 2 equal installments, the first installment due no
later
than August 15, 2002 and the second installment due no later
than
September 15, 2002 within
90 days immediately following the
last day of the amnesty period authorized under subsection (3).
(b) A taxpayer that is not an individual submits the greater
of $100,000.00 or 50% of the tax and interest due with the request
for
waiver under subsection (2) (3)
and pays the remaining tax and
interest
due in 2 equal installments, the first installment due no
later
than August 15, 2002 and the second installment due no later
than
September 15, 2002 within
90 days immediately following the
last day of the amnesty period authorized under subsection (3).