Michigan – Bill to Amend Voluntary Disclosure Agreements

SALT Report 3069 – The Michigan State Legislature passed a Bill that, if enacted, would revise the voluntary disclosure agreement available for certain business taxes. Currently, the VDA only applies to business taxes levied under the Single Business Tax Act or the Michigan Business Tax Act.  However, House Bill 4856 would amend MCL 205.30c to require the following:

  • Include Corporate Income Taxes among the taxes covered by a VDA
  • Create a combined 48-month look-back period for the Single Business Tax, the Michigan Business Tax, and the Corporate Income Tax, and
  • Require the refund of taxes to a taxpayer who enters into a VDA after October 1, 2012, and before May 1, 2013, if the total look-back period under that agreement exceeds the combined 48-month period limit

To be eligible for a VDA, the taxpayer must meet one or both of the following criteria:

  • Have a filing requirement under nexus standards issued by the Department after December 31, 1997, or
  • Have a reasonable basis to contest liability for a tax or fee administered under the Act

Taxpayers who enter into a VDA with the State Treasurer must agree to pay all taxes due for each tax covered by the VDA and for the specified look-back period. If the taxpayer successfully meets the VDA requirements, the Department will not assess any additional tax, delinquency for a tax, penalty, or interest covered by the VDA for any taxable periods prior to the look-back period.

This Bill was passed by both the House and the Senate, and on October 3, 2013 was ordered for a third reading.

For Further Information

Michigan State Legislature – House Bill 4586