Bill Text: MI HB5990 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Taxation; administration; performance of certain audits; modify procedures. Amends sec. 21 of 1941 PA 122 (MCL 205.21).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-11-27 - Printed Bill Filed 11/09/2012 [HB5990 Detail]
Download: Michigan-2011-HB5990-Introduced.html
HOUSE BILL No. 5990
November 8, 2012, Introduced by Rep. Nesbitt 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 section 21 (MCL 205.21), as amended by 2006 PA 11.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 21. (1) If a taxpayer fails or refuses to make a return
or payment as required, in whole or in part, or if the department
has reason to believe that a return made or payment does not supply
sufficient information for an accurate determination of the amount
of tax due, the department may obtain information on which to base
an assessment of the tax. By its duly authorized agents, the
department may examine the books, records, and papers and audit the
accounts of a person or any other records pertaining to the tax. A
person who has been audited by the department or its agent or a
person whose books, records, and papers have been examined by the
department shall be provided a complete copy in printed or
electronic format of the complete audit work papers, the audit
report findings, plus all correspondence and documentation which
formed a basis for any and all audit determinations. Any audit
performed by the department or its duly authorized agents under
section 3(a) shall be performed in accordance with the generally
accepted government auditing standards published by the government
accountability office of the United States government. Any sampling
used in the performance of an audit shall be done in accordance
with the American institute of certified public accountants' audit
guide, audit sampling.
(2) In carrying out this section, the department and the
taxpayer shall comply with the following procedure:
(a) The department shall send to the taxpayer a letter of
inquiry stating, in a courteous and nonintimidating manner, the
department's opinion that the taxpayer needs to furnish further
information or owes taxes to the state, and the reason for that
opinion. A letter of inquiry shall also explain the procedure by
which the person may initiate communication with the department to
resolve any dispute. This subdivision does not apply in any of the
following circumstances:
(i) The taxpayer files a return showing a tax due and fails to
pay that tax.
(ii) The deficiency resulted from an audit of the taxpayer's
books and records by this state.
(iii) The taxpayer otherwise affirmatively admits that a tax is
due and owing.
(b) If the dispute is not resolved within 30 days after the
department sends the taxpayer a letter of inquiry or if a letter of
inquiry is not required pursuant to subdivision (a), the
department, after determining the amount of tax due from a
taxpayer, shall give notice to the taxpayer of its intent to assess
the tax. The notice shall include the amount of the tax the
department believes the taxpayer owes, the reason for that
deficiency, and a statement advising the taxpayer of a right to an
informal conference, the requirement of a written request by the
taxpayer for the informal conference that includes the taxpayer's
statement of the contested amounts and an explanation of the
dispute, and the 60-day time limit for that request.
(c) If the taxpayer serves written notice upon the department
within 60 days after the taxpayer receives a notice of intent to
assess, remits the uncontested portion of the liability, and
provides a statement of the contested amounts and an explanation of
the dispute, the taxpayer is entitled to an informal conference on
the question of liability for the assessment.
(d) Upon receipt of a taxpayer's written notice, the
department shall set a mutually agreed upon or reasonable time and
place for the informal conference and shall give the taxpayer
reasonable written notice not less than 20 days before the informal
conference. The notice shall specify the intent to assess, type of
tax, and tax year that is the subject of the informal conference.
The informal conference provided for by this subdivision is not
subject to the administrative procedures act of 1969, 1969 PA 306,
MCL 24.201 to 24.328, but is subject to the rules governing
informal conferences as promulgated by the department in accordance
with the administrative procedures act of 1969, 1969 PA 306, MCL
24.201 to 24.328. The taxpayer may appear or be represented by any
person before the department at an informal conference, and may
present testimony and argument. At the party's own expense and with
advance notice to the other party, a taxpayer or the department, or
both, may make an audio recording of an informal conference. A
taxpayer who has made a timely request for an informal conference
may at any time withdraw that request by filing written notice with
the department. Upon receipt of the request for withdrawal from the
informal conference process, the department shall issue a decision
and order of determination and, where appropriate, a final
assessment, from which a taxpayer may seek an appeal as provided
under section 22.
(e) After the informal conference, the department shall render
a decision and order in writing, setting forth the reasons and
authority, and shall assess the tax, interest, and penalty found to
be due and payable. The decision and order are limited to the
subject of the informal conference as included in the notice under
subdivision (d).
(f) If the taxpayer does not protest the notice of intent to
assess within the time provided in subdivision (c), the department
may assess the tax and the interest and penalty on the tax that the
department believes are due and payable. An assessment under this
subdivision or subdivision (e) is final and subject to appeal as
provided in section 22. The final notice of assessment shall
include a statement advising the person of a right to appeal.
(3) If as a result of an audit it is determined that a
taxpayer is owed a refund, the department shall send a notice to
the taxpayer stating the amount of the refund the department
believes is owed to the taxpayer as a result of the audit. The
notice shall inform the taxpayer of his or her appeal rights. If
the taxpayer disputes the findings of the audit, the taxpayer may
serve written notice upon the department in the same manner as
provided for in subsection (2)(c) and the taxpayer is entitled to
the same informal conference and subsequent appeals as provided for
in this section.
(4) If a protest to the notice of intent to assess the tax is
determined by the department to be a frivolous protest or a desire
by the taxpayer to delay or impede the administration of taxes
administered under this act, a penalty of $25.00 or 25% of the
amount of tax under protest, whichever is greater, shall be added
to the tax.
(5) During the course of the informal conference under
subsection (2)(d), the taxpayer by written notice may convert his
or her contest of the assessment to a claim for a refund. The
written notice shall be accompanied by payment of the contested
amount. The informal conference shall continue and the department
shall render a decision and issue an order regarding the claim for
refund.
