Bill Text: MI HB5991 | 2011-2012 | 96th Legislature | Introduced
Bill Title: State; escheats; auditing standards and process; modify. Amends sec. 31 of 1995 PA 29 (MCL 567.251).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-11-27 - Printed Bill Filed 11/09/2012 [HB5991 Detail]
Download: Michigan-2011-HB5991-Introduced.html
HOUSE BILL No. 5991
November 8, 2012, Introduced by Rep. Nesbitt and referred to the Committee on Tax Policy.
A bill to amend 1995 PA 29, entitled
"Uniform unclaimed property act,"
by amending section 31 (MCL 567.251), as amended by 1997 PA 195.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 31. (1) The administrator may require a person who has
not filed a report under this act or a person who the administrator
believes has filed an inactive, incomplete, or false report, to
file a verified report in a form specified by the administrator.
The report shall state whether the person is holding any unclaimed
property reportable or deliverable under this act, describe
unclaimed property not previously reported or as to which the
administrator has made inquiry, and specifically identify and state
the amounts of property that may be in issue.
(2) The administrator, at reasonable times and upon reasonable
notice, may examine the records of a person to determine whether
the person has complied with this act. The administrator may
conduct the examination even if the person believes he or she is
not in possession of any property reportable or deliverable under
this act. The administrator may contract with any other person to
conduct the examination on behalf of the administrator.
(3) If a person is treated under section 13 as the holder of
the property only insofar as the interest of the business
association in the property is concerned, the administrator,
pursuant to subsection (2), may examine the records of the person
if the administrator has given the notice required by subsection
(2) to both the person and the business association at least 90
days before the examination.
(4) Any examination performed by the administrator or his or
her duly authorized agents must be performed in accordance with the
generally accepted government auditing standards published by the
government accountability office of the United States government.
The administrator or his or her duly authorized agents may
determine the liability based upon the facts contained in the
report being audited or other information in the administrator's
possession.
(5) The administrator or his or her duly authorized agents may
determine the liability based upon a reasonable statistical sample
or other sampling techniques consistent with generally accepted
government auditing standards in examining reports or records only
when the person being examined does not have complete records of
transactions or when the person being examined has adequate records
of transactions and both parties have agreed in writing to the use
such statistical sample or other sampling technique. However,
unless the administrator or his or her duly authorized agents have
documented reason to believe that any records maintained or reports
filed are inaccurate or incomplete, if the person being examined
has filed all the required reports and has maintained and preserved
adequate records, then all the following apply to the examination:
(a) The examination shall include a review of the person's
books and records.
(b) The examination shall not be based on a determination on
any indirect audit procedure.
(c) The examination shall not extrapolate a determination
based on any indirect audit procedure.
(6) When using an indirect audit procedure to support
examination determinations, both the credibility of the evidence
and the reasonableness of the conclusion must be evaluated before
the determination of tax liability is made. In addition, when using
an indirect audit procedure, the administrator and his or her duly
authorized agents shall follow the following guidelines:
(a) The administrator and his or her duly authorized agents
may use any method to establish the examination determination.
(b) The administrator and his or her duly authorized agents
may not be arbitrary in the use of the authority described in this
section.
(c) The administrator and his or her duly authorized agents
may use an indirect method to test the accuracy of the taxpayer's
books and records.
(d) The administrator and his or her duly authorized agents
shall investigate all reasonable evidence presented by the taxpayer
refuting the computation.
(e) The administrator and his or her duly authorized agents
may use third-party records in the determination.
(7) A person being examined by an indirect audit procedure may
challenge the accuracy of any method or test used by providing
clear and convincing evidence that the method or test is erroneous,
lacks a rational basis, or produces a different result when the
complete records are considered.
(8) (4)
If an examination of the records of
a person results
in the disclosure of property reportable and deliverable under this
act, the administrator may assess the cost of the examination
against the holder at the rate of $50.00 a day for each examiner;
however, the charges shall not exceed the value of the property
found to be reportable and deliverable. The cost of examination
made pursuant to subsection (3) shall be imposed only against the
business association.
(9) (5)
If a holder fails after the
effective date of this act
to maintain the records required by section 32 and the records of
the holder available for the periods subject to this act are
insufficient to permit the preparation of a report, the
administrator may require the holder to report and pay an amount as
may reasonably be estimated from any available records.
(10) As used in this section:
(a) "Circumstantial evidence" is evidence from which more than
1 logical conclusion can be reached.
(b) "Indirect audit procedure" is an audit method that
involves the use of circumstantial evidence, including activity
from periods that accurate and complete records are available, to
determine any unclaimed property reportable or deliverable under
this act.
