HB-4003, As Passed Senate, June 11, 2014

 

 

 

 

 

 

 

 

 

 

 

 

SENATE SUBSTITUTE FOR

 

HOUSE BILL NO. 4003

 

 

 

 

 

 

 

 

 

 

 

 

     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 28 (MCL 205.28), as amended by 2010 PA 313, and

 

by adding section 23a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:


 

     Sec. 23a. (1) Beginning January 1, 2015, the state treasurer,

 

or an authorized representative of the state treasurer, may

 

compromise all or any part of any payment of a tax subject to

 

administration under this act including any related penalties and

 

interest if 1 or more of the following grounds exist:

 

     (a) A doubt exists as to liability if the department

 

concludes, based on evidence provided by the taxpayer, that the

 

taxpayer would have prevailed in a contested case if the taxpayer's

 

appeal rights had not expired.

 

     (b) A doubt exists as to collectability if the taxpayer

 

establishes both of the following:

 

     (i) The amount offered in payment is the most that can be

 

expected to be paid or collected from the taxpayer's present assets

 

or income.

 

     (ii) The taxpayer does not have reasonable prospects of

 

acquiring increased income or assets that would enable the taxpayer

 

to satisfy a greater amount of the liability than the amount

 

offered, within a reasonable period of time.

 

     (c) A federal compromise of tax under section 7122 of the

 

internal revenue code has been granted for the same tax years. If

 

an offer to compromise a tax under part 1 or part 2 of the income

 

tax act of 1967, 1967 PA 281, MCL 206.1 to 206.699, is accepted

 

pursuant to this subdivision, the state treasurer, or an authorized

 

representative of the state treasurer, may compromise the

 

outstanding balance of the liability for each year by applying the

 

same percentage as the federal liability compromised to the total

 

liability.


 

     (2) If the state treasurer, or an authorized representative of

 

the state treasurer, compromises all or any part of any payment of

 

a tax as authorized under this section, he or she shall place on

 

file in the office of the state treasurer and publish on the

 

department of treasury's website a written report outlining the

 

basis for the compromise and, at a minimum, a statement of each of

 

the following:

 

     (a) The amount of tax assessed.

 

     (b) The amount of interest or assessable penalty imposed by

 

law on the person against whom the tax is assessed.

 

     (c) The terms of the compromise and the amount actually paid

 

in accordance with the terms of the compromise.

 

     (d) The grounds for the compromise.

 

     (3) A compromise under this section is subject to continuing

 

review by the state treasurer. The department may revoke any

 

compromise made under this section, may reestablish all compromised

 

liabilities, without regard to any statute of limitations that

 

otherwise may be applicable, and shall not refund any portion of

 

the amount offered in compromise, if either of the following

 

occurs:

 

     (a) The state treasurer, or an authorized representative of

 

the state treasurer, reasonably determines that the person

 

receiving the compromise concealed from the department any property

 

belonging to the taxpayer, the estate of a taxpayer, or any other

 

person liable for the tax or, with the intent to mislead, withheld,

 

destroyed, mutilated, or falsified any book, document, or record or

 

made any false statement, relating to the estate or financial


 

condition of the taxpayer or other person liable for the tax to

 

induce the compromise.

 

     (b) The taxpayer fails to comply with any of the terms and

 

conditions relative to the offer or to file subsequent required

 

returns and pay subsequent final tax liabilities within 20 days

 

after the department issues a notice and demand to the person

 

stating that the continued failure to file or pay the tax may

 

result in the revocation of the compromise made under this section.

 

     (4) Within 180 days after the effective date of the amendatory

 

act that added this section, the state treasurer shall do all of

 

the following:

 

     (a) Establish guidelines for the offer-in-compromise program

 

authorized under this section. If appropriate, the guidelines shall

 

be modeled after those guidelines published by the internal revenue

 

service of the United States department of treasury in regards to

 

the federal offer-in-compromise program established under section

 

7122 of the internal revenue code.

 

     (b) Establish guidelines for officers and employees within the

 

department to use when making decisions on whether an offer-in-

 

compromise is appropriate.

 

     (c) Establish procedures for an independent administrative

 

review within the department of any rejection of a proposed offer-

 

in-compromise made by the taxpayer. In order to initiate a review

 

under this subdivision, the taxpayer shall make a written request

 

on a form prescribed by the department within 30 days after the

 

department issues the rejection. If appropriate, the independent

 

administrative review procedures shall be modeled after the


 

guidelines published by the internal revenue service for the

 

federal offer-in-compromise program established under section 7122

 

of the internal revenue code.

 

     (5) The department shall disclose return information to

 

members of the general public to the extent necessary to permit

 

inspection of any accepted offer-in-compromise under this section

 

relating to the liability for a tax imposed by this state.

 

     (6) Except for a revocation as provided under subsection (3),

 

a tax that was compromised is not subject to additional assessment

 

or collection unless the compromised tax is modified or adjusted as

 

a result of information received from the internal revenue service

 

or as a result of an audit performed by this state or on behalf of

 

this state. Except as to any additional assessment imposed as

 

provided under this subsection, a taxpayer shall not request an

 

informal conference or institute tribunal or judicial proceeding

 

against the department regarding the taxpayer's tax liability or

 

the compromise.

 

     (7) The department shall not levy against property to collect

 

a liability while an offer to compromise is pending unless the

 

state treasurer, or an authorized representative of the state

 

treasurer, has determined that the taxpayer's offer to compromise

 

was intended to delay collection of the tax or the department has

 

issued a jeopardy assessment under section 26.

 

     (8) A taxpayer who submits an offer to compromise a tax,

 

penalty, or interest shall remit with its offer $100.00 or 20% of

 

the offer, whichever is greater, to the department. The amount

 

remitted with the offer shall be applied to the outstanding balance


 

of that taxpayer's liability and shall not be refunded if the offer

 

to compromise is rejected or reduced.

 

     (9) Except for the independent administrative review available

 

as provided under subsection (4)(c), a rejection of an offer to

 

compromise, in whole or in part, is final and is not subject to

 

further challenge or appeal under this act.

 

     Sec. 28. (1) The following conditions apply to all taxes

 

administered under this act unless otherwise provided for in the

 

specific tax statute:

 

     (a) Notice, if required, shall be given either by personal

 

service or by certified mail addressed to the last known address of

 

the taxpayer. Service upon the department may be made in the same

 

manner.

 

     (b) An injunction shall not issue to stay proceedings for the

 

assessment and collection of a tax.

 

     (c) In addition to the mode of collection provided in this

 

act, the department may institute an action at law in any county in

 

which the taxpayer resides or transacts business.

 

     (d) The state treasurer may request in writing information or

 

records in the possession of any other department, institution, or

 

agency of state government for the performance of duties under this

 

act. Departments, institutions, or agencies of state government

 

shall furnish the information and records upon receipt of the state

 

treasurer's request. Upon request of the state treasurer, any

 

department, institution, or agency of state government shall hold a

 

hearing under the administrative procedures act of 1969, 1969 PA

 

306, MCL 24.201 to 24.328, to consider withholding a license or


 

permit of a person for nonpayment of taxes or accounts collected

 

under this act.

 

     (e) Except as otherwise provided in section sections 23a and

 

30c, the state treasurer or an employee of the department shall not

 

compromise or reduce in any manner the taxes due to or claimed by

 

this state or unpaid accounts or amounts due to any department,

 

institution, or agency of state government. This subdivision does

 

not prevent a compromise of interest or penalties, or both.

 

     (f) Except as otherwise provided in this subdivision, or in

 

subsection (6) or (7), or in section 23a, an employee, authorized

 

representative, or former employee or authorized representative of

 

the department or anyone connected with the department shall not

 

divulge any facts or information obtained in connection with the

 

administration of a tax or information or parameters that would

 

enable a person to ascertain the audit selection or processing

 

criteria of the department for a tax administered by the

 

department. An employee or authorized representative shall not

 

willfully inspect any return or information contained in a return

 

unless it is appropriate for the proper administration of a tax law

 

administered under this act. A person may disclose information

 

described in this subdivision if the disclosure is required for the

 

proper administration of a tax law administered under this act or

 

the general property tax act, 1893 PA 206, MCL 211.1 to 211.155,

 

pursuant to a judicial order sought by an agency charged with the

 

duty of enforcing or investigating support obligations pursuant to

 

an order of a court in a domestic relations matter as that term is

 

defined in section 2 of the friend of the court act, 1982 PA 294,


 

MCL 552.502, or pursuant to a judicial order sought by an agency of

 

the federal, state, or local government charged with the

 

responsibility for the administration or enforcement of criminal

 

law for purposes of investigating or prosecuting criminal matters

 

or for federal or state grand jury proceedings or a judicial order

 

if the taxpayer's liability for a tax administered under this act

 

is to be adjudicated by the court that issued the judicial order. A

 

person required to disclose information under section 10(1)(j) of

 

the Michigan economic growth authority act, 1995 PA 24, MCL

 

207.810, may disclose the information only to the individuals

 

described in that section. A person may disclose the adjusted gross

 

receipts and the wagering tax paid by a casino licensee licensed

 

under the Michigan gaming control and revenue act, 1996 IL 1, MCL

 

432.201 to 432.226, pursuant to section 18, sections 341, 342, and

 

386 of the management and budget act, 1984 PA 431, MCL 18.1341,

 

18.1342, and 18.1386, or authorization by the executive director of

 

the gaming control board. However, the state treasurer or a person

 

designated by the state treasurer may divulge information set forth

 

or disclosed in a return or report or by an investigation or audit

 

to any department, institution, or agency of state government upon

 

receipt of a written request from a head of the department,

 

institution, or agency of state government if it is required for

 

the effective administration or enforcement of the laws of this

 

state, to a proper officer of the United States department of

 

treasury, and to a proper officer of another state reciprocating in

 

this privilege. The state treasurer may enter into reciprocal

 

agreements with other departments of state government, the United


 

States department of treasury, local governmental units within this

 

state, or taxing officials of other states for the enforcement,

 

collection, and exchange of data after ascertaining that any

 

information provided will be subject to confidentiality

 

restrictions substantially the same as the provisions of this act.

 

     (2) A person who violates subsection (1)(e), (1)(f), or (4) is

 

guilty of a felony, punishable by a fine of not more than

 

$5,000.00, or imprisonment for not more than 5 years, or both,

 

together with the costs of prosecution. In addition, if the offense

 

is committed by an employee of this state, the person shall be

 

dismissed from office or discharged from employment upon

 

conviction.

 

     (3) A person liable for any tax administered under this act

 

shall keep accurate and complete records necessary for the proper

 

determination of tax liability as required by law or rule of the

 

department.

 

     (4) A person who receives information under subsection (1)(f)

 

for the proper administration of the general property tax act, 1893

 

PA 206, MCL 211.1 to 211.155, shall not willfully disclose that

 

information for any purpose other than the administration of the

 

general property tax act, 1893 PA 206, MCL 211.1 to 211.155. A

 

person who violates this subsection is subject to the penalties

 

provided in subsection (2).

 

     (5) A person identified in section 10(1) of the Michigan

 

economic growth authority act, 1995 PA 24, MCL 207.810, who

 

receives information under section 10(1)(j) of the Michigan

 

economic growth authority act, 1995 PA 24, MCL 207.810, as


 

permitted in subsection (1)(f), shall not willfully disclose that

 

information for any purpose other than the proper administration of

 

his or her legislative duties nor disclose that information to

 

anyone other than an employee of the legislature, who is also bound

 

by the same restrictions. A person who violates this subsection is

 

responsible for and subject to a civil fine of not more than

 

$5,000.00 per violation.

 

     (6) The department shall annually prepare a report containing

 

statistics described in this subsection concerning the Michigan

 

business tax act, 2007 PA 36, MCL 208.1101 to 208.1601, for the

 

most recent tax year for which reliable return data have been

 

processed and cleared in the ordinary course of return processing

 

by the department. A copy of the report shall be provided to the

 

chairpersons of the senate and house of representatives standing

 

committees that have jurisdiction over matters relating to taxation

 

and finance, the director of the senate fiscal agency, and the

 

director of the house fiscal agency. The department shall report

 

the following information broken down by business sector and,

 

provided that no grouping consists of fewer than 10 taxpayers, by

 

firm size in compliance with subsection (1)(f) and in a manner that

 

does not result in the disclosure of information regarding any

 

specific taxpayer:

 

     (a) Apportioned business income tax base.

 

     (b) Apportioned modified gross receipts tax base.

 

     (c) Business income tax liability.

 

     (d) Use of credits.

 

     (e) Modified gross receipts tax liability.


 

     (f) Total final liability.

 

     (g) Total liability before credits.

 

     (7) A person may disclose the following information described

 

in this subsection:

 

     (a) Information required to be reported under section 455 of

 

the Michigan business tax act, 2007 PA 36, MCL 208.1455.

 

     (b) An application to enter into an agreement, a communication

 

denying an application to enter into an agreement, an agreement, a

 

postproduction certificate, a communication denying a

 

postproduction certificate, or the total amount of credits claimed

 

in a tax year under section 455 of the Michigan business tax act,

 

2007 PA 36, MCL 208.1455, notwithstanding section 455(6) of the

 

Michigan business tax act, 2007 PA 36, MCL 408.1455.

 

     (c) An application to enter into an agreement, a communication

 

denying an application to enter into an agreement, an agreement, an

 

investment expenditure certificate, a communication denying an

 

investment expenditure certificate, or the total amount of credits

 

claimed in a tax year under section 457 of the Michigan business

 

tax act, 2007 PA 36, MCL 208.1457, notwithstanding section 457(6)

 

of the Michigan business tax act, 2007 PA 36, MCL 408.1457.

 

     (d) An application to enter into an agreement, a communication

 

denying an application to enter into an agreement, an agreement, a

 

qualified job training expenditures certificate, a communication

 

denying a qualified job training expenditures certificate, or the

 

total amount of credits claimed in a tax year under section 459 of

 

the Michigan business tax act, 2007 PA 36, MCL 208.1459,

 

notwithstanding section 459(6) of the Michigan business tax act,


 

2007 PA 36, MCL 408.1459.

 

     (8) As used in subsection (1), "adjusted gross receipts" and

 

"wagering tax" mean those terms as described in the Michigan gaming

 

control and revenue act, 1996 IL 1, MCL 432.201 to 432.226.