Michigan Tax Problems

The tax assessment process starts with a taxpayer filing a tax return.  If the taxpayer does not file a tax return, the state of Michigan can still assess you a tax.  The tax return constitutes a "self assessment" of tax.  If the state of Michigan accepts your tax return as filed, then this becomes the state of Michigan's tax assessment.  A taxpayer has four years from the date the original tax return was due to file a tax return or file an amended tax return. Taxpayers have an ongoing obligation under the law to file an amended tax return if they discover that their original tax return was wrong.

The Michigan Department of Treasury may generally audit a taxpayer's return up to four years after it is filed. The Department may audit a taxpayer if they suspect problems with their tax return.  The problems may include:

• Dispute over amount of income;
• Dispute over qualifying for a specific credit, deduction, or exemption; or
• Dispute over whether the taxpayer owes a penalty.

Michigan's Audit Process

For most individuals and families, Michigan's audits are conducted via written letters.  If there is a question about your tax return, you will typically receive a letter from the Discovery Unit that requests more information.  In other cases, you may receive a letter that tells you they are adjusting one or more items on your tax return.  You are usually asked to respond to the notice with supplemental information to resolve the matter.  Here are some examples:

• The state of Michigan receives data from the IRS that shows you had more income than you reported on your state of Michigan tax return. They will send you a notice requesting information about this income.
• If you claimed a Homestead Property Tax Credit or Home Heating Credit and Treasury suspects your household income is higher than you reported on your tax return.  They will send a notice requesting information about the other income you receive or about other income earners that live with you. 

If you are involved in an audit with the Michigan Department of Treasury, you should read their publication on Taxpayer's Rights During an Audit.

Michigan Assessment Process

At the conclusion of their audit, they will send you a notice that they either agree with your claim (which often just involves sending you a refund or canceling a previous tax bill), or they will issue a Bill for Taxes Due (Intent to Assess).

The Bill for Taxes Due (Intent to Assess), gives you 60 days to request an informal conference with the Michigan Department of Treasury.  If timely request the hearing and it is granted, you should be able to have a phone conference with a Treasury employee within about six months.  They will then issue a decision on whether you prevail.  If you do not prevail, or if the decision results in additional tax/interest/penalty due, then they will issue a Bill for Taxes Due (Final Assessment).  

The Bill for Taxes Due (Final Assessment), gives you 60 days to appeal to the Michigan Tax Tribunal or 90 days to appeal to the Michigan Court of Claims.  Either way, you must first pay the undisputed amount of tax before you can appeal the disputed amount.  If you do not appeal by the deadline, then the assessment becomes final and there is no recourse to further question the taxes.  At this point, you now have a Michigan collections issue.

If you are having issues communicating with the Michigan Department of Treasury, contact the Michigan Taxpayer Advocate (for Michigan tax issues only).

This page explored how to resolve an assessment problem with the Michigan Department of Treasury.  If you believe you have a collections problem, see our page on Michigan Tax Collections for additional help.