In what was beginning to seem like an unlikely event, the Michigan Legislature finally passed a nearly year-old bill that will allow for a limited amnesty period, from May 15, 2011, to June 30, 2011. While the Senate passed the original amnesty bill in 2009, there was no further movement of the bill until September 2010, when the House and Senate finally agreed that the bill could help close Michigan’s $484 million budget gap—without raising taxes. Governor Jennifer Granholm approved Senate Bill 884 on October 5. The amnesty program is projected to bring in $61.8 million of additional revenue.

Unlike other recent amnesty programs, Michigan’s program is relatively simple. Taxpayers that participate in the program will receive a waiver of all penalties (civil and criminal) for taxes paid through the program. The Bill does not state whether taxpayers will be required to waive their right to seek a refund of liabilities paid under the program. Nor does it indicate whether post-amnesty penalties will apply to taxpayers who do not participate in the program. In order to qualify for Michigan’s amnesty program, taxpayers must file a written request for a waiver on a form provided by the Department, and meet the following requirements:

  • Have an outstanding Michigan tax liability (except for taxes due after the close of the 2009 calendar year). The Bill does not specify the types of taxes eligible for the amnesty program;
  • File any unfiled or amended returns; and
  • Pay all outstanding tax and interest.

Additionally, some taxpayers are ineligible to participate, such as:

  • Those eligible to enter into a voluntary disclosure agreement under § 30c for the tax at issue.  Under § 205.30c of Act 122 of 1941, a non-filer who either: (1) has a filing responsibility under nexus standards issued by the department after December 31, 1997; or (2) has a reasonable basis to contest liability, as determined by the state treasurer, for a tax or fee, is eligible to enter into a voluntary disclosure agreement.
  • Those whose tax is attributable to income derived from a criminal act, if the taxpayer is under criminal investigation or involved in a civil action or criminal prosecution for that tax, or if the taxpayer has been convicted of a felony under this act (Act 198 of 2010) or the Internal Revenue Code of 1986.

The Department of Treasury is expected to provide further details on Michigan’s amnesty program as the amnesty period approaches. In addition, the Department is required to provide “reasonable notice” to taxpayers who might be eligible to participate in the program at least 30 days prior to the start of the amnesty period. Thus, as 2011 moves into full swing, taxpayers with outstanding Michigan tax liabilities may be receiving notice of their eligibility to participate in the amnesty program.