Bill Text: MI HB5514 | 2011-2012 | 96th Legislature | Introduced

---

Bill Title: Taxation; administration; offer-in-compromise program; provide for certain tax liabilities owed. Amends secs. 25 & 28 of 1941 PA 122 (MCL 205.25 & 205.28) & adds sec. 30d.

Spectrum: Strong Partisan Bill (Democrat 11-1)

Status: (Introduced - Dead) 2012-03-28 - Printed Bill Filed 03/28/2012 [HB5514 Detail]

Download: Michigan-2011-HB5514-Introduced.html

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 5514

 

March 27, 2012, Introduced by Reps. Cavanagh, Smiley, Nathan, Townsend, Stallworth, Rutledge, Constan, Irwin, Geiss, Dillon, Gilbert and Ananich 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 sections 25 and 28 (MCL 205.25 and 205.28), section 25

 

as amended by 2002 PA 657 and section 28 as amended by 2010 PA 313,

 

and by adding section 30d.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 25. (1) The state treasurer, or an authorized

 

representative of the state treasurer, may cause a demand to be

 

made on a taxpayer for the payment of a tax, unpaid account, or

 

amount due the state or any of its departments, institutions, or

 

agencies, subject to administration under this act. If the

 

liability remains unpaid for 10 days after the demand and

 

proceedings are not taken to review the liability, the state

 

treasurer or an authorized representative of the state treasurer

 

may issue a warrant under the official seal of that office. Except

 

as provided in subsection (5), the state treasurer or an authorized

 

representative of the state treasurer, through any state officer

 

authorized to serve process or through his or her authorized

 

employees, may levy on all property and rights to property, real

 

and personal, tangible and intangible, belonging to the taxpayer or

 

on which a lien is provided by law for the amount of the

 

deficiency, and sell the real and personal property of the taxpayer

 

found within the state for the payment of the amount due, the cost

 

of executing the warrant, and the additional penalties and

 

interest. Except as provided in subsection (6), the officer or

 

agent serving the warrant shall proceed upon the warrant in all

 

respects and in the same manner as prescribed by law in respect to

 

executions issued against property upon judgments by a court of

 

record. The state, through the state treasurer or an authorized

 

representative of the state treasurer, may bid for and purchase any

 

property sold pursuant to this section.

 

     (2) A person who refuses or fails to surrender any property or

 

rights to property subject to levy, upon demand by the state

 

treasurer or an authorized representative of the state treasurer,

 

is personally liable to the state in a sum equal to the value of

 

the property or rights not surrendered, but not exceeding the

 

amount due for which the levy was made, together with costs and

 

interest on the sum at the rate provided in section 23(2) from the

 

date of the levy. Any amount, other than costs, recovered under

 

this subsection shall be credited against the liability for the

 

collection of which the levy was made.

 

     (3) In addition to the personal liability imposed by

 

subsection (2), if a person required to surrender property or

 

rights to property fails or refuses to surrender the property or

 

rights to property without reasonable cause, the person shall be

 

liable for a penalty equal to 50% of the amount recoverable under

 

subsection (2), none of which penalty shall be credited against the

 

liability for the collection of which the levy was made.

 

     (4) A person in possession of, or obligated with respect to,

 

property or property rights subject to levy and upon which a levy

 

has been made who, upon demand of the state treasurer or an

 

authorized representative of the state treasurer, surrenders the

 

property or rights to property or discharges the obligation to the

 

state treasurer or an authorized representative of the state

 

treasurer or who pays a liability under subsection (1) shall have

 

his or her obligation to a person delinquent in payment of a tax or

 

other account reduced in an amount equal to the property or rights

 

to property surrendered or amounts paid to the state.

 

     (5) There shall be exempt from levy under this section:

 

     (a) For an unpaid tax, the type of property and the amount of

 

that property as provided in section 6334 of the internal revenue

 

code of 1986.

 

     (b) For an unpaid account, or amount due the state or any of

 

its departments other than an unpaid tax, disposable earnings to

 

the extent provided in section 303 of title III of the consumer

 

credit protection act, 82 Stat. 163, 15 U.S.C. USC 1673.

 

     (c) The effect of a levy on salary or wages shall be

 

continuous from the date the levy is first made until the liability

 

out of which the levy arose is satisfied.

 

     (6) A warrant-notice of levy may be served by certified mail,

 

return receipt requested, on any person in possession of, or

 

obligated with respect to, property and rights to property, real

 

and personal, tangible and intangible, belonging to the taxpayer or

 

on which a lien is provided by law. The date of delivery on the

 

receipt shall be the date the levy is made. A person may, upon

 

written notice to the state treasurer, have all notices of levy by

 

mail sent to 1 designated office.

 

     (7) A levy under this section shall not be made on the

 

property of any taxpayer with respect to any unpaid tax under the

 

income tax act of 1967, 1967 PA 281, MCL 206.1 to 206.713, during

 

the period that an offer-in-compromise under section 30d is

 

pending.

 

     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 30c or 30d, 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), 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, and part 2

 

of the income tax act of 1967, 1967 PA 281, MCL 206.601 to 206.699,

 

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.

 

     Sec. 30d. (1) The department may compromise any civil or

 

criminal case arising under the income tax act of 1967, 1967 PA

 

281, MCL 206.1 to 206.713, before referring the case to the

 

attorney general for prosecution or defense. The attorney general

 

may compromise any such case after the case has been referred to

 

the attorney general for prosecution or defense.

 

     (2) The department and the attorney general may compromise a

 

civil or criminal case described in subsection (1) only if 1 of the

 

following is met:

 

     (a) If the amount of the delinquent tax, interest, and penalty

 

is $50,000.00 or less, then all of the following:

 

     (i) The taxpayer has entered into an offer of compromise with

 

the internal revenue service.

 

     (ii) The amount of the compromise with the taxpayer shall be

 

the same percentage reduction as is the taxpayer's offer of

 

compromise with the internal revenue service.

 

     (iii) The compromise is in the best interest of this state.

 

     (b) If the amount of the delinquent tax, interest, and penalty

 

is more than $50,000.00, then all of the following:

 

     (i) An amount determined by the department or attorney general

 

that is based on the taxpayer's specific circumstances.

 

     (ii) The compromise is in the best interest of this state.

 

     (3) If a compromise is made under subsection (1), the

 

department shall place on file a statement of all of the following:

 

     (a) The amount of tax assessed.

 

     (b) The amount of interest or penalty imposed on the taxpayer.

 

     (c) The amount actually paid under the terms of the

 

compromise.

 

     (4) Pursuant to the administrative procedures act of 1969,

 

1969 PA 306, MCL 24.201 to 24.328, the department shall adopt

 

guidelines for officers and employees of the department to

 

determine whether an offer-in-compromise to resolve a dispute under

 

the income tax act of 1967, 1967 PA 281, MCL 206.1 to 206.713, is

 

adequate and should be accepted.

 

     (5) The state treasurer shall establish procedures for an

 

independent administrative review of a rejection of a proposed

 

offer-in-compromise under subsection (1) before the rejection is

 

communicated to the taxpayer.