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Update: Michigan Offer in Compromise

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A New Opportunity for Tax Debt Relief to State of Michigan Taxpayers

On July 27, 2014, Michigan Governor Rick Snyder signed into law legislation which–for the first time–will allow the Michigan Department of Treasury to accept Offers in Compromise from delinquent tax payers.

The new Michigan Offer in Compromise law goes into effect on January 1, 2015 and will allow taxpayers to compromise taxes owed to the State of Michigan if they qualify by one of the three ways:

  • Doubt as to Liability
  • Doubt as to Collectability
  • A federal offer has been granted for the same tax years

 

Doubt as to Collectibility will be an option for those taxpayers who are unable to full pay the amounts owed due to low income and insufficient assets.

Doubt as to Liability will be an option for those taxpayers who do not owe when the State has done estimated assessments.

In the case of an accepted federal Offer in Compromise, the State will apply the same percentage of settlement received in the federal offer to the taxes owed to the State for the same tax years.

The Michigan Department of Treasury has 180 days from the date the law was signed to establish guidelines and procedures for submitting and processing the offers. Where appropriate, the guidelines shall be modeled after the IRS’s Offer in Compromise program.

The State of Michigan will be required to report statistics on the new program in order to track its success.

Pursuant to the new law, once an Offer in Compromise is submitted to the Michigan Department of Treasury, the State will generally not issue a Levy against you while the Offer is pending.

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