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Showing 13 posts from 2012.

Tribunal Holds that Bankruptcy Does Not Discharge Officer's Personal Liability for Unpaid Taxes

Certain officers may be personally liable for the unpaid taxes of a Michigan business.  MCL 205.27a(5) imposes personal liability on those officers with tax paying responsibilities if a business fails to file a return or pay a tax due. As a general matter, an officer has "tax paying responsibilities" if he signs returns, files returns, or has the power to direct others to file returns or pay taxes. Read More ›

Categories: Corporate Income Tax

Arrow Energy v. Department of Treasury - Tax Tribunal Weighs In On Oil & Gas Issues

Foster Swift successfully reverses a $500,000 use tax assessment in Arrow Energy Services, Inc. v. Department of Treasury (MTT No: 404349).

Facts of Case

In 2008, the Department of Treasury audited Arrow Energy for use tax compliance.  Arrow Energy is an oil and gas servicing company.  During the period of the audit, Arrow Energy was primarily engaged in turnkey operations whereby Arrow Energy utilized subcontractors to construct production-ready natural gas wells for third parties. Read More ›

Categories: Use Tax

New Law Clarifies Withholding Requirements for Flow-Through Entities

Tax withholding requirements in Michigan are set forth in MCL 206.703.  Every Michigan employer that is required to withhold federal income tax under the Internal Revenue Code is also required to register and withhold Michigan income taxes.  Effective January 1, 2012, companies that pay pension and retirement benefits are also required to withhold Michigan income taxes on those payments to retirees. The withholding rate is generally 4.35%. Read More ›

Categories: Income Tax

Treasury Form 4913 for Quarterly Corporate Income Tax Payments

The Corporate Income Tax (“CIT”) took effect on January 1, 2012 and replaced the Michigan Business Tax (“MBT”) for most taxpayers, except those electing to continue the MBT to claim certain credits.  The CIT consists of a franchise tax for financial institutions, a premium tax for insurance companies, and a flat 6% income tax for C Corporations and entities taxed as C Corporations for federal income tax purposes. As discussed in prior blog postings, the CIT does not apply to pass-through entities, such as LLCs or partnerships. Read More ›

Categories: Corporate Income Tax, Income Tax

Court of Appeals Clarifies Agricultural Exemption to the Use Tax

The Michigan Use Tax Act has several notable exemptions, one of which is the agricultural exemption.  The agricultural use tax exemption covers “[p]roperty sold to a person engaged in a business enterprise and using and consuming the property . . . in the breeding, raising, or caring for livestock, poultry, or horticultural products.”  MCL § 205.94(1)(f).  This establishes two requirements for the use tax exemption: Read More ›

Categories: Use Tax

10 Year Use Tax Audit Narrowed

Important!If your business is currently undergoing a use tax audit, then take notice.

The statute of limitations for use tax audits is set forth in the Revenue Act.  Specifically, MCL 205.27a states that: Read More ›

Categories: Use Tax

Navigating the Audit Appeal Process

Navigating the Audit Appeal ProcessEvery year, the Michigan Department of Treasury audits Michigan businesses for compliance with the Sales and Use tax laws. Oftentimes, those audits result in tax assessments that are disputed by the taxpayer. But, how does a taxpayer navigate the audit process and challenge a tax assessment?

Let’s take a look at the basics. Read More ›

Categories: Sales Tax, Use Tax

Tug Boat Case Clarifies Bounds of Use Tax

Picture of tugboatSuppose you visit your local electronics store and purchase a new TV.  You pay for the TV, but notice that the retailer did not charge sales tax.  Are you now liable for use tax?

The answer is “no” according to a recent Court of Appeals ruling. Andrie, Inc. v. Department of Treasury.  But, let’s look at the details. Read More ›

Categories: Sales Tax, Use Tax

Proposed Legislation Would Eliminate Personal Property Taxes For Most Michigan Businesses

The personal property tax (“PPT”) is one of Michigan’s oldest forms of taxation, dating back to the 1890s. However, during the last decade, the PPT has been a constant source of contention.  Advocates include local governments, which argue that the PPT is a vital source of revenue.  Opponents include many businesses, which contend that the PPT is a competitive disadvantage and impediment to attracting and retaining businesses in Michigan. Read More ›

Categories: Personal Property Tax

Revamp of Michigan Individual Income Tax Landscape

In 2011, Governor Rick Snyder signed into law Public Acts 38 and 39 of 2011 (the “Act”), which make sweeping changes to Michigan’s business and individual tax landscape.

Relevant to individuals, the Act makes many changes, including taxing income from pensions and other types of retirement plans.  This article summarizes the changes applicable to individuals. Read More ›

Categories: Income Tax