Michigan Sales Tax Enforcement Actions Checklist

Michigan Attorney General for legal action.

What This Does Not Mean

Receiving a sales tax enforcement action does not automatically mean criminal charges for tax evasion or tax fraud will be filed against you. It does not mean your business license will be immediately revoked, though revocation remains a possible consequence if you fail to address the enforcement action. It does not mean the state has exhausted all collection options, as enforcement follows a legal sequence that allows opportunities to respond before liens, bank levies, or license revocation occur. An enforcement action is a legal notice of tax debt and required compliance under state and local tax law.

Step-by-Step Checklist

1. Step 1: Review the Entire Notice Immediately

   Read the complete enforcement notice to identify the specific issue, tax period involved, amount claimed, and deadline stated. Verify that your company name, tax identification number, and address appear correctly on the notice to confirm that it properly addresses your business under

   Michigan sales tax requirements.

2. Step 2: Gather Your Sales Tax Records

   Collect all Michigan sales tax returns, including Form 5080, payment records, and correspondence with the Michigan Department of Treasury covering the period mentioned in the notice. Locate bank statements, accounting records, and sales documentation that support your compliance or may dispute the assessment amount claimed by the state.

3. Step 3: Verify Your Registration Status

   Check whether your business currently holds a valid Michigan seller’s permit registration by visiting Michigan Treasury Online or contacting the Sales Tax Section. If the notice involves non-registration, determine when your business began Michigan operations and whether sales tax nexus was established, requiring collection at that time.

4. Step 4: Calculate the Amount You Owe

   Review the tax amount, penalties, and interest shown in the notice and compare these figures with your own records maintained per record retention requirements. Note any discrepancies between what the notice claims you owe and what your documentation shows to determine whether you agree with the state assessment.

5. Step 5: Identify the Response Deadline

   Locate the specific response deadline printed in the notice, as different enforcement actions have different timeframes under Michigan law and statute of limitations provisions. After receiving a Final Bill for Taxes Due, you have thirty-five days before the state may file a lien, while levy notices provide at least ten days' advance notice.

6. Step 6: Contact the Michigan Department of Treasury

   Call the Collections Service Center at the phone number provided in your notice or visit

   Michigan Treasury Online for guidance. Explain that you received an enforcement action, ask for verification of the amount owed, inquire about payment plan availability, and request written confirmation of information provided by phone.

7. Step 7: Request a Hearing if You Dispute the Assessment

   If you dispute the enforcement action, submit a written request for a hearing or administrative review by the stated deadline if the notice provides this option. Include a brief explanation of your dispute and copies of supporting documentation, and send your request to the specified address by certified mail with return receipt requested.

8. Step 8: Explore Payment Plan Options

   If you cannot pay the full amount immediately, ask the Collections Service Center whether a

   Form 990 Installment Agreement is available for your situation. Understand the payment plan terms, including duration, monthly payment amount, and whether penalties and interest continue accruing during the plan, before committing to any payment arrangement.

9. Step 9: Submit Your Written Response

   Prepare a written response including your business name, sales tax identification number, tax period in question, and a clear explanation of your position. Attach photocopies of supporting documentation, such as return copies, payment records, or accounting statements, and mail your response by the deadline using certified mail for proof of delivery.

• Ignoring the enforcement notice: Ignoring the notice does not make it disappear and
• Missing response deadlines: Missing the deadline stated in your notice may result in
• Submitting incomplete documentation: Providing unclear or incomplete information
• Communicating only by phone: Phone conversations leave no official record of
• Sending original documents to the state leaves you without backup if records are lost or
• State tax notice review and response
• Penalty and interest reduction options
• Payroll and trust fund tax assistance
• Payment plan and relief eligibility review
• Representation with state tax agencies

10. Step 10: Document All Actions Taken

    Create a file containing copies of the enforcement notice, all correspondence, payment records, hearing requests, and documentation submitted to the state. Note dates of phone calls, names of representatives spoken with, and information provided, keeping this documentation until the matter resolves completely and any tax debt is satisfied fully.

    Common Mistakes to Avoid results in escalated collection actions, including liens, bank levy, and license revocation, authorized under Michigan law. Always respond by the stated deadline to protect your rights and avoid additional penalties. forfeiture of your right to contest the assessment and accelerated collection activity.

    Calendar the deadline immediately upon receiving any enforcement notice from the

    Michigan Department of Treasury. weakens your position if you dispute the assessment and delays resolution of your case.

    Always include clear explanations, complete documentation, and specific references to the tax periods and amounts in question. agreements, disputes, or commitments made during the call. Always follow up phone conversations with written documentation sent via certified mail to create an official

    record for future reference. additional proof becomes necessary later. Always submit photocopies only and retain all original documents in your permanent business tax files per record retention standards.

    Relief Options and Professional Assistance

    Penalty Abatement and Waivers

    Michigan law allows penalty abatement if you can demonstrate reasonable cause for non-compliance under Michigan Admin. Code R. 205.1013 and Revenue Administrative Bulletin

    2022-24. Reasonable cause includes serious illness or death, fire or natural disaster, or criminal acts against you requiring documented proof. Penalty waivers must be requested in writing to the Michigan Department of Treasury with supporting documentation attached explaining the circumstances beyond your control.

    Michigan Voluntary Disclosure Program

    Businesses that failed to register or file Michigan sales tax returns may qualify for the Michigan

    Voluntary Disclosure Program, which allows voluntary disclosure of past tax liabilities before state auditors discover the non-compliance. This program can provide relief from certain penalties and limit look-back periods for back returns. Contact the Michigan Department of

    Treasury to discuss confidential initial contact and compliance setup options available through voluntary disclosure.

    When to Consult a Tax Attorney

    Consider consulting a tax attorney or tax defense attorney if you face complex legal issues, including potential tax fraud allegations, criminal tax investigation concerns, or corporate officer liability under MCL 205.27a(5). A tax attorney can represent you during tax audit proceedings, negotiate Offer In Compromise arrangements, request penalty abatement, or represent you before the Hearings Division and Hearing Referees in administrative forum proceedings.

    Understanding Related Tax Obligations

    Use Tax and Economic Nexus

    Michigan requires businesses to collect use tax on taxable items when sales tax was not collected, including purchases made out of state for use in Michigan. Remote sellers and marketplace facilitators must register once economic nexus thresholds are met, following the

    Wayfair decision establishing sales tax nexus based on sales volume or transaction count.

    Understanding destination-based sourcing rules and marketplace facilitator obligations prevents future enforcement actions.

    Statute of Limitations for Collections

    The Michigan Department of Treasury has six years from the date of assessment to collect unpaid state taxes under MCL 600.5813 and Revenue Administrative Bulletin 1989-37.

    However, the statute of limitations for assessment is four years from the return due date or filing date under MCL 205.27a(2). Tax liens filed under MCL 205.29 remain valid for seven years from the attachment date and may be extended another seven years if refiled within six months before expiration.

    Received a State Tax Notice?

    If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.

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