Michigan Sales Tax License Revocation and Business
Shutdown Checklist
What This Issue Means
A sales tax license revocation means the Michigan Department of Treasury has officially terminated your business’s authorization to collect sales tax on tangible personal property and taxable services. This differs from voluntary cancellation, which occurs when a company chooses to close and notifies the state proactively. Once revoked under Section 205.53, you cannot legally collect sales tax from customers, and continuing to operate without authorization may result in criminal misdemeanor charges under Michigan law.
Why the State Issued This Action
Michigan revokes sales tax licenses for specific compliance failures under state administrative procedures. The most common reasons include repeated failure to file returns, failure to pay the privilege tax owed, or inability to respond to compliance notices. Revocation typically occurs after the state has issued prior warnings requesting compliance. Sales tax is considered a trust fund tax, meaning businesses collect it on behalf of the state and must remit it to the appropriate tax authorities.
What Happens If This Is Ignored
If you ignore a revocation notice, the Michigan Department of Treasury will escalate tax enforcement actions through normal collection processes. These may include wage garnishment, bank levies, or Tax Liens, depending on the amount of delinquent taxes owed.
Interest and tax penalties continue accumulating on unpaid balances. The state may also pursue criminal charges, as operating without a valid sales tax permit is a misdemeanor punishable by up to one year in prison or a $1,000 fine under Michigan law.
Understanding Personal Liability for Tax Debt
Michigan law imposes personal liability on responsible persons for unpaid sales tax regardless of business structure. Officers, members, managers of manager-managed Limited Liability
Companies, and partners who control or supervise tax payments can be held personally liable for tax liabilities under state statutes. This applies even if your business is a corporation or limited liability company. The state may pursue both business assets and personal assets of responsible persons to satisfy tax debt.
Step-by-Step Checklist: What to Do After Receiving a
Revocation Notice
Step 1: Review the Revocation Notice Carefully
Locate your official notice from the Michigan Department of Treasury and identify the specific reason for revocation, the effective date, any amounts of delinquent taxes owed, deadlines mentioned, and contact information provided by the department.
Step 2: Verify Your Account Status
Contact the Michigan Department of Treasury Business Tax line at 517-636-6925 to confirm whether your seller’s permit is currently revoked, determine your current balance, including all interest and tax penalties, identify any unfiled returns, and obtain your current account status through Michigan Treasury Online.
Step 3: Gather All Sales Tax Records
Collect all sales tax returns you have filed, records of tax payments made to the state, documentation of correspondence with the department, business financial records for the periods in question, and any prior notices or warnings you received from the state.
Step 4: Identify and File Outstanding Returns
Review your records to determine which sales tax return periods remain unfiled and the dates those returns should have been submitted. Contact the department at 517-636-6925 to confirm which returns are outstanding and obtain blank return forms from the Michigan Department of
Treasury website to complete all unfiled returns.
Step 5: Obtain a Detailed Account Statement
Request an official account statement from the Michigan Department of Treasury showing your total liability breakdown. This statement should include the unpaid privilege tax principal, accrued interest on unpaid amounts, and tax penalties, as required by state rules. Avoid estimating these amounts yourself and rely only on official documentation from the department.
Step 6: Determine Your Payment Options
Evaluate your financial situation and consider available options, including full payment of the amount owed, requesting a payment plan or installment agreement by calling 517-636-6925, requesting penalty abatement if you have reasonable cause, or exploring an offer in compromise. You may also contact the Collections Service Center at 517-636-5265 to discuss payment arrangements and hardship considerations.
Step 7: Submit Payment or Establish a Payment Plan
If paying in full, submit tax payments with documentation clearly identifying your business and the periods covered using acceptable payment methods listed on Michigan Treasury Online. If establishing a payment plan, call 517-636-6925 or submit Form 990 Installment Agreement with your first payment and obtain written confirmation of any agreement. Keep copies of all payment documentation and agreements for your records.
Step 8: Request Written Confirmation
After submitting payment or establishing a plan, request a receipt or written confirmation from the department. Ask the department to confirm the reduction in your account balance and retain all documentation of tax payments, agreements, and correspondence. This documentation protects you and provides evidence of your compliance efforts.
Step 9: File Final Return If Closing Your Business
If you are permanently closing your business, file Form 163 Notice of Change or Discontinuance for the last period of operation and request voluntary cancellation of your sales tax permit.
Ensure all delinquent taxes are settled before discontinuing operations. Obtain written confirmation that your license has been properly cancelled, and consider requesting a Tax
Clearance Certificate to avoid future liability.
- Ignoring the revocation notice: Waiting without responding allows interest and tax
- Paying without proper documentation: Sending tax payments without identifying your
- Continuing to collect sales tax after revocation: Operating without an active seller’s
- Missing payment plan deadlines: If you establish a payment plan, missing scheduled
- Not keeping complete records: Failing to retain copies of tax payments,
- Assuming personal asset protection: Michigan law imposes personal liability on
- 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
Step 10: Do Not Resume Sales Tax Collection
Once your license is revoked, you must not collect sales tax from customers on tangible personal property or resume filing without proper authorization. Contact the Michigan
Department of Treasury at 517-636-6925 to inquire about license restoration procedures if you need to obtain a new business license in the future.
Additional Compliance Considerations
Businesses subject to the Streamlined Sales and Use Tax Agreement must ensure compliance with multistate registration requirements. Foreign Corporations and out-of-state Limited Liability
Companies with a physical presence in Michigan must maintain proper registration with the
Bureau of Corporations. Marketplace Facilitator rules may affect your sales tax obligations if you sell through online platforms. Contact the Michigan Department of Licensing and Regulatory
Affairs for guidance on business entity compliance matters beyond sales tax issues.
Common Mistakes to Avoid penalties to accumulate and may trigger additional tax enforcement actions, including criminal charges for operating without a valid sales tax permit. sales tax identification number or the periods covered can result in costs being misapplied to your account. permit is a criminal misdemeanor under Section 205.53 and creates additional tax liabilities for your business. tax payments can result in plan termination and the resumption of collection actions, including the issuance of a lien. correspondence, and confirmations makes it difficult to verify what has been paid and what has been resolved with tax authorities. officers, members, managers, and partners who are responsible persons for unpaid tax debt under state statutes, regardless of business structure or entity type.
Received a State Tax Notice?
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