Michigan Unfiled Sales Tax Returns Checklist
Introduction
An unfiled sales tax return in Michigan occurs when a registered sales tax collector fails to submit required documentation to the Michigan Department of Treasury by the deadline. This is a state compliance issue administered by the Michigan Department of Treasury, not the Internal
Revenue Service, which only handles federal taxes. Sales tax is collected from customers on behalf of the state, and the return is the formal record of that collection.
What This Issue Means
An unfiled sales tax return means that a filing deadline has passed without a completed return submission. Michigan requires sales tax collectors to file returns regularly, typically monthly, quarterly, or annually, depending on their registration status. Additionally, all filers must submit an annual reconciliation return by February 28, regardless of their assigned filing frequency.
When a return is unfiled, the state cannot verify compliance or reconcile its records.
Why the State Requires This
Michigan requires sales tax returns to ensure accurate records of tax collection and remittance.
Sales tax belongs to Michigan from the moment it is collected from customers. The return is the official record that allows the state to verify compliance. The filing requirement is based on the
Michigan Sales Tax Act and applies to all registered collectors, even if no sales were made during the period.
What Happens If This Is Ignored
If an unfiled return remains unresolved, the Michigan Department of Treasury sends follow-up notices to remind the taxpayer of the filing requirement. The state may assess tax, penalties, and interest based on estimates derived from prior returns or available information. Under
Michigan law, penalties start at 5% of unpaid tax for the first two months, then an additional 5% for each month thereafter, up to a maximum of 25%. The state has statutory authority to pursue collection through wage garnishment and bank levies, provided at least 10 days' notice is given before a levy.
What This Does Not Mean
An unfiled return notice does not mean the state has automatically assessed a final tax amount or filed a lien against the business. It does not mean criminal charges have been filed. An unfiled return also does not confirm that tax was actually collected or that a specific dollar
amount is owed. The state has not yet taken collection action through garnishment or levy simply because a return is unfiled, though these actions may follow if the issue is not resolved.
Step-by-Step Checklist
Step 1: Locate Your Registration Number
Search your files for correspondence from the Michigan Department of Treasury that includes your sales tax registration number and filing frequency. If you cannot find this information, note the registration number from any notice you received about the unfiled return.
Step 2: Determine Which Periods Are Unfiled
Review any notice you received from the state to identify which return periods are missing. If you did not receive a formal notice but believe returns are unfiled, contact the Michigan
Department of Treasury to confirm which periods require filing.
Step 3: Gather Sales Records
Collect documentation that shows sales and use tax collected during each unfiled period, including point-of-sale reports, sales journals, accounting records, or bank deposits. Organize these records by reporting period for accuracy and ease of completion.
Step 4: Calculate Tax Owed
Using your sales records, determine the total sales made during each unfiled period and apply the Michigan sales tax rate that was in effect during that period. If your business operated in multiple Michigan counties, different rates may have been used for other locations.
Step 5: Obtain Blank Return Forms
Visit the Michigan Department of Treasury website to download sales tax return forms, or contact the department to request forms for the specific periods you need. Forms may be available in paper or electronic format, depending on your filing frequency and registration.
Step 6: Complete Each Return
Fill out each return form using your sales records and calculated tax amounts, including all required information such as sales totals, taxable sales, exempt sales if applicable, and the tax owed. Review each form carefully before submitting to ensure accuracy and completeness.
Step 7: Submit Returns to the State
Mail completed returns to the address shown on the return form, or submit electronically through
Michigan Treasury Online if available. Keep copies of all returns and submission documentation for your records, including confirmation numbers or certified mail receipts for proof of submission.
Step 8: Address Payment Issues
If tax is owed and you cannot pay in full, contact the Michigan Department of Treasury to inquire about payment arrangements or installment plans. The state may offer options to resolve the debt over time while avoiding more severe collection actions.
- Missing follow-up deadlines: If the state sends a notice requiring action by a specific
- Filing incomplete returns: Double-check all figures and calculations before submitting
- Failing to keep submission records: Always retain documentation proving that you
- Assuming estimated assessments are final: If the state calculates tax based on
- Not requesting penalty relief: Taxpayers may request penalty waivers in writing if they
- 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 9: File Zero Returns if Applicable
If your business did not make any sales during an unfiled period, you must still file a zero return showing no sales activity. Michigan requires all registered sales tax collectors to file returns for each assigned period, and failure to do so can result in penalties.
Common Mistakes to Avoid date, respond before that deadline expires. Ignoring a deadline can trigger further enforcement action, including estimated assessments and collection procedures. to ensure accuracy and completeness. Incomplete returns may be rejected or require resubmission, delaying resolution and potentially increasing penalties. submitted returns and paid any tax owed for protection. This documentation protects you if disputes arise later regarding filing dates or payment amounts. estimates, the assessment is not final until you respond. You have the right to correct the evaluation with actual return filings and supporting documentation. can demonstrate reasonable cause for the failure. The Michigan Department of Treasury has discretionary authority to waive penalties under certain circumstances, though interest generally cannot be waived.
Understanding Statute of Limitations
Under Michigan law, the state has four years from the later of the return due date or filing date to assess deficiencies. However, a person who has failed to file a return is liable for all taxes due for the entire period for which the person would be subject to the taxes. There is no statute of limitations for unfiled returns, meaning Michigan can assess and collect indefinitely.
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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