SENATE BILL No. 421

 

 

April 29, 2003, Introduced by Senator EMERSON and referred to the Committee on Finance.

 

 

        

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                 A bill to amend 1941 PA 122, entitled                                             

                                                                                

    "An act to establish the revenue collection duties of the                   

    department of treasury; to prescribe its powers and duties as the           

    revenue collection agency of the state; to prescribe certain                

    powers and duties of the state treasurer; to regulate the                   

    importation, stamping, and disposition of certain tobacco                   

    products; to provide for the transfer of powers and duties now              

    vested in certain other state boards, commissions, departments              

    and offices; to prescribe certain duties of and require certain             

    reports from the department of treasury; to provide procedures              

    for the payment, administration, audit, assessment, levy of                 

    interests or penalties on, and appeals of taxes and tax                     

    liability; to prescribe its powers and duties if an agreement to            

    act as agent for a city to administer, collect, and enforce the             

    city income tax act on behalf of a city is entered into with any            

    city; to provide an appropriation; to abolish the state board of            

    tax administration; to prescribe penalties and provide remedies;            

    and to declare the effect of this act,"                                     

                                                                                

    by amending section 27a (MCL 205.27a), as amended by 2002                   

                                                                                

    PA 657.                                                                     

                                                                                

                THE PEOPLE OF THE STATE OF MICHIGAN ENACT:                      

                                                                                

1       Sec. 27a.  (1) If a person liable for a tax administered                    

                                                                                

2   under this act sells out his or her business or its stock of                

                                                                                


                                                                                

1   goods or quits the business, the person shall make a final return           

                                                                                

2   within 15 days after the date of selling or quitting the                    

                                                                                

3   business.  The purchaser or succeeding purchasers, if any, who              

                                                                                

4   purchase a going or closed business or its stock of goods shall             

                                                                                

5   escrow sufficient money to cover the amount of taxes, interest,             

                                                                                

6   and penalties as may be due and unpaid until the former owner               

                                                                                

7   produces a receipt from the state treasurer or the state                    

                                                                                

8   treasurer's designated representative showing that the taxes due            

                                                                                

9   are paid, or a certificate stating that taxes are not due.  Upon            

                                                                                

10  the owner's written waiver of confidentiality, the department may           

                                                                                

11  release to a purchaser a business's known tax liability for the             

                                                                                

12  purposes of establishing an escrow account for the payment of               

                                                                                

13  taxes.  If the purchaser or succeeding purchasers of a business             

                                                                                

14  or its stock of goods fail to comply with the escrow requirements           

                                                                                

15  of this subsection, the purchaser is personally liable for the              

                                                                                

16  payment of the taxes, interest, and penalties accrued and unpaid            

                                                                                

17  by the business of the former owner.  The purchaser's or                    

                                                                                

18  succeeding purchaser's personal liability is limited to the fair            

                                                                                

19  market value of the business less the amount of any proceeds that           

                                                                                

20  are applied to balances due on secured interests that are                   

                                                                                

21  superior to the lien provided for in section 29(1).                         

                                                                                

22      (2) A deficiency, interest, or penalty shall not be assessed                

                                                                                

23  after the expiration of 4 years after the date set for the filing           

                                                                                

24  of the required return or after the date the return was filed,              

                                                                                

25  whichever is later.  The taxpayer shall not claim a refund of any           

                                                                                

26  amount paid to the department after the expiration of 4 years               

                                                                                

27  after the date set for the filing of the original return.  A                


                                                                                

1   person who has failed to file a return is liable for all taxes              

                                                                                

2   due for the entire period for which the person would be subject             

                                                                                

3   to the taxes.  If a person subject to tax fraudulently conceals             

                                                                                

4   any liability for the tax or a part of the tax, or fails to                 

                                                                                

5   notify the department of any alteration in or modification of               

                                                                                

6   federal tax liability, the department, within 2 years after                 

                                                                                

7   discovery of the fraud or the failure to notify, shall assess the           

                                                                                

8   tax with penalties and interest as provided by this act, computed           

                                                                                

9   from the date on which the tax liability originally accrued.  The           

                                                                                

10  tax, penalties, and interest are due and payable after notice and           

                                                                                

11  hearing as provided by this act.                                            

                                                                                

12      (3) The running of the statute of limitations is suspended                  

                                                                                

13  for the following:                                                          

                                                                                

14      (a) The period pending a final determination of tax,                        

                                                                                

15  including audit, conference, hearing, and litigation of liability           

                                                                                

16  for federal income tax or a tax administered by the department              

                                                                                

17  and for 1 year after that period.                                           

                                                                                

18      (b) The period for which the taxpayer and the state treasurer               

                                                                                

19  have consented to in writing that the period be extended.                   

                                                                                

20      (4) The running of the statute of limitations is suspended                  

                                                                                

21  only as to those items that were the subject of the audit,                  

                                                                                

22  conference, hearing, or litigation for federal income tax or a              

                                                                                

23  tax administered by the department.                                         

                                                                                

24      (5) If a corporation, limited liability company, limited                    

                                                                                

25  liability partnership, partnership, or limited partnership liable           

                                                                                

26  for taxes administered under this act fails for any reason to               

                                                                                

27  file the required returns or to pay the tax due, any of its                 


                                                                                

1   officers, members, managers, or partners having control or                  

                                                                                

2   supervision of, or charged with the responsibility for, making              

                                                                                

3   the returns or payments is personally liable for the failure.               

                                                                                

4   The signature of any corporate officers, members, managers, or              

                                                                                

5   partners on returns or negotiable instruments submitted in                  

                                                                                

6   payment of taxes is prima facie evidence of their responsibility            

                                                                                

7   for making the returns and payments.  The dissolution of a                  

                                                                                

8   corporation, limited liability company, limited liability                   

                                                                                

9   partnership, partnership, or limited partnership does not                   

                                                                                

10  discharge an officer's, member's, manager's, or partner's                   

                                                                                

11  liability for a prior failure of the corporation, limited                   

                                                                                

12  liability company, limited liability partnership, partnership, or           

                                                                                

13  limited partnership to make a return or remit the tax due.  The             

                                                                                

14  sum due for a liability may be assessed and collected under the             

                                                                                

15  related sections of this act.                                               

                                                                                

16      (6) Notwithstanding the provisions of subsection (2), a claim               

                                                                                

17  for refund based upon the validity of a tax law based on the laws           

                                                                                

18  or constitution of the United States or the state constitution of           

                                                                                

19  1963 shall not be paid unless the claim is filed within 90 days             

                                                                                

20  after the date set for filing a return.                                     

                                                                                

21      (7) Subsection (6) does not apply to a claim for the refund                 

                                                                                

22  of a tax paid for the 1984 tax year or a tax year after the 1984            

                                                                                

23  tax year on income received as retirement or pension benefits               

                                                                                

24  from a public retirement system of the United States government             

                                                                                

25  if the claimant waives any claim for the refund of such a tax               

                                                                                

26  paid for a tax year before 1984.  Claims for refunds to which               

                                                                                

27  this subsection applies shall be paid in accordance with the                


                                                                                

1   following schedule:                                                         

                                                                                

                                                                                

2            Refunds for              Payable on                                

                                                                                

3              tax year:               or after:                                

                                                                                

                                                                                

                                                                                

4               1988 and 1987         July 1, 1990                              

                                                                                

5               1986                  July 1, 1991                              

                                                                                

6               1985                  July 1, 1992                              

                                                                                

7               1984                  July 1, 1993                              

                                                                                

8       Enacting section 1.  This amendatory act takes effect for                   

                                                                                

9   tax years that begin on and after January 1, 2003.