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Michigan Adopts Offer in Compromise Program

Until recently, Michigan was one of only a few states that did not have an offer in compromise program. An offer in compromise program allows the state of Michigan to accept less than the full amount owed by a taxpayer […]


Fraser Trebilcock Lawyers Seal of Michigan Department of TreasuryUntil recently, Michigan was one of only a few states that did not have an offer in compromise program. An offer in compromise program allows the state of Michigan to accept less than the full amount owed by a taxpayer as payment in full of their taxes to the State of Michigan. Under a new law effective January 1, 2015, the Michigan Treasury may compromise all, or any part, of a tax due to the State of Michigan.

In order to qualify for an offer in compromise the taxpayer must demonstrate there is doubt as to the tax liability, or a doubt exists as to the collectability because the taxpayer does not have the ability to pay their taxes and there are no reasonable prospects that would allow the taxpayer to pay the amount of the liability, or the amount offered is the most that the State of Michigan can be expected to collect from the taxpayer’s present assets and income.

Taxpayers who have taxes due the State of Michigan with either doubt as to their liability, or which they cannot afford to pay, may be able to take advantage of this new offer in compromise program. Michigan Treasury Department is currently developing the program, forms and procedure to apply for an offer in compromise.The IRS has had an offer in compromise program for many years and the Michigan program will be similar to the IRS program.

This is a brief summary of a complex new law. Taxpayers should consult competent legal counsel regarding this new law.

For more information on this issue, please contact attorney Edward J. Castellani at 517.377.0845 or ecast@fraserlawfirm.com. Mr. Castellani is an attorney and certified public accountant who practices business and tax law. His clients include corporations, limited liability companies, nonprofit corporations, public charities, private foundations and trade associations. He is involved in business entity formation, mergers and acquisitions, tax audits and appeals, corporate governance, and general business and tax planning for profit and nonprofit corporations. He has developed industry specialization in health care law, automobile dealer law, trade association law and alcoholic beverage law for suppliers, wholesalers and retailer.