Tax Law Blog

New Law Allows Michigan Taxpayers to Appeal Tax Disputes without Paying First

On June 16, 2015, Gov. Rick Snyder signed into law Enrolled Senate Bill 100, which eliminates the requirement that taxpayers pay contested taxes, penalties and interest before appealing their liability to the Michigan Court of Claims. The bill was introduced by Senators Brandenburg, Horn, Zorn, Emmons, Colbeck, Schmidt, Hansen, Casperson, Nofs and Booher.

Prior to the enactment of this law, a taxpayer had two options to appeal an adverse tax assessment or decision:

1. the taxpayer could appeal the case to the Michigan Tax Tribunal without paying disputed amounts; or
2. the taxpayer could appeal the case to the Michigan Court of Claims, but only after paying the taxes, penalties, and interest assessed, even if those amounts were being contested. 

These requirements created a hurdle for taxpayers and in some instances denied them access to the court system when the disputed tax assessments were too large to pre-pay, even if the taxpayer was likely to win in court. The new law will remove this hurdle by opening the court system to all Michigan taxpayers regardless of the taxpayer's ability to pay.

Both the Tax Tribunal and Court of Claims may hear non-property tax assessment disputes, but only the Tax Tribunal may hear property tax disputes. Senate Bill 100 is anticipated to reduce the amount of non-property tax assessment disputes heard by the Tax Tribunal. The legislature views this as a benefit to taxpayers because the Tax Tribunal is not bound by the same evidentiary and procedural rules as the Court of Claims. Senate Bill 100 also increases the time a taxpayer has to file an appeal with the Tax Tribunal from 35 to 60 days and appropriates an extra $200,000 to the Court of Claims in anticipation of it hearing more disputes. The new law will become effective in 2016. 

Foster Swift's Michigan Tax attorneys will continue to keep you abreast of changes in that tax law, and are available to answer any questions you may have about this legislation. 

Categories: News & Events, Tax, Tax Disputes