The Michigan House Tax Policy Committee last week overwhelmingly approved two bills to stop the Michigan Department of Treasury from illegally taxing software services. House Bills 4018 and 4019 were introduced by Rep. Jeff Farrington to clarify that software services provided through a contract arrangement with a vendor are not taxable in Michigan. Senators John Proos and Pete MacGregor have also introduced Senate versions (Senate Bills 82 and 83.) The Michigan Department of Treasury has been routinely flouting the law, and major court decisions, by assessing Michigan-based companies for these services. The court decisions alone should stop the Department, but unfortunately they aren’t. Read more about this issue.
Also last week, State Senator Jack Brandenburg introduced Senate Bill 100 which would eliminate Michigan’s “pay-to-play” requirement for using the Michigan Court of Claims.
Under current law, Michigan taxpayers who want to utilize Michigan’s Court of Claims for tax disputes face a significant barrier to entry: Michigan requires taxpayers to “pay-to-play” the amount they protest in order to enter this venue. This presents not only a barrier to entry for many taxpayers, but jeopardizes their due process rights.
Furthermore, many taxpayers who can “afford” to pre-pay the amount they protest are becoming reluctant to do so because it is becoming increasingly difficult for taxpayers to receive their rightful refunds from cases they’ve won because the state does not want to give up the money, and instead continues to appeal with limitless resources.
Solving both of these tax problems for members is a priority for the Michigan Chamber this session.
For more information on these issues, or other tax-related legislation, please contact Tricia Kinley at email@example.com or (517) 371-7669.