Michigan Department of Treasury Issues Revenue Administrative Bulletin, Changing Policy for Tax Audits

On December 2, 2008, the Michigan Department of Treasury ("Department") issued Revenue Administrative Bulletin (RAB) 2008-8. This explains a change in policy as it affects the suspension of the Statute of Limitations for all tax audits initiated as the result of Audit Confirmation Letters issued by the Department on or after January 1, 2009. Michigan law provides two separate options to suspend or toll the Statute of Limitations MCL § 205.27a(3):

1. The Statute of Limitations is automatically tolled pending the "final determination of tax," including audit, refund, appeal, or litigation.
2. The Statute of Limitations may be suspended by mutual written agreement between a taxpayer and the Michigan State Treasurer ("Treasurer").

Historically, the Department has sought mutual written agreement with a taxpayer when necessary to suspend the Statute of Limitations for purpose of a tax audit. Beginning January 1, 2009, the Department will rely on the "automatic tolling" of the Statute of Limitations when an audit commences. The Department will no longer seek written waivers signed by the taxpayer and the Treasurer’s representative. The RAB at the following link provides the detail of this new policy: (http://www.michigan.gov/documents/treasury/RAB_2008-8_258580_7.pdf).

As referred to in the RAB, all audits currently in progress or initiated by the Department prior to its issuing an Audit Confirmation Letter dated before January 1, 2009, will be conducted under the Department’s existing policy.