Michigan tax payment plan through Treasury

A lien may stay on record as you pay

Clear Michigan guidance says what a plan stops and also what it does not stop. Its payment plan page states that both penalties and interest build up until you pay the balance in full. For the state’s protection, your property can carry a tax lien, a public claim for what you owe. Every Michigan refund is sent to your collections account.

The plan can be shorter because the refund is applied to its last part. Missing a payment or taking on new tax debt can cancel the plan and collection can begin again.

Before Treasury says yes, what does it ask you for?

You are asked by Treasury to propose a monthly payment. Treasury may also request proof of your income, your expenses each month, your assets and other debts. If approval takes time, keep paying while your request is reviewed.

The paper Installment Agreement, Form 990 lists the conditions. You must file every missing return first. You must file and pay on time any new returns and estimated payments that come due during the plan. Monthly payments or payments every two weeks are options you may suggest and the agreement is reviewed if your finances change.

How can I set up a payment plan through Michigan Treasury?

You can make the request in three ways:

• Use the Collections eService online. To connect to your account, a Treasury collections letter must give you the details.
• Fill in Form 990 and mail it to Treasury.
• Give the Collection Services Bureau a call. Every past-due state tax account goes to that bureau.

Interest and penalty charges on a Michigan balance

For individual income tax, the Treasury penalty FAQ sets the late penalty at 5% of unpaid tax in the first two months. Every month beyond that adds 5% more, with a cap of 25%. The rate for interest under MCL 205.23 is 1 percentage point above the adjusted prime rate each year and those charges continue until the tax is paid.

You can request the waiver in writing if you had reasonable cause, such as serious illness, a death, a fire or a natural disaster. Send documents that back up your reason.

If you do nothing about the bill

The Treasury collections actions page lists what the Collection Services Bureau is able to do. It can act for at least 6 years. Most levies come with notice of at least 10 days.

• Liens placed on homes and other property. They go public and that can hurt your credit.
• Each levy on wages or bank accounts (orders that take money from a paycheck or account) adds $55 in warrant costs.
• A tax warrant lets the state take business or personal property and then sell it.
• Lottery winnings, state refunds and vendor payments can each be offset against the debt.
• One referral option is the private collection agency Coast Professional Inc; another is the Attorney General.

Two plans, two bills: Michigan and the IRS

A Michigan installment agreement covers state debt only. The IRS requires its own agreement and its own payment date. Michigan may take your state refund and put it toward the plan, so set both amounts by counting only your paycheck.

Nearby states

• Ohio
• Indiana
• Wisconsin
• All states