Interest will be assessed on all payments received after the original due date. Likewise, the negligence penalty is waived if the taxpayer demonstrates that the deficiency or excess claim for credit was due to reasonable cause. An intentional disregard or civil fraud penalty may be waived at the discretion of the Commissioner of Revenue if the taxpayer establishes facts that negate a finding of intent to disregard a tax law or evade a tax. Reasonable cause exists if, despite the exercise of ordinary business care and prudence, the taxpayer was still unable to file an estate tax return or pay the estate tax by the prescribed date. The facts and circumstances of each case will be considered in determining penalty waivers.
Taxpayers bear the burden of establishing reasonable cause for a waiver of any penalty.
Unlike the former Inheritance Tax Act, Michigan's Estate Tax is administered under the Revenue Act and is subject to the penalty provisions contained sections 23 and 24 of the Revenue Act. The personal representative's liability extends to tax, interest and penalties. The Michigan Estate Tax return is due at the same time the federal estate tax return is due, generally nine months after the date of the decedent's death. When the IRS has an approved an extension for a portion of the federal estate tax under IRC 6161, the Michigan Estate Tax Act also extends the time for payment of that portion of the tax. Since approval of the federal request for extension of time to pay is not automatic and does not extend the time for filing the return, there will be situations when the approved extension of time to pay is not received until after the due date of the Michigan Estate Tax return.