Michigan Administrative Code › Department - Treasury › Bureau of Tax & Economic Policy › Taxpayers Bill of Rights › Part 4 - INFORMAL CONFERENCE › Section R. 205.1013 - Failure to file or pay penalty; waiver of penalty; reasonable cause for failure to file or pay

Current through Vol. 24-12, July 15, 2024
Rule 13.
(1)
				  Except as otherwise provided in the act, if a taxpayer fails or refuses to file
				  a return, or fails or refuses to pay a tax administered under the act within
				  the time specified by law, a penalty of $10.00 or 5% of the tax, whichever is
				  greater, shall be added to the tax owed if the failure is for a period of not
				  more than 1 calendar month. An additional penalty shall be added to the tax
				  owed at the rate of 5% for each additional month or fraction of a month during
				  which the failure continues or the tax is not paid. The maximum penalty shall
				  be 50% of the tax owed.
(2) If a
				  return is filed or a remittance is paid after the time specified, the taxpayer
				  may request that the commissioner of revenue waive and the commissioner shall
				  waive the penalty authorized by section 24(4) of the act if the taxpayer
				  establishes that the failure to file the return or to pay the tax was due to
				  reasonable cause and not to willful neglect.
(3) A waiver of penalty request shall be in
				  writing and shall state the reasons alleged to constitute reasonable cause and
				  the absence of willful neglect.
(4)
				  The taxpayer bears the burden of affirmatively establishing, by clear and
				  convincing evidence, that the failure to file or failure to pay was due to
				  reasonable cause.
(5) A taxpayer is
				  required to exercise ordinary business care and prudence in complying with
				  filing and payment requirements.
(6) When determining whether a taxpayer was
				  unable to file a return or pay a tax in spite of the exercise of ordinary
				  business care and prudence, the timeliness, facts and circumstances of each
				  case will be considered.
(7) The
				  examples set forth in this subrule, if clearly established and if other
				  contributing circumstances do not exist, generally constitute reasonable cause
				  for failure to file or pay. The following examples are not intended to be the
				  only instances in which reasonable cause may be established and each case shall
				  be judged individually upon its own facts and circumstances:
(a) The delay in filing or payment is caused
				  by the prolonged unavoidable absence of the taxpayer responsible for filing and
				  the taxpayer who is precluded, due to circumstances beyond the taxpayer's
				  control, from making alternate arrangements for filing and paying.
(b) The delay in filing or payment is caused
				  by the destruction, by fire or other casualty, of the taxpayer's records or the
				  taxpayer's business if the destroyed records directly related to and prevented
				  timely compliance.
(c) The delay
				  arose from the taxpayer's inability to obtain the necessary records or
				  information due to reasons beyond the taxpayer's control. The taxpayer shall
				  explain why the records are needed to comply, why the records are unavailable,
				  other avenues explored to secure the information, and why the information is
				  not estimated.
(d) The taxpayer
				  receives erroneous written information from a department employee who responds
				  to the taxpayer's request and the taxpayer provided all complete and relevant
				  information. The erroneous written information directly relates to and prevents
				  the taxpayer from complying with state tax obligations.
(e) The filing of a return or payment of tax
				  is delayed in delivery by the United States post office or is filed or paid in
				  the wrong office of the department.
(f) A bank error that is the sole cause of
				  the failure to pay.