Banking & Finance, Government, and Law

Taxpayers guaranteed day in court

July 10, 2015
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A law that required Michigan taxpayers disputing a tax assessment to pay the assessment — plus penalties and interest — before being allowed to go before the court has been repealed.

Michigan Gov. Rick Snyder recently signed the bill, which will go into effect in spring 2016.

“It makes it possible for taxpayers to go to an actual court without prepaying the taxes they are disputing,” said Wayne Roberts, an attorney with Varnum.

Previously, a taxpayer could either pay the tax as well as penalties and interest prior to appearing before the Michigan Court of Claims, or appeal the case to the Michigan Tax Tribunal.

Roberts said the previous law created a prohibitive situation for many because they couldn’t afford to pay the assessment before going to court, leaving the tax tribunal as their only option.

“Normal people couldn’t get into court,” he said. “They had the tax tribunal option, but they couldn’t go to court.

“The government shouldn’t be able to take your money before you have an opportunity to have your case adjudicated in court, and that is what this new law does.”

Roberts said, unlike the Michigan Court of Claims, the Michigan Tax Tribunal does not require trained legal professionals to be present, nor does it follow longstanding rules and procedures. Therefore, there is no expectation of consistency.

“You don’t have a guarantee that your judge is going to be a legally trained lawyer,” he said. “You don’t have the same formality with the rules of evidence.

“If you are in court, the judge is a lawyer and everyone is represented by lawyers, and there is an expectation that is met. Court rules and procedures are well known and will be enforced.”

He said small and mid-sized businesses and individuals will be most impacted by the repeal because they typically could not afford to pay the assessment.

For businesses or individuals that do choose to go before the tax tribunal, the bill extends the deadline to appeal a levy from 35 days to 60 days.

The bill was introduced by Sen. Jack Brandenburg, R-Harrison Township, and received support from a broad cross-section of the business community, to which Roberts attributed its success.

“I think it was a cumulative effect of all the years, cases and the collective experience of businesses and individuals and getting the chambers of commerce involved,” he said.

“Once taxpayers, individuals and businesses stood up, I think that made a difference.”

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