Senate approves Pappageorge measure to help businesses

Thursday, February 05, 2009

LANSING — Legislation designed to grant businesses more flexibility in filing estimated Michigan Business Tax payments for the 2008 tax year was approved Thursday by the state Senate, said sponsor Sen. John Pappageorge, R-Troy.

“Taxpayers across the state faced a number of uncertainties in 2008,” Pappageorge said. “MBT tax forms were not available until November and even tax professionals were struggling to keep up with the changes required by the new law.”

Senate Bill 98 would establish a more flexible structure for assessing penalties for the 2008 tax year. Taxpayers would only be required to pay 80 percent of the tax due for the tax year to avoid penalties. Under current law, taxpayers must pay 85 percent of the tax due and essentially make equal quarterly payments.

Also, under SB 98 quarterly payments are not required to be equal. It is difficult for businesses to make equal payments when the first quarterly payment comes due before the Michigan Department of Treasury can demonstrate how to compute what the annual payment will be so that number can be divided by four.

State Sen. Nancy Cassis, chair of the Senate Finance Committee said, “Importantly, businesses who made a good-faith effort to pay their taxes should not be penalized because the Department of Treasury did not make forms and instructions available until the end of November. Furthermore, this bill will provide immediate relief and flexibility for virtually every business required to pay the Michigan Business Tax.”

Basically, a business with $10,000 in tax liability could pay $1,000 in the first, second and third quarters and $5,000 in the fourth quarter would not be penalized because they reached the 80 percent threshold.

 “My bill would allow businesses to backload their tax payments, providing them with more wiggle room in how and when they pay their 2008 taxes,” Pappageorge said. “This is a common-sense bill that provides a more reasoned and fair approach to assessing tax penalties.”

SB 98 now heads to the House of Representatives for consideration. If signed into law, Pappageorge’s proposal would only apply to the 2008 tax year.