Michigan State and Local Tax Updates March 2019

Michigan proposes 15¢ motor fuel tax increase

March 20, 2019

Michigan Governor Gretchen Whitmer’s executive budget proposal for fiscal years 2020 and 2021 proposes three 15¢ motor fuel tax increases from 10/1/19 through 10/1/20. To offset the increase in the motor fuel tax for low-income working families, the budget proposal would double the Earned Income Tax Credit over two years. Governor Whitmer’s budget also calls for the repeal of the retirement tax and enacting a business pass-through tax on pass-through entities.

 


Michigan issues reminder that taxpayers might be required to confirm identity

March 20, 2019

In an effort to prevent fraudulent tax refunds, the Michigan Dept. of Treasury has issued a reminder that some taxpayers who file a state income tax return may receive a letter from the agency asking for more information to confirm their identity. The letters are a result of the department’s efforts to protect Michigan residents from cybercriminals. After a taxpayer confirms his or her identity by taking a short online quiz or submitting paperwork, the tax refund will be issued in about a month. A phone option is available as an alternative to the online quiz.

 


Michigan announces gasoline tax increase

March 13, 2019

The Michigan Department of Treasury has announced that, effective for the period of 4/1/19 through 4/30/19, the prepaid sales tax rate for the purchase of gasoline will increase to 11.7¢ per gallon, from the March 2019 rate of 10.5¢ per gallon. Additionally, for the same time period, the prepaid sales tax rate for the purchase of diesel fuel will increase to 15.2¢ per gallon from the March 2019 rate of 15.0¢ per gallon.

 


Michigan waives estimated tax penalty for qualifying farmers and fishers with conditions

March 13, 2019

The Michigan Department of Treasury (DOT) is following the IRS and waiving the estimated tax penalty for qualifying farmers or fishers who file their 2018 state income tax return and pay any tax due by 4/15/19. This tax relief is being provided by the IRS and the MI DOT because federal rule changes have caused difficulty for farmers and fishers to accurately determine their tax liability by the 3/1 deadline that applies to them. To be eligible for the waiver, qualifying MI farmers and fishers must attach IRS Form 2210-F to their 2018 state income tax return.

 


Guidance issued on new sales and use tax exemption for school bus providers

March 6, 2019

The Michigan Dept. of Treasury has issued guidance on a new sales and use tax exemption for businesses providing school buses to public schools. Some transportation contracts involve the provision of buses and bus drivers by private-sector contractors. These contractors typically purchase buses used under these contracts, which are exempt from sales tax. They make the “lessor election” under MI law. Under it, contractors elect to pay use tax due on receipts from the “rental or lease” of the buses in lieu of paying sales or use tax on the full cost of the buses.

 


What’s new for 2018 for fiduciary income tax filers?

March 6, 2019

The Michigan Dept. of Treasury has issued guidance to fiduciary income tax filers, including new developments for tax year 2018. Executors of estates, or administrators of trusts, are considered fiduciaries because they hold money or other assets on behalf of a beneficiary. These fiduciaries must file Form 1041 with the IRS and MI-1041 with the state. Certain estates and trusts may be exempt from this filing requirement if their taxable income falls below a specified limit.

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© 2019

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