Best Tax Lawyers in Michigan

About Tax Law in Michigan, United States

Tax law in Michigan encompasses the rules and regulations that govern how individuals, businesses, and other entities are taxed by state and local authorities. It covers a wide range of taxes, including income tax, sales and use tax, property tax, and business taxes. Michigan's tax system is a combination of state-imposed taxes, such as the individual income tax and corporate income tax, and local taxes, such as property taxes administered by counties and municipalities. Navigating Michigan tax laws can be complex because both state and federal requirements may apply in different situations, and the regulations often evolve due to legislative changes and court decisions.

Why You May Need a Lawyer

There are many reasons someone in Michigan may seek the assistance of a tax lawyer. Legal help is useful when you are facing an audit or investigation by the Michigan Department of Treasury or the Internal Revenue Service. If you disagree with a tax assessment or are facing penalties for late or incorrect filing, a lawyer can provide guidance and represent your interests. Individuals undergoing complex life changes, such as divorce, inheritance, or the sale of significant assets, often use legal advice to ensure they comply with Michigan tax laws. Business owners regularly need legal support for matters such as structuring companies for optimal tax benefits, navigating mergers and acquisitions, or resolving disputes over state and local business tax obligations. Legal counsel can also help with tax planning to minimize liabilities and to resolve past-due taxes or negotiate payment arrangements.

Local Laws Overview

Some of the key aspects of Michigan tax law include the state’s flat-rate individual income tax (4.25 percent as of 2024), which applies to most forms of individual income. Michigan does not allow for graduated rates or significant local adjustments, but residents must be aware of city income taxes in places like Detroit, Grand Rapids, and municipalities with their own tax ordinances. Sales tax in Michigan is set at 6 percent and applies to the sale of tangible personal property and some services, with certain exemptions. Property tax is a significant source of revenue for local governments and is based on the assessed value of real and personal property. Michigan also has a Corporate Income Tax (CIT) and imposes a tax on specific industries, such as the insurance and financial sectors. The state’s tax code is updated frequently, and residents must also comply with federal tax requirements.

Frequently Asked Questions

What is the individual income tax rate in Michigan?

Michigan imposes a flat income tax rate of 4.25 percent on most types of income. Some cities may impose their own additional local income taxes.

Am I required to file a Michigan state tax return?

You must file a Michigan state tax return if you are a resident or earn income from Michigan sources and your income meets the state’s filing requirements.

What are the sales tax rules in Michigan?

The Michigan sales tax is 6 percent and is imposed on the sale of most tangible personal property, some digital goods, and certain services. Some items, like groceries and prescription drugs, are exempt.

How is property tax determined in Michigan?

Property tax is assessed by local governments based on the taxable value of real property. Taxable value may differ from market value and is subject to annual adjustments and local millage rates.

Which cities in Michigan have their own income tax?

Cities like Detroit, Grand Rapids, Lansing, Flint, and a few others have their own local income taxes that residents and some nonresidents working in the city must pay.

Can tax penalties in Michigan be reduced or abated?

The Michigan Department of Treasury may consider penalty abatements for reasonable causes, but interest generally cannot be waived. Legal counsel can help present your case.

What should I do if I receive a notice of audit?

If you receive an audit notice from the IRS or Michigan Department of Treasury, you should review the notice carefully, gather relevant documents, and consider consulting a tax attorney to guide you through the process.

Are retirement benefits taxed in Michigan?

Some retirement income, such as Social Security, is exempt, but other retirement benefits like pensions and IRA withdrawals may be partially or fully taxable, depending on your age and the source of the funds.

How are business taxes handled in Michigan?

Michigan imposes a Corporate Income Tax (CIT) on businesses operating in the state. Some industries have special tax rules. Business owners should keep good records and consider consulting a tax professional.

How long should I keep my Michigan tax records?

You should keep your Michigan tax records for at least six years after the date you file the return, as the Department of Treasury may audit returns within this period.

Additional Resources

For those seeking more information or legal guidance on tax issues in Michigan, the following resources are helpful:

• Michigan Department of Treasury - Offers information on state tax forms, instructions, rates, and tax news.
• Internal Revenue Service (IRS) - For federal tax information and coordination with state tax laws.
• Local county treasurer offices - For property tax questions and local tax rates.
• Michigan State Bar Taxation Section - For referrals to qualified tax attorneys in Michigan.
• Taxpayer Advocate Service - For assistance resolving issues with the IRS that have not been resolved through normal channels.

Next Steps

If you believe you need legal assistance regarding your tax situation in Michigan, consider the following approach:

• Gather all relevant documents, such as tax returns, correspondence from tax authorities, and financial records.
• Make a list of your questions and concerns to discuss with a professional.
• Contact a qualified Michigan tax attorney or reach out to your local bar association for a referral.
• Schedule a consultation and be prepared to share complete and accurate information.
• Follow your lawyer’s guidance carefully to address your tax concerns effectively.

Taking proactive steps and seeking expert legal advice can help you comply with Michigan tax laws, resolve disputes, and minimize future tax liabilities.