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BK-CPA
BK-CPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 933
Experience:  Owner of a CPA firm
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I have a Michigan state tax tien on my credit file due to

Customer Question

Hi, I have a Michigan state tax tien on my credit file due to working for a business that was closed and I didn't even know why it appears on the credit file, it's since 2009, what can I do, plus help
Submitted: 1 year ago.
Category: Finance
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

State tax lien appears on your credit file because you owe state of Michigan back taxes. Only the state can release it. It is useless to fight or negotiate with the credit bureaus. First you need to find out what the balance due is for, if it is legitimate and if you can reduce it or eliminate it by filing an amended tax return. You can try to reduce the balance by filing offer in compromise or request penalty waiver for a reasonable cause. You can start with calling MI department of revenue and request transcript of your account and forms if available. Than you can take the necessary steps to resolve it.

Customer: replied 1 year ago.
Hi, eva, thank you for replying. Regarding the filing taxes, I am not the owner or manager and itsee been many year, what can I even do
Expert:  emc011075 replied 1 year ago.

It is not the business that is putting a lien on your property, it is the tax department. Do you know why do you owe taxes to MI?

Customer: replied 1 year ago.
I used to work for a restaurant as a cashier but because the owners don't speak English I usually help them with invoices that are english. They got audit one time and I went to the taxes department to help them translate but that was all
Customer: replied 1 year ago.
The amount is over 100,00
Expert:  emc011075 replied 1 year ago.

So, the owner reported income you didn't claim on your MI tax return? I am trying to establish the connection why do you owe 100K in taxes.

Expert:  emc011075 replied 1 year ago.

You usually owe back taxes if you do not report all your income and tax department finds out and late fees and penalties could double it. To owe 100K you must have a huge amount of unreported income or you didn't file tax returns for years. There's also another possibility. The restaurant owner owe payroll taxes and if you helped them with invoices, the tax department may hold you liable for it along with the owner. But this is just my speculation. If you don't know why you owe so much, you really need to contact MI tax department and find out. Than you can start looking for solutions.

Customer: replied 1 year ago.
do you know if the lien has a statue of limitations
Expert:  emc011075 replied 1 year ago.

Statute of limitation for collection is usually 10 after the tax had been assessed, meaning from the date the tax department determined that you owe additional taxes, which could be 2 or 3 years later after the due date of the return. Once the tax liability is written off as expired (beyond statute of limitation) the record of the lien will be updated as paid/satisfied and stay on your credit report for another 7 years.

Expert:  emc011075 replied 1 year ago.

The only way to remove the lien sooner is to prove that you do not owe any taxes or that MI tax department placed a lien on your property by mistake.

Customer: replied 1 year ago.
But that would be hard since I don't want to let say "wait the sleeping dog" and also I don't own any property which is what I want to do is a mortgage now but that is the problem that is preventing me now
Expert:  emc011075 replied 1 year ago.

Every state has its own procedures and the options are different in every state. I would suggest to contact MI taxpayer advocate services to discuss what's available to you. You can find the contact numbers here: http://www.michigan.gov/treasury/0,4679,7-121-4313-8483--,00.html

Taxpayer Advocate
Michigan Department of Treasury
Taxpayer Advocate Office
Lansing, MI 48922
Phone:(###) ###-####/p>

Customer: replied 1 year ago.
But I know all that you told me from the research online, my original question was I need advice from an attorney.
Expert:  emc011075 replied 1 year ago.

Ok. I am opting out.

Expert:  BK-CPA replied 1 year ago.

Hello, I am a different expert.

The tax lien is probably over sales taxes or withholding taxes. The State has you listed as a responsible person because of your involvement with trying to help the previous owners with their filings, which is why the State has assessed you for the taxes of a business even though you were only a cashier. Sometimes employees are responsible persons (ie, responsible for collecting, reporting, and remitting sales, use, or withholding taxes), and they can be held liable if they fail to carry out their duties.

This is a major mistake on the State's part most likely. You are probably not a responsible person in any way because you were just a cashier trying to be nice and help translate for the owners. Your signature on any tax form tends to be prema facie evidence that you are a responsible person, for example, but it doesn't mean you are. To clear your liability for the tax and release the lien you need to show that you are not a responsible person.

The lien was likely placed under the following MCL 205.27a:

http://www.legislature.mi.gov/(S(1sqw5k0dhrgxw5ys20gpnh4x))/mileg.aspx?page=GetObject&objectname=mcl-205-27a

"(5) If a business liable for taxes administered under this act fails, for any reason after assessment, to file the required returns or to pay the tax due, any of its officers, members, managers of a manager-managed limited liability company, or partners who the department determines, based on either an audit or an investigation, is a responsible person is personally liable for the failure for the taxes described in subsection (14)"

Sometimes people have to go through court to get a ruling that they are not a responsible person because the State just won't believe them. It may be quite a battle. You'll likely need to get professional help. Michigan is terrible to work with unfortunately, as its automated system will just hang up on you if you call it and their agents are busy...

I suggest contacting the Taxpayer Advocate to get started that was posted above. Your defense is that you are not a responsible person. Put it in writing, etc.

Best of luck!