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SB 1083

Taxation: administration; calculation of interest and penalties related to the issuance of certain refunds; provide for. Amends sec. 30 of 1941 PA 122 (MCL 205.30).

2025-2026 Regular Session Introduced by Joe Bellino and 11 co-sponsors

SB 1083 tightens refund and credit processing with tiered interest for late refunds, expands application to credits, and requires monthly Treasury reporting.

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Bill Summary · SB 1083

Summary of SB 1083 (Michigan, 2025-2026)

Purpose and intent

SB 1083 proposes amendments to the state’s tax administration framework to clarify and expand the calculation and payment of interest on refunds and credits across multiple tax statutes. The bill targets how the Department of Treasury handles refunds, overpayments, and interest, and seeks to create more robust, calendar-driven timelines for processing refunds and reporting on refund performance.

Key provisions and changes

  • Overpayments and refunds (Sec. 30(1)-(3))

    • The department must credit or refund overpayments, erroneously assessed taxes, penalties, and interest, as well as unjustly assessed or wrongfully collected amounts, with interest calculated under section 23 for deficiencies.
    • When a taxpayer files a claim or the return reflects an overpayment, the department first applies the overpayment to any known liability, with any excess refunded or credited against future liability if requested.

  • Refund processing and timing (Sec. 30(3))

    • The state disbursing authority will pay certified refunds from tax proceeds.
    • Interest on refunds (per section 23) begins 45 to 30 days after the claim is filed or after the statutory filing date, whichever is later.
    • Intercepted refunds stop accruing interest as of the interception date.
    • Refunds under $1 are not issued.

  • Calendar-based interest enhancements (Sec. 30(4)-(9))

    • Beginning 2014-2024: For Part 1 income tax refunds, the state could add separate interest if refunds were not paid within defined timeframes (specific thresholds tied to return receipt and processing dates).
    • From 2025 onward: New tiered interest provisions (Sec. 30(6)) specify increasing interest rates for refunds not paid within 30, 60, and 90 days from the date the department received the return, with increments of prime-rate-based interest plus margins (1 percentage point, then 3 percentage points, and a $100 addition at day 90). Conditions include timely original filing, no department adjustment, non-unitary filings, complete returns, and cooperation with documentation requests; no interception; and refunds exceeding $1.
    • 2015-2017 provisions extend similar interest formulas to the Michigan Business Tax Act refunds (and related credits) with a 90-day basis and a 3% per annum rate, subject to specified criteria.

  • Broadened application to credits (Sec. 30(9))

    • Starting 2017, the interest structure applies to refunds of credits authorized under the Natural Resources and Environmental Protection Act (contracts processed by the Department of Agriculture and Rural Development and forwarded to Treasury).

  • Reporting (Sec. 30(10))

    • Beginning 30 days after enactment, the department must submit monthly reports to the Legislature detailing refund processing times, backlogs, and the number of cases with additional interest or payments due under this section.

  • Definitions (Sec. 30(11))

    • The bill uses an “adjusted prime rate” as defined in section 23.

Who is affected

  • Taxpayers receiving refunds or credits will see new or modified timelines for interest accrual on late refunds and potentially higher interest amounts, depending on processing speed and compliance with filing requirements.
  • The Department of Treasury and the state disbursing authority bear increased administrative responsibilities, including stricter processing timelines, clearer rules for interest calculations, and ongoing monthly reporting to the Legislature.
  • Businesses subject to the Michigan Business Tax Act and credits processed through related agencies are also affected by the expanded interest provisions.

Procedural and timeline aspects

  • Introduced July 1, 2026, and referred to the Appropriations Committee.
  • If enacted, many provisions specify dates beginning January 1, 2025 for the enhanced interest framework on Part 1 income tax refunds and later provisions for other tax areas, with ongoing monthly reporting requirements.

Notes

  • The bill emphasizes rate-based and time-based incentives to speed refund processing and improve transparency in refund-related interest, while ensuring refunds are properly administered and credited against liabilities where appropriate.

Compiled from official sources — confirm details with the bill’s official record.

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