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GCN Home > 05/01/03 web stories

Michigan will require some to e-file income taxes

By Nancy Ferris, Special to GCN

Michigan is joining two nearby states in requiring corporations and professional tax preparers with large numbers of customers to file income tax returns electronically.

Floyd Schmitzer, administrator of Michigan’s return processing division, announced Wednesday at the spring meeting of the Council for Electronic Revenue Communication Advancement in Arlington, Va., that his state is notifying tax preparers of the change in policy, which is designed to save money for the cash-strapped state.

Although Michigan received more than 1.5 million state income tax returns electronically this year and enjoyed a 16 percent increase over 2002 filings, Schmitzer said that wasn’t good enough. Because of personnel cutbacks in the division, some state tax administrators found themselves entering data into the state’s computers instead of overseeing operations, he said.

The state will require preparers who filed more than 200 returns in 2003 to file electronically in 2004. It also will require that the state’s corporate income tax, known as the single business tax, be filed electronically beginning in January if a company prepares its return using commercial software.

As a result, Schmitzer said he expects individual income tax returns filed online to increase by more than 1 million next year. “E-file saves us 52 cents per return” in processing costs, he said, and there will be more savings – for example, 9 cents per paper return to open an envelope and a larger amount to mail out forms. “That’s a big savings” for his relatively frugal government, he said.

Minnesota and Wisconsin also require large professional preparers to file electronically, and Ohio is considering legislation to do so, Schmitzer said.

Harley Duncan, executive director of the Federation of Tax Administrators, said he was not aware of any other states imposing similar requirements, although some other states require corporations to file certain tax documents and make sales tax payments electronically. He predicted that more states would consider requiring online filing because of widespread budget deficits.

Michigan will enforce its requirement by notifying taxpayers that their returns were unacceptable, Schmitzer said. He said he expected that few such notices would be needed to achieve compliance with the rule.

More news on related topics: E-Government, State & Local



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