News Story

New State Tax Payment System Causing Headaches for Businesses

Michigan business owners are running into problems with the state’s new online system for filing sales, use and payroll taxes, and some are worried that if they can’t make timely payments, they will be stuck with fines and interest charges.

Asked if the state would waive penalties, Michigan Department of Treasury spokesman Terry Stanton said the “penalty and interest waiver will be accomplished systematically on a case-by-case basis.” The Treasury Department has also changed its stand on mail-in tax payments.

Before the system went online, businesses were told the electronic system was mandatory. Now, Treasury is only requiring it for fuel and vehicle dealers. It is not clear how long the state will accept mail-in payments.

The system known as SAP — for Systems, Applications and Products — went online Jan. 12, with the help of Deloitte, an outside contractor. The state sent out letters in November telling businesses they had to register for an online account because the mail-in system would be phased out by January.

Because tax payments for many businesses are due on the 20th of each month, many of them quickly got to work registering for an online account. But it was not a simple process. For some, it took hours if not days to register. Some business owners, even after registering, had problems with the payment system.

Lynette Brown, a Grand Rapids accountant, said her clients have been frustrated. She was unable to help them during the initial registration process because they first had to register her as a representative — through the same online system that was causing them difficulties.

“You have to set up yourself as a user and then, in a separate step you have to create a business profile. So basically, when you’re ready to do this you have to have handy all the information about your business, how it is set up, your business registration number, your federal information, your owners,” said Brown.

She said once you register and set up your business profile, you are then sent to a “payments” page at which point you need the access code sent to you by the state in the November letter.

“If you don’t have the access code, you then have to register for a new one, and that can take a week to ten days,” said Brown.

Stanton acknowledges problems exist but says the department has received payments from “tens of thousands” of taxpayers. He also says the new system will give users 24/7 access to their accounts and the “ability to file and pay electronically in one transaction.”

Brown thinks that in time the system could be an improvement. She remembers a similar experience when the Michigan Unemployment Insurance Agency set up an online payment system.

Brown has been able to get through the registration process but she still is experiencing problems.

“Payment is the trick. It will ask you if you want to pay now or later. If you click ‘now’, you’re sent to another website where you have to register, yet again. And for me, that system was down for all of last week,” said Brown.

Brown finally succeeded this week, but when she clicked “pay,” she was sent to a blank screen, with no indication her transaction was successful. She called the phone number on the website. After she went through a number of prompts and questions, a recorded message told her that the lines were too busy and that she should call back later.

Stanton says the system was tested internally before going online, but Brown wondered why the department didn’t launch it incrementally after a few “real-time” test runs.

Stanton says his department has added additional phone lines and temporary staff to handle the call volume.

“With many calls taking longer to resolve than typical tax season inquiries, we are experiencing longer-than-normal hold times,” he said.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.