This story was updated June 8.
The whole tax amnesty idea came about
last fall, when the Legislature was tearing back seat cushions to find
dimes and nickels for Gov. Jennifer Granholm's final budget.
The Republican-led House had suggested
the idea back in 2006. At the time, it was yet another
duct-tape-and-bailing-wire budget patch job. The thought was that if the
Department of Treasury waived penalties for 60 days for anyone who owed
a significant amount of back taxes, the state could raise about $25
Senate Majority Leader Mike Bishop
brought back the idea in 2009 and baked it into a revenue-generation
package. The tax amnesty piece was designed to raise $35 million this
On both attempts, the Department of
Treasury shot down both ideas, arguing a) the state wouldn't bring in
enough money to be worth anyone's while and b) the state doesn't want to
offer too many tax amnesty programs out of concern that the public
will get overly used to having them around.
So when the Granholm-led Treasury
advanced the idea in 2010 as a way to bring in $88 million for the state
coffers, a lot of Republican lawmakers were rolling their eyes and
snickering into their handkerchiefs.
Treasury's new estimates were based on an
aggressive, $1.5 million publicity campaign and — by all appearances —
the approximate size of the budget hole that needed filling.
Now, roughly halfway through the
45-day amnesty period, the Department of Treasury is reporting 12,000
applications, less than the 13,854 valid applications received during
the 2002 program, which brought in some $31.7 million, according to a
2003 report on the program.
The number is still less than half of the
47,175 applications received in the 1986 amnesty program that brought
in $73.2 million, but Department of Treasury Spokesman Caleb Buhs said
officials are staying optimistic and are continuing with their extensive
Television ads are joining radio spots,
billboards, newspaper and web ads as the department gets the word out
that "All Excuses Are Welcome" until June 30. Taxpayers with outstanding
debts to the state can "settle up without paying any penalties."
Interest fees still apply, however.
"We've hit about every medium there is," Buhs said.
Michigan is not taking the
carrot-and-stick approach other states have taken. In Pennsylvania,
those with grossly overdue state taxes were promised that an army of
auditors would be dispatched to settle up anybody in arrears who didn't
participate in its amnesty plan.
That state also took an Orwellian
"We-know-where-you" approach to scare people into paying up, Buhs said.
The approach worked, though. The Federation of Tax Administrators have
Pennsylvania picking up $261 million in its Spring 2010 program.
In 1986, the Michigan Department of
Treasury used the mildly threatening slogan, "Get to Us Before We Get to
You" campaign. It went over radio, television and print advertising and
a stepped-up enforcement detail was launched after the amnesty period,
Michigan isn't going that route in 2011.
The idea this time is to simply invite people to participate no matter
what excuse is cooked up. The 30-second TV ad now running statewide
features three people who each claim they couldn't file their taxes
because "I had a fever of 180," "a giant caterpillar ate it" and "I
couldn't find any pens."
It's catching on. Treasury is collecting 150 calls a day for information.
Some 200,000 people the Department of
Treasury has on record as owing money were sent letters alerting them of
the non-penalty period, Buhs said. The publicity effort is
significantly more extensive than the 2002 program, which had an
advertising budget of only $100,000 or so.
The most successful tax amnesty program
ever, according to the Federation of Tax Administrators, was the $582.7
million collected by the state of New York between Nov. 18, 2002, and
Jan. 31, 2003. Louisiana managed to collect $303.7 million in the fall
of 2009, Indiana $255 million the fall of 2005 and Illinois $314 million
between Oct. 1, 2010, and Nov. 8, 2010.
Forty-seven states have done some sort of
tax amnesty program since 1982, and several have done it multiple
times. New York has had five tax amnesty programs, for example.
The Department of Treasury has a web page
up detailing how a taxpayer can escape criminal prosecution for overly
late business, sales, income and property tax, among other taxes at
www.mitaxamnesty.org. Those who fall into that category need to get
their paperwork in the mail and postmarked by June 30 in order to be
With the state's economy back on the
upswing, it may be a long time before the Legislature agrees to let
Treasury try this again.
It may be a much longer time before they're this nice about it.
(Kyle Melinn is the editor of the MIRS Newsletter. He can be reached at firstname.lastname@example.org.)