MI Sales Tax

[Sherill]

Client has filed own Sch C, yearly.
Confessed to me that they have NOT paid MI Sales Tax for the last 4 yrs (due to cancer medical costs).
Wants me to speak on their behalf, pay past taxes, hopefully w/o LARGE PENALTY.
What do I say/do regarding this matter for my client?

[Bees Knees]

The cancer medical costs could be a good reasonable cause excuse for not paying the sales tax. They might abate the penalty on those grounds.

Just be truthful with MI and see what you can do for your client. You are at their mercy, so don’t play games, or try to bargain with them.

[jainen]

at their mercy

>>You are at their mercy<<

The basic problem is that medical costs are irrelevant. He can not claim that he couldn't afford the taxes because of other expenses. The money was right there in his bank account, since he had collected it from his customers and was holding it in trust for remittance to the state.

Maybe the Department of Treasury is compassionate in Michigan, and I would certainly play for sympathy. But also try to give the agent something she can actually put into her report. It is significant that the client came forward voluntarily and engaged a professional to handle it correctly. Offer to pay in full immediately if possible, or commit to a binding payment plan using automatic withdrawal. Do not dispute the interest owed, or the underlying tax. Show GOOD records so the correct tax can be determined, and carefully complete all the appropropiate forms.