You May Be Among Tens of Thousands Who Overpaid Michigan Taxes

A state audit has uncovered a raft of problems at the Michigan Treasury that resulted in thousands of taxpayers paying taxes they didn’t owe, thousands of dollars in processing costs, inadequate security safeguards that potentially exposed taxpayer information and other weaknesses.

State Treasurer Nick Khouri said in an emailed statement to the Detroit Free Press that taxpayers overpaid because of “a faulty system implementation that has not provided the service quality we expected to deliver to taxpayers.”

Khouri said his department has apologized to taxpayers and that all who were overcharged will receive a full refund.

How big was the problem?

Inaccurate programming of the system that manages sales, use and withholding taxes caused the Treasury to send out 76,000 assessment statements with incorrect balances, according to the Office of the Auditor General report.

“Some businesses and individuals unnecessarily paid a tax assessment because of the erroneous notification that they owed delinquent taxes,” according to the report.

The Treasury spent $142,000 in “avoidable processing costs,” the report said.

Khouri’s office discovered the error and put another 79,000 incorrect assessment notices on hold in April and promised corrections to the system would be made by July. If the notices hadn’t been put on hold, another $112,000 could have been erroneously collected.

Besides finding that some taxpayers were overcharged, the audit report cited nine areas of deficiency at the department, which is responsible for collecting billions of dollars for the state.

Read the full report below.