Tax Overview: Michigan
Michigan tax debts are handled by the Department of Treasury and can trigger liens, levies, and wage garnishments. The state is relatively cooperative — the OIC program will stop collections while under review, and installment agreements are available up to 24 months without financials. Michigan uses MARCS as its collection agency, which offers its own IA terms. A key quirk: the state wants the first levy payment to be made before it will consider a payment plan alternative.
Key Tax Facts
- OIC available via Form 5181 — WILL stop collections while under review
- Installment agreements up to 24 months without financials
- Extended IA with admin review requires financials (Forms 3189 & 990)
- Collection agency (MARCS): 24 months without financials, beyond 24 requires Forms 3189 & 990 plus last 3 months pay stubs
- Garnishment: state wants the first levy payment made, THEN will consider payment plan in lieu of continued levy
- Rate returned to 4.25% (was temporarily 4.05% in 2023)
Common Tax Issues
The state's requirement to make the first levy payment before considering a plan means taxpayers lose at least one payment to the levy
MARCS collection agency terms differ from the state's — taxpayers should clarify which entity holds their case
Extended plans beyond 24 months require substantial documentation through admin review
Resolution Options in Michigan
Payment Plans (Installment Agreements)
Without financials: Up to 24 months
With financials: Up to 36 months
24 months without financials. Extended IA via admin review requires Forms 3189 & 990.
Offer in Compromise (OIC)
Available: Yes
Stops collections while pending
Form: Form 5181
WILL stop collections while under review.
Wage Garnishment
Rate: Varies
Can lift with payment plan: No
Can reduce amount: No
State wants first levy payment made, THEN will consider payment plan in lieu of continued levy.
Penalty Abatement
Available: Yes
Bank Levy
Can release: No
First levy payment must be made before state considers alternatives.
Recent Tax Changes
- Rate returned to 4.25% (temporarily 4.05% in 2023)
Official Resources
How Tax Advocate Group Helps Michigan Taxpayers
Whether you're dealing with the IRS, the Michigan Department of Treasury, or both — we provide comprehensive tax resolution services to Michigan residents and businesses.