Small Businesses Join Lawsuit Challenging Tax Provision Interpretation

Date: September 06, 2023

Lawsuit questions the Michigan Income Tax Act

MIDLAND, Mich. (Aug. 24, 2023)NFIB joined a lawsuit challenging the interpretation of a tax provision in the Michigan Income Tax Act by the Michigan Attorney General and State Treasurer. The case centers on the meaning of “the current rate” in the Income Tax Act.

The Attorney General interprets “the current rate” to mean the statutorily specified rate, always reverting to this specified rate in each new tax year. NFIB argues that “the current rate” instead means the prior year’s, or most recent, tax rate. Under NFIB’s interpretation, a lower rate in one tax year would continue into the next tax year. Under the Attorney General’s interpretation, the State’s small businesses will suffer a higher tax burden.

“The tax cuts included in the Michigan Income Tax Act were a welcome relief to Michigan’s small businesses,” said Amanda Fisher, NFIB Michigan State Director. “The legislature in 2015 intended for the provision to be ongoing and benefit both individuals and small businesses statewide. As small employers plan their expenses, it is important that they have certainty in what tax provisions are offered. If the Attorney General’s interpretation is upheld, it will cause significant tax burdens on small businesses at an already fragile time in the economy.”

In NFIB’s 2020 Problems and Priorities survey, tax-related issues were top concerns for small business owners including “State Taxes on Business Income”, “Tax Complexity”, and “Dealing with IRS/State Tax Agencies.”

The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court.

Related Content: Small Business News | Legal | Michigan | Taxes

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