Tax Clearance Frequently Asked Questions

Is there a fee to submit a tax clearance request?

There is no fee to submit a tax clearance request.

How long does it take to get a response for a tax clearance request?

Treasury will respond to your request within 60 days of receipt of Form 5156. Applications are worked in the order they are received and cannot be expedited.

I am not registered with the Michigan Department of Treasury, but I am dissolving/withdrawing my business with the Department of Licensing and Regulatory Affairs (LARA). Do I still have to file Form 5156 Request for Tax Clearance Application?

No, if you are not registered for business taxes administered under MCL 205.27a you are not required to file Form 5156 and will not be eligible to receive a certificate of clearance.

I am dissolving/withdrawing my business with the Department of Licensing and Regulatory Affairs (LARA). Do I need to file anything else with Form 5156 Request for Tax Clearance Application?

Yes, Form 163 Notice of Change or Discontinuance is required when requesting a Tax Clearance Certificate for Dissolution or Withdrawal. Form 163 Notice of Change or Discontinuance can be filed electronically through Michigan Treasury Online at mto.treasury.michigan.gov.

I am not selling or closing my business, but I would like to know that I am up to date on filing returns and owe no business tax to the Michigan Department of Treasury. Which option do I select on Form 5156?

Select the first option for reason of request: I am selling my business or business assets. Complete part 1 and part 4 of the application.

I am selling my business and need a statement to show my tax obligations. Which option do I select on the Form 5156?

If the sale of the business has not been completed, select the first option for reason of request: I am selling my business or business assets. Complete part 1 and part 4 of the application.

If I am purchasing a business can I request a Tax Clearance Certificate?

No. Only the seller of the business can request a tax clearance certificate. If you are purchasing a business and need a Tax Clearance Certificate for Sale of Business and/or Business Assets from the seller, request that they submit Form 5156.

I purchased a business and the seller asked for my Federal Employer Identification Number (FEIN). Why do they need it?

If the seller has completed the sale of their business and requires a Tax Clearance Certificate for Sale of Business and/or Business Assets, they must provide the business name, address, and FEIN of the purchaser.

Failure to provide this information on Form 5156 will cause the request to be denied.

How do I know the amount of funds that should be put in escrow?

The amount of money to place in escrow can vary depending on the estimated or actual taxes due. When you complete Form 5156 Request for Tax Clearance Application, Treasury will provide an estimated or actual amount of taxes due. The escrow account should reflect at least the total amount stated in the letter.

Refer to MCL 205.27a for additional information.

How long should funds be kept in escrow?

Escrowed funds need to be held until the seller provides a Tax Clearance Certificate for Sale of Business and/or Business Assets to the buyer showing that no tax liabilities exist.

What happens if funds to cover outstanding tax liabilities are not placed into an escrow account?

The purchaser and corporate officers could be held liable as successors for any real outstanding debt or liability. The amount placed into the escrow account should be at least what is cited in the Tax Clearance Liability Explanation for Establishing Tax Escrow letter.

I resolved all outstanding debts and/or missing returns. Why do I need to fill out a new Form 5156?

Treasury cannot use the information from a previous request for tax clearance. Once the requirements listed in the letter are fulfilled, a new request can be made.

How do I delegate a third party to receive tax clearance information on my behalf?

Complete the AUTHORIZATION FOR DISCLOSURE OF TAX CLEARANCE INFORMATION section at the bottom of page 2 on Form 5156.

The letter I received from Treasury indicates that I am missing returns for Sales, Use and Withholding Taxes (SUW), but I did not have a filing requirement.

If the letter requested a return for a tax period the business was open for, a return is required, even if there was no tax liability. Returns can be filed electronically on Michigan Treasury Online (MTO) at mto.treasury.michigan.gov.

If the letter requested a return for a tax period after the business closed, be sure to file Form 163 Notice of Change or Discontinuance to notify the department of the discontinuance date. Form 163 can be filed electronically on MTO at mto.treasury.michigan.gov.

For more information regarding Sales Tax and Use Tax filing requirements, visit the FAQs.

For more information regarding Withholding Tax filing requirements, visit the FAQs.

The letter I received from Treasury indicates that I am missing returns for Corporate Income Tax (CIT), but I did not have a filing requirement.

If gross receipts were under the filing threshold, submit a new Form 5156 and include copies of federal returns showing gross receipts for the tax periods in question.

If the business is an S-Corporation and not required to file CIT, include copies of federal returns to prove S-Corp filing status or provide a statement from the IRS.

If the business filed under a unitary business group, include a copy of the tax return and schedule showing the business name and account number on the tax return(s) with a new Form 5156.

For more information regarding Corporate Income Tax filing requirements, visit the FAQs.

The letter I received from Treasury indicates that I am missing returns for Michigan Business Tax (MBT), but I did not have a filing requirement.

If gross receipts were under the filing threshold, submit a new Form 5156 and include copies of federal returns showing gross receipts for the tax periods in question.

If the business filed under a unitary business group, include a copy of the tax return and schedule showing the business name and account number on the tax return(s) with a new Form 5156.

For more information regarding Michigan Business Tax filing requirements, visit the FAQs.