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Revenue Administrative Bulletin 1989-41

Revenue Administrative Bulletin 1989-41

INHERITANCE TAX - PENALTY AND INTEREST

Approved: May 6, 1989

RAB-89-41. The purpose of this Bulletin is to clarify when to apply penalty and interest under the Michigan Inheritance Tax Act, MCL 205.201.

Penalty and interest will be charged on the inheritance tax payments made more than nine months after death. When tax is paid more than nine months after death, interest will be computed from the date of death. [MCL 205.204]

Partial payments of tax are authorized by the statute to reduce penalty and interest.  These payments must be made within nine months of death and should equal or exceed 75% of the final inheritance tax determination. [MCL 205.204(6)]

Compute penalty and/or interest according to the following chart.

Type of Payment
 Penalty* Interest**

Final payment made within 9 months of date of death.

Partial payment made within 9 months of date of death.

Payment of additional tax due “after discovered assets” and made within 30 days of date of order entered by probate register.

Payment of additional tax due to an IRS audit (i.e., tax generated by IRS audit) where the Department of Treasury has been notified within 90 days of the date of the IRS adjustment letter and the tax is paid within 30 days of the date the order is entered by the probate register.

 None None

No payment made.

Final payment paid after 9 months of date of death.

Final payment made where earlier partial payment did not equal or exceed 75% of final tax due.

Payment of additional tax due to IRS audit where the Department of Treasury has not been notified within 90 days of the date of the IRS adjustment letter.

 Computed from first day of 10th month after date of death. Computed from date of death until paid.

Final payment made within 30 days of date of order entered by probate register and where partial payment:

  • Was made within 9 months of death, and
  • Equaled or exceeded 75% of final tax due.
 None Computed from first day of 10th month after date of death until paid.

Final payment made after 30 days of date of order entered by probate register and where partial payment:

  • Was made within 9 months of date of death, and
  • Equaled or exceeded 75% of final tax due.
 Computed from date order was entered by probate register. Computed from first day of 10th month after date of death until paid.
Payment of additional tax made on “after discovered assets” after 30 days of date of order entered by probate register. Computed from date order was entered by probate register. Computed from date order was entered by probate register.
Payment of additional tax due to an IRS audit where the Department has been notified within 90 days of the date of the IRS adjustment letter and the tax is paid after 30 days of the date the order is entered by the probate register. Computed from date of IRS adjustment letter until paid. Computed from date of IRS adjustment letter until paid.

*    Impose penalty at 5% per month or fraction thereof (minimum $5.00 per month to maximum 25%) and compute from date shown in chart.

** Charge interest at ¾ of 1% per month from date shown in chart.