You’ve gone to the mailbox and find a Letter of Inquiry from the Michigan Department of Treasury. While letters from the IRS or State of Michigan can be concerning, do not panic.Quite often the State of Michigan simply needs additional information to process your tax return. These letters can be used for a variety of purposes for the state, including:
- Requesting copies of federal tax forms to verify reported income amounts
To verify amounts reported on your tax return, the State of Michigan often requests copies of W-2’s, 1099’s, Schedule K-1’s and other income reporting forms. Since most taxpayers e-file their tax returns, the State typically does not receive the source documentation to confirm amounts reported on your MI-1040.
- Requesting personal information to confirm your identity
To combat identity theft and the issuance of fraudulent refunds, some taxpayers will be requested to provide personal information to confirm their identities. You may be asked to provide a copy of your driver’s license (along with your spouse, if married) to move forward in processing your return.
- Inquiring about your filed federal tax return
Most taxpayers e-file their federal and state tax returns. However, when your State of Michigan return is filed, it does not include a copy of the federal tax return you submitted to the IRS. Therefore, the State of Michigan may request copies of your federal tax return or only certain pages of your federal return to verify information reported on your Michigan tax return.
- Request completion of a Household Resources Questionaire
Since the Michigan Property Tax Credit and Farmland Preservation Tax Credits are based on household resources versus taxable income, you may be asked to complete a questionnaire to confirm your household resources are not higher than what was reported on your originally filed tax return. If during completion of this questionnaire you realize you underreported your Household Resources, simply submit the completed form and the State of Michigan will automatically recalculate your reduced credits.
While a Letter of Inquiry is often not a cause for concern, it is possible they will result in adjustments to your return. It is important to provide the requested information in a timely manner to facilitate faster processing time of your return (and if you were in line to receive a refund, which is also on hold).
By Daniel Crawford, CPA
If you do not feel comfortable responding to this letter, please request a complimentary accounting consultation or contact us at (616) 642-9467 to have BHT&D CPAs assist in your response.