It is generally the taxpayer’s obligation to request a refund of any overpayment of taxes. However, two recent developments suggest that some jurisdictions are taking divergent positions on this policy.
The Ohio Legislature recently passed S.B. 263 , enacted June 17, 2014, which requires the department to notify taxpayers of any overpayments of taxes or fees at least 60 days before the taxpayer is required to submit a refund request. The department must then automatically issue a refund, or the taxpayer may request that the department apply the overpayment amount to future tax liabilities.
This bill comes on the heels of Ohio’s pledge to return overpayments of the Ohio Commercial Activity Tax to businesses.
As Ohio begins proactively issuing tax refunds, Michigan seems to be requiring taxpayers to adhere to rigid requirements for the return of overpayments. In Ford Motor Co. v. Mich. Dep't of Treasury , No. 146962 (Mich. June 26, 2014), the court ruled that a taxpayer must explicitly demand a refund, and that checking the box labeled “disagrees with this determination” on a notice of assessment does not constitute a valid claim for refund. Rather, the taxpayer must file a written claim which “need not take any specific form, [but] it must clearly demand, request, or assert a right to a refund.
By Melissa Fernley
Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Should states be more proactive in issuing refunds?
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