Tax Alert

Final Clarification Provided on Treatment of Disregarded Entities for MBT

(Jan. 23, 2012)

Michigan Governor Rick Snyder signed Senate Bill 369 (SB 369) on Dec. 27, 2011, clarifying the manner in which a disregarded entity is treated under the Michigan Business Tax (MBT). This clarification, which is retroactive to Jan. 1, 2008, provides that a disregarded entity for federal income tax purposes also is classified as a disregarded entity under the MBT. Prior to the change, a disregarded entity for federal purposes was treated as a regarded entity for the MBT.

The law provides two exceptions to the retroactive treatment. The first exception provides that a disregarded entity that was treated as a regarded entity in an MBT return originally filed before Jan. 1, 2012, or in an amended MBT return filed before Dec. 1, 2011, is not required to file an amended return to treat the entity as disregarded. The second exception provides that a disregarded entity that was treated as a regarded entity for its 2010 tax year may be treated as a regarded entity for its 2011 tax year. Taxpayers should evaluate whether there is an advantage to filing an amended MBT return and treating the regarded entity as disregarded.

For more information on how these issues might affect you, please contact Brian Myers at 317.208.2478 or brian.myers@crowehorwath.com, Mike Hollowell at 574.236.8672 or michael.hollowell@crowehorwath.com, or any Crowe Horwath LLP tax professional.




Under U.S. Treasury rules issued in 2005, we must inform you that any advice in this communication to you was not intended or written to be used, and cannot be used, to avoid any government penalties that may be imposed on a taxpayer.  

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Brian D. Myers
Managing Director