LANSING, Mich. (WZMQ) – State Treasury officials defended the department’s handling of this year’s tax season Tuesday as lawmakers pressed agency leaders over incorrect tax notices, delayed refunds and concerns about audit staffing levels.
The House Oversight Committee hearing was called in part to examine approximately 27,000 erroneous notices sent to taxpayers following the state’s transition to a new tax administration platform known as GenTax.
Lawmakers shared stories from constituents who waited months for refunds, struggled to contact Treasury representatives and received notices claiming they owed additional taxes or would receive smaller refunds than expected.
Treasury officials said approximately 5 million returns were filed this season and roughly 90% were processed automatically through the new system. Officials acknowledged problems occurred during the transition but said safeguards have been implemented to prevent similar issues in the future.
“The root cause was change in file formats from the legacy mainframe system now to our GenTax platform,” Tax Administration Services Bureau Director Katina Litterini told lawmakers.
Committee members questioned Treasury about customer service complaints and increasing numbers of requests for assistance from legislative offices. Several lawmakers said their offices handled significantly more tax-related constituent complaints this year than in previous filing seasons.
Treasury officials attributed some communication challenges to an outdated phone system and said a replacement system is scheduled to be implemented in July. The department also highlighted a new callback feature designed to reduce wait times for taxpayers seeking assistance.
Beyond taxpayer concerns, lawmakers revisited previous whistleblower allegations involving a decline in auditors assigned to large out-of-state corporations.
Committee Chairman Jay DeBoyer questioned Treasury leaders about data showing a reduction in out-of-state auditors and completed audits over the last several years. Treasury officials responded that staffing losses were partially driven by recruitment efforts from the Internal Revenue Service and argued that modern technology allows many corporate audits to be conducted remotely.
Treasury officials maintained that audit decisions are based on compliance risk rather than whether a company is headquartered in Michigan.
The hearing also included testimony from Lansing accountant Annette Kraft, who said tax professionals have spent significant time helping clients navigate issues tied to the new system.
“There are long-standing issues with the Department of Treasury,” Kraft testified. “There can be loss of documentation sent to the Department of Treasury or collections when responding to notices.”
Treasury leaders apologized to taxpayers affected by the problems and pledged continued improvements before the 2027 filing season.
“If there is an issue, we will take care of it. That is our promise,” Kavita Kale, Deputy Treasurer with Michigan Treasury said.
Lawmakers indicated the committee will continue oversight of the department’s response, including efforts to improve taxpayer communications, resolve delayed returns and address concerns raised about audit staffing levels.
